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Since the 1980s, the
term “globalization” has come to mean many things. From the movement of currencies,
people, and ideas across borders, to the high-tech dissemination of
popular culture, globalization is one of the mostly intensely championed
and decried issues of the past few decades. Florida is no stranger to the effects
of globalization, and the issues involved affect the daily lives of
millions of Floridians. The
University of Florida International Review recently sat down with
Professor Carol West, a specialist in economic forecasting and former
Chair of the Department of Economics (1997-2001), to discuss the state of
Florida in the global economy.
International
Review: Thank you very much for opportunity to speak with
you. First of all, can you tell us
a little about your involvement with the Center for International Business Education and
Research (CIBER) as well as economic forecasting in the state of Florida?
Dr. Carol
West: Actually, the two are interrelated. I had some background in
things international from other work I’ve done, such as spending a year
and half in Colombia after I graduated from college. The first research I did with a strong
international component was with the copper industry, and this came out
of developing state forecasting while I was at the University of
Arizona. Copper was a major part
of the state economy at that time, so in order to forecast what was
happening in the state of Arizona, you had to forecast the copper
industry. When I came to Florida,
over time I could see the impact on the tourism industry of changes in
foreign exchange rates. International tourism in Florida was specifically
affected by the fluctuation of the Canadian dollar, due the large number
of Canadian visitors. I didn’t
originally have a large amount of international aspects in forecasting
models, but I could see that I had to move in that direction to take
account of such factors.
The goal of the CIBER program here at UF is to improve the
competitiveness of US firms, and part of that is improving international
business education with a strong emphasis on the notion that
international business cannot be taught solely by a business school, but
must include area studies, languages, and so forth. It should bring these components into
business programs, as well as bring business components into language,
political science and area studies.
Building the integrated CIBER program brought together people from
across campus, and it has been quite successful.
IR: Various publications, such as Thomas
Friedman’s The Lexus and the Olive Tree and Joseph Stiglitz’s Globalization
and its Discontents, discuss the pros and cons of an increasingly
globalized economy. In your
opinion, is Florida poised to be a winner or a loser in this process?
CW: I think that Florida will be
much like almost any large-scale economy you look at. That is, there are going to be winners
and losers within the economy here.
The effects are very broad and some of them we have yet to
measure. For example, we tend to
think of agriculture, namely the citrus and sugar cane industries, as
important in this equation, and it is true that Florida is at risk of
losing some of its traditional agriculture. When you lose some agriculture, you
will lose some green spaces to development, whereby some attractiveness
of the state may be lost. What
happens in Florida also depends on what happens in other parts of the
country, as well. If other states
are impacted negatively by the forces of globalization, that will impact
the rate of workforce migration to Florida. This will impact the rate of growth of
the state as well. At this point,
we don’t have the data necessary to show the secondary effects of those
flows.
IR: In 1960, Florida’s
population growth increased 78.7%, but the rate of growth has been
declining ever since, with only a 19% growth rate between 1990 and
2000. Can you identify any reason
for this?
CW: Those figures really reflect
a mathematical phenomenon. If you
look at the absolute increase in the population, it’s actually much
larger. Even if you had just a
constant absolute growth over time, you keep adding to a larger base
which keeps growing even as the percentage is declining. We have a very large number of people
coming into the state now, even though the growth rate was higher in the
middle part of the century, because the state then was much smaller. If you look at the number of people
coming in each day, it is quite large.
People also leave Florida, so the number you have exiting the
state increases as well, even as the absolute population grows. As far as any brain drain, certainly
the state’s universities have worked very hard and successfully through
scholarships and other considerable incentives to keep bright young
people in the state. You can look
at the high numbers of high number of National Merit
and National Achievement Scholars at UF to see evidence of this.
IR: Are trends in GDP growth,
Foreign Direct Investment (FDI), and income equality similar in Florida
to the trends in the nation as a whole?
CW: I’m not sure as far as the
trends in inequality, as the income gap is significant in Florida, even
within counties. We have some
very, very rich people and some very poor rural areas. I would be surprised if a study didn’t
show increasing inequality across the state. Therefore, there are effectively
winners and losers in the equation and there is likewise increasing
domestic and international focus on the plight of the losers. If the world, the state, and the nation
are going to benefit from globalization, they’re going to have to listen
to the voices of those who haven’t been on the winning side.
