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Napolitano: Arizona needs to diversify economy

The Arizona Republic

The Arizona Republic

The U.S. financial panic gripping the country, which has its roots in the mortgage meltdown, is a prime example of why Arizona needs to diversify its housing-based economy, Gov. Janet Napolitano said Monday before about 350 business, civic and education leaders.

Speaking to the Phoenix Committee on Foreign Relations, Napolitano said long-term economic growth in Arizona could be achieved by furthering trade opportunities abroad and continuing to invest in education at home.

“The economic downturn in the United States was precipitated by the downturn in housing,” Napolitano said during her annual International State of the State address at the Arizona Biltmore Resort. “This was a housing-generated economic crisis.

“And since we were at the cusp of the housing bubble, what goes up, came down. Unfortunately for us, Sir Isaac Newton was correct.”

Napolitano, a Democrat, said the state needs to work with Arizona businesses and foreign governments to boost exports, which total more than $19 billion a year and can be a source of new jobs and revenue.

While Mexico continues to be the largest recipient of Arizona exports, she said, the state has seen significant growth in trade with Canada, Germany and Taiwan in the past year.

In the second quarter of 2008, Arizona exports are up 8 percent over the same period last year.

“Even in this very challenging economy, we are seeing positive trend lines,” Napolitano said, adding that few states have tapped into the enormous trading potential of South America.

In the current economic climate, significant “belt-tightening” at the state level is inevitable, Napolitano said, but she warned that it should not come at the expense of Arizona’s students.

Sounding a familiar refrain, Napolitano said providing the “capacity, accessibility and affordability” of higher education must remain Arizona’s top priority.

“We have to have the work force to sustain a new kind of economy,” she said, “and we won’t without increasing rigor in our schools and increasing resources for our students.”

The governor said she envisioned Arizona as a provider of new, innovative goods and services. She said that includes water and environmental cleanup technologies as well as health sciences.

At a global biotechnology convention this year in San Diego, Arizona showcased a project among Northern Arizona University and Australia and Asian partners to create an eco-friendly product to control crop-eating rat populations.

Napolitano touted Arizona as a leader in the aerospace and optics fields.

But the governor said the state needed to do a better job of securing capital investments for solar and other renewable energies.

“There is no reason Arizona should not be the Persian Gulf of solar energy,” Napolitano said.

Rick Stephenson, one of several foreign diplomats who attended the luncheon, said Arizona is playing catch-up in the race to turn solar rays into revenue.

“I questioned right off the bat, why is this not a center for excellence in solar energy?” said Stephenson, Canada’s consul and senior trade commissioner in Phoenix.

“I mean you have all the perfect conditions here in the world. Germany and Japan, even Canada, and these other places have greater advances in solar energy than you have here.”

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