2/23/2013 5:42:21 PM
Times Union: Low region GDP belies a hot trend
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ALBANY — The upstate economy isn't growing much these days.
Data released Friday by the federal Bureau of Economic Analysis found that only Buffalo's economy is growing faster than the rest of the state's, and two upstate cities — Syracuse and Binghamton — have watched their economies shrink, a dire scenario for business and political leaders.
However, despite similarly sluggish growth in the Capital Region economy, there is an exciting trend beneath the surface: the small but growing high-tech industry, driven by the University at Albany College of Nanoscale Science and Engineering and by GlobalFoundries, is expanding at a furious pace.
The health of an economy can be looked at in many ways. But one of the most important figures to economists is gross domestic product, or GDP, which measures the amount of goods and services produced in a geographic area.
In 2011, the most recent year in the federal data, the "real," or inflation-adjusted, GDP in the United States grew 1.5 percent, with metro areas having slightly better growth at 1.6 percent.
Numbers such as that are not expected to get the economy back on track. The number was lower for New York state, which had only a 1.1 percent increase in GDP, despite efforts by the Cuomo administration to control spending and taxes and encourage businesses growth.
In the Capital Region, GDP grew less than one percent. Buffalo, by way of contrast, had 1.4 percent GDP growth. Syracuse suffered the worst contraction of any major upstate city as its economy shrank by 1.2 percent.
But local business and political leaders can take solace that years of focusing their economic development efforts on the high-tech industry, especially the semiconductor industry that produces computer chips, appears to be paying off.
In fact, according to the government, computer and electronic product manufacturing — which includes computer chips, is the fastest growing sector in the local economy. In 2010, the latest year for which data are available, the GDP of the local computer and electronics manufacturing sector grew to $297 million from $134 million the year before — an increase of 121 percent.
Kajal Lahiri, an economics professor at the University at Albany, says the local semiconductor industry is behind the increase. He said that, statistically, the sector is still a small percentage of the whole economy, and it is easier to grow an industry when it is smaller.
"But the potential is great, and its psychological effect on the overall economic multiplier can be very large," Lahiri said.