Diversification in the knowledge sector

Unfortunately, the CBE doesn’t predict much growth in the coal sector. Instead, the hopes are for stability at current levels.

What this means is that while coal will continue to be a component of our state’s economic portfolio — it will be a lot smaller. It also means that the other sectors of West Virginia’s economy must make up the loss.

This is where the decade’s long flaw in West Virginia’s economic structure is exposed. The state industrial base is not adequately diversified against a potential system-wide economic collapse triggered by the dramatic drop in its main industry.

Whether it’s a fatal flaw or not will depend on the state’s ability to “hold out” long enough for the natural gas sector to ramp up.

The WVU CBE projected in its 2018 West Virginia Economic Outlook that the total Gross Domestic Product from West Virginia’s natural gas industry will equal that of coal within the next few years. If this economic growth occurs as predicted, then the state’s economy will likely stabilize.

However, it is crucial for policy makers to understand that even if the state does achieve this economic stability, the lack of broad industrial diversity and the unbalanced workforce demographic must be corrected.

Coal and natural gas don’t provide diversified strength in the sense that both are fossil fuels in an energy sector experiencing an emergence of renewable energy sources.

Further, West Virginia has been perennially ranked 50th in educational attainment.

First, this misleading ranking in no way is a reflection of the quality of the state’s educational system or its citizens.

Second, it is instead, directly attributable to a lack of economic diversity which left the coal industry workforce requirements as the driver of the state workforce demographic.

Our economic diversification efforts must emphasize development of industries that are economically strong and facilitate a balancing of the state workforce demographic.

The fastest growing industry in the United States is the information or “knowledge” sector. West Virginia policy makers must center the state economic recovery strategy on substantially expanding the state’s role in this sector.

Fortunately, the state doesn’t have to start from scratch. It already has a foothold in this sector thanks to the expansion efforts of the I-79 Technology Park.

There is no other initiative in the state that compares to the progress made at the I-79 Technology Park, nor does any effort have its potential for institutionalizing a knowledge sector in West Virginia.

Over the last decade, the I-79 Technology Park has recruited operations of the National Oceanic and Atmospheric Administration and the U.S. Department of Commerce, that have brought with them hundreds of millions of dollars in contracting opportunities for knowledge sector companies.

The availability of these contracting opportunities, along with existing regional opportunities from the Federal Bureau of Investigations Criminal Justice Information Service and the National Energy Technology Laboratory, have formed a critically important business case that is driving the steady expansion of knowledge sector companies into North Central West Virginia.

It is also mitigating our workforce issues to some extent because these companies are recruiting a workforce to the region that can perform the work. The “tip of the spear” of West Virginia’s economic diversification efforts must be the continued expansion of this business case. Aiding the I-79 Technology Park in its successful federal anchor recruiting efforts must be the highest priority.

The I-79 Technology Park has received a $4 million grant from the Federal Abandoned Mines Land program to begin the road system into Phase III. Construction of the road system is scheduled to begin in the summer of 2018.

The road system will make available several building sites physically close to the existing NOAA programs. These building sites will be able to tap into the substantial electrical and telecommunications infrastructure built to support the NOAA programs.

As part of its effort to attract additional Federal operations, the park will offer these building sites free of charge to Federal operations that provide substantial contracting opportunities. The state’s economic diversification strategy should provide whatever additional resources are possible to make this offer even more attractive because Phase III facilitates West Virginia’s economic diversification “tip of the spear.”