major forces necessitate global economic...

Major forces necessitate global economic engagement

2

Intensifying Globalization

The cross-border flow of goods, capital and services has exploded in recent decades…

1980 2012

$26 trillion

$3 trillion

36% of

global GDP

Significant Global Demand

…and foreign markets continue to

drive global economic growth

86%of global economic growth will occur

outside the United States from 2015

to 2020

Sources: James Manyika and others, “Global Flows in a Digital Age,” McKinsey Global Institute, 2014; World Economic Outlook, International Monetary Fund, 2016.

Metropolitan economies must compete globally

3

Taking part in global markets is no longer a choice for metropolitan leaders.

City and regional leaders can either seize the opportunities afforded by the

global dynamics or risk falling victim to the downsides of globalization.

This benchmarking study analyzes Greater Charlotte’s competitive position

through four factors—trade and investment, innovation, talent, and

infrastructure—compared to 19 other city-regions that most closely resemble

Greater Charlotte’s size, wealth, productivity, industrial structure, and

competitiveness factors.

Trade Innovation Talent Infrastructure

Regional Competitiveness Framework

4

Melbourne

Peer metro areas

BirminghamFrankfurt

San Antonio

Minneapolis

Dallas

Kansas CityIndianapolis

Cleveland

Atlanta

Montreal

Hamburg

Stockholm

Copenhagen

ZurichMunich

Denver

Phoenix Austin

Bottom Line – Charlotte’s competitive position

5

Economic performance: Overall economic growth has been robust over the past decade, but on metrics of inclusion Greater Charlotte has lagged.

Trade and Investment: Greater Charlotte is very globally-oriented. Exports and foreign direct investment account for a disproportionate share of the regional economy, led by tradable anchors like machinery, transportation equipment, and financial services.

But the region is at risk of losing ground to peer metropolitan economies unless it shores up its competitive drivers:

• Innovation: Build up very low levels of research and development, technology commercialization, and venture capital investment;

• Talent: Help employers overcome challenges in filling job vacancies, especially occupations that require STEM skills; and

• Infrastructure: Address lagging broadband speeds and disparities in broadband access by income.

1 | Economic Performance

Greater Charlotte is a wealthy region

7

$126.2 billion

Metropolitan GDP per Capita

61st wealthiest metro in the world

$53,142

Metropolitan GDP

107th largest metro in the world

Definition: 10-county

metropolitan statistical area

2.4

million

Source: Brookings analysis of Moody’s Analytics data.

Metro Monitor: 3 elements of economic performance

8

Growth indicators capture net change in the total size of a metropolitan area’s economy.

We measure growth through the change in total jobs, change in gross metropolitan

product (GMP), and change in aggregate wages.

Inclusion indicators measure how the benefits of growth and prosperity in a metropolitan

economy—specifically, employment and income—are distributed among people. We

measure inclusion by the change in the median change, change in the relative income

poverty rate, and the change in the employment-to-population ratio.

Prosperity refers to the wealth and income produced by an economy on a per-capita or

per-worker basis. We measure prosperity through the change in GMP per job, change in

the average annual wage, and change in GMP per capita.

Source: Richard Shearer and others, “Metro Monitor 2016” (Washington: Brookings Institution, 2016).

Greater Charlotte’s economy has grown rapidly

9

1 year

Source: Brookings Metro Monitor.

5 years 10 years

Jobs (100 metro rank)

+3.6% (13th)

Gross Metro

Product

(GMP)(100 metro rank)

+3.0% (22nd)

Aggregate

Wages(100 metro rank)

+5.1% (17th)

OVERALL

GROWTH (100 metro rank)

+11.3% (14th)

+15.6% (17th)

+18.1% (10th)

+15.3% (16th)

+23.5% (18th)

+23.3% (20th)

10th17th 18th

But growth in prosperity metrics has slowed

10

1 year


5 years 10 years

Average Wage

(100 metro rank)

+1.4% (50th)

GMP Per

Capita(100 metro rank)

+1.1% (51st)

GMP Per

Worker(100 metro rank)

-0.6% (74th)

OVERALL

PROSPERITY (100 metro rank)

+6.1% (8th)

+6.6% (35th)

+3.9% (36th)

+6.9% (34th)

-2.5% (73rd)

+7.1% (33rd)

21st59th 50th

And growth has not necessarily been inclusive

11

1 year


5 years 10 years

Employment/Population

(100 metro rank)

+1.4% (39th)

Median

Wage(100 metro rank)

-1.3% (68th)

Rel. Poverty

Rate(100 metro rank)

+1.2% (73rd)

OVERALL

INCLUSION (100 metro rank)

+1.2% (44th)

-7.5% (84th)

-2.0% (36th)

-4.6% (82nd)

-10.0% (86th)

+12.9% (92nd)

59th65th 95th

Bottom Line – Economic performance

12

Growth has been strong. Since 2004 and in the aftermath of the recession,

overall growth in jobs, output, and aggregate wages has been among the top fifth

of U.S. metropolitan areas.

Prosperity has improved as well, but not as rapidly as overall growth. Output

per capita, output per worker, and average yearly wages have all expanded, but

less so in the past year.

