The Downturn in the New England Economy: What Lies Behind It?

by Edward Moscovitch
July/August 1990

After a long period of vigorous growth--a period in which New England grew faster than the rest of the United States--employment in New England leveled off in 1989. This slowdown represents both a cyclical adjustment and a disturbing erosion in New England’s competitive position.

To help clarify the causes of the downturn and the implications for the region’s future development, this article develops a framework for analyzing regional economies, applies that framework to New England and other regions of interest, and examines New England’s share of national markets in key industries. The author finds that New England’s strong overall growth since 1984 was based on an unsustainable boom in construction, which masked problems in the region’s economic base going back at least five years.

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