Delivered at the Winter meeting of the Mayor's Innovation Project, this presentation considers the questions that regions should answer in order to understand their unique opportunities for economic growth.
2. Drivers of the Next Economy
Agenda
“Metro-Economics”
Metropolitan Business Planning (from theory to practice)
Understanding Your Economy
Key Lessons and Discussion
3. 0%
100%
200%
300%
400%
500%
600%
$s lbs
%Change
GDP Growth, 1950-2000
• Human Capital
• Information technologies
• Product innovation; flexible
customization
• Firm, consumer and knowledge
networks
• Increasing returns; divergence
The Global Economy is Undergoing a Fundamental
Transformation, Driven by Knowledge Assets
Source: “Greenspan Weighs Evidence and Finds a
Lighter Economy,” Wall Street Journal 3
4. 0
20
40
60
80
1920s 1990s
Years Spent on the S&P Index
As a Result, the Economy is More Dynamic
Sources: Newsweek, Manyika, Lund and Auguste, “From the
Ashes,” 8.16.2010; Brookings Institution
0%
20%
40%
60%
80%
100%
15% 20% 25% 30% 35%
GRPGrowth
Firm Starts and Closures (Churn) as % of All Firms
Churn and GRP Growth by MSA
5. 0
20
40
60
80
1920s 1990s
Years Spent on the S&P Index
As a Result, the Economy is More Dynamic
Sources: Newsweek, Manyika, Lund and Auguste, “From the
Ashes,” 8.16.2010; Brookings Institution
18.3%
US
Global GDP (2015)
25.8%
BIC Countries
20.2%
US
21.4%
BIC Countries
Global GDP (2010)
0%
20%
40%
60%
80%
100%
15% 20% 25% 30% 35%
GRPGrowth
Firm Starts and Closures (Churn) as % of All Firms
Churn and GRP Growth by MSA
-- and Global
7. …and Centered in Metropolitan Areas
Population
83.7%
Employment
89.8%PersonalIncome
96.3%
KnowledgeIndustries(GDP)
87%
Metros Share of U.S. Total
Source: Bureau of Economic Analysis, U.S. Patent and Trademark Office
GrossProduct
90%
Patents
95.5%
8. Drivers of the Next Economy
Agenda
“Metro-Economics”
Metropolitan Business Planning (from theory to practice)
Understanding Your Economy
Key Lessons and Discussion
9. How Metro Economies Grow
Metro economy = total value of goods and services
produced in the region
Growth is inherently business sector growth (number, size
and profitability of firms)
Business sector grows through firm creation, growth and
location decisions (retention and attraction)
Firm creation, growth and location depend upon increases
in efficiency and productivity (of firm and system, including
product innovation)
Core Question: What attributes of the region increase
efficiency and productivity, leading to business sector growth?
10. What Makes Metropolitan Regions more
Productive in the Next Economy?
Economic
Geography
Institutional
Economics
New
Growth
Theory
8
11. Metros Can Enable People and Firms to
Concentrate and Achieve Efficiencies
Economic
Geography
Institutiona
l EconomicsNew
Growth
Theory
Act Comprehensively – The Whole is
Greater than the Sum of the Parts.
Develop Institutional Capacity and
Intentionality.
Customize and Build on
Distinctive Assets.
8
12. Leverage
Points
for Sustainable
and Inclusive
Prosperity
Deploy
Human Capital
Aligned with
Job Pools
Create Effective
Public & Civic
Culture &
Institutions
Enhance
Regional
Concentrations/
Clusters
Increase
Spatial
Efficiency
Develop
Innovation-
Enabling
Infrastructure
Five Market Levers
Drive Regional
Economic
Performance
9
13. -.20.2.4.6
WageGrowth(1990-2000)
0 .1 .2 .3 .4
Poverty Rate (1990)
-
10,000
20,000
30,000
40,000
50,000
60,000
0 10,000 20,000 30,000 40,000 50,000 60,000
WagesMoveinTandem
Correlation= 0.77, significant
City
Suburbs
Equity and Growth Go Hand in Hand
Leverage Points
for Sustainable
and Inclusive
Prosperity
The sub-systems and geographies succeed or fail in context.
Neighborhoods and Regions Move in Tandem
15. Drivers of the Next Economy
Agenda
“Metro-Economics”
Metropolitan Business Planning (from theory to practice)
Understanding Your Economy
Key Lessons and Discussion
16. Metropolitan Business Planning:
A New Way of Doing Business
Grounded in Economics and Business
Comprehensive, Actionable
Strategies
NOT Plans — Enterprises
Continuous Process and
Improvement
18. Drivers of the Next Economy
Agenda
“Metro-Economics”
Metropolitan Business Planning (from theory to practice)
Understanding Your Economy
Key Lessons and Discussion
21. Analyzing Clusters
Current Concentrations:
Assets, Legacies and Bets
Cluster Dynamics and Drivers
Cluster Organization
Growth
Concentration
Growth industries that
build on region’s assets?
Opportunities to redeploy legacy
assets?
“Centers of Gravity”: mutually
reinforcing concentrations of
industries, functions, technologies,
occupations?
Shared inputs, activities,
infrastructure and other factors
contributing to cluster
efficiency/productivity?
Challenges, opportunities and
trends in specific clusters?
22.
23. Understanding Human Capital Dynamics
Status, Attraction and Retention
Segmentation, Skills Match and
Labor Market Efficiency
Opportunity and Mobility
24. Understanding Human Capital Dynamics
Status, Attraction and Retention
Segmentation, Skills Match and
Labor Market Efficiency
Opportunity and Mobility
Educational and skills
attainment of residents?
Change in population by
educational attainment, age – brain
drain?
Projected job growth/loss,
retirements by occupation and
industry?
Match of existing & projected labor
force skills (detailed segmentation)?
Labor market finding, measurement
challenges?
Opportunities for targeted
retraining, credentialing?
30. Enhancing Spatial Efficiency
Urban Growth Form
Connectedness & Mobility
Jobs housing mismatch
-- by industry, occupation,
skill level?
Segregation and isolation?
Change in residential density & job
dispersion? Specific fast-growing
areas/nodes?
Opportunities for in-fill, mixed use
development?
Opportunities for transformative
infrastructure (next gen. energy, IT,
public transit, PUDs)?
Transit use and access? Barriers?
Congestion?
33. Achieving Good Governance
Fragmentation
Tax/Value Proposition
Governance
Services and regulatory
processes that might be
efficiently coordinated,
streamlined?
Most important public goods and
services to targeted industries,
residents?
Govt 2.0: engaging firms and
citizens, transparency, flexibility,
use of public data for economic
growth?
Strategic and practical alignment
of ED programs, organizations?
34. Drivers of the Next Economy
Agenda
“Metro-Economics”
Metropolitan Business Planning (from theory to practice)
Understanding Your Economy
Key Lessons and Discussion
35. Global, Knowledge
Economy
Specialization and
Dynamism
Build on Your Assets
Coordinated, Cross-
Sectoral, Flexible,
Adaptive, Open,
Information-Rich,
Inclusive,
Entrepreneurial
Compete on
Value-Added
(not low-cost)
Intentionality
Economic
Development
in the Next
Economy