Inclusive growth remains elusive, however. Over the past ten years, the

employment-to-population ratio and the median wage have both declined, and the

relative income poverty rate has increased.

2 | Global Trade and Investment

Two components of global economic orientation

Exports are sales of goods and services to foreign

entities (people or companies).

14

1

2 Foreign direct investment arises when a foreign entity invests in a business enterprise in the United States.

Source: Emilia Istrate and Nicholas Marchio, “Export Nation 2012: How U.S. Metropolitan Areas are Driving National Growth” (Washington: Brookings Institution, 2012).; Dwight Perkins, Steven Radelet, and

David Lindauer, “Investment, Productivity, and Growth.” In Economics of Development: Sixth Edition. (New York: W.W. Norton & Company, 2006).

Why exports matter

15

Exports are driving economic growth and wage gains.

Share of

Job Growth

‘09-’14

Share of GDP

Growth ‘09-

’14

8.1%

27.0%

Services

Trade

Wage

Premium

Manuf. Trade

Wage

Premium

20.0%17.0%

Middle market firms benefit from exports.

More likely to grow revenue (76 percent of exporters vs. 64 percent of non-

exporters)

More likely to add employees (51 percent of exporters vs. 39 percent of non-

exporters).

Source: Moody’s Analytics; Brookings, “Export Nation,” 2014. J. Bradford Jensen, “Global Trade in Services,” Petersen Institute for international Economics, 2011; David Riker, “Do Jobs in Export Industries

Still Pay More?”, International Trade Administration, 2010. Brookings, National Association for the Middle Market, “Accelerating Exports in the Middle Market,” 2014. The Middle Market is defined as

companies with annual revenues between $10 million and $1 billion.

Greater Charlotte’s economy is export-intensive

Greater Charlotte relies upon exports for a greater share (14 percent) of its economic output than any U.S. peer metro area, as exports have grown faster than the economy as a whole since 2003. Exports supported more than 110,000 jobs in 2014.

16

Exports, GDP, and jobs, Greater Charlotte and peer regions

Metro Area

Export share of

GDP, 2014

Change in Export

Share GDP, 2003-

2014

Gross exports

(USD billion),

2014

Annualized

Export Growth,

2003-14

Annualized GDP

Growth, 2003-14

Total Jobs

Supported by

Exports, 2014

Change Total

Export Jobs,

2003-2014

Charlotte 14.0% 5.1% 17.7 5.7% 2.3% 110,043 40,973

Indianapolis 13.3% 4.0% 15.0 4.1% 1.7% 81,619 18,693

Dallas 13.2% 4.3% 54.9 7.0% 3.0% 315,544 106,507

Cleveland 11.7% 3.2% 13.6 2.6% 0.5% 81,371 9,007

Kansas City 9.6% 3.4% 10.2 4.8% 1.1% 64,588 18,235

Minneapolis 9.6% 2.5% 20.3 4.0% 1.1% 132,698 21,655

Austin 9.2% -0.7% 10.0 6.3% 4.2% 62,113 10,956

Atlanta 9.0% 3.1% 26.6 4.6% 1.3% 188,807 56,222

San Antonio 8.9% 4.1% 9.2 8.2% 2.8% 57,160 26,061

Phoenix 8.9% -1.6% 18.4 1.4% 1.7% 123,392 -18,814

Denver 8.0% 2.7% 13.6 5.6% 2.2% 94,701 29,740

Source: Brookings analysis of data from Census, BEA, Moody’s analytics, BLS, NAFSA, IRS, EIA, and Sabre.

Adv. manufacturing/financial services drive exports

Machinery, chemicals, transportation equipment, and financial services,

contributed 63 percent of export growth between 2008 and 2014.

17

Greater Charlotte exports by sector, 2014, and contribution to export growth, 2008-2014

Source: Brookings analysis of data from Census, BEA,

Moody’s analytics, BLS, NAFSA, IRS, EIA, and Sabre.

Why foreign direct investment matters

18

Global investment flows are growing. Worldwide foreign direct investment has

increased from just over $200 billion in 1990 to $1.2 trillion in 2014.

Foreign-owned firms pay higher wages. Average wages in foreign-owned firms

are $77,000 versus $60,000 in domestic firms.

U.S. workers

U.S. goods

exports

5.0%

20.3%

Foreign-owned firms contribute disproportionately to export and innovation

capacity by transmitting new technologies and corporate best practices.

U.S.

corporate

R&D

18.9%

Foreign firms

share of:

Source: Brookings analysis of UNCTAD, WTO and ITC, based on Eurostat, OECD, IMF, UNSD, and other international and national sources; Bureau of Economic Analysis.

Greater Charlotte’s economy is FDI-intensive

Greater Charlotte relies upon foreign firms for a greater share (6.8 percent) of its

employment base than any peer metro area. However, Charlotte is one of only

two U.S. peer metros where FDI’s share of employment has declined since 1991.

