Each week this summer a Brookings expert will post on one of the 10 traits of globally fluent metro areas. These 10 traits have proven to be particularly strong determinants of a metro area’s ability to succeed in global markets, manage the negative consequences of globalization, and better secure its desired economic future. This blog post represents trait 4 – Adaptability to Global Dynamics.
“Going global” is no longer a choice for metropolitan leaders. With 80 percent of global GDP growth projected to occur outside the United States and 70 percent in emerging markets between now and 2025, city and regional leaders can either embrace the opportunities afforded by global integration or risk stagnation.
This is the blunt point of the Metro Program’s recently released report “The 10 Traits of Globally Fluent Metropolitan Areas.” Global integration has ushered in an era that demands much more global engagement from city and regional leaders, including—as Amy Liu and Joseph Parilla wrote here last week—a heightened focus on a region’s traded sectors. Liu and Parilla argue that cultivating what the report calls “specializations with global reach” is critical because it helps regions grow their exports, tap inbound investment, and stay at the global cutting edge. The alternative: Cling to the domestic market and risk drift or worse, such as the real estate- and consumption-driven slumps and crashes that have brutalized so many undiversified U.S. metros, from Orlando to Riverside.
And yet, no one should embrace global engagement blithely. In fact, once a region goes global it had better be ready to roll with change.
Global flows of people, products, and capital are massive, erratic, and hard to alter. Global consumer and business trends can stimulate local growth or depress it. Interest rates and currency prices in one country frequently respond to the oscillations of financial markets an ocean away. And for that matter, the relative importance of regions and sectors is constantly changing as change unfolds in energy markets, global supply chains, and the public square, where by turns social harmony, middle-class striving, or political disruption may be the order of the day.
So no wonder “Adaptability to Global Dynamics” is “Trait 4” among the “10 Traits.” Cities and regions that want to succeed as they go global will need to develop a resilient ability to adjust to constant flux. They must specialize but they also must roll with the flow of global dynamics—and diversify.
And here regions have the capacity to, if not master, at least surf global cycles of change. The new report notes that many U.S. and global urban areas have developed a regional talent for self-invention and re-invention, often based on diversification and always enacted with an outward-looking frame of mind. For 800 years Hamburg has been pragmatically repositioning its port-based economy in Northern Europe and now is moving again to realign its cluster strategies with perceived new opportunities. Singapore, for its part, has dexterously moved from strength to strength, morphing from its original status as a manufacturing center into serial relevance as a global services node, a tourism destination, a regional headquarters location, and now a science and technology hub. It has constantly placed internationalism at the center of its economic strategies. And then there is Seattle, which has consciously leveraged its original fortunate location on the Pacific trade basin into global technology prowess through education initiatives and systematic trade missions aimed at staying aware of emerging trends and opportunities abroad.
Ultimately, successful metros like these know that, while they have no choice but to embrace the rigors of global engagement, they can and must manage their destinies. To be sure, the sheer scale of the macroeconomic forces at work in the world far exceed the control of any given metropolitan area. And yes, the nation-state plays a role. But even so, city-regions concentrate the assets that matter for global competitiveness. They retain the nimblest ability to assemble a skilled workforce. They link and align the region’s innovation assets. And they lead on delivering the metro area’s economic development stance and freight infrastructure.
Given that leverage, U.S. and global metropolitan areas must wield it astutely by becoming more globally fluent.