Updated 06 July 2021
Copyright: European Union Public License, version 1.2 (EUPL-1.2).
Table of Contents
- The Tech Industry in Virginia
- Federal and State Government Contracting
- Health/Service Industry
- Virginia Small Business Incentives
- The UBI Token & Cryptocurrency
1 – Abstract
As of 2019, Virginia has maintained a 7th overall state ranking within the U.S in sectors of the economy and social services provided. Out of 50 states, Virginia ranks #12 in the categories of healthcare and education (U.S News, 2021). The changes pushed forward by the state legislature have created an economy ranking of #13 and this has generated an opportunity ranking for its residence of #8 (U.S News, 2021). For example, just recently Gov. Ralph Northam has signed legislation that extends financial aid to students under the DREAM Act (Linkedin, 2021). Over the past 100 years the state of Virginia has undergone a transformation from a tobacco growing rural economy to a manufacturing based economy to eventually what we have today as a knowledge based service economy. Being situated just below the Mason Dixon Line, the state started out in Thomas Jefferson’s vision of America as a nation of farmers. Innovation started with the construction of I-95 in 1956 as an effect of the Federal Highway Act (Roads to the Future, 2003). This change would spur interstate commerce and manufacturing within the state and lay the groundwork for innovation throughout the 20th century into the 21st century. If we fast forward to the late 1980’s, specifically during Gerald Bailes term as governor from 1986 – 1990, you can see the economy of Virginia started the change to becoming a knowledge based service economy (Richmond, 2019). Known as the “Transportation Governor”, he is also known for his commitment to upgrading the education system in Virginia. Gov. Bailes’ term came before the internet but even then he started to see a change in the world’s economy and wanted to set Virginia in a position to become a shared member in the new globalized economy (Roanoke, 2021).
With the emergence of tech giants like Microsoft, Amazon, and Hewlett Packard came the need for a knowledge based workforce. The commitment to education started by Gov. Bailes would continue into this new era of technological innovation leading to the top 3% of the tech industry seeing Virginia as a top landing spot for its facilities. The effect of this commitment has spurred growth in every sector of the economy, resulting in a prospering market for small businesses. The measures put forward by the state have benefited its local businesses as well as companies looking to come into the region. Currently the state has an annual GDP of $557 Billion which is more than some countries. For example, New Zealand has an annual GDP of $509 Billion and Belgium roughly pulls in $495 Billion with their GDP (World O Meter, 2017). This article will give a layout of the economic climate in Virginia with the purpose of educating foreign investors and companies looking for a region in the U.S. to expand their businesses. Foreign investors should know that Virginia’s economy is very diverse, this includes shipbuilding on the southern shore, tobacco production in rural areas, seafood harvesting all along the coastline and inland with Northern Virginia being a major hot spot for tech and transportation into Washington D.C (U.S News, 2021).
The three Main sectors of Virginia’s economy that I will be discussing in detail include the tech industry, health/social services and federal government contract work. Foreign companies that are coming into the state can take advantage of the up to date infrastructure which includes a region wide 5G network, fiber gigabit connection and improved road infrastructure. The core economic areas are located in Northern Virginia and its capital Richmond. For those who want a connection to the tech industry and contribute to government projects should position themselves in Northern Virginia. If your business or company centers around manufacturing then locating facilities near Richmond will give you access to I-95 and other transportation options. The state of Virginia is an inclusive region that promotes and embraces diversity among its inhabitants and businesses are progressively adapting to a changing world.
2 – The Tech Industry In Virginia
Virginia is quickly emerging as a tech hub and represents 10.7% (436,545) of the workforce. According to ICS (Infinity Consulting Solutions) the tech industry represents 13.5% of the state’s economy and is valued at $62.7 billion (Pellicio, 2021). These numbers reflect the investments made over the last thirty years in education and infrastructure. Today, Virginia is ranked second in the country for the number of tech workers it has. Not only have the top 3% of tech companies thrived in Virginia but many smaller tech companies have been able to benefit from this environment. A good example of this is Castle Systems that have been in the Northern Virginia area since 1994 and have been able to thrive during this tech boom.
