Abstract

There has been a good deal of discussion recently concerning the question of business climate in various states and in the United States as a whole. That firms are responsive to market changes is certainly not new. It has long been contended that the high rate of economic growth experienced by California has been dictated primarily by both the high income character of its large population which creates a large market and the high rate of government expenditures within the state. According to recent estimates, California has 10 per cent of the national population, 10 per cent of the annual national and personal income, 25 percent of the annual government expenditures on prime defense contracts and over 40 percent of the annual government expenditures on research and development contracts, in addition to the other federal expenditures on welfare, highways, etc. At present time the problem of firms going out of business, or reducing employment, or going out of state is not sufficient to warrant concern. In fact, considering the size and character of the California industrial economy, the number of firms going out of business or otherwise reducing employment is small. The general policy recommendation is that no policy is necessary that is designed to improve business climate or to keep firms in the state.