You decide: How can NC use economic trends?
Published November 21, 2015
by Dr. Mike Walden, NC State College of Agriculture and Life Sciences, November 20, 2015.
As I travel the state giving presentations about the economy, there’s one common trait I find, regardless of where I am: People are anxious about the economy. Although there’s been economic improvement since the Great Recession, I sense an uneasiness among many people about how long the gains will last. Many believe the economic future is no longer in their hands and that it is subject to forces and actions beyond their control.
At one level, I think this attitude is correct. There are big trends that guide much of the economy’s performance. In many cases these trends are beyond the control of any individual or, indeed, any country. Think of the trends as massive “winds of change” that blow across the economic landscape, altering everything they cover. Such trends have always affected the economy, although the specific forces are likely different for each generation.
Yet at another level, the feeling of helplessness is not accurate. If we can identify the current forces of change and understand their impacts, then we can possibly react to them in a way that improves our economic outcomes.
I see three winds of change that will sweep across the country and North Carolina in the next several decades. A key determinant of the economic future of any state will be how the state and its residents accommodate these changes.
Aging Population: The proportion of the world population over age 65 will almost double in the next fifty years, including here in North Carolina. In the next several decades, 70 million “baby boomers” – those born between 1946 and 1964 – will retire. The aging population will impact every aspect of the economy, including the kind of housing built, products and services consumed, and, of course, medical care.
North Carolina has two significant industries – pharmaceuticals and medical equipment – that should see sales increase from the aging trend. But perhaps more important, North Carolina can benefit by attracting retired households to the state from other parts of the country. These households bring their pensions and other incomes that would spark a wide range of spending and job creation. With its many natural assets and competitive cost-of-living, North Carolina has long been a leader in beaconing out-of-state households. Rural counties, especially, could use in-migrating households as an engine for growth.
Continued Technological Innovation: The advances we’ve seen in information and digital technology will continue, in areas like artificial intelligence, nanotechnology, virtualization, informatics and others. Economies built around both the development and implementation of these technologies are expected to do well in the 21st century.
North Carolina has a large tech industry, centered in the Triangle region, with smaller concentrations in other metropolitan areas near universities. It is therefore expected that North Carolina will be part of the growing tech economy. However, this isn’t guaranteed. Every state – indeed, every country – wants to be part of the growing tech industry. And since the technology sector is focused on the ideas and creativity of humans – rather than site-specific resources like iron ore or good harbors — tech firms can be located almost anywhere.
So, to be a tech sector leader in the 21st century, North Carolina will have to continue offering the work environment favored by technology innovators, such as access to leading universities, natural amenities for recreation and exciting urban and cultural centers. Attracting and keeping tech entrepreneurs may be the biggest challenge in growing this industry.
Increased Ties to Foreign Countries: Economic forecasters expect developing countries in Asia, South America and Africa will be leaders in economic growth in coming decades. These countries will therefore offer expanding markets for products made in North Carolina. They will also provide millions of new tourists for travel to beautiful vacation sites in the United States.
To take advantage of these markets, two things must occur. First, North Carolina must have the ability to make products desired in the foreign markets. Second, the state must have the infrastructure to facilitate the shipment of exported products, as well as the travel of foreign tourists.
One product North Carolina has which most experts think will be in high demand in developing countries is meat. North Carolina is a leading meat producer and processor. However, to expand this sector, it will be necessary to solve the animal waste issue. Eliminating animal waste as an environmental concern is therefore a key to the state’s economic development, particularly in rural counties.
North Carolina’s roads, water ports and airports will also have to be expanded and improved for the state to take full advantage of international markets. Limited-access four-lane highways, deep-water docking facilities and direct international air flights will be crucial to developing deeper international connections. And, as always, financing will be a challenge.
We may not be able to control all the forces shaping our future. But if we can identify those forces, maybe we can adapt to and shape them to our advantage. You decide if North Carolina has a winning strategy to do this.
Dr. Mike Walden is a William Neal Reynolds Distinguished Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of North Carolina State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks.