There has been some disagreement expressed on this blog about the extent to which Virginia’s top-rated “business climate” makes a difference in economic development. There is an interesting laboratory in the vicinity of Bluefield, a mountain town that straddles the Virginia-West Virginia state line.
The editorial writers of the Bluefield Daily Telegraph certainly believe that business climate makes a difference — a sentiment expressed in a column prompted by the decision of Metal Manufacturing and Processing to locate a $3.2 million facility, which will employ 170, on the Virginia side of the state line, in Tazewell County. Writes the newspaper (which is located on the W.Va., side of the state line, incidentally):
During the announcement of MMP’s new location in Bluefield, Va., S.R. “Dick” Smith, president and CEO of [parent company] Raleigh Mine & Industrial Supply Inc., said Virginia aggressively fought for the new jobs.
“Why did we choose Virginia?” Smith asked. “We had other options — Kentucky and West Virginia. But right here is why we chose Virginia. They are excited about new jobs.”
Smith noted when the plant expansion was first proposed, Tazewell County Economic Development Coordinator Margie Douglas coordinated a meeting the following day — a meeting packed with local and state officials, who said “yes, yes, and yes” to all of the company needs.
That’s just one anecdote, of course. And one could argue that what matters are broader measures of economic performance, not a single manufacturing investment. Well, let’s follow that train of thought…
Income per household, though not without its flaws, is arguably the best single measure of economic prosperity. Tazewell, a county of 45,000 people, has a median income per household of $27,304, as reported by Wikipedia. Neighboring McDowell County, W.Va., is one of the poorest in the nation, with median household income of $16,931. Neighboring Mercer County (where Bluefield is located) draws very close to Tazewell, with median income of $26,628 per household.
To make meaningful comparisons, however, we have to drill down a bit deeper. Incomes in metropolitan (and micropolitan) regions tend to be higher than in non-metro areas. Mercer County is somewhat more urbanized than Tazewell: The larger part of the Bluefield-Princeton micropolitan area resides on the West Virginia side of the state line. That should give Mercer County, W.Va., an edge over Tazewell, but Tazewell has the higher incomes. By this line of analysis, Virgina’s better business climate would seem to make a difference not just for businesses but working men and women.
Poor West Virginia. Such a beautiful state — with so many self-inflicted wounds. The conventional wisdom is that West Virginia is poor because of its geographic location: Its rugged mountains isolate it from commerce all around. By that logic, Switzerland ought to be one of the poorest countries in Europe, but it’s not — it’s one of the wealthiest. Economic development in the knowledge economy depends far more upon culture and institutions than geography. The good news for Virginia and West Virginia alike: While we are captives to our geography, we can change our culture and our institutions.
Business climate matters.