19

Jobs in foreign-owned establishments (FOEs),

Greater Charlotte and peer regions, 2011

Metro Area

Share of

Jobs in

FOEs Jobs in FOEs

Charlotte 6.8% 48,810

Atlanta 6.8% 134,611

Indianapolis 6.5% 49,910

Kansas City 5.6% 47,371

Dallas 5.2% 134,111

Minneapolis 5.0% 75,593

Denver 4.8% 50,099

Austin 4.6% 29,180

Cleveland 3.9% 34,010

Phoenix 3.7% 55,742

San Antonio 3.0% 21,576

Change in share of jobs in foreign-owned establishments

(FOEs), Greater Charlotte and peer regions, 1991-2011

Charlotte 8.2%

6.8%

Atlanta 5.6%

6.8%

Indianapolis3.7%

6.5%

Kansas City3.2%

5.6%

Dallas 4.8%

5.2%

Minneapolis4.2%

5.0%

Denver 4.5%

4.8%

Austin 2.7%

4.6%

Cleveland 5.6%

3.9%Phoenix 3.8% 3.7%

San Antonio2.4%

3.0%

1991 2011Source: Brookings analysis of D&B / NETS, BEA, and Moody’s Analytics data

FDI mainly arrives thru new establishments (Greenfield)

20

New establishment openings (e.g. Greenfield) accounts for one-third of Greater

Charlotte’s FDI, the second highest share among peer U.S. peer metro areas. Nearly

half (48 percent) of FDI comes from just four European countries, led by Germany.

17.7%

24.4%

25.4%

26.3%

26.9%

27.0%

28.0%

29.4%

29.8%

33.3%

36.9%

26.8%

39.0%

25.8%

36.5%

30.1%

28.4%

30.2%

37.7%

32.1%

27.8%

28.2%

55.5%

36.5%

48.8%

37.1%

43.0%

44.5%

41.8%

33.0%

38.2%

39.0%

35.0%

Minneapolis

Atlanta

Austin

Dallas

Cincinnati

Indianapolis

Kansas City

Phoenix

Denver

San Antonio

Greenfield M&A Before 1991

Share of FOE jobs by mode of entry, Greater

Charlotte and peer regions, 1991-2011FOE jobs by source country, thousands, Greater Charlotte,

2011

Charlotte

7.8%

8.3%

10.9%

12.9%

15.4%

0 2000 4000 6000 8000

Canada

France

Belgium

England

Germany

Total FOE Jobs

Share of

FOE Jobs

Source: Brookings analysis of D&B / NETS, BEA, and Moody’s Analytics data

$386

$443

$567

$603

$673

$787

$882

$896

$1,065

$1,170

$1,348

$1,456

$1,662

$1,688

$1,887

$2,462

$2,614

$2,867

$3,563

$5,511

Cleveland

Minneapolis

Denver

Phoenix

Kansas City

Dallas

Hamburg

Indianapolis

San Antonio

Munich

Copenhagen

Atlanta

Stockholm

Frankfurt

Montreal

Zurich

Melbourne

Birmingham (UK)

Austin

But recent FDI flows are about average

21

Since 2009, Charlotte ranks tenth of 20 global metros in total Greenfield FDI

flows per capita, led by sectors such as automotive, engines/turbines, industrial

machinery, renewable energy, and textiles.

Greenfield foreign direct investment per person, Greater Charlotte and peer regions, 2009-2015

Charlotte

Automotive16%

Turbines11%

Machinery8%

Renewables8%

Textiles 7%

Rest 50%

Greenfield FDI, Top Sectors, 2009-2015

Source: Brookings analysis of fDi Intelligence data.

Bottom Line – Trade and Investment

22

Exports and foreign direct investment account for a significant share of Greater Charlotte’s economy. The region is the most export-intensive and FDI-intensive metro area among its U.S. peer group.

Key traded sectors like financial services, management consulting, and advanced manufacturing anchor exports and FDI.

However, in the global competition for Greenfield FDI, Greater Charlotte is about averagecompared to all its global peer metro economies.

Greater Charlotte’s unique reliance on global markets demands a sharp focus on the assets that determine global competitiveness: innovation, talent, and infrastructure.

Lower Higher

Trade and Investment CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

Export share of GDP, 2014 1 8 7 - 4 - 3 11 - - 2 5 - 6 - - 10 9 - -

% change in export share of GDP, 2003-2014 1 7 10 - 6 - 2 8 - - 4 5 - 9 - - 11 3 - -

Annualized export growth, 2003-2014 4 7 3 - 10 - 2 5 - - 8 6 - 9 - - 11 1 - -

Share of jobs in foreign-owned establishments (FOEs), 2011 1 2 8 - 9 - 5 7 - - 3 4 - 6 - - 10 11 - -

Change in share of jobs in FOEs, 1991-2011 10 4 3 - 11 - 7 8 - - 1 2 - 5 - - 9 6 - -

Greenfield FDI per capita, 2009-2015 10 8 1 2 20 9 15 18 6 14 13 16 3 19 5 11 17 12 7 4

Peer Rank

CLT = Charlotte CPN = Copenhagen IND = Indianapolis MUN = Munich

ATL = Atlanta DAL = Dallas KC = Kansas City PHX = Phoenix

ATN = Austin DEN = Denver MEL = Melbourne SA = San Antonio

BIR = Birmingham (UK) FRT = Frankfurt MPLS = Minneapolis STK = Stockholm

CLE = Cleveland HAM = Hamburg MON = Montreal ZUR = Zurich

3 | Innovation

Why innovation matters

24

Innovative capacity matters because it is the most durable economic advantage

for firms and regions in advanced economies. It is a critical input to

competitiveness, and an important driver of rising productivity which, in turn,

generates increases in living standards.

