Building and Sustaining Globally Competitive Regions

GLOBAL CITIES INITIATIVE
A JOINT PROJECT OF BROOKINGS AND JPMORGAN CHASE
Committee for Sydney | July 9, 2015
BUILDING AND SUSTAINING GLOBALLY COMPETITIVE REGIONS
MAREK GOOTMAN
Brookings Institution
@MarekGootman #GlobalCities
Wednesday, July 15, 2015

Catalyze a shift in economic development policy / practice to strengthen
the global connections and competitiveness of metropolitan areas,
resulting in more sustained growth and high-quality jobs.
AJoint Project of Brookings and JP Morgan Chase
Research ExchangeInnovate

Metropolitan Policy Program
at BROOKINGS
-10,000,000
-5,000,000
0
5,000,000
2007 2009 2014
Job Growth Challenge
Source: The Hamilton Project analysis of Congressional Budget Ofﬁce and Current Employment Statistics data.
Payroll Count Jobs Gap Growth-Based Jobs Gap
Post-Recession U.S. Jobs Gap
Since start of recession

at BROOKINGS
-10,000,000
-5,000,000
0
5,000,000
2007 2009 2014
Job Growth Challenge
Source: The Hamilton Project analysis of Congressional Budget Ofﬁce and Current Employment Statistics data.
5.6 million
missing jobs
Payroll Count Jobs Gap Growth-Based Jobs Gap
Post-Recession U.S. Jobs Gap
Since start of recession

at BROOKINGS
-5%
40%
1990 2000 2012
0%
10%
20%
30%
40%
0%
36%
Wealth Creation Challenge
Change in Output Per Capita and Median Household Income
Since 1990
Output Per Capita Median Household Income
Source: Current Population Statistics, BLS Consumer Price Index, Census Population Estimates, Moodyʼs Analytics.
Output per capita:
+$14,589

at BROOKINGS
-5%
40%
1990 2000 2012
0%
10%
20%
30%
40%
0%
36%
0%
-4%
Wealth Creation Challenge
Change in Output Per Capita and Median Household Income
Since 1990
Output Per Capita Median Household Income
Source: Current Population Statistics, BLS Consumer Price Index, Census Population Estimates, Moodyʼs Analytics.
Output per capita:
+$14,589
Median income:
-$2,120

at BROOKINGS
Inclusion Challenge
Source: Current Population Statistics.
Unemployment Rate by Age
Recession through 2013
23%
16%
16 to 19
years old
2007 2012
6%
4%
0.4%
31.4%
Top 1 Percent Bottom 99 Percent
Income Growth During Recovery
2009-2012
Source: Saez and Piketty, “ The Evolution of Top Incomes in the United States,” 2013.
13%
8%
20 to 24
years old
2007 2012
25 and Older
2007 2012

Can Domestic Consumption Drive Sustainable Job Creation?

Are Traditional Economic Development Strategies Sufﬁcient?
Starbucks Stadia
Stealing
Businesses

Where Are Jobs Being Created?
50%
56.3%
job creation from
new business openings
1.9%
job creation from
attraction / relocation
41.8%
job creation from
ﬁrm expansions
decline in plant expansions
and relocations of 50+ jobs
or $1M+ investment
2000 - 2012
Source: Conway Data, Inc; Jed Kolko, “Business Relocation and Homegrown Jobs,
1992-2006,” Public Policy Institute of California, 2010.

