Global Cities Exchange Remarks

On December 12 and 13, 2013, the Global Cities Initiative brought together business, political, and civic leaders from eight regions for the first meeting of a new peer learning network created to help local and regional leaders, with their states, develop and implement global trade and investment. On the second day, Amy Liu delivered this presentation on how the Global Cities Initiative will organize all these regional efforts under one banner. This vision will lay the foundation for the next four years of work the regions will undertake.

Click here to view the slides for the presentation »

Welcome to the second day of the Global Cities Exchange, a new and critical component of the Global Cities Initiative, a joint project of Brookings and JPMorgan Chase.

I understand yesterday was a true roll-up your sleeves work day, which was the goal. I hope it was practical and productive. Today, we are going to step back, go beyond exports and talk about the larger journey we are on…the opportunity to adopt comprehensive global engagement strategies so we can grow high quality jobs and opportunity in the face of major global, social, and economic forces.

To kick us off, we are fortunate to be joined by two critical partners, and they are truly partners.

Peter Scher is the Executive Vice President at JP Morgan Chase. He has assembled a dream team to support this Initiative and together, they have been a pleasure to work with. They have a genuine commitment to cities, which is shared by all the market presidents and other executives we have met both here and in cities across the globe. You will hear from him in a moment.

I have the distinct pleasure of introducing Strobe Talbott. Strobe is the President of the Brookings Institution. He is a global visionary and global citizen himself. He has brought to Brookings his journalistic curiosity and passion for the written word, his appreciation for the academy, and his commitment to public service from his time at the State Department. With these, he has positioned this institution as a true world class, global think tank with an international footprint. We could not have a stronger supporter and champion in Strobe. And Bruce and I often remark there is no better home for a premier think tank on cities and on global cities than the Brookings Institution. They have truly allowed us to thrive here.

Please join me in welcoming Strobe.

Through the Global Cities Initiative, JP Morgan Chase has enabled us to build on the prior work of the Metropolitan Export Initiative and expand that to meet what has been growing demand from cities to “act” on the global moment.

We know you are here because you represent a special, distinct group of leaders who have made that commitment to act and demonstrated it too. And Brookings wants to be able to meet you half way, using the power of research and expertise, convenings, and peer-to-peer learning and action to support your efforts to be more globally competitive and globally fluent.

I want to start this morning by talking about why this is the time to not only embrace exports but a broader global approach to economic development, the facilitating role of GCI and the Exchange, and explore with you how we can collaborate and structure this effort to mutual benefit. We are just at the beginning and your guidance early on will be extremely helpful.

So why now?

As Brad reinforced yesterday, the Great Recession was a wakeup call. As depicted here in red, the Great Recession was deeper and has been slower to bounce back than its predecessors. This forced everyone, from national leaders, to businesses, to regional economic leaders, to reevaluate their assumptions about growth and how to emerge from the crisis stronger and more resilient than before

But we are not out of the woods yet. The overall economy is indeed improving, but the recovery is highly uneven, with not all people and communities benefiting equally from the rebound.  On the left, the widening income inequality is stark. The bottom 99 percent of earners have seen no income improvements since the recession while the top 1 percent have enjoyed a 31 percent growth in income. 

On the right graph, not all regions are recovering at the same rate. I know I’m preaching to the choir when I say the U.S. is not one monolithic economy but a network of regional economies with different assets and starting points, reinforcing the need for a customized approach to economic recovery.

To create long-term value in our economy and ensure quality job growth with upward mobility, we need to go back to market fundamentals and embrace strong traded sectors that drive growth. These are industries that generate value-added products and services, such as auto and aerospace manufacturing, medical IT and devices, and food processing, that produce good paying jobs, support the growth of multiple local jobs, and generate the overall wealth and productivity of a region. Yet only 2 percent of net new job growth in the United States came from traded sectors over the last two decades. 

That’s why we need a new growth model, not one driven by debt, consumption, and real estate, but one focused on the core markets assets of the future economy – around innovation, trade, human capital, infrastructure. 

But as we focus on these core drivers of economic growth, we also need to adapt to changing times. The world has fundamentally changed since the recession. New macro forces at work that are redefining what it takes to excel in today’s global economy. And each of these has a global dimension.

Disruptive technologies – from internet and digital communications, 3D printing, energy storage and renewables, robotics, big data – are rapidly changing how we work and deliver products across industries and the globe.  Firms and regions must embrace these technologies or risk falling behind.

Greater global integration – This room knows that the rapid rise of global markets in Brazil, India and China, with their stronger industries and expanding middle class, has led to annual growth in the level of global trade between countries, reinforcing the greater integration of our global economy. This creates both greater global opportunities but also greater global competition. So thinking and acting globally is an economic imperative today.

Demographic revolution – And we must contend with an aging workforce that is projected to be replaced by a majority minority workforce in 20 years, driven in part to historic and new immigrants coming into our country. While we have a demographic advantage by global standards, this future workforce is projected to be less educated, given the stark education gap that exists between blacks and Hispanics and the rest of the workforce. We must close that skills gap if we are to prosper and remain a global leader

To prosper, we need to make our economies more globally competitive or more globally fluent. To do that will require new economic development approaches, at the state and regional level, that reflect what matters in today’s economy and the forces underway.  Status quo approaches will deliver status quo results. 

Brad McDearman coauthored “10 Traits of Globally Fluent Metro Areas” as part of the GCI series. What do we mean by being globally fluent? To be globally fluent means having a high degree of global understanding, competence, practice, and reach that enables a metro area to adapt to all the promises of greater globalization but also to act to mitigate some of the risks that it can bring.

And in the continuum of global fluency, Brad’s paper concludes that most metro areas are simply globally aware. They know there is a larger world out there, they may collect or track data that situates themselves in a global context, but for the most part this is an intellectual awareness that has yet to be inculcated into strategies.