But research suggests that a few things influence the quality of innovation

ecosystems: research and development (R&D), commercialization of that R&D

into new products and services (e.g. patents), the presence of entrepreneurial

activities that are linked to technology development, and advanced industrial

production.

Innovation takes many forms, and includes improvements in products, services,

processes, and management techniques. It can be hard to measure and even

harder to predict.

Source: For a full review of the role of innovation in metropolitan growth, see George Washington Institute of Public Policy and RW Ventures, “Implementing Regionalism.”

$0.25

$0.28

$1.69

$1.93

$2.39

$2.63

$2.73

$3.00

$3.67

$3.68

$3.79

$4.03

$4.25

$4.93

$6.11

$6.54

$7.47

$7.86

$10.42

Kansas City

Dallas

Phoenix

San Antonio

Indianapolis

Denver

Birmingham (UK)

Frankfurt

Munich

Minneapolis

Cleveland

Hamburg

Atlanta

Melbourne

Austin

Stockholm

Montreal

Copenhagen

Charlotte

R&D expenditures significantly trail peer metros

25

A wide literature confirms that research activities help advance economic

development. Greater Charlotte ranks second to last among its global peers in

university R&D expenditures, both overall and business-funded.

All R&D Conducted at Universities per $1,000 of

GDP, 2013 or latest year available

Business-Funded R&D Conducted at Universities per

$1,000 of GDP, 2013

$0.01

$0.01

$0.06

$0.09

$0.10

$0.12

$0.13

$0.13

$0.27

$0.30

$0.70

Kansas City

Phoenix

Dallas

Cleveland

San Antonio

Minneapolis

Indianapolis

Atlanta

Denver

Austin

Charlotte

Source: NSF Higher Education Research and Development Survey data.

Charlotte lacks a major scientific research institution

26

Unlike its peer metros, Charlotte does not house a research institution ranked in the top 750 in the world by CWTS and Leiden University in terms of scientific impact. UNC-Charlotte is the region’s most significant research asset.

Number of universities in CWTS/Leiden University

Top 750 List, 2010-2013

Higher Education R&D Expenditures, Top Source by

Metro, FY2013

5 Melbourne Montreal

Stockholm

4 Dallas

3

Atlanta Copenhagen

Frankfurt2

Birmingham Munich

San Antonio Zurich

1 Austin Cleveland Denver Hamburg Indianapolis

Kansas City Minneapolis Phoenix

0 Charlotte

Rank Institution Metro AreaR&D expenditures

(millions USD)

15 University of Minnesota Minneapolis $858,378

23 Georgia Institute of Technology Atlanta $730,488

31 University of Texas Austin $634,132

45University of Texas

Southwestern Medical CenterDallas $440,620

50Case Western Reserve

UniversityCleveland $425,788

52 University of Colorado Denver $409,443

53 Arizona State University Phoenix $405,154

70Indiana University-Purdue

UniversityIndianapolis $332,760

113University of Texas Health

Science CenterSan Antonio $175,983

236 University of Missouri Kansas City $28,829

246 University of North Carolina Charlotte $24,764

Source: Brookings analysis of Centre for Science and Technology Studies (CWTS) and Leiden University data and NSF Higher Education Research and Development Survey data.

2.0

2.8

3.9

4.8

4.8

5.0

5.1

5.2

5.8

6.4

7.0

10.6

10.8

11.4

13.9

14.2

17.4

19.7

22.4

24.8

San Antonio

Kansas City

Melbourne

Birmingham (UK)

Montreal

Atlanta

Phoenix

Dallas

Denver

Hamburg

Cleveland

Indianapolis

Austin

Zurich

Frankfurt

Munich

Copenhagen

Minneapolis

Stockholm

Charlotte’s patenting intensity lags peers

27

Total patenting has increased in Greater Charlotte over time, but the region still

trails global peers in commercialization. In the 2008 to 2012 period, Charlotte

produced 3.9 patents per 10,000 residents, third to last among peers.

Patents per 10,000 inhabitants, 2008-2012Total patents, Greater Charlotte,1977-2012

Charlotte

20 27

92

299

504

829

1,010

1977-1982 1983-1987 1988-1992 1993-1997 1998-2002 2003-2007 2008-2012

Source: Brookings analysis of OECD REGPAT data.

IT and manufacturing generate most patents

28

Charlotte’s largest technology families are information technology, advanced

manufacturing, life sciences, and energy.

