Maine’s crumbling transportation infrastructure, anemic investment in research and development, and academic performance continue to hinder the state’s economic growth prospects, according to a report issued Tuesday.

The study, called “Measures of Growth 2016,” is the latest in an annual series by the Maine Development Foundation and Maine Economic Growth Council. It says that while the U.S. economy grew by 9.4 percent in the five years from 2009 to 2014, and New England’s economy grew by 5.8 percent, Maine’s economy shrank by 1.2 percent. The last time Maine’s economy showed any growth in a five-year average was the 2012 report, which showed a 0.8 percent increase from 2005 to 2010.

The report also identifies economic strengths and weaknesses that could affect future growth in the state, including five “red flags” for areas that need immediate attention. The designations are assigned based on the degree of progress toward goals set by the growth council, which has been tracking the state’s performance for 22 years.

Besides infrastructure and R&D investment, Maine’s weaknesses are in postsecondary educational attainment, fourth-grade reading scores and eighth-grade math scores.

Maine’s three areas of strength are air quality, water quality and the cost of doing business, which decreased in 2015 because of declining energy costs, the report says. The state also showed mild improvement in the value of international exports compared with the previous year.

The report’s purpose is to track Maine’s progress in 31 areas that could affect the state’s future growth, and spur officials to enact policy solutions to the state’s economic problems, said Maine Development Foundation President and CEO Yellow Light Breen. He said none of Maine’s barriers to economic growth are simple problems that could be eliminated overnight.

“These are really significant long-term issues, and it will take a significant long-term commitment,” Breen said.

Charles Lawton, senior economist at Planning Decisions Inc. and a member of the economic development group FocusMaine, wasn’t surprised by the report’s findings, because they point to longstanding economic problems for the state. He likened the report to a regular health checkup and said it should serve as a reminder of the wide range of growth challenges faced by Maine.

“I hope that enough people will come to it for the first time, or come to it freshly, and see a broader perspective,” said Lawton, who writes a weekly column for the Maine Sunday Telegram.


Maine’s roadways are ranked on a priority scale of 1 through 6 based on their function and regional significance, according to the report. Priority 1, 2 and 3 roadways include interstate highways, arterials and collector roads that carry about 70 percent of the state’s passenger and freight traffic.

The percentage of priority 1 and 2 roads rated fair or better dropped from 69 percent in 2013 to 66 percent in 2014, the most recent year available. The growth council’s target for 2014 was 78 percent.

In 2013 and 2014, 55 percent of priority 3 roads were rated fair or better, it says, far short of the growth council’s 2014 target of 72 percent.

“Funding for road maintenance and improvement is a challenge as costs have increased and revenues from fuel taxes, a major funding source, have declined with improved vehicle fuel efficiency,” the report says. “Over the long term, Maine will have to identify new revenue streams to provide the funding needed to maintain an effective, efficient and safe roadway network.”


The report found that Maine’s total spending on research and development was only 1 percent of its gross state product – the total value of all goods and services sold in the state – in 2011, the most recent year available. It was far lower than the New England average of 4.4 percent and the U.S. average of 2.9 percent, the report says.

Investment in research and development yields a high return on investment and promotes innovation, which has been shown to generate roughly 80 percent of all economic growth, according to the report.

“It is important that we find an appropriate mechanism to provide sufficient funds for research and development, and equally important that our R&D activities generate meaningful economic activity for the state,” it says.


Maine generally is on par with the U.S. when it comes to postsecondary educational attainment, but it lags far behind the New England average, the report says. In 2014, the most recent year for which data was available, 39.1 percent of Maine residents 25 and older had a postsecondary degree, compared with 38.3 percent nationwide and 45.8 percent in New England. Maine outperforms the U.S. and New England in attaining associate degrees, but trails in attaining both bachelor’s degrees and graduate and professional degrees, according to the report.

“An educated workforce helps businesses thrive and helps attract other companies,” the report states.

Two related red flags in Maine were for fourth-grade reading scores and eighth-grade math scores.

Maine fourth-graders have generally outperformed the U.S. as a whole, while both have consistently fallen short of the New England average, the report says. In 2015, 36 percent of Maine fourth-graders scored proficient or better on the National Assessment of Educational Progress, compared with 35 percent nationwide and 42 percent in New England. Maine’s performance declined from 37 percent in 2013, it said.

The report shows a similar pattern when it comes to eighth-grade math scores. In Maine, 35 percent of students scored proficient or better in 2015, compared with 32 percent nationwide and 40 percent in New England. Maine’s performance dropped from 40 percent in 2013.

“Maine is consistently falling short of the benchmark despite declining K-12 enrollment and increased expenditures in recent years. Education is a major part of state and municipal budgets, and it is important that we maximize our return on this investment,” the report says. “Investment in early childhood education has been shown to have a comparatively high return on investment over the long term, leading to improved elementary and secondary performance, higher college attendance and completion, higher productivity and incomes, and reduced social costs such as remediation, criminal justice, health care and welfare.”


While not earning a red flag from the report’s authors, the productivity of Maine workers also continues to lag. In 2014, Maine’s economic output per worker was $87,586, the lowest in the nation. It trails the national average of $118,935 by 18 percent; the New England average of $124,125 by 29 percent; and a measure of other large, rural states, known as the EPSCoR, of $106,475 by 18 percent.

There were several other areas in which the state met its target, showed little change from 2014 or was roughly on par with the rest of the country, according to the report. They include the cost of health care, state and local tax burden, per capita personal income, and the state’s poverty rate.

One of the report’s major themes is the need for more investment in developing “an educated, skilled and entrepreneurial workforce that can meet the needs of businesses and create opportunities for themselves and others.”

“Human capital is a critical factor in economic growth and is central to the (growth) council’s work,” it says. “Addressing foundational issues such as poverty, food insecurity, and health and wellness can lay the groundwork for improved outcomes. Investing in education – from early childhood through adulthood – is essential.”

One of the most disturbing things about the report is that it shows a divergence between the economic recovery happening at the national level and Maine’s continued stagnation, said Alan Caron, principal at Caron Communications in Freeport and president of Envision Maine, a nonprofit organization that promotes entrepreneurial growth.

Caron said the report also illustrates that elected officials in Maine spend too much time talking about lesser problems such as energy costs, while largely ignoring the more important economic issues such as the state’s lack of investment in research and development.

Caron, who writes a column for the Portland Press Herald, said he did see one bright spot in the report: In 2015, Maine led New England in terms of business startup activity per capita and was on its way to eclipsing the U.S. average.

“That’s a pretty good story, and that’s an important story, because that’s the economy of the future,” he said.


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