SSTI Digest

This past fall, Vermont released what may be the nation's first statewide effort to lay out an economic development strategy based on the creative economy theories advanced most prominently by George Mason professor Richard Florida. Advancing Vermont's Creative Economy, prepared by the Vermont Council on Culture and Innovation (VCCI), offers recommendations that include collaboration among government entities, cultural organizations, and the private sector that utilizes cultural resources.

The city of Montpelier, Vt., will soon join the ranks of other high-tech cities as it prepares to implement its first Wi-Fi “hotzone” in the central downtown area. With support from Senator Patrick Leahy (D-Vt), city officials and local businesses, the Vermont Broadband Council recently launched MontpelierNet, a high-speed Internet network that will bring wireless broadband Internet access to the city.

Robin Siss, Vermont's first commissioner for the Department of Information and Innovation, has announced her resignation. Siss began the position in August. Denise Fehr will serve as acting commissioner.

The launch of a targeted small business development program designed to foster the success of new high growth, high-tech firms in Vermont was announced last month at a press conference by Sen. Patrick Leahy, Gov. James Douglas and University of Vermont (UVM) President Daniel Fogel.

The University of Vermont announced that Janice St. Onge has joined the Vermont Business Center as the director of business education.

Janice St. Onge has resigned from the Vermont Department of Economic Development to pursue career opportunities at the University of Vermont. St. Onge, whose resignation is effective Jan. 30, served for four years as the state's technology business development director.

Building on the his first economic plan, Vermont Governor James Douglas has announced a second set of proposals to retain and create jobs in the state. The governor's eight-page Creating Jobs for the 21st Century embodies several tech-based economic development elements within the four primary goals outlined below. Some of the highlights include:

Capital for start-up and early-stage business ventures should become more plentiful in Vermont based on legislation, S. 178, passed in late May. A spokesperson for Governor Jim Douglas appraised the act's total impact as representing a $105 million investment into the state's economy.

Kevin Dorn has been named secretary of the Vermont Agency of Commerce and Community Development by Gov.-elect Jim Douglas.

Vermont’s high-tech businesses now can take advantage of new tax credits with Governor Howard Dean, M.D.’s signature on H. 239. The bill creates a set of five incentives for high-tech businesses in industries including computer hardware or software, information and communications, microelectronics, semiconductors, digital communications, medical devices, energy technologies and electric vehicles.

Molly Lambert, secretary of the Vermont Agency of Commerce and Community Development since 1998, is resigning July 1 to become head of the Vermont Captive Insurance Association. The Agency is comprised of the Departments of Economic Development, Tourism and Marketing, and Housing and Community Affairs.

Long-held opinions are hard to change. The state of the US manufacturing sector is a good example. Many people, particularly those in the Northeast and Midwest, hold tightly to memories of mass layoffs and factory closings nearly 20 years ago.



After two decades of transformation, today’s manufacturing sector is quite different. In fact, manufacturing exports, including food production and processing, have enjoyed positive annual growth rates in all but one state since 1986, point out the authors of Comparing Manufacturing Export Growth Across States: What Accounts for the Differences?, a recent journal article from the Federal Reserve Bank of St. Louis. Nationally, manufacturing exports as a share of Gross Domestic Product grew from 4.1 percent in 1986 to 7.0 percent in 1998.



The annual growth rate for manufacturing exports varied widely across the states. New Mexico experienced the greatest change during the ten years of 1988-1998, achieving an annual rate of 28.2 percent. Only Alaska witnessed a decline in manufacturing exports during the period.



A more accurate picture of the comparative changes across states, however, is presented by examining manufacturing exports as a share of Gross State Product (GSP). In 1998, Vermont had the greatest share of its GSP resulting from manufacturing exports at 23.80 percent. Manufacturing exports exceeded 10 percent of GSP in only three other states: Washington (20.24 %), Utah (12.72%) and Michigan (10.39%).



With a 13.72 point difference between 1988 and 1998, Vermont also enjoyed the greatest gain in percentage points for manufacturing exports during the time period. The second highest change in percentage points was a distant 3.89 points in Washington.



Manufacturing exports are increasing in importance for state economies in all but six states. Alaska, Delaware, District of Columbia, Louisiana, Michigan, and Montana – experienced a drop over the ten years in the share of GSP from manufacturing exports.



A closer examination of the data

To find explanations of why manufacturing export growth varied across the states was the purpose of writing Comparing Manufacturing Export Growth Across States: What Accounts for the Differences?, published in the January/February issue of the bimonthly Review. Federal Reserve Bank of St. Louis staff Cletus Coughlin and Patricia Pollard conducted a shift-share analysis to isolate the effects that may account for the differences among the states and the national average.



A state’s net relative change in manufacturing exports can be explained, the authors say, by: