"metro-economics": towards a "unified field theory"

“METRO-ECONOMICS”Towards a “Unified Field Theory”

ROBERT WEISSBOURD, RW VENTURES, LLC

Portland PlanInspiring Community Series

January 17, 2011

The Legacy of Dr. King “The time has come for us to civilize

ourselves by the total, direct and immediate abolition of poverty.”

“ At no time has a total, coordinated and fully adequate program [for eradicating poverty] been conceived. As a consequence, fragmentary and spasmodic reforms have failed to reach down to the profoundest needs of the poor.”

Photo from the Associated Press

Economic Development: Markets

Empowerment

Origins: From “Equity” to … “Equity”

Economic Development: Assets

Civil Rights

Putting the Economics in Economic Development

Poverty and Economic Development“… poverty has no causes. Only prosperity has causes. Analogically, heat is a result of active processes; it has causes. But cold is not the result of any processes; it is only the absence of heat. Just so, the great cold of poverty and economic stagnation is merely the absence of economic development. It can be overcome only if the relevant economic processes are in motion.”

-- Jane Jacobs

Photo from Shelf-Basin Interactions

Market Failure in Lower Income Communities

• Employment networks• Entrepreneurial opportunities• Business, real estate investment• Expanded products and services• Competitive, healthy communities

• Undervalued, underutilized assets

Poverty Productivity

Connectedness

Isolation

Equity and Opportunity are Good for Business

Inequality has a negative effect on income growth.

-.20

.2.4

.6

Wag

e Gr

owth

(199

0-20

00)

0 .1 .2 .3 .4Poverty Rate (1990)

7

Productivity Inclusiveness Sustainability

“I N C L U S I V E G R O W T H”Constructive GovernmentInnovationAsset

DevelopmentEconomics & Markets

Amartya Sen:“… human beings are not merely the means of production, but also the ends of the exercise.”

Social

Political Economic

Source: Brookings Institution

Service Exports

75%U

.S. Air Cargo Weight

79%

Airline Boardings

92%

Population

66%

Graduate D

egrees

75%

Venture Capital Funding

94%

Patents

78%

Wind +

Solar Energy Em

ployment

76%

Top 100 Metros Share of U.S. Total

Sources: Brookings analysis of US Census Bureau, FAA, BLS, NIH, NSF, and BEA data; Brookings, ExportNation, 2010 (2008 data); Forthcoming research from Brookings and Battelle

Gross Product

73%

Source: Brookings Institution

The Goal is Economic Growth

Economic Growth Flows from Market Activity

Major Market Systems Operate at the Metro Level

Improving Metro Economic Performance Entails Customized Analysis and Deliberate Activity

Why Metros?Economic Geography and Place-Based Development

Cities Are the Critical Core of Metros

-

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

0% 20% 40% 60% 80% 100%

Museums, botanical, …Educational services

Legal ServicesHealth Services

Depository institutionsInsurance Carriers

CommunicationAir Transportation

Hub Functions of Cities

Suburban % of total MSA employmentCity % of total MSA employment

Neighborhoods are Nested in Larger Systems Which Drive the Flows of People and Capital

ECONOMICSYSTEMS

POLITICALSYSTEMSSOCIAL

SYSTEMS

Labor Markets

Business Markets

Housing Markets

Capital Markets

Consumer Markets

GovernmentServicesInfrastructure

Neighborhoods arise from the interaction of regional economic,social and political systems with characteristics of place.

PublicGoodsGovernance

Social CapitalCivic Networks

Local (Regional) Enabling Environment(Government regulation, taxation and public goods, including

particularly infrastructure and education; civic institutions; qualities of place, including the natural environment; etc.)

Transformative Systems

(Market processes – housing, labor, business; production dynamics – clusters, value chains, etc.; innovation dynamics - knowledge creation, networks, commercialization, entrepreneurship, etc.)

Inputs to Production

(Human capital; real estate; capital; natural and knowledge resources; etc.)

Economic Outputs(Businesses – gross regional product, profits; households – wages, other income, etc.)

Macro/Global Context & Trends

What Drives Inclusive and Sustainable Economic Growth?

Local (Regional) Enabling Environment(Government regulation, taxation and public goods, including

particularly infrastructure and education; civic institutions; qualities of place, including the natural environment; etc.)

Inputs to Production

(Human capital; real estate; capital; natural and knowledge resources; etc.)

Economic Outputs(Businesses – gross regional product, profits; households – wages, other income, etc.)