Top Patenting Technology Groups, Greater Charlotte Region, 2008-2012

Rank Tech Subgroup Tech Family Patents

1 IT methods for management Information technology 121

2 Computer technology Information technology 110

3 Medical technology Life sciences 69

4 Civil engineering Energy and infrastructure 47

5 Materials, metallurgy Advanced manufacturing 44

6 Control Precision systems 44

7 Other special machines Advanced manufacturing 41

8 Chemical engineering Advanced manufacturing 40

9 Optics Precision systems 33

10 Measurement Precision systems 33

Source: Brookings analysis of OECD REGPAT data.

37

35

29

28

25

15

14

13

10

5

1

Minneapolis

Cleveland

Kansas City

Indianapolis

Dallas

Phoenix

Atlanta

San Antonio

Denver

Austin

Startup activity trails most U.S. peer metros

29

Entrepreneurship enables innovation by translating new ideas into market-ready

products and services. Charlotte ranked 25th (of 40 metros) in the Kauffman

Foundation’s 2015 Startup Activity Index.

Startup Activity Rank, Kauffman Foundation, 2015

Charlotte

Components of Startup Activity Index

The Kauffman Index Startup Activity ranks forty large

metro areas in 2015 based on three metrics:

• Rate of new entrepreneurs—percent of adult

population that became entrepreneurs in a given

month calculated as a 3-year moving average;

• Opportunity share of new entrepreneurs—percent of

new entrepreneurs who were not unemployed

before starting their business calculated as a 5-year

moving average;

• Startup density—number of startup firms per

100,000 resident population defining a startup as

firms less than one-year old employing at least one

person besides the owner.

Source: The Kauffman Index: Startup Activity 2015.

$42

$67

$85

$86

$174

$293

$407

$474

$478

$510

$527

$583

$605

$766

$882

$919

$1,056

$1,085

$1,471

$4,084

Birmingham (UK)

Hamburg

Melbourne

Frankfurt

San Antonio

Munich

Phoenix

Kansas City

Zurich

Cleveland

Indianapolis

Montreal

Copenhagen

Dallas

Atlanta

Stockholm

Minneapolis

Denver

Austin

Very few Charlotte firms attract venture capital

30

Venture capital (VC) provides funds for innovative enterprises positioned for high

growth and the potential to create and capture new markets. VC firms stimulate

local economies; they are three to four times more patent-intensive than other

firms, and are much more likely to translate R&D into high-growth ventures.

Total venture capital investments per capita, Greater Charlotte and peer metros, 2005-2014

Charlotte

Top industries, by venture capital

investment, Greater Charlotte, 2005-2014

Rank Industry

Total VC Investment

(millions USD)

1 Software $72.37

2 Healthcare Services $59.93

3 Commercial Products $58.30

4 Other Financial Services $44.09

5 Commercial Services $42.94

6 Media $36.38

7 Chemicals $19.95

8 Services (Non-Financial) $16.27

9 Pharma and Biotech $16.07

10 Consumer Durables $11.70

Source: S. Kortum and J. Lerner, “Assessing the Contribution of Venture Capital to Innovation.” Rand Journal of Economics 31(2000), 674-92; Dirk Engel and Max Keilbach, “Firm Level Implications of Early

Stage Venture Capital Investment—An Empirical Investigation.” (Max Planck Institute of Economics, 2002). Brookings analysis of Pitchbook data.

Advanced industries: America’s “tech” super-sector

31

Advanced industries are technology-intensive manufacturing and services

industries, and their profile and performance provide a helpful measure of the

nation’s “tech” sector at its broadest.

Why Advanced Industries Matter

50 industries across manufacturing, services, and

energy, account for the U.S. share of:

2.7

Jobs R&D

8.9%

90.3%

Patents

81.2%

GDP

17.9%

Exports

57.5%

Defining Advanced Industries

50 industries across manufacturing, services, and

energy that meet two criteria:

$450

Minimum share of workers in industry

whose occupations require a high

degree of STEM knowledge

21 percent

Minimum industry R&D per worker, 80th

percentile of industries

Source: Mark Muro and others, “America’s Advanced Industries” (Washington: Brookings Institution, 2015).

Charlotte has a diversity of advanced industries

32

Charlotte’s advanced industries range from high-end services to advanced

manufacturing to energy generation and distribution. This mix provides a range of

employment opportunities at different wage and education levels.

Ten largest advanced industries by employment, Greater Charlotte, 2014

Rank Advanced Industry JobsShare of advanced

industry jobs

Annual compensation

per worker ($)

1 Management and Technical Consulting 15,250 15.9% 85,931

2 Computer Systems Design 10,100 10.5% 106,348

3 Architectural and Engineering 9,020 9.4% 78,724

4 Motor Vehicle Parts Manufacturing 7,590 7.9% 52,601

5 Data Processing and Hosting 6,800 7.1% 121,391

6 Electric Power Generation and Distribution 3,410 3.5% 136,079

7 General Purpose Machinery Manufacturing 3,030 3.1% 68,132

8 Engine and Turbine Manufacturing 2,480 2.6% 98,093

9 Other Miscellaneous Manufacturing 2,420 2.5% 37,595

10 Medical Equipment Manufacturing 2,390 2.5% 44,854

All advanced industries 96,210 100% 86,370

All industries 1,082,870 -- 54,763


But trails peers in advanced industries intensity

33

Charlotte’s share of employment and output generated by advanced industries

trail most peer metros, but advanced industries employment growth has been fifth

highest since 2008.