Growing the U.S. Economy Requires a Culture Shift in Economic Development
-480,965
521,978
Expanded/
Contracted
Move In/
Move Out
-13,800-188,527
259,778
23,153
San Antonio Metro Job Growth/Loss
2003-2012
Opened/
Closed
Source: Brookings analysis of NETS data from youreconomy.org

Growing the U.S. Economy Requires a Culture Shift in Economic Development
Expanded/
Contracted
Move In/
Move Out
Net San Antonio Metro Job Growth/Loss
2003-2010
71,251 9,35341,013
Opened/
Closed
Source: Brookings analysis of NETS data from youreconomy.org

Traded Sectors Drive High-Quality Economic Growth
Traded
Sector Job
=
Local Jobs
Source: Ezell, Stephen and Robert Atkinson, 2012, “Fifty Ways to Leave Your
Competitiveness Woes Behind,” ITIF.
5,600
jobs per $1 billion in exports

Software Computer Systems
Design
Telecommunications R&D Consulting
Services
Services
Pharmaceuticals Advanced
Machinery
Medical EquipmentMotor Vehicles &
Parts
Computer & Electronic
Devices
Aerospace
Manufacturing
Traded Sectors / Advanced Industries

81%
share of global economic growth
occurring outside the U.S., 2015-2020
The Bulk of Economic Growth Is Occurring Outside the U.S.
Source: World Economic Outlook, International Monetary Fund, 2015.

Global Metro Population
Global Urbanization
29%
1950

Global Urbanization
50%
2009

Source: UN Department of Economic-Social Affairs, World Urbanization Prospects, 2011
Global Urbanization
60%
2030

Source: UN Department of Economic-Social Affairs, World Urbanization Prospects, 2011
Global Urbanization
467cities with over
1 million or more
residents in 2010

Global Middle Class - 2009 | Share of Global Totals
18%North America
36%Europe
28%Asia Paciﬁc

Global Middle Class - 2030 | Share of Global Totals
7%North America
14%Europe
66%Asia Paciﬁc
Source: Kharas and Gertz, “The New Global Middle Class,” 2010

$0
$22,500
$45,000
$67,500
$90,000
2000 2010 2020 2030 2040 2050
Global Middle Class Consumption
Billions, 2000-2050
Source: Homi Kharas, “The Emerging Middle Class in Developing Countries,” OECD Development Center, 2010.

2000 2010 2020 2030 2040 2050
US Mexico Canada EU Japan Other India China
15%
54%
Global Middle Class Consumption
Share by Region, 2000-2050
75%
2%
Source: Homi Kharas, “The Emerging Middle Class in Developing Countries,” OECD Development Center, 2010.

Small and
Medium
Enterprises
Workforce
Regional
Economic
Development
Agencies
Chambers of
Commerce
Schools and
Colleges
InfrastructureLarge
Corporations
Regions Concentrate Unique Economic Assets and Networks

Venture
Capital
94%92%
PatentsLand
Mass
12%
90%
Advanced
Industries
Source: Brookings analysis of US Census Bureau, FAA, BLS, and BEA data
Largest Metrosʼ Share of U.S. Market Assets
Exports
65%
GDP
75%
Metro Areas Have the Assets that Drive Global Competitiveness
65%
Population
75%
Graduate
Degrees
74%
Bachelors
Degrees

To Prosper, Metros Must Become More Globally Competitive and Globally Fluent
T h e 1 0 T R A I T S o f
G L O B A L LY F L U E N T
M E T R O A R E A S

1. Leadership with a Worldview
2. Legacy of Global Orientation
3. Specializations with a Global Reach
4. Adaptability to Global Dynamics
6. Opportunity and Appeal to the World
7. International Connectivity
9. Government as Global Enabler
10. Compelling Global Identity
8. Investment for Strategic Priorities
Greater Global Fluency Drives Competitiveness
Global Fluency
The level of understanding,
competence, practice and
reach that a region exhibits in
an increasingly interconnected
world economy.
aware ﬂuentoriented
5. Culture of Knowledge and Innovation

GCI Research Reinforces the Role and Performance of Metros in the Global Economy
Metro North America Global Metro MonitorMetro Trade
Asia-Paciﬁc Metro Monitor, Global Metro Proﬁles

GCI Research Gives Metros Their Starting Point in Knowledge and Innovation
Hidden STEM Economy Patenting Prosperity
Advanced Industries, Foreign Students in U.S. Higher Ed, Skills Gap
H-1B: Search for Skills

