I grew up in the Midwest, but as a young man I became intrigued by the Southeast and what was happening in Atlanta. Like so many others, I was aware that Atlanta was the place to go for new ideas, a vibrant economy and lots of career opportunities.
Back then, there was clear evidence to support my early impressions. Every decade from the 1960s through the ’90s, Georgia’s economy, led by Atlanta, expanded and created jobs much faster than the rest of the nation. But the past two recessions have hit Georgia harder than almost any other region. We are still losing jobs, even as the U.S. labor market is showing gains.
Staying with the pack is the most we can realistically expect for the next few years — unless we change some of our economic growth strategies. If we act aggressively in the right areas, we can raise Georgia’s rate of growth, and we’ll be outperforming the country once again.
In the past half-century, Georgia excelled at attracting companies looking to relocate or expand. Our state continues to have a great team of economic developers led by Georgia Department of Economic Development Commissioner Chris Cummiskey. A September survey of site selection consultants ranked Georgia’s economic development agency third in the nation. And our state is very competitive with our neighbors when it comes to taxes, cost of doing business and quality of life.
Despite these strengths, the current economic uncertainty is going to hold down the number of expansions and relocations, at least for the next couple of years. We can’t change that. Where Georgia needs to act — and act aggressively — is in its use of discretionary incentives such as tax breaks and land swaps to recruit and retain new businesses.
For years now, we have been losing to other states on incentives that close the deal. We can, and should, commit the resources to attract the companies that are prepared to relocate now or will do so when the economy improves.
We also need to invest in our transportation system. I know that sounds like a broken record, but this has been one of Georgia’s historical advantages, and we are due for an upgrade to our highways, ports and rail. While statistics show that our deep-water ports are poised to increase traffic next year, this encouraging trend will reverse after 2014 without a major investment to deepen the Savannah Harbor to keep up with the expansion of the Panama Canal.
Georgia also has critical weaknesses in its research and development spending. Research and development — as a share of the state’s gross domestic product — is less than half the national average. It’s not surprising that Georgia lags behind even smaller states on the number of patents awarded. We need to focus on growing our native venture capital funds to boost both innovation and R&D activity. About 85 percent of the venture capital investment in Georgia companies comes from firms headquartered outside of the state, which is siphoning off growth.
What I saw as the promise of this state was reawakened in me five years ago when I was offered the opportunity to come to the University of Georgia. The state faces a similar awakening now, as the growth strategies of the past 50 years have mostly run their course. But we can once again lead the nation if we are willing to let go of our old ways and embrace the new.
Robert T. Sumichrast is dean of the Terry College of Business at the University of Georgia and holds the Selig Chair for Economic Growth.
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