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MetroBusinessNet Annual Convening February 17, 2005 by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC The Changing Dynamics of.

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Presentation on theme: "MetroBusinessNet Annual Convening February 17, 2005 by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC The Changing Dynamics of."— Presentation transcript:

1 MetroBusinessNet Annual Convening February 17, 2005 by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC The Changing Dynamics of Urban America

2 Agenda Context and Highlights The Changing Dynamics of Urban America Local Solutions Comments and Discussion The Importance of Being Strategic

3 New Breed of Civic Leadership –Colleges and universities –Community foundations –Think tanks Convergence of Business and Development Interests –Business leadership groups –Colleges and universities –Community foundations –Think tanks Convergence of Business and Development Interests –Business leadership groups Context Increasing leadership from the non-profit sector

4 Regional Approach –Emergence of city-states –Regional and inter-regional strategies –New approach of academics and practitioners –New understanding that economies are regional –Emergence of city-states –Regional and inter-regional strategies –New approach of academics and practitioners –New understanding that economies are regional Context Increased tendency to examine urban issues through a regional lens

5 The Economy is Regional: City-Suburban Correlations Performance Linked, but Nature of Linkages Changing Spearman Rank Correlation Highlights

6 One Economy: Linkages CITY REGIONAL ECONOMY ENVIRONMENT AMENITIES UTILITIES TRANSPORTATION HOSPITALS AIRPORTS HOUSING JOBS CITY CORPORATE SERVICES SUPPLY CHAINS MUSEUMS CONSUMER MARKETS Highlights

7 Importance of Colleges and Universities –Nurture research and enabling technologies of knowledge economy –Develop sectors and attract capital –Major corporations in own right –Mint new college graduates –Nurture research and enabling technologies of knowledge economy –Develop sectors and attract capital –Major corporations in own right –Mint new college graduates Highlights Higher education institutions increasingly leveraged for economic growth

8 Grow Smart, Not Big Education, not size, is key to success –Changing Dynamics of Urban America study –B.A. attainment key driver of growth –High school degree no longer sufficient –Population growth no longer driver (divergence theory) Education, not size, is key to success –Changing Dynamics of Urban America study –B.A. attainment key driver of growth –High school degree no longer sufficient –Population growth no longer driver (divergence theory) Highlights

9 The Importance of Education College Education is the Biggest Driver of Economic Growth (and High School Alone is Barely Significant Anymore) Wage Growth 1990-2000 (Log, MSA) % Adults with BA or Higher 1990 -.2 0.2.4.6.1.2.3.4.5 Highlights Miami, FL Washington D.C. San Francisco, CA Twin Cities, MN Portland, OR Chicago, IL Philadelphia, PA Indianapolis, IN

10 No Silver Bullet: Many Factors Matter -0.6-0.4-0.20.00.20.40.60.81.0 High School Degree Age 35-44 Business Services Sprawl Index Professional Jobs College Degree Exports Immigration (1980s) Estimated Effect on Income Growth (Standardized Regression Coefficient: with 95% Confidence Interval) Hispanic Segregation Drivers of City Income Growth Highlights

11 Agenda Context and Highlights The Changing Dynamics of Urban America Local Solutions Comments and Discussion The Importance of Being Strategic

12 The Changing Dynamics of Urban America Whats Changing? What Matters? Business CompositionSector Specializations (e.g. manufacturing, financial services); Occupational Concentrations; Industry Diversification Knowledge EconomyEducational Levels; Information Sector Jobs; Internet Access; Patents; Educational Institutions; High Tech Jobs DemographicsImmigration; Age Structure; Ethnic Composition; Income Inequality; Racial Segregation Urban Growth FormCommuting Times; Population Density; Land Use; Use of Public Transit; Sprawl Indices RegionalismCity/Suburb Income & Property Value Ratios; Poverty Disparities; Government Fragmentation

13 Increasing Role of Knowledge Factors Across Sectors 1.8.4.2 0 5-5 Wage Growth 1990-2000 (PMSA) Presence of Digital Economy Factors.6 Wage Growth Increases with Digital Economy Grand Rapids, MI Rochester, NY San Diego, CA Austin, TX

14 -.1 0.1.2.3 Income Growth 1990-2000 (Log, City) 0123 The Importance of Industry Specialization? Diversification Strategies are as Effective as Specialization Number of Specializations (Drennan)

15 Functional and Occupational Concentrations Estimated Effect on Income Growth (MSA) Professional Managerial Sales Clerical Precision Production Machine Operator Transportation Equipment* Material Handler & Laborer Farming* Services (Non HHD) 0.0 If Specializing, Look Beyond Sectors *Not Statistically Significant

16 How to Improve College Attainment Levels?

17 Its the Economy: The Effect of Unemployment 0 5 10 Attainment Growth 1990-2000 0.05.1.15 Civilian Unemployment Rate, 1990 [2000 Boundary] College Graduates Move Away from Places without Jobs

18 Its the Knowledge Economy: Knowledge Industries Attract BAs Finance, Insurance, and Real Estate Information Sector Business Services Manufacturing

19 High Human Capital Occupations Attract BAs Standardized Regression Coefficients: 1990 Occupation and 1990-2000 Attainment Growth Regression includes unemployment, wages, amenity index, and regional dummies as controls. * Not Statistically Significant

20 High HC Occupation s Productive Industries Knowledge Functions Its not the Chicken or the Egg – Its the Incubator Deployed Human Capital ITS ABOUT PRODUCTIVITY To Attract Knowledge Workers, Build an Economy Characterized by High-Human Capital Occupations and Functions IndustryKnowledge Workers

21 Agenda Context and Highlights The Changing Dynamics of Urban America Local Solutions Comments and Discussion The Importance of Being Strategic

