COLUMBIA, S.C. - South Carolina has made strides toward the economic vision laid out for the state a year ago by a Harvard economist, financier Darla Moore said Monday.

But one of the biggest challenges for the state remains its poorly structured retirement system, which could impede future growth, Moore told more than 250 business leaders attending the University of South Carolina's annual economic outlook conference.

At last year's conference, Harvard University economist Michael Porter laid out a plan to renovate South Carolina's economy by encouraging the development of clusters - that is a group of businesses in a related industry such as car makers or airline-related companies.

Porter has since agreed to return to the state to speak to legislators and Commerce Department officials in January - a good sign the state is making progress, Moore said.

Gov. Mark Sanford, who attended the conference, talks about the concept at Cabinet meetings and economic development announcements. Moore said people are using the right terms and changing their attitudes about economic development.

"When we first started this off, most people didn't know what a cluster was much less think South Carolina had any," said Moore, a University of South Carolina graduate for whom the business school is named. Now every industry thinks it's a cluster, she said.

USC economists said the presence of Vought Aircraft Industries Inc. at the Charleston International Airport could be the beginnings of airline cluster in the Lowcountry as well as spark the creation of manufacturing jobs. Vought announced earlier this month a joint venture with Italy's Alenia Aeronautica that would create more than 600 jobs at a $560 million aircraft complex where workers would make fuselage sections for Boeing's new 7E7 Dreamliner.

Moore continued to warn business leaders about the state's risk of losing investment dollars because of how outsiders perceive management of the state retirement system.

"If we look like a bunch of dumbos because we can't balance our own checkbook, it affects whether companies come in here," Moore said after her speech.

Moore said the state should follow a recommendation to set up an independent panel to manage the retirement system rather than having "political people" - the elected officials that make up the State Budget and Control Board - manage it.

Also at Monday's conference, forecasters said the state should see growth in the economy, personal income and jobs in the coming year.

"One of the keys to watch ... for what our state does overall really is in what manufacturing does," said Donald Schunk, a research economist at the University of South Carolina.

South Carolina has lost more than 68,000 manufacturing jobs since 2000, but those losses slowed down last year, Schunk said.

Employment sectors such as health, leisure and hospitality and other service industries will continue to see growth as the population increases in South Carolina, he said. Overall, Schunk expects jobs to grow by 1.6 percent next year, up from 1 percent this year.