The Business and Industry Association (BIA) in Concord recently completed a one-year study of the Hampshire economy, the purpose of which was to describe a long-term vision of the state's future to initiate a process to address the issue raised. The BIA, working in conjunction with several private consultants and faculty from the University of New Hampshire, received input from over 700 business people, local and state government officials, educators and citizens from throughout the state. Many good ideas came out of this interactive process. This article summarizes the results of the report issued by the BIA in September, 1996, entitled An Agenda For Continued Economic Opportunity in New Hampshire.
The objective of the project was threefold: to identify and acknowledge New Hampshire's strengths so that we can preserve them; to understand more clearly the forces of change in the local, national, and international economies to better enable ourselves to remain competitive in the future; and to establish a bipartisan framework for objectively discussing and evaluating our basic needs over the long term. The BIA firmly believes that we as a state and a nation are undergoing a major paradigm shift in terms of what are the important ingredients to economic development and that we need to fully understand these change before we can take corrective actions. The intent of this report is to help articulate these changes and offer recommendations to help prepare our state and its citizens for the future.
The BIA report acknowledges the current strengths of the New Hampshire economy and the fact that the state has led the rest of New England out of the recession. New Hampshire has been a top performer in terms of employment and income growth, and has experienced a revitalization of its banking and real estate sectors, both of which suffered heavily in the last recession. The objective of this project was to help lay a foundation for our continued long-term economic well being while building on these strengths.
The project team also recognized that we face a number of long-term challenges if we are to remain prosperous. These include the following:
* Preserving our environmental quality, which is our greatest asset in terms of attracting new businesses and retaining existing businesses. Balancing economic growth and environmental quality, particularly around our major transportation corridors, is a continuing challenge with no easy answers.
* Having all of our citizens benefit from increased economic opportunity. Economic gains have been unevenly distributed throughout the various regions of the state, another challenge we must address.
* Placing increased emphasis on education and advanced telecommunications. Traditional factors such as industrial land and buildings remain important, but improving worker productivity through education and training is increasingly critical in a global economy.
* Maintaining our competitive advantage and entrepreneurial spirit in a region of the United States which has lagged behind the rest of the nation in employment growth and which is a relatively high cost location for business.
A number of recommendations emerged from the BIA study. The recommendations included establishing a system of objective, quantifiable benchmarks to measure our performance in areas of critical importance, promoting an advanced telecommunications policy, encouraging growth of entrepreneurial ventures, strengthening our educational system, implementing needed sewer, water and highway improvements, and redefining the way we think about economic development.
The purpose of the benchmarks is to establish quantifiable measures of things which are important to us as a state so that we can monitor our progress in meeting these objectives. Currently, our over-reliance on two widely reported measures, unemployment rates and SAT scores, is misleading. We need to monitor our performance around a broader spectrum of issues, and utilize our public and private resources in an optimal fashion to assure that we meet or exceed our targets. Thirty-six benchmarks were established overall, and they were organized into five major categories, which would be expressed as an index on an annual basis. Some of the major categories and a sample of the major items being measured are as follows:
PROMOTING ADVANCED TELECOMMUNICATIONS AND COMPETITION
New Hampshire's businesses, schools, hospitals, and government must be able to have access to affordable advanced telecommunications. As our economy becomes more dependent on knowledge and more intertwined globally, we will be disadvantaged if we cannot communicate efficiently. Specific recommendations include:
* Expand the policy-making capacity at the state Public Utilities Commission (PUC) to address policy and regulatory issues and to foster competition.
* Encourage a more competitive environment among existing and new service providers.
* Facilitate the bulk purchase of services in the rural parts of the state to assure they are also served, not just the more lucrative urban areas.
A PROPER BUSINESS ENVIRONMENT
New Hampshire is primarily a state of small to medium-sized companies, and most of our job generation has come from these firms. New Hampshire must provide the proper environment for early stage development of innovative businesses. Specific recommendations include:
* Establishing a statewide clearinghouse for investors and entrepreneurs to help facilitate the flow of equity capital to new and emerging businesses.
* Creating development centers and accelerators for innovative ventures. These centers might be located adjacent to the University of New Hampshire or Dartmouth College.
STRENGTHENING OUR EDUCATIONAL SYSTEM
Despite the state's continued good performance in the national SAT tests, New Hampshire and the rest of the nation is continually falling behind the most advanced Asian and European countries, our major competitors. In addition, New Hampshire businesses are increasingly concerned about the relevance of our high school graduates' education to meet their needs as employers. Also, there is a strong correlation showing that different educational levels explain much of the income gap between higher and lower income households. The following specific recommendations were offered in the BIA plan:
* Schools must not only teach, they must continue to innovate and improve their curriculum.
* The current competency testing program begun in 1994 for grades three, six and 10 should be continued. This program tests proficiency in English, language arts, mathematics, social studies, and science.
* Create a performance-based source of educational funds to recognize and reward achievement with school districts. A three percent reduction in personnel and administrative costs is recommended for the next four years to fund this incentive program.
* Businesses need to work with educators to forecast skills needed over the next 10 years.
* Support the School to Work initiative, the objective of which is to get teachers and students out of the schools and into the workplace, and to get businesses into the schools.
* Incorporate additional technology into schools and set the goal of being the first state in the nation to connect every classroom to the Internet.
* Make it easier to establish charter schools within the state to foster competition.
* Establish incentives for worker training to help businesses fund job re-training programs in-house.
* Make New Hampshire a premier research location by working more closely with the University of New Hampshire and Dartmouth College. University-based research initiatives in states such as North Carolina have been a critical factor in their successful economic development initiatives.
* Strengthen the New Hampshire Vocational/Technical College System.
INVESTING IN THE INFRASTRUCTURE
New Hampshire has not invested enough in its infrastructure over the past 10 to 15 years. If we do not begin to address the problem now, we may face critical shortages in the future. Given the long lead time to plan and implement major infrastructure projects, we cannot afford to delay start of these projects. We have an existing 10-year highway plan that needs to be implemented. Many of our communities have looming shortages in either wastewater treatment or in the provision of municipal water. We need to set investment targets and develop a way to creatively finance these projects.
Perhaps the single most important ingredient to our long-term economic prosperity is the development of a new, more inclusive attitude about economic development and opportunity. Economic development still encompasses industrial parks and buildings, but it also encompasses education, technology, worker productivity and training, innovation and environmental preservation. In fact, these advanced factors are more important to our future than the so-called basic factors because we are no longer a low cost producer like Mexico or Korea, and quality of life is increasingly important to our labor force. It is for this reason the BIA has established benchmarks so that we can monitor our progress in these and related areas. In addition, the BIA believes we should strengthen the capability of regional development organizations throughout the state to help implement these recommendations.
The economic opportunity plan developed by the BIA is not one which depends solely on government to implement. Rather, it outlines and identifies major roles for the private sector, educators, government officials, and private citizens. Many of the activities can begin immediately. Others will take time and money. Most importantly, the plan is intended to provide a forum for a discussion of our future. For a complete copy of the report, call the BIA at 224-5388.
Richard Gsottschneider was one of the consultants who worked with the BIA on the preparation of The Agenda for Continued Economic Opportunity in New Hampshire. He is the president of RKG Associates, Inc., based in Durham.
