If both of us can grow tomatoes and potatoes, but you can grow tomatoes better than I, and I can grow potatoes better than you, and we both want tomatoes and potatoes, does it make sense for each of us to raise both? Not really. After all, why should I use my time to inefficiently grow tomatoes when I can efficiently grow potatoes – and can exchange some of my produce for some of yours?

Indeed, if we both focus on that which we do best, we should be able to produce more of both tomatoes and potatoes than we could or need individually, and this excess production can be sold to a third party. With this new and excess wealth, we can both raise our quality of life – perhaps by buying soap to clean our hands after a hard day’s labor. In today’s Northwest, of course, Starbucks, rather than Ivory, might be the beneficiary of our disposable income!

In other words, an increase in the quality of life results from a practical application of the principle of comparative advantage. This principle underpins economic growth. It is the basis of trade and the rise of cities. It is the source of our complex international relations. Along the way, it also serves as the engine of our peninsular economy. I we cannot do something better, more efficiently, and at less cost than people in other regions or nations, then we cannot reap the benefits of our work and will become a dependent society with no ability to generate wealth to support our needs.

The alternative, some would argue, is to simplify our needs. Yet most of the third-world’s agrarian or indentured population yearns for the level of civic and economic freedom, no less the standard of living, we enjoy in our first-world quality of life. Our acquired needs do include instant access to information, mobility for exploration, the chance for cross-cultural association, or simply time to daydream. But they are just as real as their subsistence needs for sewers, electricity and garbage collection. Let’s recall that it is our disposable income that has made many of our “needs” attainable. It is also our disposable income that enables us to invest in our continued future welfare.

No wonder, then, that the application of the principle of comparative advantage is of central concern to the Kitsap Regional Economic Development Council. Its application relates directly to our previous discussions of primary jobs and economic diversity. After all, our rising standard of living and quality of life are enabled by careful attention to the preconditions for successful economic competition. We can neither diversify our economy, nor increase the number of primary jobs without successfully competing in the marketplace for employers who can envision some comparative advantage by locating their enterprises in this county.

So what are the elements of our comparative advantage? What can be done better in Kitsap than elsewhere in the region or, for that matter, the world? Harvesting geoducks comes to mind, but its avid specialty market is not large enough to form the basis of our economy. Berthing nuclear submarines, maintaining ships or dismantling spent nuclear cores, and testing undersea weaponry also come to mind. While we would love to continue and expand this sector, and seem to have a definite comparative advantage, we do not want to be overly dependent on any one sector. Might we have a competitive leg up in private sector arenas other than geoducks? Well, yes – and no.

Comparative advantage results partly from nature, but mostly from nurture. Preparedness to compete stems from natural advantages such as available raw materials or proximity to shipping lanes, but mainly from conscious investments to create a competitive edge – be they investments in good schools, an attractive downtown, four lane highways, or a fiber optic telecommunication grid.

The existing military infrastructure in our county is a case in point because it helps explain our comparative advantage in this industrial sector. True, it is helpful to have a natural and protected inland harbor for our submarines, but it is especially helpful that public funds have been invested to create that harbor’s tremendous infrastructure. Its very existence gives us a comparative advantage, for it would take a huge capital investment in or by some other community to level the playing field. This applies, of course, not only to infrastructure at the submarine base, but the shipyard and the undersea warfare center as well.

Yet even as we retain, and even build on our military capacity, we want it to become a smaller piece of our overall economic pie. That’s the purpose of our diversification actions. So what else do we have to offer that would enhance the comparative advantage of primary job entrepreneurs in Kitsap?

Actually, it turns out that we offer quite a lot. We do have a plentiful and skilled labor force. Wholly apart from early retirees, spouses of our defense workers, and our five percent unemployed workforce, many of our migrating workers would drop their commutes in a minute if equivalent jobs were available on this side of the water. Furthermore, our workers have lower turnover than on the other side, which translates into a stable civic life and lower cost to employers.

Housing costs, with perhaps Bainbridge Island as the exception, also give us a leg up, since we have appreciably more affordable housing than other Puget Sound communities, no less than many metropolitan areas. This, again, translates into a range of business opportunities that can afford to pay a living wage because they can pay a little less than elsewhere. (One survey suggests a ten to fifteen percent lower wage expectation in return for giving up that bothersome commute.) Our telecommunication network for businesses is state of the art. We have available and fully serviced business parks. Our electric power supply is sufficient and its cost is relatively stable. Our environmental setting is without peer.

We are within ninety minutes of a major airport and less to a major port. We have our own railroad spur, and are forty minutes from a metropolis with specialist services and cultural offerings beyond one’s capacity to absorb. Our internal vehicular grid has a few minor irritants, but none that requires more than ten minutes of patience.

In short, we have a raft of preconditions that make doing business here competitive at worst and comparatively advantageous as best. This leaves open the large issue of the product or service to be offered by each business, but that’s beyond the scope of our inquiry. The salient point is that once an entrepreneur does identify the product or service, it is the totality of these preconditions they seek for themselves and their employees. Kitsap is in pretty good shape in this regard.

This positive conclusion also frames our challenge, for such preconditions do not spring to life spontaneously. They are nurtured, require toil or tweaking, demand constant care, and lapse unless we collectively make investments needed keep them alive. What’s more, they have to be communicated to entrepreneurial decision makers near and far, for silence about our offerings will surely attract no attention. Next month’s column will begin to explore our response to this challenge and of the KREDC’s role in the nurturing process.

(Editor’s Note: Zoltan Szigethy is Executive Director of the Kitsap Regional Economic Development Council. This is the third article of a series on the KREDC.).