Through most of its history, California has seen intense commercial and political rivalries between its principal northern and southern regions. The competition has generally been healthy for the state's development, turning negative only when regional interests could not agree on crucial infrastructure development, such as water supplies.

In the last decade, Southern California played catch-up with the San Francisco Bay Area as the Southland worked off the hangover of a high-tech defense boom gone bust, while the Bay Area boomed anew in Internet-driven technology and services.

But a major milestone in the resurrection of the Southern California economy will likely be passed this year: Following a decade of structural change, Los Angeles County is poised to surpass its prior employment peak of a decade ago and to maintain its growth as the Bay Area slumps.

At the beginning of the 1990s, Los Angeles had a heavy dependence on the highly paid, but fickle, aerospace industry. Subject to budgetary tides in Washington, the high-tech industry was hit hard by the end of the Cold War and by reduced financing for space missions. That over-dependence on aerospace business gradually gave way to a better-diversified regional economy led by international trade, entertainment, tourism and recreation services, technology and telecommunications. During the late 1990s, it was Northern California that developed a high dependence on technology as Silicon Valley became the worldwide capital of the Internet.

While the Bay Area struggles with the current information technology slowdown, Southern California will likely avoid an outright recession. The Southland, however, will still experience many economic stresses during the coming year. In addition to the forces affecting the national economy, the Los Angeles region faces a potentially costly entertainment-industry strike by writers and actors.

Southern California is also more dependent on international trade, with the two largest seaports and the largest air-freight hub on the West Coast. If trade with Asia and Europe weakens, then California manufacturers and exporters will suffer.

California's long-term growth will likely be limited by its cost of living and its infrastructure development compared with other regions. The state's long-term attractiveness to new residents and businesses could be diminished as a result of the perception that we are not willing to provide the resources to support new growth. Southern California, in my opinion, fares better in that comparison than the Bay Area, but we should not be complacent.

Tom Lieser is senior economist with the Anderson Forecast.