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 7 – International Connectivity.
Just 50 years ago, international travel and trade was still somewhat of a novelty. Travel across the oceans, whether by ship or plane, was both expensive and luxurious. And real-world importer/exporters like San Francisco’s Gump’s were unique in their variety of wares from around the world.
The novelty of international travel and trade may have worn-off by now, but the importance of international connectivity has only increased. To achieve global fluency in a hyper-connected world economy, it is critical that metropolitan areas gain physical access to international markets.
The importance of international connectivity begins with the global economy’s form and function. Where production lines used to extend across only a single country or even city, firms now manage and coordinate their tradable products across vast distances.
Apple’s iPhone (PDF) is designed in Silicon Valley, uses manufactured parts from places like Germany and Japan, receives final assembly in China, and then distributed and sold across the entire planet. The same goes for services, where law firms like Chicago’s Sidley Austin and advertising agencies like New York’s Wunderman operate offices in multiple countries. All of this global interconnectivity has helped global merchandise trade to grow by over 1,000 percent in just the last two decades.
To be part of these global operations, metropolitan economies must have physical connections beyond their national borders. Just as importantly, these connections must operate at both the personal and product scale.
All internationally traded industry requires access to people. Any global business will require face-to-face interaction, from the most commodity-dependent industries like natural resource extraction to the most human-dependent like finance and consulting. Locally-based services need to bring customers to their locations, whether a tourist center or a university appealing to foreign students. To make these businesses go, people must have a method to physically connect. It certainly requires telecommunications links, like phone lines and broadband access, to offer cheap and immediate interaction. But it puts a particularly large emphasis on transportation assets, like a commercial airport or an international train station, to bring people together.
The United States already boasts one of the world’s most vibrant international aviation sectors, with the number of passengers moving in and out of the nation has more than doubling in the past two decades, a growth rate far higher than GDP or domestic aviation over the same period. But much of that travel moves through just a handful of markets, from global icons like Los Angeles to tourist hubs like Orlando. Metro areas with smaller passenger levels should increase their coordination with these markets to improve their global presence.
Equally important is access to physical products. On the production side, the broadening of entire production lines across the world makes the ability for goods to flow in and out of a metropolitan area a requirement if that region wants to host globally-traded manufacturers. The story is similar on the consumption side: As developing regions’ manufacturing sectors grow and start to dominate production of certain commodities—think personal computers from China—every metropolitan area must manage freight connections to access those markets’ goods.
U.S. metro areas can look to their internationally-intensive peers to see the importance of freight transportation links. Benefitting from world-class oil refineries and chemical industries, forthcoming research shows New Orleans boasts one of the higher international freight volumes relative to its economic size. Yet moving this much international freight in and out of New Orleans would be impossible without dynamic local and regional port infrastructure.
While every metro requires international connections to achieve global fluency, these connections rely on a system of shared responsibility. Telecommunications may easily connect everyone to everywhere, but transportation is an industry that requires high up-front investments and relies on economies of scale to maximize utility.
Instead of forging infinite connections, certain markets serve as gateways to the world. Any international air traveler already knows this system: Metro areas like New York and London serve as the connection point between smaller markets. This hub-and-spoke network may require an extra flight (or more), but it essentially connects all global corners at the lowest cost possible. A similar system exists for transporting goods. Gateways like Los Angeles’ ports, Miami’s airport, and Memphis’ intermodal hubs help shuttle goods between all markets. These gateway markets bring the world to other markets’ doorsteps, and get the added benefit of local logistical activity in the process. This shared system based around metropolitan gateways provides a broad global reach for the entire country.
At the same time, it creates a difficult truth when it comes to transportation investments: Some places are more important than others.
As global trade continues to grow, it is important for leaders at all governmental levels to accept investments in certain markets will deliver the greatest benefit to all. This makes it all the more important to accurately track how specific metros trade goods and move people across national borders. As we build that knowledge base, improving that shared infrastructure system has the power to raise global fluency for all markets.