Georgia has been claiming it is the “number one state to do business” for long enough that it often seems it’s more of a branding exercise than an objective measurement. With November’s elections will come a new Governor, Lieutenant Governor, and enough changes in the legislature that significant changes in direction and policy are not only possible but likely, regardless which party wins the top positions.  

A press release from Governor Kemp last week helps us benchmark where we currently are – objectively – while we debate current legislation and future elections. Georgia has now moved into the top ten exporting states, landing at the 9th position in total value for exports.  The picture is even better when total trade is considered, as Georgia ranks 7th when imports are also considered.

Why should anyone get excited about being 9^th?  That kind of ranking in the SEC gets you to the Music City Bowl and not too many remember the achievement.

It’s about trend and direction. 

Georgia’s exports increased by 12.7% last year. The average state did a healthy 5.6% in export growth, but Georgia’s growth rate was more than double that.

Statistics are nice, but they’re only representative of the underlying story. This isn’t about numbers and percentages. It’s about our state’s and our country’s growth, health, and competitiveness.

At the core, more exports means more jobs. It means more Georgians are creating value for themselves and the companies who hire them. And it means Georgia and America are competitive on the world stage.  Trade only occurs when both sides see value on their side of the transaction. 

Our biggest export in dollar terms may surprise some, especially those in the northern half of the state. Aircraft and aircraft parts are our most valuable exports, at $16.4 billion annually. Gulfstream, the maker of the world’s most prestigious private jets, employs 10,000.  Lockheed Martin, the defense contractor, has a Georgia headcount of about 6,000.  Engine maker Pratt & Whitney has about 1,000 employees here.  Upstart air taxi maker Archer Aviation also has about 1,000 employees.

Other categories we make here and sell to other countries include Computer Hardware, Motor Vehicles, Networking Communications Equipment, and Medical Devices.  Those categories combine for an additional $11.4 billion in annual sales abroad.

This growth wasn’t by accident. While Georgia’s governing leadership is still made up of avowed capitalists, they’re not above using the tools of federalism to help the market’s invisible hand with a thumb on the scale.

While markets are international, the competition for employers to locate and expand domestically is fierce. Every state has natural advantages and disadvantages. States then have a lot of leeway to craft tax and regulatory structures that leverage their advantages and mitigate shortcomings.  Georgia’s rankings in economic development indicate a mastery of these concepts.

The biggest and most frequently used tool in the Department of Economic Development’s arsenal are tax credits. While the headlines associated with trophy level deals often demonstrate the value of incentives given to an employer to grow with Georgia, the math is often vaguely described as to where the money comes from. Most of the dollars don’t come from the state’s checkbook.  They are instead conceptual, and come from “opportunity cost”.  

The standard template – open to virtually any employer of size willing to relocate to Georgia or for an existing employer wanting to expand their presence here – is to credit them with taxes that the state wouldn’t collect if the factory was never built and Georgians were never hired.  The companies instead enter into an agreement to pay local governments a fixed fee over a period of years that is more than the vacant land currently generates in taxes but far less than they would pay on a new factory. 

The difference is the “incentive”. The state isn’t writing checks for most of the package, save for some specific infrastructure upgrades and some site preparation. They’re just agreeing not to collect taxes that never existed. 

Populists in both political parties grumble about these “giveaways”. These grumblings grow louder in election years. Many are now even louder still as they believe taking away many of these incentives will pay for various versions of tax reform currently under debate. 

Many of those making these proposals will stand for re-election on the long internalized brand of that Georgia is the number one state to do business. They simultaneously want to change the underlying tax structure and incentive packages that have led to demonstrable economic growth in all corners of the state.

Current and future employers are watching both legislative proposals and campaign rhetoric closely. They may not yet be taking everything that is said literally, but they are quite certainly evaluating them seriously.