2013 NEBRASKA POLICY AND ISSUES SUMMITN E B R A S K A C H A M B E R O F C O M M E R C EN O V E M B E R 1 8 , 2 0 1 3
J O N AT H A N H AU G H T ONS E N I O R E C O N O M I S T, B E A C O N H I L L I N S T I T U T E P R O F E S S O R , D E PA R T M E N T O F E C O N O M I C S , S U F F O L K U N I V E R S I T Y
J H A U G H T O N @ S U F F O L K . E D U
State Competitiveness, November 2013
NE: Competitive or not?
The Ratings Cacophony
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Key ideas
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NE GDP weathered the recession about as well as the US Because fundamentals of competitiveness are solid?
Competitiveness: Our measure is Broad Associated with per capita income Helpful in identifying policy-relevant areas of strength,
weaknessNE: Knocking at the top 10
Some others are improving Several problems need attention
Personal Income per capita
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NE: Muted recession damage
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Competitiveness Is …
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A state is competitive if it has in place the policies and conditions that ensure and sustain a high level of per capita income and its continued growth. Naturally leads to the question of what these policies and
conditions are
Michael Porter: Competitiveness measures “the microfoundations of prosperity”
and “wealth is actually created at the microeconomic level.”
The BHI index: Inspired by Porter but developed in-house Long-term: what makes a persistent difference to real income?
Policy is important, but only part of the story Natural resources; culture; history.
The Big Picture: Top 5 + Neighbors
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MASSACHUSETTS 1 (7.77) COLORADO 6 (6.36) NORTH DAKOTA 2 (6.99) KANSAS
10 (5.77)MINNESOTA 3 (6.81) NEBRASKA 11 (5.75) SOUTH DAKOTA 4 (6.48) IOWA 13 (5.55)UTAH 5 (6.42) MISSOURI 32 (4.64)
NE: Index was 5.97 in 2011 and 6.36 in 2010.
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NE: The trend
Ranks: 2005 7 2006 11 2007 11 2008 14 2009 17 2010 6 2011 6 2012 11
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8th over the whole period
NE: The subindexes
NE index NE rank
Government and fiscal policy 5.17 23
Security 5.56 18
Infrastructure 5.64 16
Human resources 5.94 7
Technology 5.00 25
Business incubation 4.84 28
Openness 4.26 40
Environment 5.97 11
Overall 5.75 11
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NE: Government and fiscal policy
NE index
State & Local taxes/income 4.81
Workers Comp. premia 5.43
Bond rating 5.43
Budget surplus / GSP 5.28
Avg. pmt to insured unemployed 5.64
FTE St. & Loc. Employees/cap 3.82
Overall 5.17
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NE: Infrastructure
NE index
Mobile phones/1000 4.07
Hi-speed Internet lines/1000 4.46
Air passengers per cap 4.56
Avg. travel time to work 6.58
Electricity prices/kWh 5.71
Apartment rental (2 bdrm) 5.90
Overall 5.64
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NE: Business Incubation
NE index
Bank deposits/cap 4.84
Venture capital ($/worker) 4.56
Employer firm births/cap 4.89
IPO volume, $/capita 4.53
% of labor force in unions 5.40
Minimum wage 5.19
Tort Reform 4.62
Standardized wage rate 5.48
Overall 4.84
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NE: Openness (weak spot)
NE index
Exports/capita 5.01
Employment in foreign MNEs 3.97
% foreign-born 4.60
Overall 4.26
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Subindex 1: Government & Fiscal Policy
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NE StrengthsBudget surplus % GDP 4
NE WeaknessesGovt. employees/residents 46
Colorado 22Iowa 27Kansas 35Missouri 4Nebraska 23
Massachusetts 33Mississippi 13
Subindex 2. Security
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NE StrengthBGA integrity index 6
Colorado 4Iowa 15Kansas 23Missouri 37Nebraska 18
Massachusetts 3Mississippi 45
Subindex 3: Infrastructure
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NE StrengthsTravel time to work 3Apartment rental cost 8Electricity prices 9
NE WeaknessesMobile phones/capita 41High-speed lines/capita 34
Colorado 4Iowa 29Kansas 7Missouri 13Nebraska 16
Massachusetts 33Mississippi 41
Subindex 4: Human Resources
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NE StrengthsUnemployment rate 2% adults in labor force 2NE WeaknessesPhysicians/residents 35
Colorado 15Iowa 4Kansas 16Missouri 28Nebraska 7
Massachusetts 1Mississippi 50
Subindex 5: Technology
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NE StrengthsS&E graduates/capita 10NE WeaknessesPatents/capita 39High-tech employment 33
Colorado 7Iowa 19Kansas 26Missouri 27Nebraska 25
Massachusetts 1Mississippi 45
Subindex 6: Finance/Business
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NE StrengthsMinimum wage 5
NE WeaknessesVenture capital/capita 39Tort index33
Colorado 18Iowa 30Kansas 20Missouri 39Nebraska 28
Massachusetts 12Mississippi 24
Subindex 7: Openness
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NE WeaknessesEmployment in foreign MNCs
42
Colorado 39Iowa 38Kansas 27Missouri 43Nebraska 40
Massachusetts 8Mississippi 45
Subindex 8: Environment
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NE StrengthCarbon emissions/square mile
9
Colorado 19Iowa 24Kansas 12Missouri 33Nebraska 11
Massachusetts 28Mississippi 23
NE: Long-Term Issues (in bottom 15)
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S1 (Government/Taxes) High number of govt. employees (46)
S2 (Security) Jump in crime (36)
S3 (Infrastructure) Few mobile phones/cap (41)
S5 (Technology) Patents/capita (39)
S6 (Business Incubation) Venture capital/capita (39)
S7 (Openness) Low employment in foreign MNCs (42)
Index up 1 point, PCI up $1,893
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Real personal income per capita = 30,873 + 1,893 × Competitiveness Index
2011 p=0.01
R2 = 0.23PI per capita deflated using a spatial pNEce index (Aten et al. 2011)
3500
040
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4500
050
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3 4 5 6 7Competitiveness Index 2011
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Applied to NE
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Ranked 11th with index of 5.75 Business: 28th (4.84) Openness: 40th (4.26)
Raise these to the mean (5.0): Rank would rise to 9th with index of 6.02 Real personal income would rise $500 per person per
year That’s a total of $900 million annually.
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Suffolk University was founded in 1906, and has over 9,000 students in its College of Arts and Sciences, Sawyer Business School, and Law School.
The Beacon Hill Institute was founded at Suffolk University in 1991 for the purpose of bringing economic analysis to bear on current public policy issues.