SAN FRANCISCO (KCBS) – When it comes to creating a favorable climate for business, California’s natural environment may be more important than the regulatory one created by state lawmakers, according to new research.

California is blessed with natural advantages that may outweigh tax burdens and other overhead costs, said Jed Kolko, associate director of research at the Public Policy Institute of California.

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“California has good weather. It’s a mix of industries that’s heavily weighted towards those that are growing more quickly,” she said.

“These are factors that help California grow faster than you might think, given its business climate.”

KCBS’ Margie Shafer Reports:

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The PPIC study Kolko co-authored sheds light on why historically California’s economy has grown on pace with the national economy even though it usually ranks low in surveys of states whose laws are favorable to business.

While the research suggests many factors that determine long-term economic growth lie beyond the reach of policy makers, Kolko cautioned that policy could still someday trump warm, sunny days on the Pacific coast.

“If California loses its ability to incubate and encourage fast growing industries to be here, that would be unfortunate” in the long term, she said.

Kolko identified two policies in particular, a simpler tax structure rather than a lower tax rate, and a lower share of government expenditure on welfare and transfer payments, as means of hastening economic expansion.

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