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

Washington, DC / November 5, 2015Metropolitan Policy Programat BROOKINGS

Source: Brookings analysis of Moody’s Analytics and Brookings Global Metro Monitor

Greater Washington’s economy is strong

3.2 million jobs5th largest metro in the US50th largest metro in the world

$403.6 billion6th largest metro in the US14th largest metro in the world

DC

PRINCEGEORGE’S

CALVERT

CHARLES

PRINCEWILLIAM

FAIRFAX

MONTGOMERY

FREDERICK

LOUDOUN

JEFFERSON

CLARKE

WARREN

FAUQUIER

CULPEPPERSTAFFORD

SPOTSYLVANIA

Greater Washington’s economy is strong

METRO AREAMETRO AREA OUTPUT OUTPUT/WORKER

1 New York $1,071 b $174,798

2 Tokyo $736 b $93,227

3 Los Angeles $592 b $172,284

4 London $500 b $89,604

5 Paris $484 b $118,053

6 Seoul-Incheon $370 b $69,632

7 Washington $367 b $156,9578 Chicago $359 b $133,021

9 Beijing $307 b $41,424

10 Moscow $301 b $94,949

Largest Business, Financial, Professional Services Economies

Source: Brookings analysis of data from Oxford Economies and Moody’s Analytics

DC

PRINCEGEORGE’S

CALVERT

CHARLES

PRINCEWILLIAM

FAIRFAX

MONTGOMERY

FREDERICK

LOUDOUN

JEFFERSON

CLARKE

WARREN

FAUQUIER

CULPEPPERSTAFFORD

SPOTSYLVANIA

Source: American Community Survey, 2013 Estimates

Greater Washington’s economy is strong

1.5x national median

household income

US

$52k

$90k

DC Metro

50% national poverty

rate

US

15.8%

8.5%

DC Metro

DC

PRINCEGEORGE’S

CALVERT

CHARLES

PRINCEWILLIAM

FAIRFAX

MONTGOMERY

FREDERICK

LOUDOUN

JEFFERSON

CLARKE

WARREN

FAUQUIER

CULPEPPERSTAFFORD

SPOTSYLVANIA

But the region’s economy is slow-growing

Source: Brookings Analysis of Moody’s Analytics GDP estimates

93rdGrowth in GDP 2010-2014 ranks

among top 100 metros

1

1.2

1.4

1.6

2008 2014 2020

Projected output growth

TOP 100METROS

DCMETRO

But the region’s economy is slow-growing and must diversify

FederalGovernment19%

Greater Washington Economy (2014)

Source: Brookings Analysis of Moody’s Analytics GDP estimates & USA Spending Data*includes Federal spending on contracts, grants, loans and other financial assistance

Federal Contractors19%

Manufacturing2%

OtherServices60%

Why global engagement matters

How Greater Washington is faring

Lessons emerging from other metros

1 2 3

1

2

3

Why global engagement matters1

8

Advanced Industries

Global Engagement

Trade Investment

9

Global Engagement

Trade Investment

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

11

Advanced industries drive exports and innovation

Share of U.S. Totals

Source: Brookings Institution, forthcoming

PatentsGDP R&DJobs Exports

8.9%

17.9%

57.5%

81.2% 90.3%

Advanced Industries

12

Wages

$90,000 > $47,000average advanced

industry wageaverage wage

Skills

1 out of 2advanced industry jobs require less

than a 4-year degree

Advanced industries support high-paying jobs and mid-skilled work

Source: Brookings Institution, forthcoming

Advanced Industries

Advanced Industries

13

Global Engagement

Trade Investment

Source: World Economic Outlook, International Monetary Fund, 2015

Trade

1980

$3 trillion

$26 trillion

2012

The cross-border flow of goods, capital and services has

exploded in recent decades…

36%global GDP 86%

of global economic growth will occur outside the US from 2015 to 2020

Source: James Manyika and others, “Global flows,” McKinsey & Co., 2014

…and foreign markets will continue to drive global

economic growth

15

Trade

Share of GDP Growth

‘09-‘14

Share of Job Growth

‘09-‘14

Manuf. Trade Wage

Premium

Services Trade Wage

Premium

8.1%

20.0%

27.0%

17.0%

Exports are driving economic growth and wage gains

Sources: Moody’s Analytics; Brookings “Export Nation”; J. Bradford Jensen, “Global Trade in Services,” Petersen Institute for International Economics, 2011; David Riker, “Do Jobs in Export Industries Still Pay More?” ITA, 2010.