GCI Research Gives Metros Their Starting Point in Global Trade and Connections
Global Aviation
FDI Monitor
Export Monitor Metro Freight Flows

Metros Leverage Specializations With Global Reach
Sustainability and
Electronics
Portland
Health and
Wellness
Minneapolis- St. Paul
Agriculture and
Bioscience
Des Moines
Services and
Canada
Syracuse

Metros Leverage Specializations With Global Reach
Sustainability and
Electronics
Portland

Exports
Goods
Manufactured products
or parts produced in a
metro and shipped to a
foreign country.
Payments made by
foreign companies to
distribute ﬁlms and
other media, software
licenses, use industrial
processes, or
franchising fees
Services
Work done by a metro-
based worker on a
foreign project, or
services purchased in
the U.S. by foreign
persons (education,
tourism, health)
Royalties
Exporters purchase
inputs and services
from ﬁrms in the supply
chain
Secondary

Source: U.S. International Trade Commission, 2010, “Small and Medium-Sized Enterprises: Characteristics
and Performance”
Going Global Pays Off for U.S. Manufacturers and Services Firms
Non-
Exporters
-7%
Exporters
37%
SME Manufacturing Firms Revenue Growth
(2005-2009)
higher sales than non-exporters
100%
higher employment than non-exporters
70%
Business Services Exporters
Source: J Bradford Jensen, “Global Trade in Services: Fear, Facts, and Offshoring,” Peterson Institute for
International Economics, 2011.
20%
higher wages than non-exporters

Source: U.S. Census Bureau, “A Profile of U.S. Exporting and Importing Companies, 2010-2011”, 2013.
U.S. Firms Fail to Meet Export Potential
5%
of U.S. employer
firms export
2012
302,000
Both Years
199,000
2011
293,000
Many Firms are Not
Recurring Exporters
58%of U.S. exporters
sell to only one
market
60%
middle-market U.S. firms do not
export at all
10%
revenue of U.S. middle-market
exporters is international source
4%
middle-market U.S. firms
currently expanding overseas
3%non-exporting middle-market
U.S. firms that regularly review
international options

Pilot Export Metros

• Companies fear exporting.
• Companies lack awareness of global opportunities and services.
• Companies are confused by the fragmented export assistance delivery system.
• Export promotion efforts are reactive and not linked to core economic
development strategies, so generate an inadequate pipeline of export-ready
companies.
• Regional leaders and institutions lack the incentives and resources to reorient
economic strategies to global trade.
Firms Face Market and Institutional Barriers to Exporting

3
Metros Have a Critical Role to Play in Exports
Increase the number of export-ready ﬁrms through direct relationships
Coordinate federal, state, and local programs
Catalyze cultural shift by mainstreaming exports and trade
Metro
State
Federal
Organize and facilitate trade missions
Support and coordinate metro-level efforts
Prioritize exports in state economic strategy
Open new markets through free trade agreements
Finance exports through Ex-Im and SBA
Provide on-the-ground expertise in U.S. and foreign markets
Produce export data to inform state and regional effort

GCI Provides a Process and Tools to Create and Implement an Export Plan
Guides and Framing Papers
Exchange Website Research and Interactives
Market Assessment
Export Plan
Implementation Plan
Policy Memo

10 Steps to Delivering a Successful Metro Export Plan
1. Go Metro to Go Global
8. Identify and Promote Policy Priorities3. Produce a Data-Driven Market Scan
2. Organize for Success
4. Capture Local Market Insight
5. Champion Exports Now
6. Develop a Customized Export Plan
7. Prepare for Implementation
9. Track and Publicize Progress
10. Mainstream Exports Into Economic
Development