Advanced Industries Employment and Output Profile, Charlotte and Peer Regions

Rank Metro AreaShare of total

workforce, 2014

Jobs,

2014

Annualized job growth rate,

2008-2014

Share of GDP,

2014

GDP (USD billion),

2014

1 Austin 12.8% 119,480 2.9% 25.6% 26.7

2 Dallas 10.4% 344,650 0.7% 23.9% 95.8

3 Denver 10.3% 139,690 1.8% 19.2% 30.0

4 Kansas City 9.6% 99,850 1.5% 14.4% 14.5

5 Minneapolis 9.5% 181,990 0.3% 16.4% 33.3

6 Indianapolis 9.1% 91,920 0.5% 23.5% 23.8

7 Cleveland 8.9% 93,520 -0.9% 13.7% 14.8

8 Charlotte 8.9% 96,210 1.4% 16.6% 19.1

9 Atlanta 8.8% 221,320 0.7% 14.5% 39.8

10 Phoenix 8.2% 154,900 -0.1% 14.9% 28.0

11 San Antonio 6.5% 65,440 2.9% 15.9% 16.0


Bottom Line – Innovation

34

Fast growth in advanced industries employment since 2008 shows that Greater Charlotte does house innovative firms in management and technical consulting, advanced manufacturing, and computer systems design.

But very low levels of research and development, technology commercialization, and venture capital reveal that Greater Charlotte’s innovation ecosystem is not yet at the same level as global peers.

Unlike its peer metro economies, Greater Charlotte does not house major research universities or medical centers, major engines of the innovation economy. UNC-Charlotte is the region’s most significant research asset, but it is not currently ranked among the top 750 universities with the greatest scientific impact. Innovation CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

R&D conducted at universities per $1,000 of GDP, 2013 18 6 4 12 8 1 17 13 11 7 14 19 5 9 2 10 16 15 3 -

Business-funded R&D conducted at universities per $1,000 GDP, 2013 10 3 1 - 7 - 8 2 - - 4 11 - 5 - - 9 6 - -

Percentage of university scientific publications cited in top 10 percent, 2010-2013 20 7 4 9 5 11 8 2 15 10 13 19 12 3 18 6 16 17 14 1

Percentage of university scientific publications conducted with industry, 2010-2013 20 5 6 16 7 1 10 2 8 12 3 18 19 14 17 9 15 11 4 13

Patents per 10,000 inhabitants, 2008-2012 18 14 7 16 9 3 12 11 5 10 8 19 17 2 15 4 13 20 1 6

Startup activity rank, Kauffman Foundation, 2015 7 4 1 - 10 - 6 2 - - 8 9 - 11 - - 5 3 - -

Venture capital investments per capita, 2005-2014 16 5 1 20 10 7 6 2 17 19 9 12 18 3 8 14 13 15 4 11

Share of jobs in advanced industries, 2014 8 9 1 - 7 - 2 3 - - 6 4 - 5 - - 10 11 - -

% change in advanced industries employment, 2008-2014 5 7 1 - 11 - 6 3 - - 8 4 - 9 - - 10 2 - -

Lower Higher

Peer Rank CLT = Charlotte CPN = Copenhagen IND = Indianapolis MUN = Munich





4 | Talent

Why Talent Matters

36

Human capital—the stock of knowledge, skills, expertise, and capacities

embedded in the labor force—is of critical importance to enhancing productivity,

raising incomes, and driving economic growth.

As labor markets have become more global, skilled immigrants have become

an increasingly important source of talent for U.S. metro economies. Foreign

students studying at U.S. universities—the well-educated workers of

tomorrow—are a new and growing input to metropolitan economic

competitiveness and cultural diversity.

Producing, attracting, and retaining educated workers; creating jobs for those

workers; and connecting those workers to employment through efficient labor

markets all matter for regional competitiveness and ensuring broad-based

economic opportunity.

Source: For a full review of the role of human capital in metropolitan growth, see George Washington Institute of Public Policy and RW Ventures, “Implementing Regionalism.”

Charlotte’s workforce is well-educated

37

About 35 percent of the region’s workforce has obtained a post-secondary degree, placing Charlotte in the middle of its highly educated peer group.

Percentage of population above 15 years old with tertiary education, 2013

28.7

28.9

31.2

32.1

32.2

33.0

33.3

33.3

33.8

34.1

35.1

36.0

36.6

36.9

39.5

41.2

42.0

42.0

42.6

43.3

Hamburg

San Antonio

Montreal

Frankfurt

Birmingham (UK)

Cleveland

Indianapolis

Phoenix

Dallas

Munich

Melbourne

Atlanta

Kansas City

Copenhagen

Austin

Stockholm

Zurich

Denver

Minneapolis

Charlotte

Source: Brookings analysis of U.S. Census Bureau data.

11

10

9

8 8

7 7

6

4

1 1

Indianapolis Austin Dallas Phoenix Kansas City San Antonio Atlanta Cleveland Denver Minneapolis

Yet regional employers struggle to fill job vacancies

38

Despite its educated workforce, Charlotte’s employers nevertheless face

challenges in filling job vacancies. Among U.S. peers, Charlotte’s online job

postings had the longest median duration (11 days) before being filled.

