California 100, a research initiative that aims to shape the state’s long-term success over the next century, today released a report by Loyola Marymount University researchers that offers important insights about California’s business climate.
The team of marketing faculty members from LMU College of Business Administration found that California represents a “high cost and high productivity” model of economic growth. The state has ample government spending on education, research and development, and infrastructure, boosting productivity. On the other hand, the state has to impose high taxes to cover the costs of the spending.
“This model has brought California economic prosperity,” said LMU Assistant Professor Richard Tang, who co-authored the report with professors Sijun Wang and Madhu Viswanathan, and California 100 Research Director Henry Brady. “But in order to sustain its economic success, California must maintain its leadership in technological innovation and ability to attract people while alleviating economic inequality and addressing environmental sustainability.”
The report, “The Future of California’s Business Climate,” examines how California’s economic prosperity relies on the pre-existing mix of businesses in the state, and governmental policies that affect business climate today, and in the future.
The report explains that, despite mainstream narratives about mass business exodus, there is no significant behavioral evidence that small businesses and startups – the source of new ideas and of business game-changers – shun California. To the contrary, they seem to be thriving because of the state’s reputation for innovation, its highly talented workforce, its leadership in science and technology, and its access to venture capital.
California has a very strong economic base that creates substantial exportable goods and wealth for the state, the report notes. However, businesses are affected by the high cost of living, especially the cost of housing, and California’s highly regulated business environment.
In spring 2022, LMU received a $90,000 grant from California 100 to examine the state’s current economy, taking a close look at individual opportunity and business climate. “The Future of California’s Business Climate” is one of 15 reports planned as part of the California 100 Initiative, which is incubated through the University of California and Stanford. Other reports focus on the future of agriculture, advanced technology, arts, criminal justice reform, economic mobility, education, energy, health, housing, immigrant integration, transportation, federalism, fiscal reform and civil society.
California 100’s work is guided by an expert and intergenerational commission. Through various projects and activities, California 100 seeks to move California toward an aspirational vision — changing policies and practices, attitudes and mindsets, to inspire a more vibrant future.
Read the full report here.