22 Population Growth Not Connected to Prosperity Correlation Between MSA Income Growth and Population Growth 10-Year Moving Windows, 1969-2000 Yellow = Not Statistically Significant Cities Do Not Need to Grow Big to Grow Wealthy

23 Many Paths to Success Income Growth vs. Population Growth 1990-2000 Top 110 Cities Fastest SlowestFastest Growth in Population (Rank) Growth in Income per Capita (Rank) Washington D.C. San Francisco, CA Chicago, IL Indianapolis, IN Minneapolis, MN St. Paul, MN Miami, FL Portland, OR Philadelphia, PA Great Variation in City Economic Types, Paths, Outcomes

24 But More Important to Get it Right Success Breeds Success 4020 Change in Wages Initial Wages (1990, thousands) Divergence (1990s) 2 1.5 1.5 4020 Change in Wages Initial Wages (1970, thousands) Convergence (1970s)

25 Agenda Context and Highlights The Changing Dynamics of Urban America Local Solutions Comments and Discussion The Importance of Being Strategic

26 Towards Local Solutions In depth assessment of the local economy - original data collection on all relevant dimensions of economic performance. Metropolitan Audit Cluster analysis to determine where you fit in, who your peer cities are, on a variety of possible dimensions City Taxonomy New tool to assess the concentration of knowledge functions and industries in each metropolitan area Occupation by Industry Analysis

27 City Taxonomy DNA Clustering Map Where Is Your City Today? Who Are Your Comparables?

28 Variables used to define Clusters MSA Population City Population Business Services (Info. Sect.), MSA Education Score Art Score Age 25-34 Financial Services (Info. Sect.), MSA Clerical Occupation Business Diversity Distribution Sector Number of Specializations, MSA Exports City/Suburb Density Ratio Adults w/o HS Degree Latino Immigration Income Inequality Income Growth Government Sector Adults w/BA or Higher Management/Production Ratio Professional Occupation Age 18-24 Income (2000) Managerial Occupation Age 35-44 Population Growth Native Pop. Growth Immigrant Pop. Growth Sales Occupation City/Sub. Housing Value Ratio City/Sub. Income Ratio City/Sub. White Ratio 2000 Pop. as % Max Pop. City Pop. as % MSA Pop. Manufacturing Sector, MSA Machine Operator Occupation Precision Prod. Occupation Service (non HHD) Occupation City/Sub. Poverty Ratio Age of Housing Stock Black Consumer Services (Info. Sect.), MSA Age 45-54 Age over 65 Age 55-64 Governments per capita MSA

29 The Clustering Methodology

30 Washington, DC Cluster 15: Beautiful Minds? MSA Population City Population Business Services (Info. Sect.), MSA Education Score Art Score Age 25-34 Financial Services (Info. Sect.), MSA Clerical Occupation Business Diversity Distribution Sector Number of Specializations, MSA Exports City/Suburb Density Ratio Adults w/o HS Degree Latino Immigration Income Inequality Income Growth Government Sector Adults w/BA or Higher Management/Production Ratio Professional Occupation Age 18-24 Income (2000) Managerial Occupation Age 35-44 Population Growth Native Pop. Growth Immigrant Pop. Growth Sales Occupation City/Sub. Housing Value Ratio City/Sub. Income Ratio City/Sub. White Ratio 2000 Pop. as % Max Pop. City Pop. as % MSA Pop. Manufacturing Sector, MSA Machine Operator Occupation Precision Prod. Occupation Service (non HHD) Occupation City/Sub. Poverty Ratio Age of Housing Stock Black Consumer Services (Info. Sect.), MSA Age 45-54 Age over 65 Age 55-64 Governments per capita MSA

31 Washington DC: Young Professionals, Culture and Education Age 25-34 Art Score Adults with BA or Higher Professional Occupations Manufacturing Sector MEDIAN 1

32 Occupation by Industry Analysis Its not Just Where You Work… Indianapolis, IN Portland, OR Twin Cities, MN Chicago, IL San Francisco, CA Philadelphia, PA Washington, DC Miami, FL San Jose, CA High HC Occupations Productive Industries Knowledge Functions

33 … Its What You Do

34 Example: Kansas City (Brookings Institution Report) Industries Administrative and Support Services Management, Technical, and Scientific Services Professional Services Functions Business Services Headquarters Conventions and business organizations Market research and advertising Occupations Accountants, Analysts, HR Professionals Computer, Engineering and Mathematical Management Office and Administrative Support

35 Broad Policy Implications 1.Take Care of the Basics Education (including workforce training) Inclusion (racial, ethnic, immigrant, income equity) Innovation (e.g. R&D tax credits) Infrastructure (including knowledge infrastructure) Quality of Life 2.Leverage Unique Strengths in the Local Economy Identify occupational, knowledge, functional concentrations Strengthen economic relationships, business networks, commercialization of knowledge (within and between concentrations) Support complementary, diverse specializations building on areas of concentration 3.Make it a Regional Strategy Develop targeted programs and City-Suburb partnerships around particular linkages: shared business relationships, workforce issues, common amenities...

36 Agenda Context and Highlights The Changing Dynamics of Urban America Local Solutions Comments and Discussion The Importance of Being Strategic

37 MetroBusinessNet Annual Convening February 17, 2005 by: James Davitt Rooney, CEOs for Cities Riccardo Bodini, RW Ventures, LLC The Changing Dynamics of Urban America

38 Quality of Life does Not Matter as Much as Economic Factors Standardized Regression Coefficients: 1990 Factors and 1990-2000 Attainment Growth Regressions Include unemployment, wages, amenity index, and regional dummies as controls * Not Statistically Significant Good Weather and Night Life are Not Nearly as Important to College Graduates as Employment


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