Although today’s U.S. labor market is strong and unemployment is low, many working-age American remain marginalized. As communities across the country grapple with the challenges of an ever-evolving labor market, this report provides a framework for local leaders to grow good jobs through industrial development strategies that are based on their regions’ unique capabilities.
Map of economic Complexity
This map provides detail of American cities’ capabilities to host new industries, as captured by our economic complexity indices. At the city level, the strategic index is a measure of a city’s overall potential to add complex industries and each industry’s propensity to spur enduring growth. Policymakers can use these metrics to chart their unique paths toward more inclusive growth.
Economic Complexity in Metropolitan Areas of the United States
Summary and objectives
This report aims to provide insights to local leaders on how the rapidly changing economy is reshaping communities’ distinct advantages and opportunities. Because this plays out differently depending on the unique mix of industries in each city—and the implicit capabilities they depend on—each community needs to chart its own tailored strategies toward growth. We propose a framework for regions to grow good jobs through capability-based industrial development strategies where firms specify the inputs they need to be productive and cities become more resilient and attractive as they invest in those inputs.
Former Brookings Expert
Assistant Administrator, Latin America and the Caribbean - U.S Agency for International Development
Senior Project Manager and Senior Research Analyst - Global Economy and Development
Visiting Researcher - Workforce of the Future initiative at Brookings
Former Senior Research Associate & Senior Project Manager - Metropolitan Policy Program
The main objectives of this report are to:
- Review the main underlying causes of structural change in the national labor market—from automation to digitalization to global competition—and the nature of the policy responses to date in addressing these challenges.
- Propose a tailored approach to helping policymakers and companies bring economic growth to their regions by applying data-driven network analytics to reveal industry and city growth patterns within the U.S.
- Demonstrate how the network analytics approach can inform local economic development strategies that foster growth and good jobs through four city-specific case studies: Nashville, TN; St. Louis, MO; South Bend, IN; and Boise, ID.
For more information on methodology and results, download the related technical paper.
Key Policy Insights
- Increase complexity of industrial composition. We find that economic complexity is correlated with urban success. To grow and attract complex industries, focus on building capabilities. Cities can chart a path to growth through strategic diversification of industry.
- Identify industries that maximize feasibility and strategic gain. Often there is a tradeoff between industries that are feasible and those that offer the most potential growth. To chart a growth strategy, industrial development efforts should consider both the ability of a city to host an industry, as well as the strategic value of that industry.
- Prepare for industrial growth and decline. Using our research to anticipate the growth and decline of industries, a city can prepare for occupations that will be in demand by upskilling existing workers and attracting others with existing skill sets. Understanding which industries are expected to contract will allow workers and cities to prepare.
- Focus on capabilities in order to grow and attract industries. Although tax incentives may attract firms, they do not develop capabilities. Rather than engage in a race to the bottom, cities should prioritize worker skills and infrastructure over tax incentives. These efforts should be tailored to the specific requirements an industry needs to be successful.
- Ensure growth industries fit local workforce skills and provide upward mobility. Target industries that match a city’s workforce skills, pay well, and offer worker benefits. Foster entrepreneurial activity to enhance upward mobility by building a diverse economy with numerous complementary capabilities.
- Develop institutional foundations for inclusive growth. Offer affordable housing, lower commuting cost and time, and provide support and benefits that are linked to workers, not just jobs. Support wage subsidies and other related policies which are good for both sides of the labor market.
This report was produced by the Global Economy and Development Program’s Center for Universal Education in collaboration with the Metropolitan Policy Program at Brookings. Carlos Daboin, Gabriel Hernandez, and Isha Shah were instrumental in their research assistance. They contributed deep insight to the research process, as well as provided data analytics and visualizations.
Photo by Alden Skeie on Unsplash