North Dakota is still struggling to climb out of the economic doldrums caused by the slumping agriculture and energy industries. A few years ago, the situation was very different, when both of these vital sectors were booming. North Dakota's gross domestic product reached a peak in 2014 at $59.5 billion and has been up and down since. The story is much different in Minnesota, where the economy has grown steadily in recent years, peaking last year at $351.1 billion. Minnesota's economy, besides being much larger, is much more diverse. That produces a much smoother ride, financially, for the state and its residents.
North Dakota remains far too dependent on its natural resource wealth - the twin economic pillars of "oil and soil," or energy and agriculture. A few years ago, during the halcyon boom days, when both farm commodity and oil prices were soaring, North Dakota leaders were patting themselves on the back for the state's impressive economic performance. In the years since, state government and the people who depend on its programs have endured a painful period of retrenchment, a process that is not over.
Legislators in North Dakota have yet to wake up to the fact that the state finds itself caught in the natural resource trap. States and nations that derive their wealth from natural resources often fall into complacency and fail to innovate. In time, the world passes them by. North Dakota, unfortunately, finds itself on that dreary trajectory.
But the presidents of North Dakota State University and the University of North Dakota are offering a bold alternative. The two flagship universities provide important economic engines through the research they perform. NDSU President Dean Bresciani and UND President Mark Kennedy are making the case for an initiative that would provide $100 million over a four-year period to the two universities, to be divided equally, to fund promising research. To thrive, research universities should have a solid and predictable funding base to enable them to do both basic and applied research that will drive innovation and economic vitality. Unfortunately, North Dakota has neglected to provide significant financial support for its research universities outside of sustained support for agricultural research.
Other states have been more farsighted. Texas is often cited for its Permanent University Fund, a dedicated revenue stream funded by oil revenues that was first implemented in the late 1800s, when leaders consciously set out to make the University of Texas a first-rate school. The fund today approaches $20 billion.
North Dakota has created the Legacy Fund, funded by a portion of the state's oil and gas revenues. That fund today has a balance of more than $5.5 billion. In just the past two months, deposits to the fund totaled $120.5 million - more than enough to fund the university innovation initiative. We challenge our legislators in this session to truly help our state and invest in this plan to help us strengthen and diversify the economy. The Bank of North Dakota, through its mission a crucial economic development toolbox, should be part of this effort. North Dakota is good at balancing budgets, but legislators must do better than that to give the state a bright future.
Editorials represent the views of Forum management and the Editorial Board.