Median duration of job openings (days), Greater Charlotte and peer regions, 2013

Charlotte

Source: Brookings analysis of Burning Glass data.

25.4%23.9%

22.7% 22.5% 22.2% 21.9% 21.7% 21.5% 21.3% 20.8%

18.3%

Denver Austin Indianapolis Minneapolis Cleveland Kansas City Dallas Atlanta Phoenix San Antonio

48.3% 47.4%44.9%

42.9% 42.7% 42.1% 41.7% 41.5%39.3%

37.4%35.4%

Austin Denver Atlanta Dallas Kansas City Minneapolis Cleveland Phoenix San Antonio Indianapolis

Employer demand for STEM skills is high

39

About one in five Charlotte workers work in STEM occupations. Nearly half of all

job ads are in STEM occupations, the third highest share in the nation.

Share of job ads in STEM occupations, Greater Charlotte and peer regions, 2013

Charlotte

Share of workers in STEM occupations, Greater Charlotte and peer regions, 2013

Charlotte


1

2

5

7

11

12

12

13

14

15

17

Minneapolis

Denver

Cleveland

Atlanta

Indianapolis

Dallas

Phoenix

Kansas City

San Antonio

Austin

And STEM jobs are among the hardest to fill

40

The median duration for STEM job ads are higher (14 days) than job ads overall

(11 days), and middle-skill STEM jobs—those requiring more than a high school

degree but less than a Bachelor’s degree—have the longest fill times.

Median duration of STEM job openings (days), by

education requirement, Greater Charlotte, 2013

Median duration of STEM job openings (days),

Greater Charlotte and peer regions, 2013

Charlotte

18

32

10

High School or Less Some college orAssociate's degree

Bachelor's Degree

Median duration STEM jobs overall: 14 days

STEM Jobs


78.8

84.6

81.6

72.3

71.0

86.8

82.3

82.1

74.4

75.0

78.2

82.5

79.4

80.7

80.7

81.2

80.4

79.3

72.2

72.8

92.6

86.3

83.8

83.5

80.0

80.0

79.7

78.7

78.5

77.4

77.3

76.8

76.4

75.7

74.5

73.7

71.9

71.3

70.6

69.6

Stockholm

Zurich

Copenhagen

Hamburg

Frankfurt

Minneapolis

Denver

Kansas City

Munich

Melbourne

Montreal

Austin

Cleveland

Dallas

Indianapolis

Atlanta

Phoenix

Birmingham (UK)

San Antonio

Meanwhile the labor force participation rate is falling

41

Charlotte’s labor force participation rate has declined by a larger margin than all

global peer metros except Atlanta and Phoenix since 2000, exacerbating labor

supply-demand mismatches.

Labor Force Participation Rate, 2000-2014

Charlotte

20142000

Source: Brookings analysis of OECD data.

5.7%

6.0%

6.4%

9.4%

9.7%

11.8%

12.1%

13.2%

13.4%

14.2%

14.4%

14.5%

14.8%

17.5%

19.6%

20.0%

21.4%

25.2%

25.9%

37.4%

Cleveland

Indianapolis

Kansas City

Minneapolis

San Antonio

Denver

Atlanta

Birmingham (UK)

Hamburg

Phoenix

Copenhagen

Austin

Dallas

Frankfurt

Stockholm

Munich

Montreal

Zurich

Melbourne

Immigration can help address skills demands

42

Immigrants further economic growth by matching their skills with the demands of

local employers. While the share of its population born abroad is relatively low,

Charlotte is an emerging immigrant gateway, passing 250,000 immigrants in 2014.

And in-migrants, whether from other states or abroad, are relatively well-educated.

Educational attainment, by migration status, Greater

Charlotte, 2014

Foreign-born share of total population, Greater

Charlotte and peer regions, 2013

Charlotte

14.8%

8.0%

13.1%

20.8%

20.4%

25.1%

20.6%

28.6%

30.4%

43.8%

43.0%

31.4%

Less than high school

High school graduate

Some college or associate's degree

Bachelor's degree or higher

Overall population

Migrated from:

Another U.S. state

Abroad

Source: Brookings analysis of U.S. Census Bureau data.

1.39

1.43

1.53

1.78

1.79

1.86

2.44

2.72

3.63

3.65

3.94

San Antonio

Indianapolis

Kansas City

Cleveland

Denver

Phoenix

Minneapolis

Atlanta

Dallas

Austin

And employers are demanding international talent

43

Greater Charlotte’s employers exhibit strong demand for highly skilled foreign workers, applying for the fourth most H-1B visa applications per 1000 workers among U.S. peers. Nearly 81 percent of those applications are positions that demand STEM skills, the second highest share in this analysis.