Transformative Systems

(Market processes – housing, labor, business; production dynamics – clusters, value chains, etc.; innovation dynamics - knowledge creation, networks, commercialization, entrepreneurship, etc.)

Lead to New Drivers of Productivity which Favor Cities

•Dense knowledge networks•Functional specialization• Innovative capacity

% C

hang

e

Gross Domestic Product% Growth over last 50 years

Increased Value of Knowledge Factors…

•High skilled labor force• Intellectual property•Product innovation; flexible

customization•Customer networks

The Knowledge Economy

Source: Brookings Institution

18.3%US

Global GDP 2015

25.8%BIC Countries

Source: Brookings Institution

Exports make up 25% of

Portland’s GMP20.2%US

21.4%BIC Countries

Global GDP 2010

18.3%US

Global GDP 2015

25.8%BIC Countries

Source: Brookings Institution

20.2%US

21.4%BIC Countries

Global GDP 2010Portland ranks 3rd in exports (as % of GMP)

18.3%US

Global GDP 2015

25.8%BIC Countries

Source: Brookings Institution

20.2%US

21.4%BIC Countries

Global GDP 20102002-2008 GMP Growth =

144.5%

Demand for clean energy generation

Demand for products that reduce energy consumption

Demand for products that reduce pollution

Source: Brookings Institution

Portland is the 24th least

segregated metro

Source: Brookings Institution

11.3% of Portlanders live

in povertySource: Brookings Institution

EnhanceRegional

Concentrations Deploy

Human CapitalAligned with

Job Pools

Increase Spatial

Efficiency

Create EffectivePublic & Civic

Culture & Institutions

DevelopInnovation-

EnablingInfrastructure

Leverage Points

These Five Key Leverage Points Take Us from Theory to Practice

Enhance Regional

Concentrations:

Industries, Occupations

and Functions

Portland Plan ClustersAthletic and

Outdoor IndustryCleantechSoftware

Advanced Manufacturing

Cluster Map Source: Bo Heiden, Strategic Uses of the Global Patent System

Portland has the 19th most educated

population,1/3 have at least a bachelor’s degree

Deploy High Human Capital Alignedwith Job Pools

24.1% establishment

births and deaths as % of

total

Develop Innovation-

Enabling Infrastructure

Innovation Ecosystem

MarketResearch

Marketing

Manufac-turing

Finance

R&D

Suppliers

External

Consultants

Research Partners

Academics

Customers

Consumers

Image based on material from Land O’ Lakes Inc.

16.7 patents per 10,000 employees

Develop Innovation-

Enabling Infrastructure

Innovation Ecosystem

MarketResearch

Marketing

Manufac-turing

Finance

R&D

Suppliers

External

Consultants

Research Partners

Academics

Customers

Consumers

Image based on material from Land O’ Lakes Inc.

19th most high impact firms –

7.5 mid-size firm births per

10,000 employees

Develop Innovation-

Enabling Infrastructure

Innovation Ecosystem

MarketResearch

Marketing

Manufac-turing

Finance

R&D

Suppliers

External

Consultants

Research Partners

Academics

Customers

Consumers

Image based on material from Land O’ Lakes Inc.

56th in business

churn; 22.3% firm births and deaths as % of

total

Develop Innovation-

Enabling Infrastructure

Innovation Ecosystem

MarketResearch

Marketing

Manufac-turing

Finance

R&D

Suppliers

External

Consultants

Research Partners

Academics

Customers

Consumers

Image based on material from Land O’ Lakes Inc.

Housing Costs as Percent of Income

Housing + Transportation Costs as Percent of Income

6.4% of Portlanders travel to work using public transit, putting Portland in 11th place.

Increase Spatial Efficiency

Source: Center for Neighborhood Technology

Housing Costs as Percent of Income

Housing + Transportation Costs as Percent of Income

Portland ranks 24th in traffic congestion

Increase Spatial Efficiency

Source: Center for Neighborhood Technology

Housing Costs as Percent of Income

Housing + Transportation Costs as Percent of Income

Portland ranks 63rd in average travel time to work at 25.3 minutes

Increase Spatial Efficiency

Source: Center for Neighborhood Technology

Housing Costs as Percent of Income

Housing + Transportation Costs as Percent of Income

Increase Spatial Efficiency

82% of Portlanders live within urbanized areas

Source: Center for Neighborhood Technology

Housing Costs as Percent of Income

Housing + Transportation Costs as Percent of Income

Increase Spatial Efficiency

24% of jobs are within 3 miles; 29% of jobs are more than 10 miles away from city center

Source: Center for Neighborhood Technology

Portland has .77 special

district governments

per 10,000 people, putting it in 63rd place

Create Effective Public & Civic Culture & Institutions

Portland has .77 special

district governments

per 10,000 people, putting it in 63rd place

Create Effective Public & Civic Culture & Institutions

Portland ranks 37th in most

governments, with 0.3

governments per 10,000

people

Create Effective Public & Civic Culture & Institutions

A Dynamic Economy

The economy is changing rapidly.

