You decide: What ails North Carolina's economy?
North Carolina’s economy was slammed by the Great Recession, with statewide unemployment passing 11 percent and more than 300,000 jobs lost between 2007 and 2010. In the last three years, the state’s economy has rebounded; 200,000 jobs have been added and aggregate production of goods and services is now back to pre-recessionary levels. Still, the statewide jobless rate in mid-2013 was 8.8 percent, 1.2 percentage points higher than the national rate.
But while we can talk about a statewide economy, traditionally North Carolina has been comprised of many regional economies. In particular, the economies of the large urban areas have followed a very different path than the economies of the state’s small towns and rural areas. Perhaps at no time in the state’s history have we seen these economic paths diverge more than in the last quarter century.
Specifically, the state’s urban regions have prospered, while many small towns and rural regions have made few, if any, gains. For example, since 2001, North Carolina’s metropolitan counties have experienced a 23 percent increase in total output of goods and services (technically called gross domestic product), while non-metropolitan areas (rural areas and small towns) have gained only 6 percent.
Two factors are responsible for these divergent results: the development of information technology and the increase in foreign trade.
Information technology has spawned entire new industries, rendered many older industries obsolete and has replaced brawn-power with brain-power as the most significant worker characteristic. What’s more important now is how workers think, solve problems and create new solutions. This means that college-educated workers, particularly in the scientific, technological and management fields, are the hottest commodity for companies.
The information technology revolution has been a boon for urban areas for two reasons. First, most colleges and universities are located in urban areas where most young college grads want to be. So expanding companies in the new economy know they can get a ready supply of college graduates in big cities.
Second, many in the information technology field -- such as program designers, website developers and the aforementioned young workers -- value social interaction and collective decision-making and problem-solving. By definition, these interactions