Why Choose Virginia
There are several reasons why Virginia is seeing a boom in its tech industry. Firstly, many companies are moving to Virginia to be closer to Washington, D.C. A good example is in the case of Amazon who has strategically placed facilities in Arlington, VA in order to be close to the nation’s capital (The Hill, 2021). This has produced an advanced workforce specializing in areas that include cloud computing, machine learning and artificial intelligence. Additionally, the school system in Virginia is structured to produce talent who wants to stay and work in their state. In 2018 the state increased its tech Job posting by 32% (Pellicio, 2021). This shows that there are businesses coming to Virginia and finding it profitable to hire candidates en masse. As an effect of the increased revenue brought in by the tech industry, the communities around this boom have benefited from the extra surplus. The opportunity rating for the state is not just for its residents but also aids startup businesses and foreign investment.
As mentioned before, the Virginia Fiber network gives clients and businesses strategic access to the nation’s capital. In the map below you can see vital fiber lines running from Reston, Mclean and Arlington into Washington D.C. that offer network speeds reaching up to 940 Megabits per second (Slideshare, 2017). If you want to expand your business in Virginia, you want to locate yourself in the Northern Virginia area so that your network traffic is prioritized when sending and receiving data from major metropolitan cities. For clients coming from Europe, there is a direct subsea cable in Virginia Beach that connects Europe to North America and as an effect of the world being mostly dependent on undersea cables for internet access, you are guaranteed to never have your network brought down by natural disasters or region wide outages. The consistency of Virginia’s network infrastructure is a major luring point for foreign and domestic businesses. For those who want to connect networks in Europe and the Americas, Virginia is a popular destination over other states because it is not landlocked.
3 – Federal and State Government Contracting
Both the State Government and Federal Government offer companies the ability to bid on contracts that cover sectors of the economy from vehicles/transportation to health and healthcare (Virginia, 2017) . Due to the close proximity of Virginia to Washington D.C we see a lot of employers from the state bid on and do work for the government. This is great for foreign companies that do specialized work in a particular sector of the economy. For security reasons, a company doing government work will have to have it’s background checked and have to comply with data security regulations in the U.S. To start federal contracting, you want to first register your business as a legal entity with the IRS. Once you have received a Tax ID and TIN from the IRS, your business is now a legal entity. After registering your business with the IRS you are going to have to register with SAM which needs a notarized letter and this must be done twice per year. SAM is the official government site for registering businesses for the federal government and seeking contract opportunities. The last step is to secure a CAGE code which identifies your business as a commercial and government entity (Schaus, 2018). Part of the economy in Northern Virginia is geared towards work for the federal government and this supports roads , military bases and industrial parks.
Being a small business vendor to the federal government opens your business up to another form of clientele. In a 2019 study by Bloomberg Government in 2019 the federal government spent $594 billion on federal contracts, which was a 34%($442 billion) increase from 2015 (Snyder, 2020). Most of this spending increase was from the Department of Defence and due to this increase, consumer spending increased by 19% in the same period. This means that even if your business does not participate in federal contracts, the consumer market will be better and your company has a better chance of capturing new clients during this time period. The money distributed to small businesses has also increased from the spending on federal contracts (Snyder, 2020). Even though these numbers are from 2019 and spending trends do change, it’s more than likely that within the next 5 years you can take advantage of another federal government spending trend. By relocating your business to Virginia during the spending periods, you can access a much bigger market of spenders.
Federal spending acts almost like a stimulus check for the local economy that does government work. Just like the tech industry benefiting the surrounding community, government spending has the same effect. Many times revenue generated for the state comes from government contracts that work solely in the tech industry. Therefore, there is a consumer spending market when government spending is higher. Of course government spending on federal contracts is down right now due to the COVID-19 pandemic, but this is a trend that you want to watch for. Federal government contracts occur in many areas of the economy; for example, shipbuilding on the south coast of Virginia has been a steady industry for a long time in the state. Being aware of booming industries could help a company coming into the state market services and products to an interested user base.
4 – Health/Service Industry
Due to the COVID-19 pandemic, hospitals and health systems around the country have seen declines financially. Consequently, this has caused the Health and Service industry to undergo a transformation in how it does business and provides services to patients. Before the Pandemic the health industry was in the process of redesigning its health care delivery model to reflect the conveniences seen in other industries such as air travel, retail and banking. This change is a shift to providing digital health (Agee, 2020, pp.44). The state of Virginia has implemented strategic plans to utilize technology for remote visits to care facilities. Since the start of the Pandemic, the health industry has been instilled with a sense of urgency to roll out these wide sweeping plans that have been aided by hundreds of CMS (Center for Medicaid and Medicaid Services) emergency waivers to fast track plans. For example, at the Carilion Clinic in Roanoke Virginia, programs that were estimated to take two years to roll out were completed within a couple of days. As of right now 73% of the Carilion Clinic’s ambulatory visits are done virtually. Both patients and providers who have interacted with this service have reported high satisfaction levels (Agee, 2020, pp.44). As normal pre-pandemic health services are restored, the state will still continue to use virtual visits to alleviate strain on it’s health infrastructure.
