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How will North Carolina get along in the Connected Age?
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Published: February 4, 2009
How will they figure out how to help North Carolina's economy recover? Who can tell them what will work?
I am thinking about North Carolina Gov. Bev Perdue and members of the General Assembly. When they gathered in Raleigh last month, they found the state facing economic challenges unprecedented in the lifetimes of most of us.
Here is my recommendation to them: Read Michael Walden's new book, "North Carolina in the Connected Age: Challenges and Opportunities in a Globalizing Economy."
Many North Carolinians know Walden, who is the William Neal Reynolds Distinguished Professor and extension economist in the Department of Agricultural and Resource Economics at North Carolina State University. That big title is a cover for his tireless efforts to help people all over our state understand the economic factors that affect them.
In his weekly column and regular radio broadcasts, he explains complicated things in simple and understandable ways.
His new book tells how North Carolina's economy fits in what he "dubs" the "Connected Age," which is "built on technology, trade, competition and the expanding service sector" and "has fully integrated all parts of the state into a national — indeed, international —network of interlinked commerce."
The Connected Age is a time of global connectivity and competition. In many ways North Carolina has fared well in this Connected Age by transforming its economy from dependence on its traditional
industries.
In 1970 our economy was grounded on a manufacturing base. More specifically, North Carolina depended on "the Big 3": tobacco, textiles and furniture. These groups still play a part in our state's economy, but their roles are minor compared to the importance of the "Big 5" that now dominate in North Carolina: information technology, chemical products, food processing, transportation manufacturing and banking.
Walden describes the "twilight" of North Carolina's traditional industries (like the "Big 3"). For instance, the contraction of textile and furniture manufacturing was part of a predictable process. When manufacturing industries mature, they are easier to duplicate and they always tend to move to lower-labor-cost areas. As the world gets more connected, that shift can take place very rapidly.
North Carolina was fortunate to be able to secure the "Big 5" as replacements, as the traditional "Big 3" faded in importance. The state's investments in higher education helped open the door for the information technology businesses in the Research Triangle Park. Favorable banking laws opened the door for the extraordinary growth of banking in our state. The growth of the "Big 5" and other new businesses are based on innovative, entrepreneurial and well-educated people who were prepared to do things in different and better ways.
What happens when these new businesses mature? Will they, like furniture and textiles, seek lower-cost places to get their work done? Walden gives no assurance that we will have a lock on these businesses forever.
Walden also warns that the benefits of North Carolina's relative economic success are not distributed evenly across the geography and the people of the state. In one of his most interesting chapters, he divides the state into about 20 separate economic regions (from Greater Charlotte to Greater Wilkes, from Far West to North East). Then he gives an overview of the specific characteristics of each region and the special challenges it faces.
In a concluding chapter, Walden outlines some of the critical economic issues that our governmental leaders must face, including options for overhauling our system of taxation. Although "North Carolina in the Connected Age" was written before the current economic crisis, Walden seems to have anticipated it.
The new book should be in the briefcase, on the desk, and by the bedside of every North Carolina political and business leader.
D.G. Martin is the host of "North Carolina Bookwatch," airing at 5 p.m. Sunday on UNC-TV.
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