State of the Region Report Shows Bright Economy, Areas Where Competitiveness Lags

FAYETTEVILLE, Ark. – The state of the Northwest Arkansas economy continues to be bright with high levels of employment, but the area trails similar regions in educational attainment and research funding. That’s the finding of a report prepared for the Northwest Arkansas Council by the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas.

The first State of the Northwest Arkansas Region Report compares key economic and social factors in Northwest Arkansas with those in similar regions throughout the United States. It was released Tuesday by Kathy Deck, director of the Center for Business and Economic Research. On hand for the release of the report were University of Arkansas Chancellor G. David Gearhart, chairman of the Northwest Arkansas Council; Mike Harvey, the council’s chief operating officer; and Walton College Dean Dan Worrell.

Deck said the national recession had a substantial effect on Northwest Arkansas and is a reminder that the area needs to continue to position itself attractively relative to peer regions to continue to improve its overall quality of life.

“The State of the Northwest Arkansas Region Report is designed to highlight both the region’s strengths and put a focus on areas where our competiveness lags our peers,” Deck said. “This report demonstrates how employment opportunities and establishment growth in the region surpassed our benchmark group over the last decade, but also how our educational attainment and research expenditures were limiting factors. These findings have clear messages for the region’s leaders.”

The report compares the economy in the Northwest Arkansas region – Benton, Madison and Washington counties in Arkansas and McDonald County in Missouri – to that in similar areas around Lexington, Ky.; Gainesville, Fla., and Huntsville, Ala. It also compares conditions with Austin, Texas, as well as Arkansas and the United States.

Key findings from the report indicate:

• During the decade from 2000 to 2010, employment in Northwest Arkansas grew at 23.7 percent, a rate that outperformed the peer regions, the state of Arkansas and the nation as a whole.

• Compared to the peer regions, Northwest Arkansas experienced the smallest jump in the unemployment rate over the past decade and during the recession from 2008 to 2010.

• From 2001 to 2007, the growth rate in business establishments averaged 5.5 percent, but from 2007 to 2010, there was an average annual decline of 0.7 percent in the number of businesses in the region. Both the growth during the pre-recession years and the decline during the recession and post-recession years outpaced the peer regions.

• Research expenditures increased by 31.3 percent from 2001 to 2008, the slowest among the major research institutions in the peer regions.

• Fewer than 25 percent of adults in Northwest Arkansas have attained a bachelor’s degree or higher, ranking the region last among peer regions, but better than the Arkansas average.

Gearhart said the report will help a range of individuals and organizations – including the university – make informed decisions about factors affecting the region’s economic health.

“It’s clear from the state of the region report that educational excellence and economic vitality go hand-in-hand,” Gearhart said. “That’s why it’s important that the university continue collaborating with major industry and continue fostering young, innovative startups like NanoMech and Arkansas Power Electronics International.”

Yearly updates of the report are planned as a way to track which elements of the economy are improving and which ones still need work.

“This ‘state of the region’ baseline shows where we stand today, and it’s the first step toward measuring how Northwest Arkansas changes over time,” Harvey said. “Future reports will reveal trends. We’ll know whether college and high school graduation rates are improving, whether high-quality jobs are being created and whether Northwest Arkansas is becoming a better place to live and work.”

“By comparing ourselves to some of the nation’s top communities – Huntsville, Gainesville, Lexington and Austin – we’re challenging ourselves to aim high,” Harvey said.

The Northwest Arkansas Council is a private, nonprofit organization formed to improve quality of life, education, water quality, transportation and economic opportunity in the region.