16Source: Brookings, National Association for the Middle Market, “Accelerating Exports in the Middle Market,” 2014The Middle Market is defined as companies with annual revenues between $10 million and $1 billion

Trade

Middle market firms benefit from exports

Companies reporting revenue increases

Exporting

Non-exporting

76%

64%

Companies that added employees

Exporting

Non-exporting

51%

39%

2014 SURVEY

Advanced Industries

17

Global Engagement

Trade Investment

Global investment flows are growing…but the US is losing market share

Source: UNCTAD

TradeInvestment

1984 1999 2012

$2 trillion

$1 trillion

Global

U.S.

Foreign Capital Investment, 1980-2012

19Source: Brookings, Bureau of Economic Analysis

Investment

5.6 millionemployees in foreign-owned firms, 2011

…and tend to pay higher wages

Average wages domestic firms

$77k

$60k

Average wages foreign-owned

firms

Foreign-owned firms employ millions of workers…

5.0%foreign-owned investment share of workers

Investment

20.3%foreign-owned investment share of goods exports

18.9%foreign-owned investment share of corporate R&D

They also punch above their weight on export and innovation

capacity

Source: Brookings, Bureau of Economic Analysis

How Greater Washington is faring2

22

Advanced Industries Trade Investment

Regional Indicators of Global Engagement

Advanced Industry Intensity &

Specialization

Patenting

Talent

Export Strength

Export Industry Specialties

Infrastructure

Foreign Investment

Intensity

Foreign Investment in

Advanced Industries

23

PEER METRO AREASPEER METRO AREAS ADVANCED INDUSTRY SHARE OF WORKFORCE (2014)

1 Seattle 15.9%

2 San Francisco 14.5%

3 Washington 13.5%4 Boston 13.4%

5 Austin 12.8%

6 San Diego 12.4%

7 Raleigh 12.2%

8 Baltimore 9.0%

9 Philadelphia 8.7%

10 Sacramento 6.4%

Computer Systems Design

39%

Management & Technical Consulting

23%

12%

R&D Services

11%

Agricultural & Engineering

A large share of the workforce is in Advanced Industries…

…spread across major employment sectors

Greater WashingtonAdvanced Industry Employment

(2014)Source: Brookings analysis of Moody’s Analytics data and USA Spending data

Advanced Industries

24

GREATER WASHINGTONCOUNTY OR CITY

ADVANCED INDUSTRY

EMPLOYMENT

Fairfax & Falls Church (VA) 148,550

District of Columbia (DC) 71,650

Montgomery County (VA) 68,980

Arlington County (VA) 39,230

Loudoun County (VA) 23,730

Prince George’s County (MD) 23,040

Alexandria City (VA) 16,390

Prince William & Manassas Park (VA) 13,690

Frederick County (MD) 10,520

Advanced Industries are present throughout the Greater Washington region

Source: Brookings analysis of Moody’s Analytics data

Advanced Industries

25

But Advanced Industries in this region are reliant on the Federal Government

Federal Government

Exxon Mobil Research

Georgetown University

Avicode Inc.

The Boeing Co.

Medimmune Inc.

Verisign

Amazon Tech Inc.

Henry M Jackson Foundation

Canon U.S. Life Sciences Inc.

150 300 450 600patents, 2008-2014

Top Patenting OrganizationsGreater Washington

FederalGovernment

64%

Share of Advanced Industry Revenue from Federal Contracts

Greater Washington

Sources: Brookings analysis of Moody’s Analytics and USA Spending data, OECD REGPAT Database, PCT Patents

