September 11, 2013

Economist: MetroWest Towns Must ‘Create Destiny’

Barry Bluestone, director of the Michael and Kitty Dukakis Center for Urban and Regional Policy at Northeastern University, addressed about 100 MetroWest business and government leaders at the MetroWest495 Biz Economic Forum in Framingham Wednesday morning.

Cities and towns in Massachusetts control more of their economic fate today, especially with less support from the federal and state governments, about 100 MetroWest business and government leaders were told this morning.

And cutbacks from Washington are a part of the reason behind the recent dip in the Massachusetts economy, said economist Barry Bluestone, a professor at Northeastern University and director of the Michael and Kitty Dukakis Center for Urban and Regional Policy. Bluestone was the keynote speaker at the MetroWest495 Biz Economic Forum, held at the Sheraton Framingham Hotel & Conference Center and sponsored by the Worcester Business Journal, MetroWest495 Biz and the 495/MetroWest Partnership, based in Westborough.

With rising federal budget deficits and a continued call for tax cuts, there will be little additional federal aid, Bluestone said. And states are facing structural budget deficits, which will cut into local aid, he added.

That means cities and towns will have to "create their own destiny," and the best way to do that is by attracting new businesses.

Recent survey data of businesses in some larger Massachusetts communities reinforced that view, he said.

The survey, conducted by the Dukakis Center, revealed that the chief reasons businesses expand and add jobs lie in factors cities and towns control, starting with permitting, tax rates and quality of schools. In addition, communities that effectively promote their economic development efforts and incentives scored high with business leaders who were surveyed, Bluestone said. What scored low? Tax breaks and crime rates, he said.

"Municipal leaders must initiate and support the development process," he added, urging cities and towns to assess their strengths and weaknesses in boosting economic development.

The region's economy has done well after the recession, Bluestone said, "but to win in this game … requires constant vigilance and constant attention."

Bluestone pointed both to federal budget cuts and a drop in sales from exports for the recent slowdown in the Bay State economy that has seen the Massachusetts jobless rate rise while the national rate has fallen. The state unemployment rate rose from 6.4 percent in April to 7.2 percent in July. Meanwhile, the national rate has fallen steadily, to 7.3 percent for August.

Along with federal budget cuts, a drop in exports to, especially to Europe, has also contributed to the slowdown, Bluestone said. Forty percent of goods produced in the Bay State go to Europe, about three times the national rate.

So, which industry will help spur growth? Bluestone said it's manufacturing. The reason Massachusetts is surviving its current economic dip is the "tremendous" productivity gains among the state's manufacturers. Between 1997 and 2007, right before the start of the Great Recession, output per manufacturing worker outpaced the rest of the state by 5 to 1, he told the audience. And, in a survey taken last year, 65 percent of manufacturers said they expect to increase production over the next five years, while 70 percent expect to add jobs.


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