Published in Economic Development

Despite ‘dramatic’ progress, Michigan ‘not arrived yet’ in becoming nationally competitive

BY Sunday, November 04, 2018 07:01pm

Michigan has made “dramatic” progress in better competing with other states since coming out of the Great Recession, steadily improving from near the bottom of a competitiveness index to the middle.

That’s the conclusion of an annual analysis from Northwood University for the Michigan Chamber Foundation in a report that examines Michigan’s overall economic competitiveness.

Researchers this year ranked the state 20th nationally in a competitiveness index, up from 21st in 2017 and far better than the 47th in the first-ever report in 2012.

When measuring performance since 2011 alone, Michigan ranked eighth nationally with the automotive, tourism and agriculture industries as its strongest economic drivers.

The progress stems from Michigan having a friendlier business environment, according to the report’s authors, who noted the state led the Great Lakes region in economic growth from 2012 to 2018 “and was a strong performing state nationally over the last seven years.”

Michigan’s “relatively strong performance” for debt, taxation and regulation outweighed a “relatively weaker performance” in workforce composition, cost and labor, and capital formation, said Tim Nash, senior vice president and director of Northwood University’s McNair Center for the Advancement of Free Enterprise and Entrepreneurship.

To sustain the progress, the state “must continue to set its sights high and benchmark best economic and political practices of this country’s top performing states,” the Northwood University report concluded.

“There is no doubt that Michigan continues down a comeback path, but it has not arrived yet,” according to the report. “Can Michigan return to the position of greatness it once occupied in the U.S. business structure? We again answer unequivocally yes, but only if we continue to adopt growth-friendly public policies.”

To compile a competitiveness index, the McNair Center uses 200 metrics that include gross state product, tax and regulatory policies, employment growth, and the cost of doing business.

The report’s authors noted that Grand Rapids was the top-performing city among eight in the Midwest in an analysis of data from 2000 to 2017.

In the five factors that go into the overall competitiveness index, Michigan ranked:

  • 7th in general macroeconomic environment, versus 48th in 2012
  • 13th in state debt and taxation, compared to 10th in 2012
  • 33rd in workforce composition and cost, versus 45th six years ago
  • 27th in labor and capital formation, compared to 45th in 2012
  • 25th in regulatory environment, a decline from 18th in 2017 and 24th in 2012

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