This adaptation that the state has implemented applies directly to companies that want to do business in the state, in that the care for their employees will be up to date with the current standards. The health industry that is currently in place offers clients coming into the state the choice of providing employment based healthcare or opting out to choose the state run healthcare for its employees. Even with the widespread measures taking place, there is still a need for consumer assistance in the healthcare industry. For example, there is still a need in the area of medical transportation and healthcare delivery. The transportation of patients who need a convenient mode for care delivery has been and will continue to be a need for the state (Riefberg, 2020, pp.44). Sectors of the healthcare system like this can be an opportunity for a startup or expanding company to take advantage of. The state’s plan for the future is not to phase out face-to-face visits but to give consumers more health care options.
The success for small businesses in Virginia depends on adaptivity from the state and employers. Lawmakers are providing tools to small businesses that reflect the changes in this new economic environment. Currently, the Virginia government is supporting and promoting the CARES Act (Coronavirus Aid, Relief, and economic Security Act) which is a 2.2 trillion dollar economic stimulus that was passed by the federal government in March of 2020 (Parkinson, 2020). This stimulus package was meant to aid small businesses and individuals struggling during the pandemic. Even before COVID-19 the state government had been aiding and helping gig economy workers throughout the state. While this program is meant for the inhabitants of the state, the VEDP (Virginia Economic Development Partnership) offers financial assistance to businesses looking to relocate to the state and recruit employees from the Commonwealth of Virginia. The state’s incentive programs reduce the cost of opening or increasing the size of a business facility. Within the Virginia’s Guide To Incentives (2020- 2021) it discusses the COF (Commonwealth Develop Opportunity Fund) which is funding that is given by the governors in order to secure a company location or expansion in Virginia (VEDP, 2020). The state sponsored fund is used as a last resort when there is serious competition from other states for the expansion of a company.
5 – Virginia Small Business Incentives
The Commonwealth of Virginia has one of the lowest corporate income tax rates at 6%, this gives small businesses working in the state stable operating costs and sustainability. This tax rate has not been increased since 1972 and makes Virginia an attractive landing point for local and incoming businesses (VEDP, 2020, pp.23). The State hosts many incentive programs that are meant to attract foreign investors. These opportunities include The Port of Virginia and Infrastructure Development Grant, the Governor’s Agricultural and Forestry Industries Development Fund, and the Virginia Enterprise Zone program. All of which are described below, this should be helpful to those looking to expand their facilities to the state underneath one of the listed programs.
Port of Virginia Economic infrastructure Development Grant
This program is directed by the Virginia Port Authority and is meant to incentivize businesses to expand their operations into ports in Virginia. The Virginia Port Authority has four criteria that businesses must meet to qualify for a cash grant (VEDP, 2020, pp.10) and are listed below:
- You must locate or expand a facility within the state
- The facility must create 25 new full-time permanent positions during the first year of operation of the facility
- The business or company must be involved in maritime commerce. This includes exports or imports of manufactured goods in the Port of Virginia
- The company must be involved in at least one of the following:
- Freight forwarding
- Goods processing
- Wholesaling of goods through the port
Governor’s Agricultural and Forestry Industries Development Fund
This program is one of the Governor’s discretionary incentive programs where a grant is awarded to a business that adds value to the agricultural sector in Virginia. Funding mostly goes to businesses that will result in the creation of new jobs or investment opportunities. Below are a list of conditions that need to be met in order to be eligible for this program (VEDP, 2020, pp.22).
- The Business owner is creating new jobs and capital in Virginia.
- The business must produce agricultural or forestry goods of value.
- 30% of the agricultural or forestry goods produced in the facility must be grown in Virginia.
- The Grant can not exceed $500,000 unless the facility has statewide or regional importance.
- A financial commitment must be made by the political subdivision applying for the grant.
- The business beneficiary must agree to a performance agreement that outlines metrics on job creation and capital investment.
- The public announcement of the project must be coordinated with the Governor’s office.
