Yankee Ingenuity - New England Cut Taxes, Controlled Costs, and Used High Tech to Diversify Its Economy
Tuerck, David G., The World and I
While it's true that New England's rich history and natural beauty draw thousands of visitors each year, it's also true that the six-state region has often weathered economic crags rivaling its rocky coasts. New England suffered one of its most severe recessions over the period 1989--1991. That it rebounded fully is evidence of the region's economic resiliency.
Why was New England hit so hard?
For the country as a whole, the recession ended in 1991. What followed was an economic boom fueled largely by the spread of personal computers and networks and by the expansion of the Internet. Initially, New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont) failed to benefit from this boom. At the start of the decade, New England's computer minititans--firms like Wang and Data General--were unable to make the transition to personal computers.
In addition, the end of the arms race meant that defense giants like Massachusetts-based missile producer Raytheon and aerospace leader General Electric were no longer receiving government contracts. Connecticut could no longer depend on Electric Boat in Groton and Colt in Hartford to spur economic growth through the production of submarines and guns.
The New England financial sector also suffered. The decline in employment in finance, insurance, and real estate was 2.0 percent for New England, compared to the national average of 0.3 percent. Forty- eight commercial banks in New England failed between 1989 and 1992, 23 of them in Connecticut.
As a result, the recession's effects were deeper and lasted longer for New England (see fig. 1). The growth of gross state product (GSP) for the six states lagged behind the growth of U.S. gross domestic product (GDP) until 1995. Manufacturing was particularly slow to recover. From 1989 to 1992, New England manufacturing saw an average decline in employment of 4.2 percent, nearly three times the national decline of 1.7 percent.
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Publication information: Article title: Yankee Ingenuity - New England Cut Taxes, Controlled Costs, and Used High Tech to Diversify Its Economy. Contributors: Tuerck, David G. - Author. Magazine title: The World and I. Volume: 16. Issue: 8 Publication date: August 2001. Page number: 20. © 1999 News World Communications, Inc. COPYRIGHT 2001 Gale Group.
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