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• Position: Interview with economic consultant James F. Smith on North Carolina's economy - Interview

James F. Smith, professor of finance at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill, teaches international macroeconomics. He was a consultant to President Reagan's Council of Economic Advisers in 1981. Before coming to UNC in 1988, he worked for Sears, Union Carbide, Wharton Econometric Forecasting Associates, the University of Texas and the Federal Reserve Board. The Dallas native earned his B.A., M.A. and Ph.D. degrees from Southern Methodist University.

BNC: How does North Carolina fit into the global economy?

Smith: Everyone can hardly wait for Mercedes-Benz to announce its move to North Carolina. Then we'll have a genuine Tar Hell car to buy, though the notion of a Carolina-blue Mercedes seems a little bit odd. But everywhere I go in the world, people want to tell me how proud they are of their facilities in North Carolina, or how much they'd like to have some, since everybody tells them it's one of the few places in the world where people are willing to give a full day's work for a full day's pay.

BNC: Is North Carolina more involved internationally than other states?

Smith: There's a very large amount of foreign investment in the state in relation to total investment and a large number of companies exporting products. We are, as you know, a state with a healthy trade surplus with the rest of the world. America as a whole last year had a net merchandise balance of minus $96.3 billion, and North Carolina was about plus $4 billion. North Carolina is part of the solution, not part of the problem. A healthy fraction of our labor force has jobs because of selling to people in other countries.

NEW MANUFACTURING FACILITIES 1990-1992 1 Texas 377 2 North Carolina 345 3 Ohio 268 4 California 221 5 Florida 218 6 Georgia 203 NEW FOREIGN-OWNED FACILITIES 1990-92 1 North Carolina 93 2 Texas 57 3 Florida 49 4 South Carolina 45 5 Ohio 43 6 Georgia 40 Source: Site Selection magazine A good example is the Wilsonart laminate factory |of the Ralph Wilson Plastic Co.~ in Fletcher, just south of Asheville. Over 25% of its output is sold in Europe, Australia and Latin America. If you go to that factory, the production workers will tell you that they have jobs because people in France or Panama or Mexico or Brazil or Australia or Japan like their counter tops.

BNC: Is it hard for North Carolina companies to find foreign markets for their goods?

Smith: Not so much for large companies, but surveys consistently show...