DATE: Saturday, March 15, 1997              TAG: 9703150018

SECTION: LOCAL                   PAGE: B8   EDITION: FINAL 

TYPE: Editorial 

                                            LENGTH:   60 lines

ECONOMIC GROWTH WHERE DOES VA. RANK?

The Allen administration recently released data heralding ``record-shattering'' success in creating jobs and securing capital-investment commitments since the governor took office three years ago.

So why did University of Virginia economist John Knapp describe last year as ``a mediocre one for the Virginia economy''? Why did a recent report from the business bureau at the College of William and Mary say Virginia's economic growth during 1996 was ``marginally lower than the nation's''? And how did a recent Time magazine cover story turn up 21 states with a job growth rate well exceeding Virginia's between 1994-'96, plus 13 others in the same general ballpark as the Old Dominion?

Hyperbole is one answer, although not the only one. When the press release states that 1994, 1995 and 1996 were ``the three best years ever in the history of the commonwealth in the recruitment of new investment,'' it doesn't mention that the sort of ``recruitment'' that's being measured didn't begin until 1985.

That's when the state's Department of Economic Development - now Virginia Economic Development Partnership - came into existence.

Beyond that, there are several explanations. First, Virginia has had to run hard just to stand still in an era when defense downsizing has cost the state 45,000 jobs in some years. The Allen administration may be mounting a stellar effort at turning out new jobs, but sizable chunks are also disappearing.

Last year's federal shutdown and the Blizzard of '96 also had a dampening effect on the state's 1996 showing.

Second, ``committed investment'' means investment that's on the drawing board, not necessarily in the ground. Many promised investments will come to fruition; some may not. Motorola's planned computer-chip plant west of Richmond is a prime example. Announced in April 1995, the $3 billion plant is on hold because of a downturn in product demand.

Third, Virginia tends to run a year or so behind much of the rest of the nation in reflecting national economic trends. No one is quite sure why, says Secretary of Commerce and Trade Bob Skunda. But it may well be that the current national economic upswing and Skunda's recruitment efforts won't fully show up in Virginia's economy until a year or two from now.

The William and Mary report, for instance, forecast growth in Virginia equaling or exceeding the national average in the next two years.

Certainly, beefed-up state economic-development efforts during the Allen years have won plaudits. Site Selection Magazine ranked Virginia seventh and Financial World ranked it 12th among states for economic-development success in 1996.

But politicians generally should be cautious about claiming too much credit - or assigning predecessors too much blame - for the economic shifts that occur on their watch.

``It's a gross inaccuracy to try to relate the progress of the state economy to the different administrations. We're a satellite of the national economy,'' says Knapp, director of business and economic research at U. Va.'s Weldon Cooper Center for Public Service.

Skunda is right that those who ignore state economic recruitment efforts in the modern era do so at their peril. But strong recruitment efforts alone do not ensure a burgeoning economy. And a healthy economy reflects far more than the policies of the politician at the helm of state government.

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