GLOBAL CITIES INITIATIVEA J O I N T P R OJ ECT O F B R O O K I N GS A N D J P M O R GA N C H AS E

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Detroit, MI | April 22, 2015@bruce_katz!#globalcities

-10,000,000

-5,000,000

0

5,000,000

2007 2009 2014

Payroll Count Jobs Gap Growth-Based Jobs Gap

Source: The Hamilton Project analysis of Congressional Budget Office and Current Employment Statistics data.

4.0 million!missing jobs

Jobs Gap Caused by Great Recession

-5%

40%

1990 2000 2012

0%

10%

20%

30%

40%

0%

36%

0%

-4%

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, Moody’s Analytics.

Output per capita: !+$14,589

Median income: !-$2,120

81 millionpoor or near poor in 2000

107 millionpoor or near poor in 2011

HUMAN CAPITALINNOVATION

MANUFACTURING

INFRASTRUCTURE

STEM

ADVANCED ENERGY

EXPORTS

R&DOPPORTUNITY

CONSUMPTION

DEBTCONSUMPTION

DEBTDEBTCONSUMPTION

CONSUMPTION DEBTDEBT

CONSUMPTIONDEBT

Pre-Recession Economy Next Economy

The imperative for global engagement

1 2 3

1

2 3

2009

Global GDP

28.2%!BIC Countries

19.9%!US

Source: International Monetary Fund, World Economic Outlook Database, April 2013

2018

Global GDP

17.6%!US

21.0%!BIC Countries

Source: International Monetary Fund, World Economic Outlook Database, April 2013

Source: UN Department of Economic-Social Affairs, World Urbanization Prospects, 2009

Global Metro Population

50%

2009

Source: UN Department of Economic-Social Affairs, World Urbanization Prospects, 2009

Global Metro Population

50%60%

2030

Global Middle Class - 2009 | Share of Global Totals

18%!North America

36%!Europe 28%!

Asia Pacific

Source: Kharas and Gertz, “The New Global Middle Class,” 2010

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

offers a path to more and better jobs

Global Engagement

Global Engagement

ExportsForeign Direct !Investment

22%wage premium in foreign-owned firms

14%US productivity growth contributed by foreign-owned firms

5.0%foreign-owned firms employ

US workers

Global Investment Flows Are GrowingFDI Flows (Capital)

Source: UNCTAD

1984 1999 2012

$2 trillion

$1 trillion

Global

U.S.

$1.3 trillion

$168 billion

1984 1999 2012

U.S. Share of Global Investment is ShrinkingU.S. Share of Global FDI (Capital)

45 percent

26 percent

12 percent

Source: UNCTAD

5,000$1 billion increase in exports supports

jobs

11%wage premium in exporting firms

Greater likelihood of health and retirement benefits in export-intense industries

Exports Share of GDP!2012

13.5%

United States

29% 22%

15%

30%

Japan

China Canada India

European Union

15%

Source: Brookings analysis of WTO and EIU data, 2013

$944 billionUS manufactured exports 2010

Japan

$680$944

United States GermanyFrance

$409

China

$1477

$1091

Top Manufacturing Exporting Countries!Billions, 2010

Source: World Trade Organization, 2011

$358

Service Imports

Service Exports

$518

US Service Trade!Billions, 2010

$160 billion!trade surplus

Source: World Trade Organization, 2011 (Data reflect Commercial Services)

U.S. Value Added in U.S. Imports 2009

2%

25%

40%

4%

European Union

Canada MexicoChina

Source: Brookings, Metro North America (2013)

Can we increase !our ! ! ! ! ! ! ! in global markets?

competitiveness

R&D-intensive industries that concentrate the nation’s science, technology, engineering, and mathematics (STEM) workforce