Source: Newsweek, Manyika, Lund and Auguste, “From the Ashes,” 8.16.2010

A Dynamic Economy

Success depends on open, adaptive, networked governance.

Summary: Implications for Practice

Cities are the Solution High Road Development Intentionality New Governance Metropolitan Business Plans

Metropolitan Business Plans: A New Way of Doing Business

Grounded in Economics and Business: comprehensive, integrated growth strategies based on unique regional strengths

Gets the Job Done: not just a plan; cross-sector institutional capacity critical to regional performance

Continuous implementation, monitoring, adaptation and further strategy development

Demonstrate better ways to invest in metros to strengthen national economy; develop new federal policies and programs.

Source: Brookings Institution

Why “Metropolitan Business Planning”?

The steps to analyzing and improving a regional economy lend themselves to the proven discipline of business planning.

ECONOMIC DEVELOPMENT PLANNING TRADITIONAL BUSINESS PLANNING

Vision for the Regional Economy Business Mission & Vision

Status of Economy: Assets,Opportunities, Challenges Market Analysis

Goal-Setting & Strategy Identification Analysis of Strategic Alternatives & Risks

Identification of Policies, Programs, Products & Interventions Development of Products & Services

Operational Planning for Implementation Operational & Management Planning

Identification of Funding Needsand Sources Forecasting & Financial Planning

Definition of Outcome Measures & Targets Target-Setting & Performance Tracking

Source: Brookings Institution

Northeast Ohio

Minneapolis-St. PaulPuget Sound

Source: Brookings Institution

A New Economic Federalism

Affordable Housing

HUD Section 8

Workforce Training

Small Business

Assistance

Upgrading Roads and

Rail

Export Strategy

Dept. of Labor

Workforce Inv. Act

Small Business Admin. Loans

Dept of Commerce Int’l. Trade

Admin.

Dept. of Transpo.

SAFETEA-LU Programs

Developand DeployInformationResources

DevelopInnovation-

EnablingInfrastructure

Create EffectivePublic & Civic

Culture & Institutions

DeployHuman CapitalAligned with

Job Pools

EnhanceRegional

Concentrations

Increase Spatial

Efficiency

A New Economic Federalism

HUD Section 8

Dept. of Labor

Workforce Inv. Act

Small Business Admin. Loans

Dept of Commerce Int’l. Trade

Admin.

Dept. of Transpo.

SAFETEA-LU Programs

Comprehensive Metropolitan Strategy

Developand DeployInformationResources Develop

Innovation-Enabling

Infrastructure

Create EffectivePublic & Civic

Culture & Institutions

DeployHuman CapitalAligned with

Job Pools

EnhanceRegional

Concentrations

Increase Spatial

Efficiency

Comprehensive Metropolitan Strategy

A New Economic FederalismIntegrated Federal Investment

White House Office of Urban

Affairs

HUD Section 8

Dept. of Labor Workforce Inv. Act

Small Business Administration Loans

Department of Transportation

SAFETEA-LU Programs

Department of Commerce

International Trade Administration

Cross-Agency Regional Teams Pooled and Flexible Funding Support for Regional Capacity Building “New Federalism” Partnership

Developand DeployInformationResources Develop

Innovation-Enabling

Infrastructure

Create EffectivePublic & Civic

Culture & Institutions

DeployHuman CapitalAligned with

Job Pools

EnhanceRegional

Concentrations

Increase Spatial

Efficiency

Comprehensive Metropolitan Strategy

A New Economic FederalismIntegrated Federal Investment

White House Office of Urban Affairs

HUD Section 8

Dept. of Labor Workforce Inv. Act

Small Business Administration Loans

Department of Transportation SAFETEA-LU

Programs

Department of Commerce International Trade

Administration

WE’RE ALL IN THIS TOGETHER

“We are tied together in the single garment of destiny, caught in an inescapable network of mutuality.“

Photo from the Seattle Times

DISCUSSION

“METRO-ECONOMICS”Towards a “Unified Field Theory”

ROBERT WEISSBOURD, RW VENTURES, LLC

Portland PlanInspiring Community Series

January 17, 2011