ECONOMIC REPORT CARD

The Connecticut Economic Resource Center (CERC), a non-profit agency whose mission is to promote a competitive business environment in the state, recently released its annual "benchmarking" report rating Connecticut's progress. As is often the case in economic reports, this is a "good news, bad news" story.

Connecticut ranks high in many categories when compared to other states. Connecticut ranks 5th out of 50 states for innovation and technology, 3rd in technology output per worker, 6th in human capital (well-educated workforce), and 5th in concentration of financial and capital resources. But let's not get cocky.

Our state is low on the totem pole in all sorts of growth areas and that does not bode well for the future. For example, Connecticut ranks 43rd in entrepreneurial and business vitality, 40th in growth of financial resources, and 34th in global links.

Southeastern states and some states in the West and Midwest lead the nation in growth categories. That's no surprise. Those areas have seen development and in-migration of population for the last few decades.

The CERC report notes that some economists might argue that because of Connecticut's existing wealth and concentration of resources, "there is not much room for growth, hence a low score on the growth scale is little cause for concern." However, nearby states such as Massachusetts and New Jersey rank high in both concentration of assets and growth. CERC's study asks: "If they can do it, why can't Connecticut?"

Jeffrey Blodgett, CERC's vice president of research, said unless state government and business work together to improve conditions there will be "a slow, steady weakening of growth" in Connecticut.

Reacting to the CERC report, Republican Gov. Jodi Rell said it is clear the state must improve in growth categories. "If Connecticut is a focal point for innovation, expansion, and achievement, job creation and retention will follow," she said.

Massachusetts has created a renewable energy trust, restructuring its electric utility industry and promoting renewable energy to help companies and families cope with the cost of energy. New Jersey has devised programs to help companies cope with operating losses if they can show they are developing innovative products or services that could result in permanent job growth.

To point Connecticut in the right economic direction, CERC offers several recommendations in its report. A top priority is an analysis of Connecticut's research and development efforts to determine why our state lags in government and university funded research even though industry-based research investment remains high.

CERC says the state must do much more in stimulating new business formation because right now we have "the worst record of business growth of any state," according to the report.

Connecticut's skilled workforce, much of it consisting of baby boomers, is aging and ready for retirement. CERC says the state must boost its efforts in education, especially in urban areas, to help revitalize the workforce for the future with a special focus on technology expertise.

Not surprisingly, the report also urges state government to upgrade Connecticut's infrastructure including roads and bridges, electric transmission lines, and its ports and railroads to help companies make its products and ship them where they need to go worldwide.

All these suggestions come at a time when Connecticut (and all other states) face the prospect of a national recession. A serious economic downturn could erase many advances made in recent years and make it difficult for Connecticut to finance the improvements the CERC report views as necessary for a healthy future.
 

Posted 2/25/08

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