O’Malley-McDonnell business duel moves offshore

The spirited competition between Maryland Gov. Martin O'Malley and Virginia Gov. Bob McDonnell to bring jobs and businesses to their respective states has moved offshore.

The governors have most recently turned their attention to India, whose fast-growing economy ranks as the ninth largest in the world.

Mr. McDonnell, a Republican, returned last week from an 11-day trade mission that included a visit to the nation of 1.2 billion people, and Mr. O'Malley, Democrat, left Friday for his own six-day trip to the country.

The similarly timed trips mark the latest chapter in the states’ economic rivalry.

“We continue to compete and never like to lose,” Mr. O'Malley said earlier this month when engineering-construction giant Bechtel Corp. moved several hundred jobs from Frederick County, Md., to Fairfax County. “But at the same time, there aren’t many things in terms of economic strengths that I would trade with Virginia.”

Said Mr. McDonnell: “Gaining an international company like Bechtel Corp. is a huge coup for Virginia. … The company was attracted to the commonwealth due to its business environment, cost and ability to attract the best workforce.”

The fight between the states has intensified in the past couple of years as the need for jobs has grown in a bad economy, and as Mr. O'Malley and Mr. McDonnell — respective chairmen of the Democratic and Republican governors associations — have emerged as national leaders in their parties.

In June, Mr. O'Malley led an economic-development trip to China mere weeks after Mr. McDonnell conducted his own trade mission there.

While Virginia has been able to draw businesses with its relatively low tax rates and limited regulation, Maryland has had to overcome the perception that its policies are unfriendly toward business.

Studies consistently rank Virginia as the more attractive place to do business and some have taken Maryland to task for its myriad regulations, higher-than-average income- and corporate-tax rates and the heavy influence carried by labor unions.

CNBC and Pollina Corporate Real Estate this year ranked Virginia as the most business-friendly state in the country, while Maryland ranked 29th and 36th in the respective studies.

“There’s a pretty big difference there,” said Mark Robyn, an economist for the District-based Tax Foundation, which in 2010 ranked Virginia’s business climate 12th nationally and Maryland’s 44th. “Virginia is generally a lower-tax state and by our measure they have a tax system that is structured better than Maryland’s.”

Despite the Bechtel loss, Maryland has long had success attracting life-science and biotech companies.

The state’s life-sciences industry employs more than 71,000 people and each year drives $17.6 billion in direct and indirect economic activity, while generating about $500 million in income- and sales-tax revenue, according to the state.

Industry giants such as Gaithersburg-based MedImmune LLC and Rockville-based Human Genome Sciences Inc. have been joined by scores of new companies, allowing the industry to create one-third of the state’s new jobs from 2002 to 2010.

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