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West Virginia and the new economy

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Brooks McCabe Brooks McCabe

Brooks McCabe is managing member and broker of West Virginia Commercial LLC. He has been involved in commercial and investment real estate for more than 30 years, and he also is general partner of McCabe Land Co. LP. He has served in the West Virginia Senate since 1998, and is a special project consultant to The State Journal.

West Virginia has the beginnings of a new economy, but so far that new economy is regionally based, with the state hesitant to emphasize the opportunity in a comprehensive manner.

“The 2014 State New Economy Index: Benchmarking Economic Transformation in the States” ranks West Virginia as 49th, only ahead of Mississippi. The nonpartisan Information Technology and Innovation Foundation has been compiling the Index since 1999 during which West Virginia has remained at, or near, the bottom of the rankings. North-Central West Virginia has made significant progress in the last 10 years, but has yet to meet its full potential. More state support is needed for the region, and a more comprehensive approach is needed statewide to accentuate the opportunities available in West Virginia.

The one bright spot is West Virginia’s e-government — the state is tied for third nationally. This is quite an accomplishment for a rural state and shows what can be done. Real progress has been made in the Auditor’s and Treasurer’s offices, and with the implementation of the OASIS system, more progress is coming. This illustrates that West Virginia has the ability in those area where it has the focus and willingness to spend the dollars to accomplish the tasks at hand.

West Virginia was in the middle of the pack in non-industry investment in R&D (26th), Foreign Direct Investment (27th), and Health IT (29th). The amount of research and development performed in the state’s universities, nonprofit research labs and West Virginia-based federal research labs and agencies helped bring the state to a respectable ranking. This area is perhaps one of the best future opportunities available to the state, but it will need more support with a central focus if the true potential is to be met. The percentage of a state’s workforce employed by foreign-owned companies is an indication of strength in the new economy. The West Virginia Development Office has been successful in bringing automotive and chemical plants to the state. This is now beginning to show up in the indices. The Marcellus Shale opportunities should bring even more foreign investment. Health IT relates to electronically routed prescriptions and electronic health records. This is an area of considerable focus in West Virginia, given the rural nature of the state.

Unfortunately, the state did not do well in the other 21 indicators. West Virginia was 50th in workforce education and entrepreneurial activity, both critical indices if the state is to prosper in the new economy. It was 49th in high-tech jobs, which include software and computing related services, telecommunications and biomedical industries. West Virginia was 48th in fast-growing firms, scientists and engineers and in patents by individual inventors. Some of the other lower rankings were: information technology jobs; immigration of knowledge workers; value-added manufacturing; online agriculture; broadband telecommunication; industry investment in R&D; and movement toward a clean energy economy.

West Virginia cannot be all things to all people, but can focus on real opportunities within its borders. The best bet in the near term is in North-Central West Virginia, with its concentration of new economy-type organizations and the possibilities being presented by the related Marcellus Shale developments. West Virginia University, the West Virginia High Technology Consortium Foundation, the National Energy Technology Lab, the National Institute for Occupational Safety and Health, the National Oceanic and Atmospheric Administration, the National Aeronautics and Space Administration as well as the FBI and Department of Defense installations provide a strong backbone for the expansion of new economy initiatives. MATRIC and Marshall University offer similar, though at a smaller scale, opportunities in the Charleston-Huntington corridor.

Much of what needs to be done is already in motion. The activity just needs to be accelerated. Rather than incremental change, the state needs to strive for exponential change. The science and engineering programs need to accelerate their courses and faculty expansion to capture the new opportunities emanating from the federal laboratory presence in the state as well as the engineering and manufacturing opportunities for the commercialization of the midstream and downstream products from the wet natural gas. Value-added manufacturing has its greatest opportunity in West Virginia with the downstream investments relating to the forthcoming ethane crackers. Dramatically ramping up industry relevant research and the development of new patents needs to be a priority. New research centers focusing on coal, oil and gas, as well as clean water, need to be explored. Cleaner energy and renewable energy need to be major priorities. Continuation of the investment in broadband infrastructure also needs to be a priority. Recruitment of highly skilled new economy workers needs to be a focus as well as retraining indigenous worker where appropriate must be addressed in a timely manner. Even helping the state’s farmers gain better access to the Internet and integrating the use of computers into their business practices needs attention.

Making the state a leader nationally affects everyone. There is enough work for us all if the state of West Virginia is serious about becoming a major player in the new economy. Even with all the good things happening in West Virginia and all its organizational assets, West Virginia still ranks 49th out of 50 in the New Economy Index. An aggressive comprehensive approach is needed. One that views time of the essence and one that allocates scarce resources through a cost benefit analysis. The old way of supporting mature programs because of past successes may no longer be appropriate. Dollars must be reallocated to those programs and initiatives that could drive the state into the new economy. These will be hard decisions, and West Virginia’s success will depend upon them.

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