Advanced Industries

26Source: American Community Survey, 2013 Estimates

1.5x population

Bachelor’s degree attainment rate

US

30%

49%

DC Metro

1.4x immigrant

Bachelor’s degree attainment rate

US

29%

42%

DC Metro

A highly educated workforce… …but employers have a hard time filling STEM jobs

Source: Brookings, Still Searching: Job Vacancies and STEM Skills

Washington, DC

San Francisco, CA

Baltimore, MD

Boston, MA

Austin, TX

Seattle, WA

Philadelphia, PA

Raleigh, NC

Sacramento, CA

San Diego, CA

5 10 15 20

median duration of STEM job listings

days

PEER METRO AREAS

Advanced Industries

Source: American Community Survey, 2013 Estimates

1.5x population

Bachelor’s degree attainment rate

US

30%

49%

DC Metro

1.4x immigrant

Bachelor’s degree attainment rate

US

29%

42%

DC Metro

A highly educated workforce… …yet low representation of foreign students

Source: Brookings Geography of Foreign Students

Advanced Industries

Boston, MA

San Francisco, CA

San Diego, CA

Seattle, WA

Durham, NC

Washington, DC

Philadelphia, PA

Austin, TX

Baltimore, MD

Sacramento, CA

F1 visas approved per 1,000 students

70

PEER METRO AREAS

35

$6.8 b

$4.4 b

$3.4 b

$2.7 b

$1.9 b

Travel & Tourism

Technology

Management & Legal

Royalties

Finance

28

Trade

$27 billionGreater Washington exports

13thlargest export economy in the United States

A leading export economy…

Source: Brookings, Export Nation

…powered by service industries

…yet it punches below it’s weight in export intensity

29

Trade

$27 billionGreater Washington exports

13thlargest export economy in the United States

A leading export economy…

Source: Brookings, Export Nation

95thgreatest export intensity in the United States

6.1%share of GDP in exports

30Source: Sabre Global Flights

LondonToronto

ParisSan Juan

BeijingSeoul-Incheon

Frankfurt am MainTokyo

Mexico CityRome

0 250 500 750 1000

Origin-Destination Passengers (thousands)

Trade

San Francisco

BostonSeattle

PhiladelphiaSan DiegoBaltimore

RaleighAustin

Sacramento

International Origin-Destination Passengers (millions)

Washington DC

160 8

A major aviation center… …with strong global connectionsPEER METRO AREAS

31Source: Brookings FDI in US Metros

Investment

US

5.0%5.4%

DC Metro

Above-average FDI jobs share…

34thhighest FDI jobs share in the United States 50th

in the United States

24%of FDI jobs in Advanced Industries

…but low Advanced Industries share of FDI

3 Lessons emerging from other metros

State and local leaders need to focus on the real sources of job growth

1.9%job creation from firm

attraction

98.1%job creation from firm expansion & startups

Sources: Brookings analysis of NETS data

AtlantaBaltimoreCharlestonChicagoColumbusDes MoinesFresnoHoustonIndianapolisJacksonvilleKansas CityLouisville-LexingtonLos AngelesMilwaukee

Minneapolis-St. PaulPhiladelphiaPhoenixPortlandSacramentoSalt LakeSan AntonioSan DiegoSeattleSt. LouisSyracuseTampa BayUpstate SCWichita

GLOBAL CITIES INITIATIVEA Joint Project of Brookings and JP Morgan Chase

Metro areas are pioneering global trade and investment strategies

35

Greater Portland: Targeting under-exporting firms and industries

Goal: Double Regional Exports Maintain the region’s competitive advantage through a heightened focus on cluster development, trade and innovation.

Computers & Electronics

Research: 67 percent of region’s total exports

Strategy: Maintain advantage, boost secondary exports, fill supply chain gaps

35

Greater Portland: Targeting under-exporting firms and industries

Goal: Double Regional Exports Maintain the region’s competitive advantage through a heightened focus on cluster development, trade and innovation.

Computers & Electronics

Research: 67 percent of region’s total exports

Strategy: Maintain advantage, boost secondary exports, fill supply chain gaps

We Build Green Cities

Research: Portland has an international reputation for sustainability

Strategy: Brand and market Portland’s global edge in key clusters

Target Under-Exporters

Research: Company surveys reveal lack of proactive export strategies

Strategy: Provide case management to 10-15 mid-sized under-exporters

It’s time for Greater Washington to act like the economic power that it is

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

Washington, DC / November 5, 2015Metropolitan Policy Programat BROOKINGS