Virginia Enterprise Zone Program
The Virginia Enterprise Zone Program is sponsored and managed by the Virginia Department of Housing and community Development. The program assists businesses that are developing and expanding in specific state sanctioned enterprise zones. The Enterprise Zone Program offers two incentives to businesses working in these areas. Additionally each zone community offers their own incentives to businesses (VEDP, 2020, pp.18).
6 – The UBI Token & Cryptocurrency
While there are no centralized financial institutions that govern the rules and regulations of cryptocurrency, there are taxes and transfer fees that are applied to cryptocurrencies. For taxes there are two types of taxes that you want to be aware of when trading and selling cryptocurrencies. The first set of taxes are on long term gains which are decided by your income, and are taxed at a rate of 0 – 15%. It is important to mention that if your cryptocurrency investment is sold for a loss then taxes are not applied. The second type of tax is taxes on short-term gains. This is when you buy then sell a crypto asset within 365 days. These short-term gains are set at the rate of your local income tax rate. Again if you sell your crypto for a loss then you do not have to pay this tax and the tax is calculated by your annual income. In addition to taxes, buyers and sellers of cryptocurrency will be subject to gas fees when transferring crypto.Gas fee prices are dependent on two factors, first is what crypto exchange platform you are using and the second one is the value of the cryptocurrency at that time. Usually, there will be just one gas fee applied for sending cryptocurrency to another vendor.
The UbI Currency is a Crypto Token that is used for transactions within Ubiunodes. Clients and Ubionode employees primarily use the token as a medium for exchange in order to make payments. Essentially, the token allows any client to buy and sell consultant services from any country without the restrictions that come from financial institutions. The only requirement that we have at Ubinodes is that you manage your own crypto wallet with either Euros or Dollars for exchange in it. This makes paying for Ubinones consulting easier and faster since it can be used wherever you are located. Connected parties can instantly send and receive payments without a centralized body applying taxes. The value of the token is not affected by the fluctuations of other cryptocurrencies and is backed by Ubinodes. Clients can use flat money or Bitcoin and other major cryptocurrencies to buy the Ubinodes token. This is considered to be a decentralized way of payment that offers clients and employees a faster manner of payment.
Currently, banks in Virginia are starting to allow customers to purchase and deposit Bitcoin and other cryptocurrencies. For example, Charlottesville based bank Blue Ridge Bankshare is letting it’s customers withdraw and deposit Bitcoin from it’s ATM’s, this would make it the first bank in the country to allow a transaction of this kind (Griset, 2021). As of right now the bank has 19 ATMs that allow cardholders to make Bitcoin transactions. Clients who want to transfer their cryptocurrency resources to Virginia will find it easy to make the transition due to the adaptation of cryptocurrency being used by Virginia businesses. I expect that in the next 5 years cryptocurrency will be a commonly tradable currency for all banks and financial institutions within the state. There is a thriving tech industry and with that there are many resources available for mining cryptocurrencies. Instead of ordering parts and materials abroad for cryptocurrency mining, you can purchase and order all the parts within the state. With a plethora of wholesale and retail sellers of computers and networking equipment, Virginia is a great place to start mining cryptocurrencies
7 – Summary
With the state of Virginia high ranking in business development and education, it has transformed itself into a globalized economy. These changes have come due to the investments made over the last 30 years and as the world continues to evolve so will Virginia. Currently, the economic environment is the most lucrative aspect of the state. This mostly includes the tax credits and incentives that the Commonwealth offers. Again, as mentioned in the above sections, the corporate income tax rate is at 6% with tax credits for qualified companies. A good example of a tax credit that a company may receive in VA is a facility tax credit; companies that do qualify can receive a $1,000 income tax credit for each full-time job created in the state (VEDP, 2020, pp.22). The Commonwealth of Virginia hosts tax credits for multiple sectors of the economy and should be a first option when deciding to enter the Virginia market. The success of a business is determined by multiple factors which includes health, education, technology and resources. The environment of Virginia supplies a portion of all these resources to companies looking to grow and expand.
Since the start of the tech boom in the mid 90’s, the state of Virginia has been a home for the internet. With infrastructure projects like the data center in Henrico county, it creates a business climate that facilitates growth of companies that decide to expand to the state (VEDP, 2020, pp.25). As of right now, the state is considering new locations for data centers that rely on clean renewable energy and a good partnership with the local community. With access to a reliable pool of local talent, stable connections to fiber and a flexible electrical grid, the state is positioned to host the creation of new businesses. The future for the tech sector in the state will include the expansion of technical infrastructure from urban areas to suburban and rural areas. This will create jobs and change the way the state does business with the outside world; therefore, in the future I see new markets opening up in towns and cities in the Commonwealth that we do not have today.
