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Thursday, 27 September 2012 13:28

State still has room to improve competitiveness

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GRAND RAPIDS — Michigan is just beginning to improve its economic competitiveness, although a new analysis still “does not paint a rosy picture” of the state’s overall position compared to other states.

The economic analysis by Northwood University ranks Michigan 47th in the nation in overall economic competitiveness. The state fared poorest in three of five categories, scoring 48th in general macroeconomic conditions, and 45th in both workforce composition and costs and in labor and capital formation.

The state ranked far better in two other areas.

A year after Gov. Rick Snyder and legislators restructured the state’s business tax, Michigan ranked 10th in the nation for debt and taxation, according to the Northwood University Competitiveness Index. The state placed 24th in regulatory environment.

The analysis, commissioned by the Michigan Chamber Foundation, concludes that “Michigan has tremendous room for improvement but also reasons for optimism.”

“The last 18 months have shown promise,” said Tim Nash, an associate professor of economics and business at Northwood University who presented the analysis at the recent West Michigan Policy Forum in Grand Rapids. “We see great hope.”

The findings should serve as a “guidepost and tool for benchmarking” for public policy leaders in the state to consider, the study states.

“The real question is: Can Michigan move in the right direction? Can Michigan regain her greatness? The answer is absolutely, ‘Yes,’” Nash said. “But only if we confront the economic reality facing this great state. It’s leadership and policy that will make a difference.”

Michigan Chamber Foundation Executive Director Bob Thomas called the state’s “relatively strong” rankings for debt and taxation and the regulatory environment as two positives that the state can build on.

“We are optimistic that the next edition of this study will show further progress if policymakers stay focused on what matters,” Thomas said.

Those two strengths, however, are outweighed for now by the three negatives at a time when “the cold, hard truth is Michigan is in a fierce competitive battle with other states and foreign countries for jobs,” Michigan Chamber of Commerce CEO Rich Studley said.

One issue Northwood University suggests needs consideration is the potential effects of making Michigan a right-to-work state.

The study offers national data showing a “very high correlation” in the growth of jobs, per-capita income and state domestic product from 1998 to 2010 in right-to-work states versus non-right-to-work states, Nash said.

Right to work was the top issue emanating from the inaugural West Michigan Policy Forum four years ago. In voting at this year’s event, the issue didn’t show up in attendees’ top five priority issues, although that doesn’t mean it will go away.

Top issues from prior forums “will not die, become diluted or allowed to erode over the next two years,” co-chairman Jim Dunlap said. “If there is an opening to advance the agenda, we will do so accordingly.”

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