Rhode Island's poor business-climate rankings are too important to ignore

We’ve heard it all before. Rhode Island is one of the worst states in the country in which to do business, consistently ranked near the bottom when the 50 states are compared on the basis of factors considered especially conducive or prohibitive to doing business, such as tax rates, regulations and infrastructure. More

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Rhode Island's poor business-climate rankings are too important to ignore

Posted 10/25/10

We’ve heard it all before.

Rhode Island is one of the worst states in the country in which to do business, consistently ranked near the bottom when the 50 states are compared on the basis of factors considered especially conducive or prohibitive to doing business, such as tax rates, regulations and infrastructure.

Whether the rankings are completely accurate may be debatable but they should not be ignored, says John C. Simmons, executive director of the Rhode Island Public Expenditure Council. He sees Rhode Island as “much more competitive” than such ratings indicate, “but these are the rankings that people use” and “what people perceive us to be.”

“And perception can become reality,” he added.

A 15-page RIPEC report prepared for a Sept. 30 forum puts it this way: “While there does not appear to be a consensus on the best way to measure whether a state has a business-friendly climate, and which factors should be evaluated, there is no doubt that the rankings affect public perception and that their usage has become increasingly widespread over the past decade. … Perception is a key factor when promoting economic growth.”

The RIPEC report focuses on the Rhode Island ratings set by five business-climate studies, including two research organizations, the Tax Foundation and the Small Business and Entrepreneurship Council (SBE Council), and three media outlets, cable news channel CNBC, Forbes and Chief Executive magazines.

Scott A. Gibbs, president of the Economic Development Foundation of Rhode Island, based in Cumberland, said those most likely to use ratings are professional search consultants retained by major companies to scout new locations across the country.

The foundation is a private nonprofit that has developed such sites as Highland Corporate Park in Cumberland/Woonsocket, the 295 Industrial Office Park in Lincoln and the Westerly Airport Industrial Park.

“I can guarantee you they are looking at these rankings,” Gibbs said of search consultants, “and the rankings have, in my opinion, a material impact on whether a state even gets on a consultant’s radar screen. Search consultants, before they even talk to a state, are gleaning all sorts of data on such factors as taxes, the work force, building costs and the overall business climate.”

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