Economic Development & Competitiveness

Why is this issue important?

Countries and states are competing for employers, jobs and people in a world in which technology has made all of them more mobile than ever before. Success in this competition is the key to prosperity.

Current Status

Taxes and investments are important.

• Even before the pandemic, the migration rate for large U.S. firms nearly doubled between the mid-1990s and early 2010s

But COVID and the rise of remote work have accelerated the pace of economic change and cemented attracting and retaining talent as the preeminent issue.

• Before the pandemic, 3.6% of workers telecommuted at least half the time
• Post-pandemic, Harvard Business School estimates that number will be 16%, and an Upwork survey pegs it at 22%.

A world in which many workers can live anywhere increases the importance of quality-of-life issues.

• Cost of living (including taxes and state and local budgets)
• Quality of public schools and higher education
• Physical and digital infrastructure (i.e. access to broadband)

Another critical issue is international competition for digital technology leadership. A 2021 Harvard Kennedy School report found that China is now a full-spectrum peer in what are likely to be the foundational technologies of the 21st century, such as artificial intelligence, 5G wireless and semiconductors. 

China’s massive population also gives it the edge in the all-important competition for talent. One tool national governments have in the battle for talent is immigration.

• Immigration is an important technology talent issue: The U.S. has a family-based immigration system, while most other industrialized nations have a skills-based system

Status in Connecticut

Connecticut has distinct strengths, but also face economic competitiveness challenges. Including recent shifts to more responsible fiscal policies, its outstanding strengths flow from an educated workforce:

• Connecticut’s public schools ranked third among the states in 2020
• It features 38 colleges and universities 
• It had the fourth most innovative state economy in 2022
• Ranked third for employees with advanced degrees
• Ranked fifth among states in patenting activity, a doubling of patents held over the last decade

Connecticut’s biggest challenges are:

Labor shortages, taxes and cost of government

• Connecticut, like other New England states, faces a looming labor crisis: With 109,000 job openings in February 2022, the number of people either working or looking for a job declined by more than 71,000 since the pandemic began
• Ranked second highest in state and local tax burden per capita
• Progress has been made, but the cost of large pension liabilities and public employee benefits continue to limit spending on other priorities

Need to adopt a strategy to win the competition for talent and technology

• Develop a technology roadmap anchored in large-scale technology partnerships between universities and business
• Win federal funding in targeted areas of university-industry research partnerships 
• Promote an I-91 Knowledge Corridor running from Yale University north to UConn and UMass Amherst as once envisioned 

---

Economic Competitiveness Resources

• Connecticut Center for Economic Analysis
• Connecticut Business & Industry Association
• Brookings Metro
• Richard Florida, Creative