global cities initiative | detroit
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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
-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