Many folks have highlighted West Virginia's historic reliance on two forces for "economic development": 1) outside companies willing to locate facilities here, and 2) state government. Seeking the first leads to an intense focus on comparing our relative competitiveness on tax structure and incentives, seeking the second leads to an intense focus on central planning and tax-payer fueled investments (and the inherent political nature of those investments).
Both approaches have a heavy reliance on government to lead the way. Much pressure is put on state and local development organizations to recruit newsworthy wins, such as the hugely successful Toyota plan in Putnam County and the Hino Motors facility in Wood County (also looking like a good win for our state). In fact, West Virginia has won awards for its centralized development and business recruiting efforts. Why then are we still at the bottom of the heap in economic growth and income?
What can often get lost with the centralized approach is the lack of a vibrant, entrepreneurial small business sector. And after all, this is where the majority of new jobs are created and where future big companies get their start. We should be very concerned that West Virginia has the lowest rate of entrepeneurship in the nation, and that we only had seven companies on the Inc. 5000 list of fastest-growing small companies (that's 0.14%, far below the 0.6% WV represents of the U.S. population).
Some point to an historic reliance on the government and outside corporations for jobs for our predicament in the entrepeneurial realm. How can we balance our economic future with a more vibrant private-sector, entrepreneurial community of risk-tolerant investors, inventors and innovators?
We're attempting many of the right things, according to agreed upon best practices. Some organizations like the YES Network and the Entrepreneurship Alliance are focusing on matching much-needed mentors with budding entrepreneurs. Some are focusing on reaching young people with business plan contests and education. Some are focusing on intensive training programs. Others on the commercialization of technical research from our universities.
What else will it take? Time, perhaps. More investors, for sure, especially those with a higher risk tolerance and a willingness to invest in industries they may not be familiar with (much of our local wealth is from the energy sector; how can we help these investors feel comfortable evaluating and investing in an Internet startup?).
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