I do not have real current figures on FDI, but Florida certainly
is an attractive area for FDI from Latin American corporations, such as
investment in the orange industry coming from Brazilian orange
industry. A Brazilian airplane
firm also has offices in Florida.
The total volume today compared with, say, five years ago, I
cannot say. However, anecdotally
you can say that there has been an increase in FDI. There are many firms interested in real
estate development, hotel development, and tourism.
IR: What roles do migrant
workers, and agriculture as a whole, play in Florida’s economy?
CW: Well, agriculture is not the
engine of growth in Florida at this point in time, because there are
other sectors that have grown substantially in importance. You can think of retirees as a sector,
real estate as a sector, tourism as a sector, and so forth. These have been much stronger in growth
over time than has agriculture.
While still an important industry within the state, much of the
valuable agriculture comes from urban counties, such as Palm Beach
County. People tend not to think
of this county as agriculturally productive, but it produces a large
amount of sugar cane. Florida
differs in this way from many states.
When you think of the migration of workers, it is not just the
farm workers at issue here. It is
also important to consider the positive effects of foreign students on
the vibrancy of research and academics at institutions state-wide. The effects of the influx of Indian
employees in the software industry, for example, have been
significant. They have been a
valuable source of skilled labor.
One of the projects that CIBER is funding right now is looking at
the potential impact of Department of Homeland Security regulations on
the supply of agricultural labor to the state. We do rely on having farm workers from
other countries coming in to harvest crops in the state of Florida.
IR: In terms of comparative
advantage, what should be the focus of industry in Florida?
CW: Certainly Florida will
continue to be attractive as a sight for retirees, “snowbirds,” and
tourists. As long as we have
beaches and sunshine, those will always be significant industries for the
Florida economy. I think Florida
ought to be able to be a strong force in the biomedical and technology
industries simply because it is such an attractive place to live. Scientists and researchers have a
choice of where to live; therefore the state should be able to attract
more entrepreneurial endeavors in the scientific field. Gainesville itself has a very strong
grouping in the environmental sciences area, which is an increasingly
international field simply because the
demand
for enhanced environmental protection is coming from other countries as
their incomes grow and their economies develop.
Additionally, an amazing number of multinational corporations’
Latin American headquarters are located in southeast Florida, including
hundreds of banks and major firms in the Miami area. Miami is, in many respects, the gateway
to the Latin American region.
IR: How much did the hurricanes
of the 2004 season affect Florida’s economy and ability to compete
globally?
CW: I don’t think that the
hurricanes have had a major impact.
Basically, people tend to rebuild an area and forget. People also generally expect hurricanes
in Florida, even though we had more last year than we have typically
had. Even before Hurricane Andrew,
hurricanes were not totally unexpected in the area. What is important for Florida is to
work on hurricane preparedness for schools, businesses, and so on. Hurricanes differ from other natural
disasters in that people get reasonably fair warning to move away from
impacted areas. There is certainly
some short-term impact on businesses that close down, but the time period
is not necessarily long enough to hamper Florida’s economy in global
competition.
IR: To take a political angle,
what current international events have affected Florida’s economy?
CW: I think the one particular
event that had the possibility of the most influence was the potential of
the Free Trade Area of the Americas (FTAA) headquarters being located in Florida. There was the hope of the state becoming the
Belgium, for example, of the Americas, linking economies across the
hemisphere. There was certainly a lot of disappointment when those
trade talks stalled.
IR: Thank you, again, for your time and expertise
on these issues.
CW: You’re welcome.
Professor West has taught undergraduate courses in
microeconomic theory and forecasting and currently teaches undergraduate
and MBA classes in international business. As Forecasting Program
Director in UF's Bureau of Economic and Business Research from
1984-2002, her analyses of the Florida economy were widely disseminated
in the business media. She is currently Director of UF's Center for
International Business Education and Research (CIBER).
*Interview transcribed
by Matt Marchant.
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