by Peter Galuszka

When it comes to image, sweet Virginia has had a relatively breezy time of it. Ever since the Martin Agency, a Richmond advertising firm, ginned up the "Virginia Is For Lovers" jingle back in the 1960s, Virginia has gained a positive national press for its blue-tinged mountains, tri-cornered hats with white wigs, sandy beaches and verdant hills rolling through the land of presidents. Like a comely young lady, Virginia seems the bright, natural beauty whom everyone seems to praise without giving the matter much thought. Now, she wears the extra moniker of "the Digital Dominion" and is brimming magically with high-tech jobs that many states would die for.

But who’s this dame, really? Sure, she looks good, but how strong is her economy and how does her high-tech industry stack up against the rest of the country. Is her quality of life really so powerfully seductive?

Virginia Business wants to find out. So, as part of our yearlong Growth & Development series, we hired a private eye and did a background check. We contracted with Chmura Economics & Analytics, a Richmond econometrics firm, which, at our request, accumulated and processed data that gives Virginia’s true position relative to other states. We looked at such key areas as how fast her high-tech sector is growing, how strong the rest of her economy is, how well educated her residents are and how well or poorly they live. That done, the data gumshoes at Chmura Economics probed deeper and came up with regional comparisons (page 71) for the state’s metropolitan areas. We wanted snapshots taken through the keyhole so we could hold up the prints up for all to see.

In a nutshell, our data is organized in three areas. First are green colored charts and tables that show how the state and its economy are performing at the moment, as measured by employment rates, employment growth and income growth. Next, we offer dynamic factors in red colored charts that show how well the state’s economy is positioned to grow in the future, looking at such indicators as the prevalence of high-tech jobs and the level of R&D activity. Lastly, we show data on blue colored charts describing the state’s quality of life, from housing prices to health data to crime.

So, what do we see? Well, a lot of what you might imagine is apparently true. Virginia is a natural beauty with a pleasant quality of life and a well-mixed economy from services, to defense, to shipbuilding to farming and tobacco. The economy is among the strongest of all the states, yet there are significant disparities among Virginia’s regions, with Northern Virginia leading the pack, Richmond and Charlottesville panting to catch up and the rest of the state lagging behind. Overall, growth in gross state product from 1997-98 puts Virginia in an enviable sixth place nationally. The unemployment rate is a low 2.8 percent, the fourth best in the country.

The shining economic light by far is its high-technology sector as evidenced by our dynamic indicators. In fact, the state runs in some pretty fast company. In this flurry of New Economy change, Virginia is now No. 5 among 50 states in the creation of high tech jobs. Even though defense spending has been fueling high tech here for years, the big spurt of growth is actually fairly recent. "We’re making great strides in these past three to four years," says Christine Chmura, president and senior economist of Chmura Economics, who believes that high tech is sound and will continue to prosper. If anything that trend is likely to continue.

Are there any surprising negatives? Yes, indeed. Our dynamic indicators found that when it comes to research and development, the Old Dominion is a bit of a dullard. This flies in the fast of its growing reputation as a high tech haven. Nor is this the only evidence of schizophrenia we found. Education is another. While Virginia has plenty of people with college degrees, at the same time a lot of Virginians can’t get past high school. We are a fairly low No.33 in the country in the number of people with high school degrees or less. Go figure.

The R&D issue is perhaps more troubling of the two, however, because it has implications for its high-tech reputation. Virginia is a modest 14th in total R&D spending which is hard to square with its fast-growing status as a high tech star. Virginia’s leading research schools — Virginia Tech and the University of Virginia — are nowhere near the head of the pack in research or patents. The Navy, NASA and cigarette maker Philip Morris garnered roughly five times the number of patents as these university research centers over five years from 1995. Virginia Tech and the University of Virginia are far behind such nationally ranked schools as those in the University of California university system and the Massachusetts Institute of Technology in terms of patents, as well. Nationally, the state ranks a depressing 36th among the states in the number of utility patents per 10,000 employees.

Why is this? Chmura says that patents "should give an indication of the innovation along with the emergence of high tech. But given the high job growth numbers, the two don’t synch up." She believes that besides pumping more money into university R&D, Virginia needs to encourage universities to develop a spirit of entrepreneurship and keep professors and students engaged in research. The paucity of patents coming out of northern Virginia’s world-class technology sector is particularly surprising. The explanation may be that companies are investing in technology but not putting a premium on patent protection. Many tech companies are still too young, observes Irah Donner, a senior partner with the Intellectual Property department of Hale & Dorr's Washington law office. Venture capitalists funding these fast-growing companies have a two-year investment horizon, but patent protection tends to pay off in five to seven years.

For their parts, both Virginia Tech and U.Va. recognize this weakness and are trying to push research entrepreneurship. Virginia Tech, for instance, is liberalizing its rules to let professors moonlight more and is encouraging private research labs in such fields as wireless communications, fiber optics and mechanical engineering. One example is Wireless Valley, a private, for-profit wireless research firm made up of students and professors, It holds about 20 patents. In Charlottesville, the University of Virginia Foundation is building wet laboratories in office parks so for-profit research centers associated with the university can bloom.

Our data on quality of life pretty much confirmed what many know: Virginia is a pretty good place to live. Crime rates are relatively low (no. 34 of 50 states). Many Virginians are well educated (No. 7 in the country with people having a bachelor’s degree or higher), and the poverty rate is fairly low (No. 7 from the bottom). The Old Dominion is the middle of the pack as far as average earnings per job toxic air and water emissions and infant mortality rates. Housing prices are reasonable and there are growing problems with traffic congestion. A few other curious trends: Virginia has a relatively high level of AIDS and residents tend to be putting on weight. And despite high levels of concern regarding teenage driving deaths, Virginia’s highways are still among the safest in the country.

In any event, our snapshots are meant as a service so residents and those interested in the Old Dominion can have a clearer idea of how the state stacks up.

Return to Virginia Business - February 2001