regions charting new directions -...

Robert Weissbourd

Regions Charting New Directions:

Metropolitan Business Planning

South Bend Economic SummitJune 21, 2012

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

han

ge

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

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%

GR

P G

row

th

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

Churn and GRP Growth by MSA

-- and Global

Serv

ice E

xp

orts

75%

U.S

. Air C

arg

o W

eig

ht

79%

Airlin

e B

oard

ing

s

92%

Po

pu

latio

n

66%

Gra

du

ate

Deg

rees

75%

Ven

ture

Cap

ital F

un

din

g

94%

Pate

nts

78%

Win

d +

So

lar E

nerg

y E

mp

loym

en

t

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

Gro

ss P

rod

uct

73%

…and Centered in Metropolitan Areas

Gross Metropolitan Product, 2005

Driver’s of the Next Economy

Agenda





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

Act Comprehensively – The Whole is Greater than the Sum of the Parts.

Develop Institutional Capacity and Intentionality.

Customize and Build on Distinctive Assets.

Economic Geography

Institutional EconomicsNew

Growth Theory

9

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

10

“… 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

Leverage Points for Sustainable and Inclusive

Prosperity

-.2

0.2

.4.6

Wag

e G

row

th (

19

90

-20

00

)

0 .1 .2 .3 .4

Poverty Rate (1990)

Equity and Opportunity are Good for Business

Neighborhoods and Regions Move in Tandem

Variation of appreciation trends across neighborhoods,King County 1990-2004

The Pieces of Economic Development …

Succeed or Fail “In Context” of Each Other

EntrepreneurshipBusiness Development

SustainabilityHousing

Workforce Training

Infrastructure

15

New Approaches for the Next Economy


Agenda





Metropolitan Business Planning: A New Way of Doing Business

Grounded in Economics and Business

Comprehensive, Actionable Strategies

NOT Plans — Enterprises

Continuous Process and Improvement

Business Planning: A Proven Discipline for Comprehensive, Effective Action

Identify regional assets/opportunities

Develop customized strategies

Turn strategies into concrete actions

Build institutional capacity

Execute


Regional Economy Mission and Vision

Market Analysis

Identify Strategies and Goals

Specify Products, Services and Policies

Operational Planning

Financial Planning

Performance Monitoring

Pilot Metro Business Planning Regions

Northeast OhioPartnership for Regional Innovation Services in Manufacturing ( PRISM )

Metropolitan Business Plans in Action

Metropolitan Business Plans in Action

Puget Sound (Seattle)Building Energy-Efficiency Testing and Integration Center (BETI)

Developing Institutional Capacity

Steering Committee

Strategy 1 Team

Initiative 1AInitiative 1B

Strategy 2 Team

Initiative 2A

Strategy 3 Team

Initiative 3A

Strategy 4 Team

Initiative 4A Initiative 4B

Engage stakeholders across public, private and civic sectors

Iterate analysis/strategy and institutional development

High-level (e.g., C-suite) leadership group/steering committeeDay-to-day (staff-level) working teamsExpert/business/practitioner teams for specific strategies and

initiative developmentStrategy is coordinated; Implementation is distributed


Agenda





Understanding the South Bend Region’s Economy

South Bend MSA

Rest of “Michiana”

The Big Picture: Restructuring?

Source: Bureau of Economic Analysis; Bureau of Labor Statistics

South Bend MSA USA All Metros

80.0

90.0

100.0

110.0

120.0

2000 2002 2004 2006 2008 2010

Employment(Indexed to 2000)

$55,000

$65,000

$75,000

$85,000

2001 2003 2005 2007 2009

Productivity (Output per Worker)

$25,000

$35,000

$45,000

$55,000

2000 2002 2004 2006 2008 2010

Average Annual Wage

100

105

110

115

120

2001 2003 2005 2007 2009

Real GRP/GDP(Indexed to 2001)

Analyzing Clusters

Current Concentrations: Assets, Legacies and BetsCluster Dynamics and DriversCluster Organization

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

Growth

Co

nce

ntr

atio

n

Opportunities to Target, Redeploy

Legacies? (3-digit NAICS, employment)

Bets

Assets

Manufacturing• Concentrations in primary and

fabricated metals, machinery, electrical, chemical, transportation equipment, plastics

• Connections to nearby orthopedic devices and RV/manufactured housing clusters?

• Specific sub-segments growing?

Industry Growth

Co

nce

ntr

atio

n in

Re

gio

n

Education• Leverage university strengths to

support private sector?

Communications Technology• High employment growth; High LQ;

high wage; high productivity; low absolute employment

Biotech/Life Sciences• Tie in with hospitals or Notre Dame

research?

Growth industries that build on South Bend assets?

Understanding Human Capital Dynamics

Status, Attraction and RetentionSegmentation, Skills Match and

Labor Market EfficiencyOpportunity and Mobility

High-end Production, Weak Retention

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

High SchoolDiploma

Bachelor's +

Educational Attainment

St. Joseph County

Indiana

USA

-0.1%

-0.6%

-1.1%

USA

Indiana

South Bend MSA

Growth in 25-44 Population, 1997-2009

16 Colleges and Universities High Production of Human Capital

0%

10%

20%

30%

40%

Management +Professional

Service Sales + Office NaturalResources,

Construction +Maintenance

Production,Transportation

+ MaterialMoving

Occupation Share, 2010

South Bend MSA USA Skills mismatch?Which jobs/ industries will help retain recent grads?

Cultivating Innovation

Innovation Ecosystem

MarketResearch

Marketing

Manufac-turing

Finance

R&D

Innovation PipelineCluster-based innovationInnovation ecosystem

Weak Indicators Across Pipeline

Increase university commercialization?Explore cluster-based innovation opportunities?

Enhancing Spatial Efficiency

Urban Growth FormConnectedness and Mobility

South Shore Line South Bend Airport TRANSPO St. Joe Valley Metronet

Strong Transportation Assets and Relatively Dense

Source: Center for Neighborhood Technology, Housing + Transportation Index; Innovation Index , Stats America

Residential Density Employment Density

463

500

700

South Bend MSA

Indiana

USA

Broadband Density, 2009

Connections across broader region? Jobs-housing mismatch?

Achieving Good Governance

FragmentationTax/Value PropositionGovernance

20,000

30,000

40,000

50,000

60,000

70,000

4.00% 6.00% 8.00% 10.00%

GDP Per Capita vs. Sales Tax Rate(Illustrative)

Compete on High Value instead of Low Costs

Most important public goods and services to industry, residents? Quality of these?

Regulatory processes (permitting, licensing, inspections, etc.) onerous for businesses?

Alignment of ED programs, organizations?

Govt 2.0: engaging firms and citizens, transparency, flexibility, use of public data for economic growth, …?

Services/initiatives that might be efficiently coordinated, streamlined?

Challenges &

Opportunities

Assets

Illustrative Strategy Development

Strong research assets at Notre Dame, esp. in

MicrosensingBiomedical Diagnostics

and Nanotechnology

Proximity to Warsaw’s Medical Devices cluster

Legacy manufacturing assets and human capital in need of

redeployment

Predevelopment barriers (assembly, product and market development, etc.)

Targeted, employer-driven workforce

training

Industry Innovation Center of Excellence (advanced medical

manufacturing)

Potential Strategy


Agenda





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

DISCUSSION

Robert Weissbourd

Regions Charting New Directions:


South Bend Economic SummitJune 21, 2012

regions charting new directions -...

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