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Brian McGowan is California’s deputy secretary for economic development and Commerce. He was appointed by Gov. Arnold Schwarzenegger in December 2007, and began serving in January as the secretary of Business, Transportation and Housing, ex-officio voting member. Before his appointment, McGowan was the economic development agency administrator for San Bernardino County, economic development manager for Ontario for five years and economic development coordinator for Palm Springs for six years.

McGowan has also championed local international initiatives in government. He created the Palm Springs Foreign Trade Zone and led a series of trade missions to China for both Ontario and San Bernardino County. He also helped build trade ties with Mexico and assisted Bulgaria and Serbia in creating economic development programs through the United States Agency for International Development.

McGowan discussed his newest role and fielded general questions on the state’s economy with Real Estate Southern California editor and West Coast Bureau Chief of GlobeSt.com Don Jergler. (For the shorter magazine version of the interview, see the September issue of Real Estate Southern California)

GlobeSt.com:With the economy and real estate in a bad spot, is California currently still a good place for investment?

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

GlobeSt.com:California supposedly leads the nation in foreign direct investment. How does this affect our economy?

McGowan: California currently has 10% of the market share in the US in foreign direct investment. In 2007, firms invested $50 billion in the US, which created more than 100,000 new jobs, a 25% increase over 2003. Over the last five years California attracted 400 projects from over 300 companies, which created about 40,000 jobs in California alone.

It’s a great thing. We live in a globalized economy. Companies can locate anywhere in the world. In terms of foreign investment in California, IT/software is number one, they got 25%, and second was retail, at around 15%, and third was creative industries, at 10%. We’re seeing a real increase in foreign investment in the financial sector overall.

GlobeSt.com:Some people view “going green” as an added cost to the already high cost of doing business in California. Do you agree or disagree?

McGowan: Going green, green technology, in the long run, businesses are discovering with the high cost of fuel, that the return on investment of going green is becoming a shorter period of time. Nowadays, if you’re not building green, you’re making a huge mistake.

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

McGowan: Absolutely not. The fact is we live in a world with dwindling resources and a growing population. It’s not only the right thing to do, it’s a good business decision. We have to think about the way we’re treating our city environments and our environments in general. I think if anybody’s watched the Olympics in Beijing, you’ve seen that brown, ugly haze in the background, and I think that’s eventually going to scare businesses and residents away. I think California’s leading the way when it comes to environmental technology and environmental stewardship. California companies receive more investment in clean technology than anywhere else in the country, and that represents almost half of the green tech. investment in the US. Since 1990, the green business establishments have grown in the California by 84%, and employment has almost doubled. What we’re noticing is that when it comes to green tech and solar tech, California leads in those areas too.

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

McGowan I think California overall is really the best place in the world to do business. It’s got all of the right elements to make it the best place in the world to do business. We have three deep-water ports, 12 cargo airports, four national laboratories, which is more than any other state, out of the 10 NASA centers around the country, three are located in California, there’s more R&D dollars spent in California than anywhere else in the US. What this all boils down to is innovation. University California technology transfer is the first among all US universities. As far as the state of business in California, California’s economy is so big and diverse, most states can only claim two or three leading industries, California claims all of them. California’s more akin to a country than it is a state.

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

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

GlobeSt.com:Parts California are in need of serious infrastructure improvements, which in Southern California often hampers goods movement out of the ports like the Long Beach and Los Angeles. All solutions seem to be years off. What can be done now to start solving these issues?

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

GlobeSt.com:Can you talk about technology?

McGowan: California leads the way and I think we’ll continue to do so. I think you’re going to be seeing some radical changes in the aerospace industry. NASA, for example, is talking about building the next generation space vehicle in California, the advent of VLJs (very light jets), which is all being pioneered here in California, nonotechnology, California leads the way in nanotech. Obviously, California’s know for its information technology and its communications industries. In all those areas, you’re going to see some tremendous growth. And the weak dollar is not only making a better place for foreign direct investment, but it’s increasing our exports. Overall exports are up 5% in 2007. We’re actually getting an increase in the number of leads we get from manufacturers—a result of higher oil costs and the weak dollar—and we intend to take advantage of that.

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