A M E R I C A’ SA D VA N C E D

I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,

A N D W H Y T H E Y M AT T E R

W H A T

W H E R E

W H Y

B R O O K I N G S

A D V A N C E D

I N D U S T R I E S

P R O J E C T

A M E R I C A’ SA D VA N C E D

I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,

A N D W H Y T H E Y M AT T E R

W H A T

W H E R E

W H Y

B R O O K I N G S

A D V A N C E D

I N D U S T R I E S

P R O J E C T

A M E R I C A’ SA D VA N C E D

I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,

A N D W H Y T H E Y M AT T E R

W H A T

W H E R E

W H Y

B R O O K I N G S

A D V A N C E D

I N D U S T R I E S

P R O J E C T

A M E R I C A’ SA D VA N C E D

I N D U S T R I E SW H AT T H E Y A R E , W H E R E T H E Y A R E ,

A N D W H Y T H E Y M AT T E R

W H A T

W H E R E

W H Y

B R O O K I N G S

A D V A N C E D

I N D U S T R I E S

P R O J E C T

Advanced Industries

Pharmaceuticals

Medical EquipmentMotor Vehicles & Parts

Aerospace

Manufacturing35

Software Computer Systems Design

Telecommunications R&D Consulting Services

Services12

Oil & Gas !Extraction

Electricity !Generation

Energy

3

Advanced Industries

Advanced Industries

60.0%

8.7%

90.0%81.2%

17.7%

80.0%

U.S. GDP

ExportsU.S. Workers

Private Sector R&D

PatentsEngineers / Architects

Concentrate the Assets of the Innovative Economy

$160

$120

$80

$40

$0

Aver

age

Wag

e (th

ousa

nds)

Associate’s!Degree

Some!College

Secondary!Diploma

No Secondary!Diploma

$153

$117

$130

$89

$115

$69

$89

$56 $60

$38

$54

$32 $4

4

$28 $3

3

$20

Advanced IndustriesOffer a Significant Wage Premium at Every Level of Education

Doctoral!Degree

Professional!Degree

Master’s!Degree

Bachelor’s!Degree

50 percent!of advanced industry jobs !

require less than a bachelor’s degree

Drive Productivity in Other Industries

Stimulate Local Economies

Support Long!Supply Chains

Develop Technology that Transforms Lives

Advanced Industries

39 million!total jobs supported by

advanced industries

Advanced IndustriesInnovation Skills Infrastructure

Advanced IndustriesInnovation Skills Infrastructure

Total Spending on Research and Development 2010-2012 average as share of GDP

0

Korea

Israe

lFin

land

Sweden

Japa

nChin

ese T

aipei

Denmark

German

ySwitz

erlan

dAus

triaUnit

ed Stat

esSlov

enia

Icelan

dFra

nce

Belgium

Austra

liaSing

apore

Netherl

ands

China

1

2

3

4

Advanced Industries

Innovation Skills Infrastructure

Share of population 20-34 with a STEM degree

Percentage of graduates majoring in STEM fields

RANK VALUE24

25

26

27

28

29

0.86%

0.84%

0.82%

0.77%

0.76%

0.75%

SloveniaEstoniaCanada

United StatesNetherlands

Hungary

30

31

32

33

34

35

22.0%

21.9%

21.8%

19.3%

19.2%

18.7%

NorwayAustraliaPoland

United StatesChileJapan

RANK VALUE

Advanced Industries

Innovation Skills Infrastructure

Metros are centers of global trade and investment

1 2 31

2

3

Source: Brookings analysis of US Bureau of Economic Analysis data

Service Exports

75%63%

Manufacturing Exports

Population

66%

Top 100 Metro ExportsShare of U.S. Totals

Source: Brookings, ExportNation 2012

Top 100 Metro Exports

Chemical Products

68% 76%

Business/Professional

Computer/Electronic

78%

Population

66%

Share of U.S. Totals

Source: Brookings, ExportNation 2012

Top 100 Metro International Connectivity

Air Cargo

83% 83%

Water Cargo Air Passengers

96%

Population

66%

Share of U.S. Totals

Source: Brookings, Global Gateways (2012) and Metro Freight (2013)

Population

66%

Advanced Industry

Employment

74%

FDI Employment

74%

Employment in Advanced Industries and Foreign-Owned Firms

Top 100 Metro Share of U.S. Totals

Source: Brookings, Metropolitan Areas and the Next Economy (2011)

