If there’s a takeaway from the latest “Tracking Innovation” report published by the state Department of Commerce, I’d summarize it thusly: We don’t have anything to get complacent about economically because we’re not doing as well as we may think.
The top-line data on that comes early in the document, when it notes that North Carolina’s GDP per capita ($66,919 as of 2022) remains in the bottom half of all U.S. states, ranking 32nd.
And in our own neighborhood, we’re looking up at Tennessee, Virginia and Georgia, all of which were nonetheless below the national average ($77,583). Virginia got close to the midpoint but didn’t quite reach it.
A century of investing in the “infrastructure, institutions and human capital” that fuels innovation has helped, but at no point have they “been sufficient to propel North Carolina’s per capita income to a level above the average per capita income for the nation as a whole,” the report says.
The graph above illustrates the trend.
It shows that we made a bunch of progress coming out of the Depression, until the start of the 1950s. After stagnating a bit during the Eisenhower administration, we started rolling again in the 1960s and didn’t stop until the Gas Crisis.
Regression followed, until the country came out of the doldrums in the middle of Reagan’s first term. A good, long run of improvement followed until late in the Clinton era. The bursting of the tech bubble, 9/11, two wars and the 2008 market crash followed.
We’ve pretty much been treading water since about 2000, with the market crash having crushed the last real upward movement in our standing relative to the rest of the country. While our per capita income’s been ticking upward the last few years, even during the pandemic, we still haven’t made up the ground lost after 2008, never mind since our peak in 1997.
The report — the eighth in a series from the state’s Board of Science, Technology & Innovation that dates back to 2000 — runs through 42 indicators and finds that we have strengths and weaknesses.
We are, for instance, a growing state that funds its higher-education system better than most. On the flip side, spending on K-12 education as a percentage of GDP lags.
But beyond the metrics, we remain a state where just a few urban areas — the Triangle, Charlotte and the Triad — account for much of the economy, much of the innovation that’s occurring, and much of the growth.
Even in urban North Carolina, there’s untapped potential, especially in the Triad, around Asheville and around Wilmington, the report says.
“The foundation exists in these emerging counties outside the Triangle to grow significant innovative, entrepreneurial ecosystems,” it says. “A focused, sustained effort to marshal their assets and address gaps has strong potential to broaden North Carolina’s innovation strengths beyond the Research Triangle region.”
The folks at NCInnovation probably think the report’s playing their song, given its mission of bolstering the commercialization of research at non-flagship UNC System institutions like East Carolina, N.C. A&T State, UNC Charlotte and Western Carolina.
And they would have a point. But the report hints that UNC System President Peter Hans’ next big personnel decision — hiring a successor to NC State University Chancellor Randy Woodson — could be more important than his decision to leave former State Budget Director Lee Roberts in charge at UNC Chapel Hill.
That’s because while we speak of the Triangle’s Big 3 universities, it’s really a Big 2½. Duke and UNC Chapel Hill each accounted for about $1.4 billion in R&D spending in 2022.
For all the progress NCSU’s made under Woodson, its R&D spending — $583.2 million — wasn’t even half of its neighbors’. Caveat: State’s the only one of the three that lacks a medical school, and a lot of federal research dollars flow to the biosciences.
Woodson’s hiring by former UNC System President Erskine Bowles back in 2010 was by most reckonings a home run. The question now is whether Hans can hit another.
By the way, there’s a case to be made that the Big 3 really’s a Big 1: Duke generates more patents than the other Triangle flagships, and gets more of its R&D money from the private sector than does Carolina or State.
