As the third year of the Global Cities Initiative draws to a close, it is time to take stock of what we’ve learned from the 12 metropolitan areas that have adopted metro export initiatives and another eight that will soon release their plans.
These efforts grew out of strong local desire to create good jobs in the recession’s wake. With U.S. consumer demand sluggish and global middle class consumption rising, it made common sense to help firms and regional economies expand through exports and trade even though the concept was quite novel as an economic development strategy.
Better yet, these jobs pay more, with firms that export paying at least 17 percent more in wages than local-serving firms. To help metro areas tap global growth, Brookings joined forces with JP Morgan Chase to arm public and private sector leaders with custom market data and a forum for developing customized export strategies. Today, these 20 metro areas, also aided by initial support from the Brookings-Rockefeller Project on State and Metropolitan Innovation, are at the vanguard of globally-oriented economic development. Other state and regional leaders can take note of what has worked well as they consider ways to engage the international marketplace to enhance economic resilience and job growth.
Here are the top features of a good export plan.
Regional in Scope
Although the name of a city (e.g. New York, Los Angeles) is often the foundation for a global brand, the most effective export plans extend beyond the central city and are regional in scope, matching the geographic spread of supply chains and air and freight logistics. For instance, the city of Chicago and seven counties announced an unprecedented regional collaboration to expand exports. Rather than poach firms from one another, resulting in a zero-sum gain to the regional economy, the economic development teams from across the eight jurisdictions agreed to help existing firms grow, aligning and coordinating activities on international trade. At the hub of this regional effort is World Business Chicago. Like in many metro areas, the quarterback of the export initiative is a public private partnership or business-led group. Other entities also play critical roles: Chambers of commerce engage their large business memberships; elected officials act as vocal champions for going global; and state, federal, and local trade agencies provide program support and overseas representation.
Focused on Threshold Firms
With limited resources and pressure to demonstrate tangible impact, regional leaders have had to prioritize which firms to proactively target, beyond a general commitment to small- and midsized- enterprises. Places like Chicago, Portland and San Diego have thus focused their efforts on high potential “threshold firms.”These are small- and mid-sized manufacturers that have proven products and financial margins and thus are on the threshold of exporting more consistently or exporting for the first time. Moreover, recent analysis indicates obstacles to export growth for mid-sized firms are comparatively easy to alleviate. Local and regional leaders are finding these firms through a mix of one-on-one outreach and firm surveys. The strongest plans are building a pipeline of qualified companies that can make immediate use of existing export resources.
Anchored in Globally-Relevant Industry Clusters
Like firms, metro economies are highly differentiated, specializing in a unique mix of goods and services. Leveraging those specializations is essential in the race for global customers. Regional leaders are increasingly turning to global opportunities as a way to jumpstart or scale their priority economic clusters. Wichita’s export initiative is working to respond to disruptive shifts in the global aviation industry and plans to build new support systems to help their secondary and tertiary suppliers penetrate growth markets such as Brazil and China. Similarly, despite the dominance of computer chip fabrication in greater Portland’s export economy, the Portland Development Commissions is now also facilitating the expansion of the region’s clean economy firms in Japan and China through their “We Build Green Cities” initiative.
Customized with Innovative Programs and Interventions
The best export plans create new programs to enhance or fill gaps in the existing regional export ecosystem. For example, over and over, company interviews and surveys reveal that many firms are not aware of the export services that exist and don’t know how to get started. As a first order of business, many metro areas are trying to create a streamlined, transparent, and coordinated system of existing export services, such as those offered by the state, the federal Commercial Service, Small Business Administration, Export-Import Bank and local universities. This transparent roadmap of available services is the centerpiece of the Minneapolis-Saint Paul plan. Partners in Syracuse, New York went further. Rather than simply knit the system together, they hired an export outreach concierge to lead businesses through available programs and services. In Columbus, Ohio, Columbus 2020 plans to leverage the strong international footprint and relationships of the Ohio State University to facilitate connections for its firms with business alumni in priority markets like Sao Paolo. Partners in Los Angeles have set up the Export Champions programs with UCLA that connects participating firms with international MBA students to help them develop new market entry strategies.
Linked to Broader Regional Economic Development
At the beginning, many regional leaders thought they were designing a narrow effort to help firms do business abroad. In short order, it was clear that to grow exports effectively, leaders needed a multi-pronged approach embedded in a larger regional economic system and strategy. San Diego’s export plan includes a focus on strengthening broadband and IT infrastructure to help their tech-savvy firms and entrepreneurs better produce and deliver products and services abroad. Portland’s plan includes a focus to unlock freight bottlenecks. Furthermore, the export plans in Syracuse, Milwaukee, and Sacramento are critical planks to larger, integrated regional efforts to grow jobs and opportunity. The result is a true cross-sector approach to help priority firms and industries expand and innovate in ways that benefit firms and workers across the economy.
Though early, the metro export plans that exhibit these features are already seeing returns. Portland has helped create local business consortiums that have won contracts in China and Japan; the pipeline of export-quality firms in Syracuse has nearly doubled; and Wichita has opened a new sales office in China.
As more and more cities develop strategies to enhance their role in the global marketplace, metro areas as diverse as Chicago, Portland, and Wichita are showing what it takes to make greater global engagement a concrete and central part of their economic DNA.