Population

47%

GDP

44%

MichiganDetroit Metropolitan Area

Metro share of state totals

Source: Brookings

Metro Detroit Performs Well on Exports, But Lags Other Large Metros on Growth

Exports

14Rank

8Rank

$38 BValue

18.7%GDP Share

8Rank

Output $203 BValue

2003 2009 2013

175

100

Top 100Exports

Detroit GDP

150

125

75

Top 100 GDP

Detroit Exports

Indexed Change in GDP and Exports, 2003-2013Detroit and Top 100 Metros

Detroit’s FDI Employment Base Is Declining and Highly Dependent on Auto

1991 2001 2011

160

60

Top 100

100

20

Detroit Metro

Indexed Change in FDI EmploymentDetroit Metro and Top 100 Metros, 1991-2011

Source: Brookings

Detroit Metro FDI Employment by Sector

Detroit Metro Export Value by Sector

27% Other Goods

34% Motor Vehicles and Parts

38% Services

21% Other Goods

59% Motor Vehicles and Parts

19% Services

Detroit City Has Few FDI Jobs, Especially Relative to the Metro

Source: Brookings

share of metro Detroit FOE jobs in Detroit city

20/20rank among peer cities

16/20rank among peer cities

15,102jobs in FOEs in Detroit city

12.1%

5.4%share of city employment in FOEs

Detroit, MI - Global Engagement

City Share of Metro FOE Employment

Share of Peer Cities, 2011

Louisville, KY 75.1%Memphis, TN 60.4%

Cleveland, OH 48.4%Cincinnati, OH 39.7%Pittsburgh, PA 31.5%Chicago, IL 30.7%Philadelphia, PA 13.9%Detroit, MI 12.1%

Share of City Employment in FOEs

Share of Peer Cities, 2011

Cincinnati, OH 15.5%Cleveland, OH 11.3%

Chicago, IL 6.1%Memphis, TN 5.9%Louisville, KY 5.5%Detroit, MI 5.4%Milwaukee, WI 4.8%Philadelphia, PA 3.3%

Detroit City Is More Reliant on M&A and Large Firms Than Its Peer Cities

Greenfield M&A Pre-1991

Share of FOE Jobs by Mode of Entry, 2011

13%

52%

35%

23%

33%

44%

Detroit city Peer city average

Source: Brookings

0% 15% 30% 45% 60%

51-250 251-500

Detroit City

Detroit Metro

Top 100 Metros

Share of FOE Jobs in Mid-Sized Establishments

1 2 31 2

3 Metros are engaging globally in new ways

METROINNOVATION

Catalyze Trade & Investment

Market AssessmentTarget Sectors

8% 9%12%

Economic Profile15%

12%

13%

9%

Establish Goals & Strategies

Boost SME exportsIncrease global fluency

Double exports Support key sectors

Government

Philanthropy

Firms

Universities

Collaborate to Compete

Catalyze Trade!and Investment

A Model of Cross-Sector CollaborationSan Diego

Catalyze Trade & Investment

Invest in !What Matters

Innovation Human Capital Infrastructure

SUNY Albany!Nanotech Campus

Columbus

Innovation Human Capital Infrastructure

Innovation Human Capital Infrastructure

PORTMIAMI

PORTMIAMIInnovation Human Capital Infrastructure

Deep Dredge Project $220 million project, funded solely through state & local resources

Port of Miami TunnelInnovative public-private partnership

Intermodal Rail Reconstruction Project Financed with competitively-awarded federal funds to a partnership of the port, county & railway

Catalyze Trade & Investment

Invest in !What Matters Network Globally

Chicago

Mexico City

Chicago

Mexico City2nd largestMexican immigrant population resides in Chicago metro area

130Chicago-based firms with operations in Mexico City

$1.7 billiontotal bilateral trade of locally produced products

290,000tourists and business travelers between Chicago and Mexico City per year

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GLOBAL CITIES INITIATIVEA J O I N T P R OJ ECT O F B R O O K I N GS A N D J P M O R GA N C H AS E

T H E D E T R O I T E C O N O M I C C L U B H O S T S

Detroit, MI | April 22, 2015@bruce_katz!#globalcities