Dr. Mike Walden
North Carolina Cooperative Extension
North Carolina’s economy has gone through three major economic periods during the last century. Like most states, farming was the leading industry in both production and employment in the early 1900s. Most workers rose before dawn and went to their fields to care for the crops or livestock.
Then came the manufacturing era. Tractors and machinery revolutionized farming and released thousands of workers for jobs in the growing number of factories. Textile, cigarette and furniture manufacturing became the mainstays of the North Carolina economy.
Manufacturing employment peaked in the 1970s – although it’s important to recognize that manufacturing output has continued to go up. Manufacturing followed the path of farming. Both have been highly productive industries using more technology and machinery and fewer workers in their production processes.
The third shift was to services and a reformulated manufacturing. Rising incomes, the two-worker household and an aging society all combined to increase the use of numerous kinds of services – personal, health care and professional. The service economy boomed and job growth in services went through the roof.
At the same time North Carolina’s “big three” of textile, cigarette and furniture manufacturing began to wane. Replacing them were the upstarts of technology, pharmaceuticals, machinery, food processing and vehicle parts.
Now many forward thinkers believe we are on the cusp of another transformation in the economy. Many jobs in the service economy are being replaced by machines, including robots, or computer programs. So peak growth in the service sector may be in the past. Plus, there are ongoing changes in the world economy, in terms of prices and preferences, which may create opportunities for new or revitalized economic sectors.
Below are four economic areas that are on many lists for being leaders in economic growth for the upcoming decades. The big question is how many of these will take North Carolina along for the ride?
Technology: Technology encompasses many facets, but the most fascinating today are in areas like information transfer, management and analysis; robotics; micro instruments; and 3D printing (think making a new refrigerator to your specifications in your home). The “digital revolution” – which some call the Third Industrial Revolution – is the starting point for most of these innovations, and the viewpoint is that the boundaries of the digital revolution will continue to expand.
North Carolina has a large footprint in technology. Most of it is centered in the state’s large metropolitan areas near research universities. A challenge will be to spread the wealth of the tech sector’s expected growth to smaller cities and rural areas. Some of this has happened with the large “data farms” (where “cloud” storage resides) in the western part of the state.
Energy: New drilling technologies have allowed the nation to undergo an energy revolution in the last decade, and it’s expected to continue. However, current estimates show North Carolina has a relatively small reservoir of onshore oil and natural gas. The large deposits are thought to be offshore, and, if that’s accurate, their recovery could have a noticeable impact on the state economy. Yet federal approval is required, and environmental concerns to coastal property owners and to the state’s tourism industry are always issues.
Machinery Manufacturing: As the world develops with a new focus on resource efficiency, it’s expected there will be a surge for new machinery – with everything from construction equipment to turbines, vehicles, jet engines and heating and cooling equipment being in demand. North Carolina already has many of these industries. For example, we are among the leaders of states in the production of vehicle parts, and the Triad is developing a reputation in aviation equipment. So our state is well-positioned to take advantage of growth in machinery manufacturing.
Agribusiness: North Carolina’s economy may come full circle with agriculture. As the world adds people – but particularly middle-class people – worldwide diets are changing. Purchases of protein-based foods (meats) and processed foods are increasing. Both of these sectors are in North Carolina’s wheelhouse. The state’s agribusiness and food-processing sectors are currently measured in the tens of billions of dollars of output. These numbers could rise as the world’s consumers become more like us.
So when we contemplate the North Carolina economy of the next 50 years, we can see a future driven by technology, machinery manufacturing, agribusiness and perhaps energy. These might compose the next North Carolina economy. Is it possible, is it probable — and what will it mean for workers, families and communities? You decide.
Dr. Mike Walden is a William Neal Reynolds Distinguished Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of North Carolina State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The College of Agriculture and Life Sciences communications unit provides his You Decide column every two weeks.
Previous columns are available at http://www.cals.ncsu.edu/agcomm/news-center/tag/you-decide
Related audio files are at http://www.cals.ncsu.edu/agcomm/news-center/category/economic-perspective