Research Reports: Economic Growth & Development

Most studies find that lower levels of taxes and spending, less-intrusive regulation, and lower energy prices correlate with stronger economic performance. The implications of this research track well with recent public policies adopted in North Carolina. Judging from the available empirical evidence, North Carolina’s new policy mix is likely to result in stronger economic growth in the coming years.

The House and Senate tax bills now under discussion in the General Assembly would constitute fundamental tax reform, but will not prevent state government from funding core public services such as public schools and universities. They will, however, increase job creation and economic growth.

North Carolina has over 22,500 permanent administrative rules, which carry the full force of law but are not passed by legislators. The General Assembly should return major legislative authority to elected, accountable representatives of the people.

North Carolina features over 50 occupational licensing boards, more than most other states. In practice, it protects current members of a profession from competition, while increasing costs to consumers and would-be professionals blocked from the field. Economists studying occupational licensing generally find it restricts the supply of labor and drives up the price of labor and services. Without state licensure, private providers of reviews and certification, internet sites and consumer applications, social media, and competitors and market forces would ensure quality and safety. The government would still enforce safety and quality through the court system.

In recent years, an increasing number of local governments across the nation and across North Carolina have adopted “Smart Growth” policies. However, North Carolina should look to the future and adopt a flexible growth agenda — Flex Growth. Flex Growth is a market-based system of principles for government land use and development policy, especially at the state and local government levels, based upon the idea that people — and not government bureaucrats and planners — know what is best for themselves.

North Carolina has an Amazon tax, which categorizes out-of-state firms as in-state, and thereby liable for sales tax, under certain conditions. However, the tax has not proved effective at increasing revenues, it does not level the playing field, and it may drive firms out of the state.

Cronyism is an umbrella term covering a host of government activities by which an industry or even a single firm or speculator is given favors and support that they could not attain in market competition. This report explains what opens government to cronyism, gives a brief rundown of recent examples of cronyism in North Carolina, and offers several possible reforms.

Once a popular off-Hollywood venue for filmmakers before state film tax incentives, North Carolina is now one of the leaders in a race to the bottom among other states and nations in giveaways to movie production companies. The incentives show that state leaders know that lower taxes and regulations attract industry. So why play favorites with industries? Why not just lower taxes and regulations altogether?

Private, charter, and home schools continue to be popular in many states, including North Carolina. This popularity, however, has not produced a significant enrollment shift from district schools to schools of choice – private, charter, or home schools. North Carolina and nine other states had a net increase in the percentage of students attending a school of choice between 2001 and 2010, but statewide market share increases were trivial. School choice reformers must continue their praiseworthy efforts to expand educational options for families. They must also recognize that the traditional public school system will remain the primary provider of schooling for most families.

Declining fish stocks are affecting N.C. fishermen and fishing communities despite the U.S. government spending $70 million a year to bail out failing federally managed fisheries under traditional management systems. Catch shares are a transformative approach to fisheries management that inject property rights into the fisheries to produce a sea change in incentives. Catch shares eliminate race to fish, encourage a more discriminating harvest, and reduce bycatch. Research finds strong links between catch shares and improved economic and biological performance of fisheries and that switching fisheries to catch share systems not only slows their decline but possibly stops (or even reverses) it.