Colin Barry

New Carolina Initiative (MOC, Tuesday, Week 12)


Why has South Carolina stayed poor?
-- Agricultural history
-- Losing jobs in textiles and apparel
-- Bad educational/human capital base

Traditional South Carolina growth strategy:
-- "pro-business" environment
-- cheap labor
-- recruit big manufacturing firms with tax incentives
-- emphasize technical education

Why this doesn't work:
-- Subsidies are costly. State tax rate is significantly higher than national average (17.7% vs. 15%); tax incentives to big firms get paid for by local businesses/citizens.
-- Attract the wrong kind of firms: sensitive to labor costs = won't invest in human development
-- Doesn't address roads, schools, other fundamentals
-- There is always someone cheaper (globally)
Overall, focus on individual companies, not state competitiveness.

So why did South Carolina do this?
-- Diversify away from dying industries
-- Jobs = politicians' success metric
-- Tax incentives are not as visible to constituency as infrastructure spending
-- SHORT TERM VICTORIES = what politicians love

So how well as the New Carolina Initiative performed?
Positives: some cluster organization, some state agency involvement, education/training metrics improved, foundation laid (?).
Negatives: still low per-capita income, still bad education, senior government leaders are uninvolved/skeptical, textiles are still bleeding.
Complicated by '08 recession, and only really six or seven years old...