Forging Ahead and Lagging Behind: An Analysis of Convergence and Economic Development in North Carolina

This paper analyzes trends in economic development in North Carolina to determine whether there has been evidence of per capita income convergence in the state during the period 1970-2000. The analyses reveal that (a) there has been a process of convergence of per capita income in the state in the past three decades, and (b) income convergence in NC occurred during a period of economic expansion and divergence during economic decline. However, a comparative analysis of metro and non-metro counties as well as among traditional geographic areas indicates that there was a general trend of divergence in metro areas and convergence in non-metro areas. This trend suggests that there are pockets of affluence and pockets of poverty existing side by side in the state. The regression analyses reveal that while the initial level of per capita income, human resource development and population growth had a significant impact on income growth, the impact of urbanization and investment in infrastructure was weak. The analysis on economic structure shows that employment in manufacturing had a major impact but employment in agriculture and services did not