economic growth and well-being in the mountain empire

Economic Growth and Well-being in the Mountain Empire

Bill ShobeCenter for Economic & Policy Studies, U.Va.

Wise Virginia, February 23, 2013

You heard it hear first…

Prosperity is not about money.

Income Growth in SWVA

Source: Bureau of Economic Analysis, Regional Economic Information System

Income Growth: Another View

Source: Bureau of Economic Analysis, Regional Economic Information System

Income Growth: Sources

Source: Bureau of Economic Analysis, Regional Economic Information System

The Economy is Dynamic

Jobs and people move around (a lot).

Unemployment

Source: Virginia Employment Commission

Employment by Sector

Population

Source: Virginia Employment Commission

Development Conundrums

Higher productivity labor implies higher potential wages and more opportunities elsewhereHigher wage jobs imply greater productivity, so fewer workers are neededIncreased economic activity implies higher costs (price of fixed assets)Entrepreneurship increases with density

What Contributes to Prosperity?

Human capital Health and education

Natural capital Resources Amenities

Social capital Entrepreneurship Effective and responsive government

The Elephant in the Room

Coal has been a great natural advantage for the region But has it also been a curse? Has it limited diversification? Has it reduced the focus on human capital and

entrepreneurship?

Coal Production

Coal and Natural Gas Prices

Increasing Prosperity

Must address all three stocks of regional capital People Place Institutions

Must be based on a realistic assessment of advantages and potentials rather than simplistic comparisons to other places

If You Build It…

There is a sense in which a region is like a firm: If you provide something people want And do it efficiently And let them know about your product Your prospects are good.

BTW: A firm that has to pay people to consume your product, you have some thinking to do.

A Land of Natural Advantage

There is enormous untapped potential hereThe way forward is: Grounded in realistic assessment And focused on the elements of prosperity

rather than simple money measures of economic activity, which are a consequence of prosperity rather than a cause.

Thank you

Bill ShobeCenter for Economic & Policy StudiesWeldon Cooper Center for Public ServiceUniversity of Virginiashobe@virginia.edu