94-01-26 Stronger National and International Economies Will Help Virginia Weather Defense Cuts

STRONGER NATIONAL AND INTERNATIONAL ECONOMIES
WILL HELP VIRGINIA WEATHER DEFENSE CUTS

     CHARLOTTESVILLE, Va., Jan. 26 -- What's ahead in Virginia's economic
picture?  The
answer depends increasingly on how well the U.S. and global economies are
performing, says a
University of Virginia economist.
     "The condition of the U.S. economy will make a major difference in how
well the state
adjusts" to coming defense cuts, says John L. Knapp, professor at U.Va.'s
Center for Public Service. 
And not only is the health of the national economy increasingly dependent on
strong economies
overseas, the state too is more and more directly affected by foreign
developments, he adds.
     Writing in the current issue of the University of Virginia News Letter,
Knapp warns however
that "even under the most favorable circumstances, Virginia's economy will
require major
adjustments" to shrinking military spending.  Defense cuts "will dampen
growth in the state for the
next several years," he says, noting that in 1992 only California was a
bigger recipient of defense
dollars.
     But 1994 is shaping up as a good year for the national economy, Knapp
says, and "this is
good news for Virginia, because the state's economy is a satellite of the
national economy." 
Employment should grow by 50,000 jobs in Virginia in 1994 as the national
economy picks up. 
Personal income also will be on the rise.
     Foreign trade too will have a strong bearing on Virginia's future, Knapp
says.  Exports are
becoming an important part of the state's economy and have been expanding at
average annual
rates of close to 10 percent in recent years, he notes.  Western Europe, East
Asia, Canada and
Latin America, including Mexico, have all been important markets for the
state recently, he says.
     At the same time direct foreign investment in manufacturing in Virginia
plays a key role in
the state's employment picture.
     Among other developments in the state's economy that Knapp cites are the
growing
importance of services, tourism, retail superstores, catalogue centers and
small businesses, and the
increasing competition among states for industry.  The proposed Walt Disney
Co. theme park in
Northern Virginia could have a significant long-range impact on Virginia's
economy, Knapp added.
###
                                                 January 25, 1994
     [For interviews or additional information John Knapp may be reached at
(804) 982-5638
or 982-5522.]


[Submitted by: Karen A. Castle  (kac@uva.pcmail.virginia.edu)
               Wed, 26 Jan 94 10:21:39 EST]