
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, January 27, 1994                   TAG: 9402250035
SECTION: EDITORIAL                    PAGE: A-10   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

ACCOMMODATIONS

IT'S NO SECRET that defense-spending cuts in the post-Cold War era pose a challenge for Virginia's economy. Two sets of facts tell the story:

Defense spending has gone from 6.5 percent of gross domestic product in 1986 to an estimated 4.7 percent this year, and is expected to level off at 3.5 percent in a few years.

In no state but California, with nearly five times Virginia's population, is defense as big an industry as in the Old Dominion. The commonwealth has about 2.5 percent of the nation's population; operations here account for more than 7.5 percent of the defense budget.

Defense spending in the state is centered in Northern Virginia and in the Tidewater region. But Southwest Virginia has not been immune to the cutbacks, as laid-off workers at the Radford Army Ammunition Plant can attest. Moreover, hard times in Virginia's defense-dependent regions have contributed to the revenue shortfalls that led to a squeeze in the flow of state dollars to such Southwest Virginia institutions as Virginia Tech and Radford University.

Get used to economic ups and downs, warns University of Virginia economist John L. Knapp. One effect of the defense cutbacks, he writes in the latest issue of the News Letter of UVa's Center for Public Service, is that Virginia's economy is becoming more like the national economy - less resilient and more subject to cyclical swings.

Similarly, the defense industry no longer gives Virginia quite the economic buffer it once might have against such current national trends as the rise of global competition, the shift from manufacturing to service industries as a source of new jobs, and the need for labor-force flexibility.

But while the military is of greater economic importance to Virginia than to most states, neither it nor any other single sector is overwhelmingly dominant on a statewide basis. Regardless, Virginia would have had to make some accommodation with the same economic sweeping the nation generally. Defense cutbacks simply sharpen Virginia's need to do so.

by CNB