Setting the Stage

Brian BosworthPresentation to The Ford Foundation Regionalism and Sustainable Development Fellowship

Memphis TNFebruary 7, 2007

Two Objectives

1. Review some of the big global trends that are driving changes in the regional agenda, making regions more important, and raising the bar for Chambers of Commerce.

2. Discuss the logic framework of this Fellowship… our “theory of change.”

The U.S. and the Global Economy(stuff you already know)

1. We live in a “flat world” causing rapid shifts in competitive advantage of nations.

2. Technology change has been a constant but never at this velocity and with this transforming quality.

The U.S. and the Global Economy (continued)

3. A global talent explosion led by such nations as Brazil, Russia, India, and China.

4. Facing a “perfect storm” in U.S. science, engineering, technology

Retirements; declining high school math and science; flagging interests of young Americans; under-represented minorities; decline in talent emigration to U.S.

5. We face intense competition for and conflict over energy resources

U.S. has huge fuel dependencies with very little R&D into new solutions

Already a source of global conflict6. We have global savings-debt crisis in a radically

imbalanced global economy Personal savings in U.S. lowest in 70 years

U.S. seeking well over $2 billion per day of foreign capital to balance trade deficit

The U.S. and the Global Economy(continued)

Of Course, A Lot of Assets

Very highly functioning system of democratic capitalism.

A national economy more than three times larger than any other nation.

An extraordinarily creative, entrepreneurial population

But Some Troubling Demographic Trends

Huge Demographic Changes in the U.S.(stuff you might not know)

1. From 1960 to 2000, U.S. labor force doubled (from 70 million to 141 million).

2. Number of prime age workers (25-54) increased over 130%.

3. Percentage of adults with high school degree doubled (from 41% to 80.4%).

4. Percentage of adults with B.A. or higher tripled (from 7.7% to 24.4%).

Demographic Changes in the U.S.(continued)

Several studies conclude that this rise in education attainment has been a major driver of U.S. economic growth.

From 25 to 40% of average annual growth in output since mid-1900s can be attributed to increases in education attainment.

Demographic Changes in the U.S.(continued)

But, this era of labor force growth has come to an end.

BLS projects total growth from 2000 to 2040 of only 29% (compared to 102%).

Number of prime age workers will increase only 16% (compared to 130%).

Labor force participation will decrease.

Demographic Changes in the U.S.(continued)

That’s only half the story.

Education attainment won’t increase; it’s likely to decline.

Older workers as educated or more than new ones coming in.

Attainment slowdown already underway:•High school graduation rate is declining;

•College entrance rate is flat: and,

•College completion rate is declining

Demographic Changes in the U.S.(continued)

Big changes in racial/ethnic composition of younger age cohorts -- much larger percentage of those not well served by education systems.

2000 census showed Whites twice as likely as African-Americans and three times as likely as Hispanics to earn a B.A

Demographic Changes in the U.S.(continued)

Two big wild cards:•Immigration -- Now, it is accelerating the trend to

low attainment. Doubtful that this will change.

•Prolonged labor force participation of older workers -- The percentage of age 65+ who still work is on the slow increase. But, it’s not likely to increase further at the magnitude necessary to change these big numbers.

So, What Does This Mean?

As labor force and educational attainment grow slowly or not at all, overall economic growth will slow.

But differences among regions will become even more important; some will slow more than others; some will buck the trend and grow.

Even over the past 40 years, while national economic growth helped all regions, some regions did much better than others.

Regional DifferencesRegions with above average numbers of college graduates have experienced faster growth and higher per capita incomes.

•From 1980 to 1998, the 10 regions with the most college graduates had per-capita income growth of 1.8%annually.

Regions with fewer than average numbers of college graduates experience lower per capita incomes and slower growth.

•From 1998 to 2000, the 10 regions with the fewest college graduates saw an annual income growth of 0.8%.

Widening Regional Gaps

In 1980, average per-capita income in the most-educated regions was 12% above the U.S. average and in the least-educated regions 3 % below the national average.

By 1998, most-educated regions had average incomes 20% above the national average, while average incomes in the least-educated regions had fallen to 12% below the national average.

The most-educated regions enjoyed productivity growth of 0.5% per year, compared with growth of 0.1% for the least-educated ones.

Source: Gottlieb and Fogerty Educational Attainment and Metropolitan Growth (2003)

In Future, Some Regions Will Do Better Than Others

Especially, those that do a better job at educating their less advantaged young people, and then retaining them.

Those that do a better job at educating their adult workers and then retaining them.

Those that do a better job at attracting well-educated people from other regions, and then retaining them.

Regions Do Well When…

They have globally-oriented businesses good at applying and converting technology into innovative products and services.

They have R&D institutions good at spinning out technological adaptations of science and engineering innovations.

Their businesses and R&D institutions can attract and retain talented and creative people.

They have strong and flexible institutions for education and skill development.

Everyone contributes. Everyone can be moved, housed, and schooled.

Leads to New Economic Development Paradigm

InnovationLearningPlace-makingReducing Disparities

Innovation

Focus on traded sectors -- e.g., biotechnology, advanced manufacturing and information technology.

Nurture and support emerging & established industry clusters.

Foster university-industry partnerships.•For R&D if you have it, for rapid and widespread

technology application if you don’t.

Learning

Provide rich and continuous supply of human capital (education, skills, flexibility, creativity, and drive)

Requires strong K-12, robust 2-year college system and world-class universities

Sophisticated and well-coordinated public workforce development system

Place-making and Distinctive Identity

What’s important in a time of high What’s important in a time of high mobility?mobility?

