Brian McGowan is California's deputy secretary for economicdevelopment and Commerce. He was appointed by Gov. ArnoldSchwarzenegger in December 2007, and began serving in January asthe secretary of Business, Transportation and Housing, ex-officiovoting member. Before his appointment, McGowan was the economicdevelopment agency administrator for San Bernardino County,economic development manager for Ontario for five years andeconomic development coordinator for Palm Springs for sixyears.

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McGowan has also championed local international initiativesin government. He created the Palm Springs Foreign Trade Zone andled a series of trade missions to China for both Ontario and SanBernardino County. He also helped build trade ties with Mexico andassisted Bulgaria and Serbia in creating economic developmentprograms through the United States Agency for InternationalDevelopment.

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McGowan discussed his newest role and fielded generalquestions on the state's economy with Real Estate SouthernCalifornia editor and West Coast Bureau Chief of GlobeSt.com DonJergler. (For the shorter magazine version of the interview, seethe September issue of Real Estate Southern California)

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GlobeSt.com:With the economy and real estate in a badspot, is California currently still a good place forinvestment?

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McGowan: Of course it is. California's the eighth-largesteconomy in the world and our overall economy is still growing. Gov.Schwarzenegger often refers to our economy as a nation state. It'sso big and diverse. It's that diversity and complexity that makesit particularly resilient. In California, we're seeing continuedgrowth in many sectors, and that's another reason why California isthe best place in the world to do business.

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GlobeSt.com:California supposedly leads the nation inforeign direct investment. How does this affect oureconomy?

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McGowan: California currently has 10% of the market sharein the US in foreign direct investment. In 2007, firms invested $50billion in the US, which created more than 100,000 new jobs, a 25%increase over 2003. Over the last five years California attracted400 projects from over 300 companies, which created about 40,000jobs in California alone.

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It's a great thing. We live in a globalized economy. Companiescan locate anywhere in the world. In terms of foreign investment inCalifornia, IT/software is number one, they got 25%, and second wasretail, at around 15%, and third was creative industries, at 10%.We're seeing a real increase in foreign investment in the financialsector overall.

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GlobeSt.com:Some people view "going green" as an addedcost to the already high cost of doing business in California. Doyou agree or disagree?

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McGowan: Going green, green technology, in the long run,businesses are discovering with the high cost of fuel, that thereturn on investment of going green is becoming a shorter period oftime. Nowadays, if you're not building green, you're making a hugemistake.

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GlobeSt.com:Is the Green Movement just a fad?

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McGowan: Absolutely not. The fact is we live in a worldwith dwindling resources and a growing population. It's not onlythe right thing to do, it's a good business decision. We have tothink about the way we're treating our city environments and ourenvironments in general. I think if anybody's watched the Olympicsin Beijing, you've seen that brown, ugly haze in the background,and I think that's eventually going to scare businesses andresidents away. I think California's leading the way when it comesto environmental technology and environmental stewardship.California companies receive more investment in clean technologythan anywhere else in the country, and that represents almost halfof the green tech. investment in the US. Since 1990, the greenbusiness establishments have grown in the California by 84%, andemployment has almost doubled. What we're noticing is that when itcomes to green tech and solar tech, California leads in those areastoo.

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GlobeSt.com:Can you give us a brief state-of-the stateaddress?

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McGowan I think California overall is really the bestplace in the world to do business. It's got all of the rightelements to make it the best place in the world to do business. Wehave three deep-water ports, 12 cargo airports, four nationallaboratories, which is more than any other state, out of the 10NASA centers around the country, three are located in California,there's more R&D dollars spent in California than anywhere elsein the US. What this all boils down to is innovation. UniversityCalifornia technology transfer is the first among all USuniversities. As far as the state of business in California,California's economy is so big and diverse, most states can onlyclaim two or three leading industries, California claims all ofthem. California's more akin to a country than it is a state.

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GlobeSt.com:Real estate in California is so expensive,and some say that is because there are so many barriers todevelopment, both commercial and residential. Is this the case? Andwhat can be done to create more affordable building opportunitiesin California?

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McGowan: Are we more expensive than Wyoming and Arkansas?Sure. But California offers so many more amenities than theseothers states. You've really got to compare it to Shanghai, London,or Berlin, and if you look at those places, we're comparativelyaffordable. The government, this administration, is aware of thecost to do business, and the cost of housing in California, andthey're addressing those issues as best they can. The votersapproved Prop. 1C to spend $625 million for affordable housing inCalifornia, so this administration is recognizing the fact thatCalifornia is made up of all different types and economic strataand that we want to make sure we're providing opportunities foreveryone in California so that we can continue to grown theCalifornia economy.

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GlobeSt.com:Parts California are in need of seriousinfrastructure improvements, which in Southern California oftenhampers goods movement out of the ports like the Long Beach and LosAngeles. All solutions seem to be years off. What can be done nowto start solving these issues?

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McGowan: The governor pushed and supported and Prop. 1B,which was a $20-billion transportation bond that was approved, torebuild and help improve infrastructure issues. That kind ofinfrastructure is a federal issue, but I think California and thegovernor have been leading the way to bring attention to thecountry's infrastructure deficit. One way to make progress is we'renot going to wait for the Federal government to take care of ourproblems, and we're going to take care of our own problems. Thegovernor is encouraging legislature other local governments aroundthe state to explore public-private partnerships. In our country,this is a major crisis we're facing. If you can't move people andgoods, you can't grow your economy. This governor is keenly awareof that. You're competing against places like china that have brandnew infrastructure.

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GlobeSt.com:Can you talk about technology?

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McGowan: California leads the way and I think we'llcontinue to do so. I think you're going to be seeing some radicalchanges in the aerospace industry. NASA, for example, is talkingabout building the next generation space vehicle in California, theadvent of VLJs (very light jets), which is all being pioneered herein California, nonotechnology, California leads the way innanotech. Obviously, California's know for its informationtechnology and its communications industries. In all those areas,you're going to see some tremendous growth. And the weak dollar isnot only making a better place for foreign direct investment, butit's increasing our exports. Overall exports are up 5% in 2007.We're actually getting an increase in the number of leads we getfrom manufacturers—a result of higher oil costs and the weakdollar—and we intend to take advantage of that.

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