Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 22, 1994 TAG: 9405240005
SECTION: EDITORIAL PAGE: D-2 EDITION: METRO
SOURCE: By MARY HOUSKA
DATELINE: LENGTH: Long
I strongly concur on both points.
As an economist, I contend that economic growth is essential for Southwest Virginia not only because it brings with it good jobs, but also because the slow decline that accompanies economic stagnation is painful for some and, eventually, unpleasant for everyone.
By applying regional-economics concepts to Southwest Virginia, I will try to explain why these Southwest Virginians are also correct about the importance of regional cooperation.
The geographic boundaries for regional interdependence are broader than the greater Roanoke area, or even the territory covered by the Economic Development Partnership or the New Century Council. The partnership and the council cover much of the area of the highest level of economic interactions, but there are some notable area omissions.
An economy that is growing and creating good jobs retains and attracts young adults in their 20s and 30s. In the past 20 years, neither the Roanoke metropolitan area nor Southwest Virginia has created enough jobs to retain the same proportion of young adults in its population as has the United States as a whole. The state of Virginia, on the other hand, has created more jobs and retained more young adults (as a percentage of its total population) than has the United States.
Because lagging economic growth leads to slow population growth, Southwest Virginia has been doubly penalized with a loss of political representation in Richmond and Washington. As our region loses political clout, it becomes more difficult to sustain the leverage needed to obtain help from governmental power centers for our economic problems.
There never has been an abundance of such help, so less means very little! Turning around the region's economy therefore must be achieved by the people of Southwest Virginia. It also means that the region must work together to accomplish that goal.
More than most small urban centers, Roanoke is the central place - the provider of transportation, communication, trade, finance and services - for a very large geographic area. Furthermore, there are especially strong economic interactions between Roanoke and much of Southwest Virginia, in addition to Roanoke's role as a central place. Roanoke's historic roots are tied to the coal veins in Southwest Virginia and West Virginia. Roanoke's prosperity is still partially linked to the successful marketing of the region's coal.
The geographic area with which Roanoke is mutually dependent extends relatively short distances to the north, east and south. (Competing cities like Lynchburg, Greensboro and, to some extent, Charlottesville pull business away from Roanoke in those directions.) But, to the west and southwest this mutually dependent relationship stretches a long way. Jobs are created in Roanoke when basic employment expands in its hinterlands. But whether new employers will be attracted to the counties surrounding Roanoke depends upon the level of products and services available from the Roanoke metropolitan area.
Why then don't the governments and business leaders of Southwest Virginia work together to help each other in this economic development process? The answer is that they perceive themselves as rivals, not cooperative beneficiaries.
What is the gain to the government entity where a firm locates? Increased tax revenues will be offset for some time by investments which that county or city makes as a location incentive to new business. Employees are more likely to come from shorter commuting distances, but that does not necessarily mean that they will live in and pay taxes to that governmental unit.
As some of these surrounding counties gain population, some employment competition does arise, but this is likely to be in retail trade and consumer services. Recent construction of large shopping malls in Montgomery County, for example, probably has hurt not only existing Blacksburg and Christiansburg merchants but also Roanoke-area merchants. New retail and consumer-service businesses simply push out older ones, unless there has been an accompanying expansion of the area's economic base.
The key to regional economic development is an increase in what regional economists call ``basic'' or ``export'' employment. Basic employment is employment generated by an enterprise that sells part or all of its product or service outside the region.
Most manufacturing firms ``export'' their product out of this region. With the exception of the community colleges, the colleges and universities of Southwest Virginia sell their services to students who primarily come from other places. Much of Norfolk Southern's business involves hauling to customers outside the region. The new catalog-sales businesses in this area also depend upon sales outside this region. There are a number of other kinds of local businesses which ``export'' part or all of their products or services.
These enterprises directly purchase goods and services from other local businesses. This generates additional employment. For firms located in the more rural surrounding counties, some of these purchases will be local, but more will come from the Roanoke metropolitan area.
Many more jobs are created by people spending income earned from the wages, salaries and profits of ``exporters'' and the firms from which they buy their inputs. These jobs will be primarily in all sorts of retail trade and services. This process of jobs creating more jobs continues to expand employment.
Because of this regional economic interdependency, it is imperative that cooperative efforts such as the Economic Development Partnership and the New Century Council succeed. I would like to see more cooperation. The unwillingness to work together sincerely for the economic success of the whole region will damage the future of each part as well as the whole.
Mary Houska is an associate professor of economics at Hollins College.
by CNB