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Not all economic news is bad, study says
LANSING — There may be light ahead for Michigan’s economy, at least in the long term, two nonprofit institutions say.
Despite the highest unemployment rate in 16 years and a failing auto industry, the 2008 State New Economy Index ranks Michigan’s potential for economic success 17th in the nation, up two spots from last year. The index doesn’t measure economic performance or how good jobs are, but whether the state has the ability to move forward successfully, said Robert Atkinson, president of one of the study sponsors, the Information Technology & Innovation Foundation.
“We know what the building blocks of success are,” he said. “This index is a measure of how strong those building blocks are for each state. If you don’t have those building blocks, it’s going to be a lot harder to be successful.”
Washington, D.C.-based ITIF and Kansas City, Mo.-based Ewing Marion Kauffman Foundation produced the report to gauge states’ progress toward a more global, knowledge-based economy.
“The index suggested there are some assets in Michigan that could be taken advantage of going forward in the future,” Atkinson said.
For example, the state ranks eighth in education levels among immigrants, he said. That’s considered good for the economy because immigrants create more fast-growing, high-wage companies than other groups.
Michigan also ranks No. 1 in the e-government category, he said.
“For example, the ability of citizens to go online and register a business or conduct business with the government is good,” he said.
And the state ranks 11th in foreign direct investment, Atkinson added.
“For instance, Toyota is opening up a research and development facility in Michigan,” he said.
According to Kauffman Foundation economist Tim Kane, the state has a strong research and development industry.
Kane said the state ranked high in its supply of human capital but low in entrepreneurship. He added he is worried Michigan suffers from a “brain drain” because it’s losing entrepreneurs to other states.
“Education levels of the Michigan work force are high, but it doesn’t translate to a lot of risk-taking in small businesses,” he said.
Michigan State University economist Paul Menchik said the weak economy means people are more unwilling to invest in business ventures.
Michigan’s manufacturing industry is less productive than the national average, according to the report.
“There’s been a general reduction in the role of manufacturing” in the state, Menchik added. “Michigan is declining in manufacturing, just the way the United States has. I don’t see we’re better or worse than any other state.”
As some manufacturing companies phase out of Monroe County, the county’s Industrial Development Corp. has been able to attract about 17 research and development companies from northwest Ohio, said its president, Bill Morris.
“We have been able to create unique expansion of about 120 jobs, but it has been slow,” he said.
Sen. Jason Allen, R-Traverse City, said the state’s strongest economic investments were in expanding its tourism industry, providing incentives for the film industry and redeveloping downtown areas.