8 – Sources
Agee, N.H. (2020, June 07). COVID-19 Accelerates Digital Health. Virginia Economic Review,44.
Bid contract. (2021, June 24). Federal and Local Government Contracts, Bids, and RFPs in the State of Virginia (VA). Retrieved from https://www.bidcontract.com/State-County-City-Bids/State-government-contracts-bids-Virginia-VA.aspx
Case, L.(2020, June 07). The Future of the Tech Sector Outside of Silicon Valley. Virginia Economc Review,28.
[Jennifer Schaus – Federal Government Contracting].(2018, Dec 19). Government Contracting – Getting Started in Federal Contracting – Win Federal Contracts [Video File]. Retrieved from https://www.youtube.com/watch?v=0ktnNE0O9uI
Linkedin. (2021, June 14). Marymount hosts Gov. Ralph Northam as he signs bills to extend financial aid to Dreamer students. Retrieved from https://www.linkedin.com/posts/marymount-university_marymount-hosts-gov-ralph-northam-as-he-activity-6810574134620246017-_6U6/
Parkinson, J. (March 20, 2020). Senate scrambles to strike deal on $1T pandemic relief for businesses, families. Retrieved from https://abcnews.go.com/Politics/senate-scrambles-strike-deal-1t-pandemic-relief-business/story?id=69713460
Pellicio, J. (2021, Feb 4). Virginia’s Tech Industry Keeps Growing. Retrieved from https://www.infinity-cs.com/blog/virginias-tech-industry-keeps-growing
Richmond Times-dispatch. (2019, Oct 29).Former Virginia Gov. Gerald Baliles, credited with historic investments in transportation, dies at 79. Retrieved from https://richmond.com/news/plus/former-virginia-gov-gerald-baliles-credited-with-historic-investments-in-transportation-dies-at-79/article_a0ae52d5-620e-5394-a7ad-1d9f0a0ea956.html
Riefberg, V. (2020, June 07). The Long-Term Impact of COVID-19 on Health Care. Virginia Economic Review,45.
Roads to the future.(2003, Dec 20). Interstate 95 in Virginia. Retrieved from http://www.roadstothefuture.com/I95_VA_Desc.html
Roanoke Times, T. (2021, Jun 15). Their View: New possible names for 3 community colleges with problematic names. Bristol Herald Courier (VA). Retrieved from https://infoweb.newsbank.com/resources/doc/nb/news/18322D17A20B0AC8?p=AWNB
SAM. (2021, June 24). The Official U.S. Government System for. Retrieved from https://sam.gov/content/home
Slideshare. (2017, July 13). NVTC Data Center & Cloud Infrastructure Committee – Virginia Subsea Cables Slides. Retrieved from https://www.slideshare.net/AlexaMagdalenski/nvtc-data-center-cloud-infrastructure-committee-virginia-subsea-cables-slides-july-2017
Snyder, D. (2020, Jan 6). Federal Contract Spending: Five Trends in Five Charts. Retrieved from https://about.bgov.com/news/federal-contract-spending-five-trends-in-five-charts/
Stratsoft. (2021). Maps. Retrieved from http://stratsoftllc.com/maps/
The Hill. (2021, May 12). Amazon to double workforce in Virginia, hiring nearly 2,000 employees for second headquarters. Retrieved from https://thehill.com/policy/technology/553159-amazon-to-double-workforce-in-virginia-hiring-nearly-2000-employees-for?rl=1
Us News.(2021, Mar, 08). Virginia #7 Overall Ranking. Retrieved from https://www.usnews.com/news/best-states/virginia#state-recommended-articles
VEDP. (2020, July 01). Virginia has performance-based incentives for companies that locate or grow in the Commonwealth. Retrieved from https://www.vedp.org/incentives
Virginia Gov. (2017). Virginia Performs. Retrieved from https://vaperforms.virginia.gov/Economy_EconomicDiversity.cfm
Virginia guide to incentives VEDP. (2020, July 01). Virginia guide to incentives. Retrieved from https://www.vedp.org/sites/default/files/2020-08/VEDPGuideToIncentives2020-21.pdf\
World O Meter.(2017). GDP by Country. Retrieved From https://www.worldometers.info/gdp/gdp-by-country/
Griset, R. (2021). Banking on bitcoin. Retrieved from https://www.virginiabusiness.com/article/banking-on-bitcoin/