10 Steps to Delivering a Successful Metro Export Plan
1. Go Metro to Go Global
Go Metro to Go Global
8. Identify and Promote Policy Priorities
3. Produce a Data-Driven Market Scan
Market Assessment
Developing the Export Plan
Track and Publicize Progress
2. Organize for Success
4. Capture Local Market Insight
5. Champion Exports Now
6. Develop a Customized Export Plan
7. Prepare for Implementation
9. Track and Publicize Progress
10. Mainstream Exports Into Economic
Development

Organize for Success
City
State
Federal
Business/Civic Alliance
Industry
Universities
Ports
Airports

FederalStateMetro
Steering Committee and Core Team
Ofﬁce of the Governor
State international trade ofﬁce
State economic development
agency
State chamber of commerce
U.S. Commercial Service
U.S. Small Business
Administration
Small Business
Development Center (SBDC)
Export-Import Bank
U.S. Department of Agriculture
Mayors
Chambers of commerce
Regional economic
development partnership
University/business school
Air and water ports
World trade center
Manufacturing extension
program
Freight forwarders
Exporting companies

Champion Exports Now: Culture Change
Private Sector
Business
Local Elected
Ofﬁcials
Economic
Development
AgenciesMedia
Nonproﬁts and
foundations

Communications
•Maintain momentum
•Keep committee
engaged and informed
•Win over stakeholders
•Media engagement and
understanding

Market Assessment
Doing business in foreign
countries requires a great deal of
intelligence. In order to create an
effective business plan and
development strategy, you have
to understand the country, and
that takes a lot of time.
“
Data
Local market
intelligence
Reports

Market Assessment: Market Scan
Understand your starting point and potential
Identify largest export industries
Identify growing and emerging export industries
Identify high potential foreign target markets

Market Assessment: Capture Local Market Intelligence
Company surveys
One-on-one company interviews
One-on-one export services
provider interviews
Optional: Focus Groups

Develop a Customized Export Plan
Rationale for Exports
Why does your metro need a plan?
Goal and Objectives
What do you want to achieve and what
will you change to get there?
Market Assessment Findings
What are the main things you learned
from your assessment?
Strategies and Tactics
What activities will you do to bring
about the change you want?
Ex. Our metro’s job growth
has fallen recently;
diversification of industries
Ex. Improve and streamline
the export assistance
ecosystem
Ex. Raise global engagement
of are and small firms
Double number of firms
exporting
Ex. Companies think the
export assistance ecosystem
is fragmented

Performance Measurement and Metrics Matter
Track Implementation Progress
Publicize and Show Success
Help Gain Buy-In and Resources
Maintains Accountability
Prove that the Concept / Approach Works
1.
2.
3.
4.
5.

Performance Measurement Challenges
•Focus on having the right
plan, not just the desired
soundbite
•Prove Impact
•ED Groups Inﬂuence but donʼt
Control Outcomes
•Data Limitations
•Difﬁcult to Know what Happens
after Interaction

Types of Export Metrics
Output Indicators
Quantitative Outcomes
Qualitative Outcomes
Impact Indicators
Total Partners Engaged / Number of
New Events, Initiatives Created
Number of New Firms Entering the Export
Pipeline / Number of Companies participating in
Trade Missions
Integration of Exporting Into Larger
Economic Development Initiatives
Total Metro Exports / Metro Export
Intensity

Quantitative Outcomes Qualitative Outcomes
• Number of New Firms Entering the
Export Service System
• Total Demand for Export Services
• Amount Loaned to Firms by Ex-Im
• Use of Regional Export Assets (ports,
etc)
• Participants in Trade Missions
• New Sales Contracts
• Cluster Speciﬁc Export Growth
• New Export Leads Entering USEAC

Quantitative Outcomes Qualitative Outcomes
• Number of New Firms Entering the
Export Service System
• Total Demand for Export Services
• Amount Loaned to Firms by Ex-Im
• Use of Regional Export Assets (ports,
etc)
• Participants in Trade Missions
• New Sales Contracts
• Cluster Speciﬁc Export Growth
• New Export Leads Entering USEAC
• Integration of Global Perspective into
Economic Development Decisions
• Use of Export Strategies and Initiatives
in Broad Economic Development Plans
• Increased Media Coverage for Exports
• Participation of Business Champions
• Adoption of Recommended Export
Policies
• Export Success Anecdotes

