Economic Development and Globalization in South Carolina

Figure 1.

The boundary between the South and the world continues to melt. Photograph by Justin McIntosh, courtesy of Wikimedia Commons.

As South Carolina entered the twenty-first century, a growing sense of concern about the effectiveness of the state's long-standing economic development policy emerged. From 1950 through 1980, South Carolina enjoyed remarkable success in the area of economic development. Per capita income, an accepted measure of economic growth, not only increased by nearly 400 percent in real terms but also rapidly gained on the national average, moving from just under 60 percent of the national average in 1950 to an impressive nearly 80 percent by 1980. As the state's per capita income steadily converged on the national figure, both quantitative and qualitative measures suggested that South Carolina had finally moved into the prosperous American economic mainstream. The state's population grew by nearly 50 percent during this era, providing the labor power needed to sustain development, and the process of urbanization also gained momentum as the percentage of the state's once heavily rural population living in urban areas increased from just less than 37 percent in 1950 to over 54 percent in 1980.¹

From 1980 through the end of the century, state policy makers, buoyed by this track record of success, vigorously pursued essentially the same development policies that had worked in earlier decades, making minor adjustments and adding new industrial recruiting incentives as various corporate prospects demanded and successive gubernatorial administrations thought appropriate. All of this was accomplished with generally bipartisan legislative support. These policies continued to bring impressive levels of outside investment to the state during times of national economic expansion, but by 2001 some South Carolina leaders noted that the once steady convergence of the state's per capita income toward the national average had ground to a halt. Since 1980 South Carolina's per capita income had hovered at or near 80 percent of the national average. Absolute increases in the state's per capita income were impressive during the two decades, and merely keeping pace with a national average that itself grew by more than 3 percent annually between 1980 and 2000 required no small amount of effort on the part of state development leaders. But hitting a plateau at four-fifths of the national average, a position that left South Carolina ranked regularly among the ten poorest states in the nation, hinted at deeper problems with the state's economic development strategies.²

The relative stagnation of per capita income in South Carolina produced considerable hand-wringing in state development circles. Some experts blamed the traditional development strategy of "smokestack chasing," with its emphasis on attracting mature, and even declining, industries interested in relocating in lower wage and nonunion areas, for the slowing of income convergence. Others thought smokestack chasing had served the state well enough for a time but that South Carolina needed a new strategy designed to help a still undereducated state succeed in the emerging knowledge-based economy. "Economic development is

Figure 2.

The relative stagnation of per capita income in South Carolina produced considerable hand-wringing in state development circles. Some experts blamed the traditional development strategy of "smokestack chasing," with its emphasis on attracting mature, and even declining, industries interested in relocating in lower wage and non-union areas, for the slowing of income convergence. Photograph courtesy of the Collections of the Library of Congress.

now struggling to find its way in South Carolina," observed respected College of Charleston economist Frank Hefner early in 2006. "More of the same is not going to work because you can only get so many bmws." Ironically, given the pride the state took in landing a big investment from the German automaker, other analysts linked the state's comparative economic stagnation directly to economic globalization. The rise of competitive, low-wage "off-shore" economies accompanying globalization have offered formidable challenges to the long-standing development strategies employed by most southern states...