The Economy of The Future

10.26.12 | BRR network member Bruce Katz has been speaking around the country recently about a revolution on its way, a metropolitan revolution that is.

Ignited by the failures in our financial system and the Great Recession that followed, Katz says it is cities and metros that will drive economic growth in the US and abroad in the years to come. But we need to reorient our economy to ensure this happens.

“For the first time in recorded history, more than half of the world’s population lives in cities and metropolitan areas,” Katz told an audience of regional leaders in Atlanta earlier this month. “By 2030, the metro share will surpass 60 percent.  Rising nations and their rapidly growing metros now power the world economy and drive global demand”

A lot of this demand is coming from countries like Brazil, India and China, Katz says, which accounted for about one-fifth of the global GDP in 2009, and whose share is expected to grow. But the US can take part in this growth too, according to Katz, if it  remakes its economy with leadership from cities and metro regions.

Katz sees a focus on exports, clean energy and innovation as key to this transition.

Cities need to move toward an economy where “more firms in more sectors trade more goods and services seamlessly with the world, particularly with nations that are rapidly urbanizing and industrializing,” Katz said. He sees potential for export growth in the manufacturing sector, which, as we’ve written is growing and helping to fuel our economic recovery.

“Everything is changing,” Katz told a group of citizens, government, policy and business leaders at a recent speech at the GrowSmart Maine summit in Augusta.

“The energy we use, the infrastructure we build, the homes we live in and the office and retail buildings we frequent, and the products we buy are all shifting from modes that are outdated to systems that are smarter, faster, more technologically enabled, and more environmentally sound.”

Katz says cities need to focus on innovation, on making things again and on this “clean, green industrial revolution.” Growth in the low-carbon economy, in industries like the energy sector and related areas like green architecture, design and construction will improve the economy and our health and safety.

According to Katz reorienting our economy toward exports and low-carbon investments is also connected to our ability to innovate and provide opportunity. Jobs in these sectors tend to pay more and often have better benefits. And, of course, success depends on having a better-educated and well-trained workforce with opportunity open to all citizens. (See work by BRR Network member Manuel Pastor for more).

Katz encouraged regional leaders in Atlanta and Maine to follow the example of other cities (Los Angeles, Minneapolis-Saint Paul, Portland, Seattle, and Syracuse) who are innovating locally and creating city-wide business plans that take advantage of their unique competitive advantages in the global economy, building on what makes their areas unique.

“The pre-Recession economy, driven by consumption and amenities, celebrated the uniform,” He said.  “The next economy, driven by production and innovation, rewards the distinct.”

Katz sees potential in Atlanta’s downtown and midtown region to form a “world class innovation district,” for example, with Fortune 500 companies, a cluster of educational institutions, arts and cultural institutions, and green space.

In Maine, Katz sees potential to build on the production-oriented economy, which he says can help spur new ideas and innovation in other sectors. In cities like Portland, Lewiston, and Bangor leaders should build on specialties in producing leather, for example, or beverages and tobacco, or paper and wood products.  Maine could also build on its natural resources or existing clean economy jobs, Katz said.

Cities that are having success in this area are collaborating with corporate, government, university and civic institutions, taking into account geographic assets, and networking globally—“creating and stewarding close working relationships with trading partners in both mature economies and rising nations.”

Katz and Brooking Institution Fellow Jennifer Bradley have a book coming out about some of these ideas this spring called the Metropolitan Revolution. Read more here.

Photo/ Ron Reiring.

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