Export Plan Co-Chairs
Portland
City of
Portland
Mayor’s Ofﬁce

Computers & Electronics
Research: 67 percent of regionʼs total exports
Strategy: maintain advantage, boost secondary exports, fill supply chain gaps
Progress: Intel role as co-chair, Westside Freight Analysis
We Build Green Cities
Research: Portland has an international reputation for sustainability
Strategy: Brand and market Portlandʼs global edge in key clusters
Progress: Highly successful trade mission to Japan with four green firms
Target Under-Exporters
Research: Company surveys reveal lack of proactive export strategies
Strategy: Provide case management to 10-15 mid-sized under-exporters
Progress: Launched pilot program to help 6 firms access new markets
Portland
Develop a Customized Export Plan

Categories of Action from Regional Export Strategies
‣ Integration in Core Economic Development
‣ Business Retention
‣ Dedicated Lead Generator
‣Activity Coordination
‣ New Market Exploration
‣ Industry Sector Targeting
‣ Services Emphasis
‣ Metro-to-Metro Trade Partnerships
‣ Organizational Change
‣ Customer-Driven versus Service Providers
‣ Performance Metric Alignment
‣ Mentoring
‣Technical Expertise
‣Trade Missions / Supply Chains
‣ University Support
‣ Student / Faculty Business Engagement
‣ Gateway Market Presence
‣ Culture Change
‣ Grant Competitions
‣ CEO Partners
‣ Global Identity

FDI matters for national and regional economic development because of some
outsized economic contributions
Sources: BEA, NSF, ITA, and Peterson Institute for International Economics
Knowledge
Technology
Networks
One in ﬁve U.S.
manufacturing
jobs
19 percent
of corporate
R&D
expenditures
20 percent of all
U.S. goods
exports
Four times as
many workers in
advanced
industries
22 percent higher
average wages
12 percent of U.S.
productivity
growth

Growth in Jobs Under Foreign Ownership
Average year, 1991-2011
45% M&A
34% Expansion
21% Greenfield
FDI Capital Inflows
1992-2008
87% M&A13% Greenfield
Source: Brookings, Bureau of Economic Analysis
Mergers and Acquisitions Are the Dominant Form of FDI

Greenfield
Large, export-intensive
manufacturing
Small to mid-size locations
of large retail firms
Mid-sized manufacturing
and services
Source: Brookings, FDI in U.S. Metro Areas
1.3%
of foreign-owned establishments have
more than 500 employees
75%
of metro areas have less than 10 such
establishments.
Average size of greenfield establishment at time of entry:
San Diego: 27 employees
Minneapolis: 35 employees
Expansions of existing foreign-owned firms created twice
as many jobs as new greenfield from 2001-2011.

Important source of new capital, transfers skills and technology to U.S. ﬁrms,
and opens global distribution channels.
Primary learning for metros: hard to get in front of deals, but BRE is critical.
Acquired in 2007; no job
loss and made a global
research hub
Maintains manufacturing
and R&D facilities in MD
MedImmune
Montgomery County, MD
Life Sciences
San Diego, CA
Firms gain foothold in
U.S. market and
innovation via M&A
Takeda Pharmaceuticals:
grew from 85 to 250
employees, (150 PhDs)
Jim Beam
Louisville, KY
Doubled size of Maker’s
Mark KY distillery
Gained global
distribution channels
through Japanese parent
Mergers & Acquisitions

US GCI Exchange - Learning and Action Network
Atlanta
Baltimore
Charleston
Chicago
Columbus
Des Moines
Fresno
Greenville-
Spartanburg
Houston
Indianapolis
Jacksonville
Kansas City
Los Angeles
Louisville-
Lexington
Milwaukee
Minneapolis-
St. Paul
Philadelphia
Phoenix
Portland
Sacramento
Salt Lake
San Antonio
San Diego
Seattle
St. Louis
Syracuse
Tampa Bay
Wichita

