New Report Highlights Rhode Island’s Disastrous Business Climate
Wednesday, January 25, 2012
A report released by the Rhode Island Public Expenditure Council (RIPEC) offers discouraging news about the state’s business climate, the latest blow to a state that has received national criticism for its inability to attract new businesses.
The report examines five business climate rankings – three from research organizations (The Tax Foundation, the Small Business and Entrepreneurship Council, and the Beacon Hill Institute) and two by media outlets (Forbes and CNBC) – and finds that, in general, the state is not perceived as a good place to start or grow a business. However, although the state ranked in the bottom ten in four of the five analyses, the Beacon Hill Institute, which examines long-term competitiveness, ranked the state 20th in the country.
While there are broad signs that the national economy is recovering, the report notes that Rhode Island continues to struggle with a weak personal income growth, a persistently high unemployment rate, the third highest in the country in December, and a declining population.
If the state is to turn its economic outlook around it must move to create an attractive environment for businesses – especially businesses that offer high-wage, “knowledge economy” jobs, according to the report. While businesses do not base location decisions on a single factor, states with high taxes, burdensome regulatory climates, and an overall high cost of doing business will be less attractive to businesses looking to relocate or expand, the report states.
But not all is hopeless for Rhode Island. The Beacon Hill Institute, which examines long-term competitiveness, ranked Rhode Island 20th in the century. Furthermore, the state ranks third in the country for science and enginerring degrees awarded per 100,000 inhabitants. And changing the tax system, continuing to improve regulatory conditions, and fixing the transportation system will ameliorate the state’s business climate ranking. If these changes and renovations are implemented, it will certainly go a long way in determining Rhode Island’s economic future.
Rhode Island is not alone in facing a challenging economic recovery. According to a late December poll by CNNMoney indicated that the chances of a double-dip recession in 2012 are at 20 percent. While this is down from an earlier estimate of 30 percent, growth estimates nationally remain modest at best.
The report noted that while improving the state’s economic climate will represent a significant challenge, Rhode Island has already demonstrated a commitment to improving the state’s business climate through revisions to the income tax structure and regulatory environment.
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