Regions Charting New Directions: Metropolitan Business Planning

Robert Weissbourd

Regions Charting New Directions:

Metropolitan Business Planning

Mayor’s Innovation ProjectJanuary 16th, 2013

Drivers of the Next Economy

Agenda

“Metro-Economics”

Metropolitan Business Planning (from theory to practice)

Understanding Your Economy

Key Lessons and Discussion

0%

100%

200%

300%

400%

500%

600%

$s lbs

% C

hang

e

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

1920s 1990s0

20406080

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

15% 17% 19% 21% 23% 25% 27% 29% 31% 33%0%

20%

40%

60%80%

100%

Churn and GRP Growth by MSA

Firm Starts and Closures (Churn) as % of All Firms

GRP

Grow

th

1920s 1990s0

20406080

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)

15% 17% 19% 21% 23% 25% 27% 29% 31% 33%0%

20%

40%

60%80%

100%

Churn and GRP Growth by MSA

Firm Starts and Closures (Churn) as % of All Firms

GRP

Grow

th-- and Global

…and Centered in Metropolitan Areas

…and Centered in Metropolitan Areas

Population

83.7%

Employm

ent

89.8%

Personal Income

96.3%

Knowledge Industries (GDP)

87%

Metros Share of U.S. Total

Source: Bureau of Economic Analysis, U.S. Patent and Trademark Office

Gross Product

90%

Patents

95.5%

Drivers of the Next Economy

Agenda

“Metro-Economics”

Metropolitan Business Planning (from theory to practice)

Understanding Your Economy

Key Lessons and Discussion

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?

What Makes Metropolitan Regions more Productive in the Next Economy?

Economic Geography

Institutional Economics

New Growth Theory

8

Metros Can Enable People and Firms to Concentrate and Achieve Efficiencies

Economic Geography

Institutional 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

Leverage Points

for Sustainable and Inclusive

Prosperity

DeployHuman CapitalAligned with

Job Pools

Create EffectivePublic & Civic

Culture & Institutions

EnhanceRegional

Concentrations/Clusters

Increase Spatial

Efficiency

DevelopInnovation-

EnablingInfrastructure

Five Market Levers Drive RegionalEconomic Performance

9

-.20

.2.4

.6W

age

Grow

th (1

990-

2000

)

0 .1 .2 .3 .4Poverty 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

Wages Move in TandemCorrelation = 0.77, significant

City

Subu

rbs

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

11

New Approaches for the Next Economy

Success = Dynamic Economic Growth

Success = Short Term

Jobs

Subsidize companies

Reduce taxes

Train the unemployed

Municipal competition

Government-led

Traditional economic development

New economic growth planning

Leverage regional strengths

Add value

Connect training to jobs

Regional collaboration

Public-private partnerships

Drivers of the Next Economy

Agenda

“Metro-Economics”

Metropolitan Business Planning (from theory to practice)

Understanding Your Economy

Key Lessons and Discussion

Metropolitan Business Planning: A New Way of Doing Business

Grounded in Economics and Business

Comprehensive, Actionable Strategies

NOT Plans — Enterprises

Continuous Process and Improvement

Seattle

Phoenix

Buffalo

Louisville-Lexington

Central Upstate New York

NortheastOhio

MilwaukeeChicago

Memphis

Twin Cities

Metropolitan Business Planning Regions

Drivers of the Next Economy

Agenda

“Metro-Economics”

Metropolitan Business Planning (from theory to practice)

Understanding Your Economy

Key Lessons and Discussion

Analyzing ClustersCurrent Concentrations:

Assets, Legacies and BetsCluster Dynamics and DriversCluster Organization

Growth

Conc

entr

ation

Analyzing ClustersCurrent Concentrations:

Assets, Legacies and BetsCluster Dynamics and DriversCluster Organization

Growth

Conc

entr

ation

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?

Understanding Human Capital DynamicsStatus, Attraction and RetentionSegmentation, Skills Match and

Labor Market EfficiencyOpportunity and Mobility

Understanding Human Capital DynamicsStatus, Attraction and RetentionSegmentation, Skills Match and

Labor Market EfficiencyOpportunity 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?

Cultivating Innovation

Commercialization of R&D

(universities/institutes)

Entrepreneurship(individuals)

Clusters(firms)

Cultivating Innovation

Commercialization of R&D

(universities/institutes)

Entrepreneurship(individuals)

Clusters(firms)

University research specializations?

Extent & nature of university-industry connections?

Cluster innovation and firm R&D dynamics?

Sources, successes of start-up activities? Entrepreneurship access, support, connections?

Characteristics of VCs? Availability of earlier-stage funding?

Legacy industries that need to redeploy assets and innovate?

Emerging industries with high potential?

Enhancing Spatial Efficiency

Urban Growth FormConnectedness & Mobility

Enhancing Spatial Efficiency

Urban Growth FormConnectedness & 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?

Achieving Good GovernanceFragmentationTax/Value PropositionGovernance

Achieving Good GovernanceFragmentationTax/Value PropositionGovernance

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?

Drivers of the Next Economy

Agenda

“Metro-Economics”

Metropolitan Business Planning (from theory to practice)

Understanding Your Economy

Key Lessons and Discussion

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

Robert Weissbourd

Regions Charting New Directions:

Metropolitan Business Planning

Mayor’s Innovation ProjectJanuary 16th, 2013