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Gambling on the future: business, political elite look at Arkansas' future.

Gambling On The Future

It was fairly exclusive company - legislators, bankers and members of the Good Suit Club - in short, the people who generally get to make all the decisions about Arkansas' future.

They were talking about ways they could get rid of their country cousin, who represents the state's traditional economic role of getting by but never getting better.

Everyone, it seems, wants Arkansas to improve as a good place to live and work, but hardly anyone seems to agree on how to make this happen.

That's one conclusion to draw from a survey of 1,850 of the state's business and political elite conducted last spring by R. Lawson Veasey, political science professor at the University of Central Arkansas, and Kent Oots, a business research consultant.

They sent out survey forms trying to discover how a rural, agrarian state such as Arkansas can compete in the scramble for jobs while also increasing revenue and economic security.

Small, Not Big; Light, Not Heavy

According to the survey results, Arkansas business leaders believe economic growth will depend on the state's success in attracting light, rather than heavy, industry. Small business will play the most prominent part in creating new jobs.

Further, respondents say, public education, a good labor force and investment capital formation are the three ingredients essential to economic development in the state.

Respondents weren't shy about saying where they stood on the proposed state lottery. As a way to raise additional revenue, the lottery was a big winner over more traditional revenue boosters like taxes on sales and sins.

Counting Heads

Besides politicians, Veasey and Oots surveyed business people, educators and groups like the Arkansas Industrial Development Commission and the Arkansas Business Council (better known as the Good Suit Club) for ideas on moving the state ahead after a decade of flat population growth and continued poor economic health.

"In the recessionary period we're going through," Veasey notes, "that's nothing new to Arkansas - we're used to doing without. Always being on the bottom has hurt us from a psychological perspective, but it's helped in terms of being able to weather bad times."

Survey respondents feel that the state may do better by trying to attract light industry rather than heavy industry like the Saturn plant that recently located in Tennessee. As an example, Veasey says Sanco Industries of Benton has thrived doing "spin-off" business for larger firms.

Sanco assembles components for Japanese manufacturers, Veasey notes, and this allows their employees to familiarize themselves with high-tech work. As the workers become more educated at this type work, Veasey believes they can upgrade the quality of their lives.

No More One-Industry Towns

"We need to be sensitive to diversification - we don't need to be a whole collection of one-industry towns," Veasey says. "We should still continue to recruit heavy industry but also look at capital development for small businesses because that's where the innovation comes.

"In a state like Arkansas, we can't afford to ignore any possibilities."

Dave Harrington of the AIDC predicts that Arkansas will do better than most states in the production of high-tech products but won't necessarily be involved in the research and testing phases of the product.

"Our plants will utilize high technology in production, and non-manufacturing sectors will involve high technology as much as anybody else in communications, services, bio-medical research, etc." Agriculture, food processing and tourism, Harrington believes, will continue to be "naturals" for developing Arkansas' economy.

"I agree we do stand a better chance in getting light manufacturing for the near future, but I think our ability to attract heavier industry will improve as our labor-force skills improve and as the market opportunites expand in the Southwest U.S.," he says.

In one part of the survey, the respondents were asked to name the three factors they considered to be the most important to future economic development in Arkansas. In order, the respondents named public education, human relations and the labor force, and investment capital formation.

"Education is really the number one concern," Veasey says. "It's the problem and also the solution. Basically, it's now the responsibility of the employee to train the worker but that cuts down on profit margin. If we can upgrade public education, that takes the burden off the private sector and helps their bottom line."

Survey respondents felt that the areas of least concern for the state's future economic development were public health, health care facilities and leadership.

Education Emphasis/Lottery,


Thomas A. "Mack" McLarty, president of Arkla Inc., says he agrees with other survey respondents that education not only ensures a quality labor pool for prospective employers but also can improve the quality of life for newcomers to the state.

"We're in the process of acquiring a company in Minneapolis and some of their people will be candidates for jobs here with Arkla," McLarty says. "The first thing on their minds is public education for their children."

In a third section of the survey, respondents were questioned about the state's proposed lottery and whether it can provide a real solution to the state's funding problems.

In their report, Veasey and Oots note that the increase of state lottery programs relates directly to the decrease in federal aid and the need to reconstruct the deteriorating human physical infrastructure of most states.

While Veasey and Oots both have reservations about a state lottery, the program was a clear favorite among survey respondents.

More than 23 percent thought a lottery was the best way for the state to obtain additional revenues while 18.5 percent thought no new revenues were needed.

Oots claims that, as neighboring states add lottery programs, the market shrinks. Lotteries, he says, also prey on that portion of the population which is least able to afford to buy tickets.

"The lottery is politically attractive," notes Oots, "but at its best, it will only clear about $30 million. That wouldn't even make a dent in the education budget. Even in states where it does well, the lottery doesn't provide a substitute for the tax base."

Archie Schaefer, a spokesman for the Arkansas Business Council, says the feeling among members is that the state's current lottery proposal is "terribly drawn."

"The proposal gives entirely too much authority to the commissioners," Schaefer claims. "As far as how it's operated and what's done with the money, it's bizarre."

In attracting new industry to the state, Veasey and Oots note that statewide policies "appear to be more reflective of national and international norms, while local policies vary drastically...".

Community-based development policies focused on the unique attributes of each city or town seem to be underemphasized statewide, according to Veasey and Oots.

"The states that have gone the farthest economically," concludes Oots, "are ones that have recruited industry. They move through that phase, then move more into technology. You still need heavy industry to attract that."

PHOTO : ECONOMIC IMPACT: Deanna Johnson, an AT&T employee, makes up part of Arkansas' labor force, which leaders ranked second most important to the state's future economic development.

PHOTO : Factors Most Important To Future Economic Development
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Title Annotation:Survey
Publication:Arkansas Business
Date:Oct 22, 1990
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