WV FAILS TO DIVERSIFY ITS ECONOMY - Clinging To Extractable Industries

(06/26/2014)

By Bob Weaver

West Virginia has ranked in the last three spots for the past seven State New Economy Index reports, according to Ted Boettner, executive director at the West Virginia Center on Budget and Policy.

The state has long depended on natural resource extractables to drive the economy.

"It is clear that West Virginia needs to make much needed investments in research and development and to focus more of our economic development efforts to support innovation and entrepreneurism instead of inefficient tax cuts,” Boettner said.

“We are failing across the board,” he said.

After most of West Virginia's factory jobs left and were globalized, the state continues to hang-on to coal, fossil energy and disposable natural resources for its economy to survive.

Now, the state's politicians, many who have strong ties to the extractable industries, are focusing on defeating a so-called "war on coal," failing to move toward diversification of the economy.

The Mountain State ranked 49 in the 2014 State New Economy Index recently released by the Information Technology & Innovation Foundation, a non-profit, non-partisan think tank in Washington.

The study focused on innovation policies and documenting how technology creates new economic opportunity worldwide.

The new economy refers to an economy that is much more globalized and knowledge and technology-based than the economy of past generations, said Robert Atkinson, president of the Information Technology & Innovation Foundation.

The index uses 25 economic indicators that are broken down into five concentration groups: knowledge jobs, globalization, economic dynamism, the digital economy and innovation capacity. It also factors in six previous reports beginning in 1999.

“Clearly it is hard for states that rank low on the index to move up a lot, but a state like West Virginia should aspire for modest and consistent progress,” Atkinson said.

“One place would be to strengthen the state’s colleges and universities, including increasing the quality of education so more students actually learn the kinds of 21st century skills needed by employers.”

The state ranks among the lowest with students attending college, and ranks among the lowest in academic high school achievement.

Atkinson added the state might want to ensure programs that help small manufactures become more productive and innovative.

“This means investing in things that provide a foundation for a more innovative economy, such as broad-band, higher education, clean energy and small business incubation,” Boettner said.

“For example, Ohio has invested $1.6 billion in its Third Frontier Program that invests in technology-based economic development programs such as a research scholarship program, entrepreneurial support, product development assistance and technology centers.”

West Virginia clings to an economy driven by fossil-fuel extraction.

“The two states whose economies have lagged behind the most in making the transition to the new economy are Mississippi and West Virginia,” the report stated.

“Historically, the economies of many of these states depend on natural resources, on tourism, or on mass-production manufacturing and relied on low costs rather than innovative capacity to gain a competitive edge,” the report stated about the bottom 10-ranking states on the index.

“In the new economy, however, innovative capacity (derived through universities, research and development investments, scientists and engineers, highly skilled workers and entrepreneurial capabilities) is increasingly the driver of competitive success, while states only offering low costs are being undercut by cheaper producers aboard.”


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