Introduction
Current research provides a comprehensive analysis of the current state of Boston, Massachusetts business environment and the ways of its future revitalization, development and enhancement. There is no denying the importance of the fact that the successful development of business environment in urban areas is premised on municipal authorities’ ability to stimulate business and commercial initiative by creating adequate legislative base, investment and development incentives, as well as guaranteeing intensive development of downtown infrastructure needed for the development of business. It goes without saying that these initiatives should be based on extensive cooperation of public policymakers with business, community, educational and scientific institutions.
Main text
Current analysis of the weaknesses and strength of Massachusetts business environment is considerably based on Beacon Hill Institute 2007 study and the annual report of John Adams Innovation Institute 2006 which presents pessimistic view of the state’s future business projects. This analysis seeks to evaluate these opposing viewpoints and create alternative vision of the necessary directions of public policies to enhance state’s competitiveness over the long-term period.
Massachusetts State Competitiveness
According to Beacon Hill Institute Competitiveness report which was created in 2007 Massachusetts ranks the second place in competitiveness among other states losing the first rank for Utah state. There is no denying the importance of the fact that this report uses effective methodology of competitiveness analysis which placed Massachusetts in such a high place. The abovementioned report rightly defines competitiveness as state’s ability to create business environment and climate for the business to invest and realize business projects on its territory. The competitiveness weaknesses and strengths are measured on the basis of several interconnected criteria such as government and fiscal policies, security, human resources, infrastructure, technology, openness, business incubation and environmental policies (Kean et al., 1998).
According to the report Massachusetts has competitive advantages in some spheres and areas, though lacking it in others. For instance, in government taxes and policies criteria, Massachusetts ranks 34 place, which shows high budget deficit and large numbers of state-employed workers (Beacon Hill Institute, 2007). Hence, according to reports the state’s government policies lack financial discipline which is needed for stimulating competitiveness. Infrastructure and security indexes are also not very high leaving Massachusetts behind other states. However, there exists considerable doubt concerning adequate evaluation of this index since it is impossible to guarantee 2 overall ranks without its sufficient development.
In other important criteria such as human resources indices Massachusetts has the first rank which proves the presence of highly qualified labor force and developing technology sectors and hubs. We think that the leadership in this criteria guarantees overall 2 ranks among all states. To other criteria such as business incubation, that is the ability to attract creative business incentives and initiatives and openness indices are also rather high which means that Massachusetts has liberalized market which attracts investment. Massachusetts has a 42 rank (rather low) in environmental policies provision, however, as we see it does not affect the level of competitiveness. We think that low effect of poor environmental policies can be one of the reasons why the assessment of Massachusetts competitiveness considerably differs in some reports. It can be explained by the fact that environmental policies affect long-term competitiveness which this report fails to predict.
To sum it up, as Beacon Hill Institute suggests Massachusetts business environment is effective and attractive to business initiatives and development, however, some weaknesses originate from poor environmental policies, ineffective and deficit financial policies of state authorities and low infrastructure development.
John Adams Innovation Institute Annual Report 2006 presents somewhat more pessimistic prospects of business environment and competitiveness.
Among other things, John Adams Innovation Institute Annual Report 2006 shows that Massachusetts has significant infrastructure and innovation problems which make it fall behind another technologically developed state. For instance, as the Report suggests High Intensive Care Unites are lacking sufficient technological equipment and specialists, urban transport in Boston is not renovated and new infrastructure is not created.
Among other weaknesses, the Report mentions low public investments into downtown revitalization and creating incentives for building new office buildings and promoting new urban way of life facilities. All these contribute to significant infrastructure and business environment problems which result in pessimistic predictions of long-term prospects of growth.
Recommendations on improving business and development climate in Massachusetts
As a Keeping Massachusetts Competitive Report (2002) suggests Investment Tax Credit (ITC) is one of the most effective tools for creating flexible and favorable investment climate (Mass Insight Corporation, 2002). However, Massachusetts has low ITC we offer its further lowering to create more competitive advantages for the State. In its turn the scale of new investments will lead to intensive development of social and infrastructure initiatives.
There is no denying the importance of the fact, that for the successful long-term development of business climate further Boston downtown revitalization is needed. It should be transformed into technology hub and this requires further cooperation between public authorities, educational, scientific institutions and businesses. Further improvement of state infrastructure is also needed for creating comfortable and transaction cost-free transport and road capacities for the business.
Among other important goals one should mention establishing strict financial discipline, the absence of which was mentioned as a problem by the Beacon Hill Institute study. This includes decreasing the number of state-employed workers and solving the problem of budget deficit. As the example of other states such as California suggests, such measures turn to be effective in terms of attracting new capital investments.
Summary
Besides this, long-term business environment and competitiveness prospects demand effective development of environment protection and energy save projects which are likely to play major role in determining the direction of investments in the near future. As John Adams Innovation Institute annual report suggests unless necessary technology and environmental innovation are made, it is difficult to predict any improvements in investments and business competitiveness index.
Besides this it should be noted that the need for further creation of qualified is felt and this necessity is likely to increase even more in the case of intensive technological investments and innovations. The development of qualified and high-income labor force, of course, precondition further housing development which requires public infrastructure projects and private investment attraction. To sum it up, notwithstanding existing difficulties, Massachusetts business environment will develop in the case of effective realization of public policies and initiatives.
References
Beacon Hill Institute (2007). State Competitiveness Report. Beacon Hill Institute. Web.
John Adams Innovation Institute (2006). Annual Report. Massachusetts Collaborative. Web.
Kean, R., Gaskill, L., Leistritz, L., Jasper, C., Bastow-Shoop, H., Jolly, L., et al. (1998). Effects of Community Characteristics, Business Environment and Competitive Strategies on Rural Retail Business Performance. Journal of Small Business Management, 36(2), 45-67.
Mass Insight Corporation (2002) Keeping Massachusetts Competitive. Web.