“If Maryland were a company, would I buy, sell, or hold its stock?”
That was the question posed by Carey Business School Executive Vice Dean and Professor Phillip H. Phan as he delivered an appraisal of Maryland’s economy to the state’s Economic Development Commission on April 30, 2014, in Annapolis. Phan offered his insights at the commission’s invitation.
Citing public data from numerous federal agencies, Phan gave the state a mixed rating. He cited positive developments such as the $50 million Maryland Innovation Initiative to promote knowledge sharing among researchers, the Regional Institution Strategic Enterprise Zones (RISE) program that aims to foster community development near colleges and universities, and the resurgence of the Port of Baltimore. But he also noted negatives such as the poor performance of Baltimore City’s public schools and the “C-minus” condition of the state’s infrastructure.
In answer to his opening question, Phan said he would buy stock in Maryland because he views the state’s economic performance and “entrepreneurial ecosystem” as “above par nationally.” However, he added, he would protect the investment by tying it to a sell call that would be triggered by a significant increase in any of the three following markers for Baltimore – its rates of violent crime, population flight, and high school dropouts.
Phan clarified at the start of his 3,300-word statement that the views were his own and were not made on behalf of Johns Hopkins University or the Carey Business School.
Other comments from Phan’s appearance before the Economic Development Commission:
- “A critical component of a region’s asset mix is human capital, as measured by the educational achievement of its children. … Maryland is ranked fifth nationally in math performance at fourth grade, with Massachusetts ranked at No. 1. By eighth grade, Maryland drops to No. 16, below Virginia, with Massachusetts still ranked first. Since 2005, Maryland has outpaced the country in math performance, but the rate of improvement has flat-lined since 2007.”
- “Maryland’s annual funding for public universities per student hovers at the national average of $13,000, compared to Massachusetts at $11,000 and New York at $20,000. In Maryland, the number of individuals in science and engineering as a percentage of the workforce is about 7 percent, which is the same as in Virginia and Massachusetts. This number is high when compared to the U.S. average of 4.5 percent and New York’s at 3.7 percent. In terms of the number of science and engineering PhDs, relative to all science and engineering degrees conferred, Maryland is similar to the U.S. average at 4.6 percent but below Massachusetts at 6.6 percent.”
- “The American Society of Civil Engineers grades Maryland’s infrastructure [at] C- compared to California’s C grade, Virginia’s D+, and the national average of D+. Overall, Maryland’s infrastructure, which is a critical element in economic productivity, is not yet a limiting factor but does little to enhance the productivity of the state’s other assets such as the resurgent Port of Baltimore.”
- “Maryland state agencies’ R&D spending at $116 per science and engineering worker is well below the national average and ranked 37th compared to West Virginia at $2,000 per science and engineering worker. … Maryland is ranked sixth in academic patenting after Massachusetts, Florida, Wisconsin, Utah, and Delaware, despite receiving more federal R&D dollars per capita than any other state in the country.”
- “The Maryland Innovation Initiative is the right approach to building knowledge networks, which is the skeleton of an innovation ecosystem. … In my opinion, the initiative can be more effective with a coordinating office to ensure active participation of the partner institutions and dissemination of the knowledge produced by the [funding] recipients.”
- “Maryland receives more government grant money to commercialize technology than most states but a very small amount from private sources. This tells me that that Maryland’s high-technology entrepreneurs have learned the art of obtaining government grants but underperformed in the capital markets.”
- “New high-technology business formations, as a ratio of all new business formations in Maryland, was about 25 percent in 2013, which is below Virginia at 29 percent and higher than New York at 10 percent and Massachusetts at negative-2 percent. … The national average of high-technology business formation to all business formations is 6 percent. These data also suggest that Maryland does a good job in high-technology business formation.”
- “In 2013, Maryland exports grew by double digits to reach $11.8 billion, which represents 3.7 percent of gross state product (GSP). In contrast, California reported exports of $168 billion, which is 9.3 percent of GSP. … For Maryland to improve its performance as a participant in the international market, it needs to triple the share of exports as a percentage of GSP. Further, to the extent that exports are a way for Maryland to avoid beggar-thy-neighbor tax and incentive policies, the state must do better in export promotion.”