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Industry. Economic development Trend. Measuring economic impact Key. Help entrepreneurs and executives make better business decisions.
It's only been a year since Florida Gulf Coast University tapped Christopher Westley to lead the Regional Economic Research Institute, but he's blunt about the organization's mission.
“I want it to support the productive class of society,” he says. “The Regional Economic Research Institute should never be used to implicitly raise taxes.”
That means, for example, that any economic impact study the institute publishes will also include a caveat that money spent for one purpose might mean forgoing a better alternative.
It's what economists like to call the opportunity cost.
The institute was established about a decade ago to track key data for the region stretching from Sarasota to Naples. It tracks and shares data on economic gauges such as airport passenger traffic and housing permits. It also conducts a business-climate survey in Lee County that measures executives' current and future sentiments.
But as its new director, Westley is determined to make it even more useful for companies and entrepreneurs. Westley doesn't mince words: “If it's not adding value, it's parasitic.”
To see where he's coming from, it helps to understand Westley's underlying economic philosophy. As a fellow and one of the most prolific authors with the Mises Institute, Westley hails from the Austrian school of economics that advocates free markets. “My bias is to create a resource that will make the local markets more efficient,” Westley says.
For example, at last count there are 13 chambers of commerce in Lee County, plus government economic development groups. Westley hopes his organization's research can help them better allocate their resources. “A lot of them are doing the exact same thing,” Westley says.
Speaking with Westley, you quickly know whose side he's on. “We need to support wealth creation, and you don't support that by raising taxes,” he says.
Naples grad
A Naples High School graduate, Westley attended University of Florida and earned a public relations degree. But a year program with the American Enterprise Institute in Washington, D.C., changed his mind about one day becoming a business writer. “That solidified it for me. I liked economics,” he recalls.
After earning a Ph.D. in economics from Auburn University, Westley taught the subject at Jacksonville State University in Alabama until 2015. “I always wanted to come back to Florida,” he says.
Westley says he had been waiting for a position to open at Florida Gulf Coast University and accepted the appointment to teach economics at the Lutgert College of Business at FGCU and to direct the institute. “I was working on similar things at JSU,” he says.
After the appointment at FGCU, Westley set aside a tome he's working on titled “The Encyclopedic Dictionary of Austrian Economics.” He's about halfway done and plans to continue working on it later this year. “I'm on the M's,” he chuckles.
Westley fits right in at FGCU's Lutgert College of Business. The school has earned the distinction of being a bastion of free-market thinking where every economics and finance student gets a copy of Ayn Rand's celebration of the entrepreneurial hero, “Atlas Shrugged.” FGCU's business school is one of the few that teaches subjects such as the moral foundations of capitalism.
Growing the institute
The institute publishes a monthly report of regional economic data, mostly covering Charlotte, Collier, Glades, Hendry and Lee counties. In addition, it publishes the Lee County business climate survey quarterly. Assisting Westley is economic analyst John Shannon.
But Westley says one of his goals is to attract students to the institute for research projects. “If they're active with us, they learn economics,” he says. “And they get exposure to the Southwest Florida business community.”
If their research is published in an academic journal, Westley bestows on them the title of fellow of the Regional Economic Research Institute. “It's to reward students to do significant economic research,” he says.
Students will help the institute tackle more projects such as industry diversification. Westley created a way to measure industry diversification by metro area and state and recently published the first quarterly issue of the industry diversification report (see accompanying article).
In addition, the institute supports the Southwest Florida Economic Development Alliance by providing research and demographic information and students are involved in that effort, too. FGCU was a founding sponsor of the newly formed alliance, which brings together economic development organizations from the region's five counties.
Diversification remains elusive
Industry diversification has been the mantra of economic development since the recession, often used to justify government handouts to industries deemed desirable.
But a newly created diversification index developed by Florida Gulf Coast University's Regional Economic Research Institute shows Florida continues to struggle with industry diversification, especially during the busy tourism season.
“It should spark a discussion about the relative success of economic development policies that have existed over the last 20 years,” says Christopher Westley, a professor of economics at FGCU and director of the institute.
Nationally, Florida ranked 29th in employment diversity, and it ranks in the bottom of the Southeast, where five of seven states are more economically diverse than the U.S. average. In fact, the top five states with the most diverse employment in the country are Georgia, South Carolina, Tennessee, North Carolina and Virginia, according to the institute's index.
Florida's economic development officials have dangled incentives to companies in industries such as technology and manufacturing that could bring a more diversified employment base to the state. That's because the state's traditional reliance construction and tourism-related jobs has made it more vulnerable to economic cycles.
But Westley says the index he's created dating back to 1995 shows that strategy hasn't been effective. “That's what we've been doing for 25 years and look at what it's brought us,” Westley says, suggesting that focusing on lower taxes and fewer regulations might have a more positive effect on employment diversification instead.
Some of the challenge lies beyond Florida's borders. For example, federal monetary policy had a significant impact on fueling Florida's building industry during the bubble, lowering the diversification index as construction boomed. In addition, the federal government's increased regulations means only the largest companies can comply, depressing entrepreneurship.
The diversification index is calculated using state employment data. It swings depending on the time of year, with economies such as the Naples area more diversified than other areas of Florida during slower summer and fall but less diversified during the winter tourism season. “We'll update it every three months,” says Westley, who recently published the first diversification index report recently.
Westley suggests that Florida's economy is dependent on tourism and construction the way Texas was during the oil boom of the mid-1980s. “I think we're at a crossroads like Texas was,” he says. “That's a study that needs to be done.”
Companies such as Arthrex, a Naples-based manufacturer of high-value surgical tools, could show the way for increased diversification, Westley suggests. Cutting taxes and regulations to promote entrepreneurship is key to help startups turn into companies like Arthrex.
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