Globally-oriented is where most US metro areas reside. They are now taking that data and awareness and applying that into a new set of strategies… trade missions, foreign language learning, exports strategies. But ultimately, the global dimension is limited to a few discrete and separate efforts.

Global fluency is where global thinking and action is the main guiding force and integrated in all strategies. It is in the DNA of all major decision makers and actors in a region, embedded in the culture of economic growth. Few places, like New York and London, fall into this category.

We are actively exploring the extent to which this Exchange can bill as its objective to help metro areas move along this continuum.

So what are the 10 traits of a more globally fluent metro? As the definition implies, it means taking every dimension of regional economic development, and the core drivers of economic development, and putting them into a global lens. 

1. Metros always needed strong local leadership to drive vision and execute with diverse constituencies, but now that leadership needs to have a global outlook and their own global networks.

2. History, location, natural assets may give some regions a distinct head start or deficit in global edge.

3. Industry specializations matter but now they must have global reach (exports, global supply chains).

4. The ability of local policies, strategies, and governance culture to adapt to change has always mattered, but now it’s about adapting to global economic shocks and other global disruptions.

5. With increasing global competition, regions need even higher levels of innovation capacity and talent, including a globally fluent workforce

6. Being opportunity-rich, appealing, and open is not only good for attracting and retaining domestic talent, but attracting people and firms from around the world.

7. International connectivity is about modern infrastructure to move goods, people, and ideas across the globe.

8. The ability to secure investment for strategic priorities goes beyond government to include even foreign capital investors to effectively implement transformative projects and strategies.

9. Governments at all levels do matter as partners to enable global strategies.

10. Regions often pursue a branding strategy, particularly for recruitment purposes, but now cities must establish an appealing global identity and relevance in international markets if they want to stand out.

Let’s use San Jose as a quick example. San Jose is not traditionally considered a “global city”, but the 10 traits show that you don’t have to be a major global financial center or production hub to be a global city.

San Jose was a largely agricultural region in the mid-20th century, but its economy has evolved dramatically to one now marked as a global leader in a range of advanced industries and IT driven by global companies such as Google, Apple, and Cisco.

Most of that innovation was made possible by a major global recognized research institution like Stanford, which generated high skilled talent and cutting edge applied research and has fueled start ups.

The rich opportunities the economy has generated, via education, good jobs, and an open entrepreneurial culture added fuel to the growth and attracted students and innovators from around the world, giving the San Jose metro area the country’s highest share of foreign born residents with a college degree.

The result was a new global brand for San Jose… called Silicon Valley.

But the drive to be more globally fluent is not just found in the U.S. This map shows the major financial cities or historic trading cities that have been long considered global cities. 

But now a new crop of cities are emerging with much more intentional efforts to build up global assets, global industries and global brand.

This brings us to the goal and role of the broader Global Cities Initiative in this economic moment, your engagement, and how this effort can be of value.

Goal: Catalyze a critical shift in economic growth policies and practices that results in more globally-oriented metropolitan areas, positioning them for high quality growth and competitiveness in the 21st century economy.

GCI is made up of three core activities that together help us achieve ultimate outcome of greater global engagement and competitiveness.

Research to change thinking: reinforce the power of metro areas in the global economy and give metro areas a sense of their performance and strengths in the key assets of the global economy.

Convenings: both in the U.S and globally, bringing cross-sector leaders together in ways that can inform and catalyze solutions within regions but also that give national and state governments a sense of how they can engage.

Exchange: which takes all that knowledge and convening into concrete action (talk through 3 ways).

These are highly synergistic activities. We introduce or apply new research in the convenings and in the Exchange. We want new relationships and new ideas for action to come from our convenings. And some of the participants in the Exchange can be hosts for the domestic forums or participate in some of global forums to further impact and knowledge in their regions.

And I want to remind everyone that GCI is a 5-year initiative and we are in year two, with the Exchange being the newest program.

The Exchange: As mentioned earlier, by the end of the 4-year period, we hope to have helped, and be able to showcase, 28 metro areas that are at the vanguard of global economic development. Twenty are in the room today. We will be adding 8 more over the next few years.

What will we do together over next 4 years?

Through this network and platform, we want to help you… and to help each other develop global engagement strategies with exports and FDI at the core. These meetings, and what we do with you in the interim via webinars and on-the-ground coaching and convening, is to help you design and execute…Then also learn about the strategies over time, as represented by the 10 Traits paper.

Connect you to global best practices: either by giving some participants an opportunity to see a global best practice in person, such as in Queretaro, or to bring some of our global cities to this Exchange to talk through models and lessons learned from a variety of innovations.

We know that it is not enough to guide planning but also provide support during implementation, which is hard… and where this peer group will play a role.

Monitor progress: this is about capturing progress for news and reporters to elevate what we are doing; but also because it creates fodder for peer-to-peer learning. 2-pagers already exist for metros with completed plans, including a section on progress and outcomes to date. We are going to post them online, drive reporters and metros to your stories, and ask you to update them regularly.

Facilitate international relationships: we can offer guidance on how to forge global economic partnerships with a key trading partner… like the one between Chicago and Mexico City. But the Exchange and other convenings will also give you an opportunity to network with leaders in other global cities.

Next Steps:

You are not mandated to participate in this Exchange for four years, but the opportunity exists and it is up to you to take advantage of this opportunity to bring this knowledge and learning to your efforts at home.

At the same time, we want to make sure this Exchange is a good use of your time, with real practical value. So, here are some questions I want to pose for discussion.

But first, I want to reinforce on behalf of Brookings and JP Morgan Chase, how excited we are about your participation in this Exchange. And we look forward to working with you. Thanks.