• TransportationTransportation

• Culture and RecreationCulture and Recreation

• Public EducationPublic Education• Housing ChoicesHousing Choices

• Vibrant Center CityVibrant Center City

• Authentic NeighborhoodsAuthentic Neighborhoods

• Tolerance and DiversityTolerance and Diversity

Reducing Economic and Social Disparities

Shift from charity to investmentShift from charity to investment

Recognition that growing socio-Recognition that growing socio-economic disparity is bad for economic disparity is bad for business business

Utilizing market mechanisms to Utilizing market mechanisms to create opportunitycreate opportunity

The Ford Foundation The Ford Foundation

Regionalism and Sustainable Regionalism and Sustainable Development FellowshipDevelopment Fellowship

Our Theory of ChangeOur Theory of Change

Our Theory of Change: 1

Regions are the primary geographic building block for global economic competitiveness.

The region is the operating landscape for traded sector businesses.

It takes a region to achieve the economies of scale, scope, and opportunity necessary for the diversity of people and specialized businesses that are essential to succeed in tough global competition.

Workforce, transportation, housing, education, supplier networks -- all exist on a regional scale

Our Theory of Change: 2

Businesses gain or lose competitive advantage based on the health of the region.

Businesses competing in a global economy gain competitive advantage from a healthy regional economy that on a long-term, sustainable basis

•Produces and attracts educated, skilled, and creative people;

•Fosters innovation and accelerates its rapid diffusion through the region;

•Moves people and goods quickly and efficiently;

•Makes smart use of environment and natural resources;

•Offers affordable housing, near jobs; and,

•Works to reduce disparities of income and opportunities.

But businesses and their performance are hurt if they But businesses and their performance are hurt if they are based in an unhealthy region where poor public are based in an unhealthy region where poor public policy and private sector neglect combine with short-policy and private sector neglect combine with short-sighted vision to create:sighted vision to create:

high levels of concentrated poverty,high levels of concentrated poverty, traffic congestion and commuting delays,traffic congestion and commuting delays, jobs-housing mismatch and affordability barriers, jobs-housing mismatch and affordability barriers, urban-suburban disparities,urban-suburban disparities, inner-city decline, and inner-city decline, and limited access to good jobs for low-income people.limited access to good jobs for low-income people.

Businesses cannot recruit locally or attract nationally or Businesses cannot recruit locally or attract nationally or internationally (much less retain) the technical skills internationally (much less retain) the technical skills and business savvy they need for competitive success.and business savvy they need for competitive success.

See readings by Manuel Pastor

Our Theory of Change: 3

The business sector must lead the region in pursuit of sustainable development.

•Business has the most at stake.

•Business can lead at the regional scale, where civil jurisdictions lack effective mechanisms and too frequently compete rather than collaborate in economic development.

•The business sector has the capacity to mobilize resources, the expertise to organize and implement complex undertaking, and the continuity of presence that extends beyond the term of elected public officials.

Our Theory of Change: 4

Individual business action is just too daunting and usually ineffective

•No single business can effect wholesale regional change,

•Challenges just too big, too deeply embedded.

•Most business leaders just don’t have the time.

•Few business leaders have the skills.

•Lean management has reduced corporate hierarchy.

•Newer, more entrepreneurial business leaders not comfortable with the slower pace of civic decision-making.

•Other groups in the region sometimes view business leaders with suspicion.

Our Theory of Change: 5

Collective action through general purpose business associations is essential.

•Because immediate costs of engaging in regional agenda are high for individual firms, it’s up to business-based, mediating institutions to mobilize collective business action.

In fact, in a knowledge-based, global In fact, in a knowledge-based, global economy, it’s now the central challenge of economy, it’s now the central challenge of business-based, civic institutions (Chambers business-based, civic institutions (Chambers of Commerce) to help their member of Commerce) to help their member businesses: businesses:

1.1. find and pursue opportunities for collective find and pursue opportunities for collective action in pursuit of sustainable regional action in pursuit of sustainable regional growth;growth;

2.2. create long-term partnerships; and,create long-term partnerships; and,3.3. use their combined economic power and use their combined economic power and

influence to promote business practices and influence to promote business practices and public policies that build efficient and inclusive public policies that build efficient and inclusive metropolitan regions.metropolitan regions.

Our Theory of Change: 6

Chambers of Commerce will develop and expand their capacity for regional leadership.

•The skills and tools to support the mission of modern regional business organizations are quite different from those required for traditional civic boosterism. • strategic analysis• coalition building and agenda setting• product development, implementation, and evaluation •Chamber execs still need highly developed process

skills, but now also need deep content knowledge.

Our Theory of Change: 7

This Fellowship can build knowledge and the capacity for action.

•Participation will include chamber from 32 major metropolitan regions who will:• learn from national experts and from each other.• develop a Regional Action Plan with peer support.• engage regional business leaders in supporting that

Plan.• “spread the word” and help build the capacity of other

chamber executives in North America.

Sustainable Development: Defined

Economic development that can be sustained over time because it is not environmentally or economically self-limiting.

It is a growth strategy: It aims to build per capita income and wealth within the region while explicitly creating wider opportunity for all residents to contribute to and participate in the benefits of economic growth.

It advances regional patterns of growth that meet environmental quality attainment standards, combating fragmented, inefficient land use planning and wasteful development patterns that can concentrate poverty and increase business and taxpayer costs.

Some of the Questions

What does this mean for your Chamber’s…•Geographic scope -- what’s the region?)

•Relationship with other business organizations?

•Mission, objectives, services, and performance metrics?

•Organization, membership, and revenues?

Who are your partners (who is not) and what is your relationship to local and state governments?What are the most important issues and how do you establish priorities?

Our Style?

Challenging, iconoclastic, curious, non-ideological, and with high mutual expectations.Friendly, supportive, respectful.

Informal, serious in intent (if not always in demeanor).