Develop an Integrated Trade Plan
Integrate Other Global Strategies
Monitor Progress and Success
Connect Metros to Global Best Practices
Support Implementation Through Peer
Interaction
Facilitate International Relationships
+ T h e 1 0 T R A I T S o f
G L O B A L LY F L U E N T
M E T R O A R E A S
GCI Learning and Action Network

Exports Are Part of a Comprehensive Economic Development Strategy
GLOBAL
ENGAGEMENT
Innovative Traded
Products & Services
Skills to Support Global
Sectors
Exports & FDI
Freight & Infrastructure
Immigrant Talent/
Cultural Fluency

Develop an Integrated Export/FDI Plan
Integrate Other Global Strategies
Monitor Progress and Success
Connect Metros to Global Best Practices
Support Implementation Through Peer
Interaction
Facilitate International Relationships
GCI Learning and Action Network

at BROOKINGS
7 Habits
of Highly Effective Regional Leaders

Value TradeRegion People Networks Outcomes
at BROOKINGS
AssetsRegion
Habit 1: Embrace Regional Markets and Local Assets
3rdlargest metropolitan economy
in the United States
Chicago:
3 states
6 satellite cities
14 counties
554 municipalities
at BROOKINGS

ValueTradeRegion People Networks Outcomes
at BROOKINGS
Systems
Habit 2: Increase Trade
Michael Spence, “The Evolving Structure of the American Economy,” CFR, 2011
at BROOKINGS
Traded-Sector
Job
=
Local-Serving
Jobs
Trade

at BROOKINGS
Systems
Habit 3: Create Value
at BROOKINGS
Value
TalentTrade Innovation
Governance Infrastructure
15,536
23,158
Source: Brookings and research partnersʼ analysis of NETS data on inter-metropolitan ﬁrm relocations
in a large name-withheld midwest metropolitan area.
Impact of Relocating Firms*
2004 – 2009
$146,488
$127,654
IN OUT IN OUT
Move-related Jobs Sales Per Job

at BROOKINGS
Systems
Habit 4: Invest In People
at BROOKINGS
“Leaders with longer perspectives
understand that companies cannot thrive
for long while their workers and their
communities struggle.”
-Michael Porter
“Unless you have the right skilled people,
you are just wasting your money on
technology and equipment.”
-GE Executive
People

at BROOKINGS
Systems
Habit 5: Focus on Systems, Not Silos
at BROOKINGS
Systems
Governance
Infrastructure
Human
Capital
Innovation
Traded
Sectors
Prosperity

at BROOKINGS
Systems
Habit 6: Build Networks
Government Economy
Networks

at BROOKINGS
Systems
Habit 7: Track Long-Term Outcomes
Outcomes
Track What Matters
Objective: Put the regional economy on a path
toward sustained improvement in quality growth and
broad-based prosperity.
Performance Metrics:
• Economic Growth
• Jobs, Output, Startups
• Wealth and Income
• Productivity, Household Income, Share of Output
from Trade
• Equity and Inclusion
• Income and Labor Force Participation by Age,
Race/Ethnicity
vs. Traditional Metrics
Source: withheld.
“High performance economic development is the
dedicated pursuit of any objective, no matter what the
current objective may be, coupled with measured
progress along the way.”
Performance Metrics:
• website unique visits
• conversations with companies that are relocating
or expanding
• jobs announcements
• investment announcements
• jobs created per week

@MarekGootman
Marek Gootman
202-797-6294
mgootman@brookings.edu
BROOKINGS
Director, Strategic Partnerships and Global Initiatives
brookings.edu/about/projects/global-cities
AJoint Project of Brookings and JP Morgan Chase

Building and Sustaining Globally Competitive Regions

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