Editorial

Economic Development
Later this month, about the time we all are stocking up on Halloween candy and decorating the lawn with witchy yard art, Site Selection magazine will publish its annual ranking of states with the best business climates. And if recent history is any guide, North Carolina will be listed among the two or three best, perhaps even at the very top as we have been for two years running.

What a cruel trick to play on a state that could benefit from a few economic treats. With the shock of the Pillowtex bankruptcy still echoing, it would be painful to read another upbeat press release from the Commerce Department citing the Site Selection survey and repeating its “we’re No. 1” mantra. Promoting the state is part of Commerce’s job and citing such surveys helps maintain the state’s lustrous image, whether that image is accurate or not. But there’s a downside to that. Legislators who read press releases implying that our current business recruitment efforts are working are understandably hesitant to try something new. If it ain’t broke why fix it?

There’s more than a little smoke and mirrors behind the business climate rankings in Site Selection, the bible of economic developers. First, all the data is self-reported by the states using their own definitions of what constitutes a business expansion and the number of jobs created. It’s long been suspected that some states count new gas stations and convenience stores as industrial expansions. Second, 50 percent of the survey is based on nothing more than an opinion poll of corporate real estate executives. A more accurate measurement of how North Carolina stacks up in business recruitment is another list that Site Selection publishes. The “Top Deals” list, published each May, tracks which states were chosen for the year’s largest economic development prizes, in terms of capital investment and jobs created. For North Carolina, there is an eyeopening disparity between the two lists.

In 2000, Site Selection said we had the nation’s third-best business climate. But that year we landed just one of the 20 largest U.S. industrial announcements. Virginia landed five of the biggest deals but was ranked eighth in business climate. North Carolina supposedly had the nation’s best business climate in 2001 but we again landed only one of the year’s 20 largest industrial expansions and relocations. South Carolina had two that year.

We remained atop the business climate survey in 2002, but guess how many of the 20 top deals came our way? None. Almost every state in the Southeast landed at least one, including all of our neighbors. South Carolina landed the BMW expansion (400 jobs), Virginia got the Eli Lilly insulin manufacturing plant (700 jobs) and Tennessee won the new Saturn SUV assembly plant (600 jobs).

North Carolina should be proud that it has long been considered to be among the nation’s elite. But let’s not forget that economic development is about creating jobs, not where you rank on some magazine list.


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