Share of H-1B applications for positions demanding STEM

skills, Greater Charlotte and peer regions, 2010-2011

H-1B guest worker visas requested per 1,000 workers,

Greater Charlotte and peer regions, 2010–2011

Charlotte

60.0%

66.2%

69.0%

73.7%

74.2%

74.5%

75.6%

75.6%

75.7%

80.7%

80.8%

Cleveland

San Antonio

Indianapolis

Dallas

Atlanta

Denver

Austin

Kansas City

Phoenix

Minneapolis

Charlotte

Source: Brookings analysis of U.S. Department of Labor, Labor Condition Application data.

10.6

11.3

11.9

12.3

12.7

14.0

14.5

16.1

16.9

21.3

22.5

San Antonio

Phoenix

Kansas City

Indianapolis

Cleveland

Minneapolis

Atlanta

Austin

Denver

Dallas

Foreign students are another potential talent source

44

Foreign students enhance an economy’s global engagement by injecting spending

into the local economy, establishing connections with their home market, and staying

to local to work upon graduation. Currently, Charlotte has fewer foreign students at its

colleges and universities than many of its peer regions.

F1 student visas approved per 1,000 higher education

students, Greater Charlotte and peer regions, 2008–2012

Charlotte

India – 742

China - 641

Saudi Arabia - 464

South Korea - 239

Canada - 162

Top origin markets for F1 student visas, Greater

Charlotte, 2008–2012

Source: Brookings analysis of Immigration and Customs Enforcement data.

Bottom Line – Talent

45

Greater Charlotte’s workforce falls in the middle of its peer group in terms of tertiary educational attainment.

Charlotte’s employers nevertheless face challenges in filling job vacancies, especially middle-skill occupations that demand STEM skills. Among U.S. peers, Charlotte’s online job postings had the longest median duration before being filled. As workers have aged, Charlotte’s labor force participation rate has declined, potentially exacerbating these skills deficiencies as STEM-intensive advanced industries expand. Greater Charlotte’s educational institutions will be critical in filling this gap.

Employers are turning to in-migrants—both from abroad and the rest of the U.S.—to fill skills needs. Charlotte is not yet a major immigration hub, but its foreign-born population is growing quickly. In-migrants tend to be disproportionately well-educated.

Talent CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

Share of 15+ population with tertiary education, 2013 10 8 5 16 15 6 12 2 17 20 14 7 9 1 18 11 13 19 4 3

Median duration of job openings, 2013 11 4 9 - 3 - 8 2 - - 10 6 - 1 - - 7 5 - -

Share of workers in STEM occupations, 2013 6 9 2 - 5 - 8 1 - - 3 7 - 4 - - 10 11 - -

Median duration of STEM job openings, 2013 9 4 11 - 3 - 6 2 - - 5 8 - 1 - - 7 10 - -

Labor force participation rate, 2014 16 17 12 19 13 3 14 7 5 4 15 8 10 6 11 9 18 20 1 2

Change in labor force participation rate, 2000-2014 18 20 15 9 11 6 14 10 3 2 16 13 5 17 8 4 20 12 1 7

Foreign-born share of total population, 2013 17 13 8 12 20 9 7 14 6 11 19 18 1 16 3 4 10 15 5 2

Share of foreign-born population with at least some college or associate's degree, 2013 8 7 4 - 6 - 10 9 - - 2 3 - 5 11 1 - -

H-1B guest worker visas per 1,000 workers, 2010-2011 4 3 1 - 8 - 2 7 - - 10 9 - 5 - - 6 11 - -

F1 student visas approved per 1,000 higher education students, 2008-2012 7 4 3 - 6 - 1 2 - - 8 9 - 5 - - 10 11 - -

Lower Higher

Peer RankCLT = Charlotte CPN = Copenhagen IND = Indianapolis MUN = Munich





5 | Infrastructure

Why infrastructure matters

47

Firms rely upon global access points like airports and ports and digital

infrastructure to move their products, services, and people to markets outside

the region in the most efficient manner possible.

The competitiveness of a metropolitan economy also hinges on its ability to

effectively connect its people and physical assets to their best use within the

region—what planners and economic developers call “spatial efficiency.”

Source: For a full review of the role of infrastructure in metropolitan growth, see George Washington Institute of Public Policy and RW Ventures, “Implementing Regionalism.”

CLT is a fast-growing, well-connected airport

In 2015, the Charlotte-Douglas International Airport moved 44.9 million

passengers between Charlotte and 147 destinations, the 24th highest total in the

world. Passenger growth was among the fastest in its global peer group between

2004 and 2014.

48

44.9 millionCLT’s total passengers, 2015

24th

CLT’s global rank, 2015

-20.3%

-7.2%

-3.8%

3.6%

10.2%

12.2%

16.2%

19.4%

21.7%

33.1%

42.0%

42.5%

45.3%

46.0%

48.0%

55.5%

59.9%

65.1%

65.4%

72.7%

Cleveland

Indianapolis

Kansas City

Phoenix

Dallas

Minneapolis

Atlanta

San Antonio

Frankfurt

Munich

Montreal

Denver

Birmingham (UK)

Hamburg

Austin

Zurich

Stockholm

Copenhagen

Melbourne

Origin-destination aviation passenger growth, Greater

Charlotte and peer regions, 2004-2014

Charlotte

Source: Brookings analysis of Sabre aviation data.

Int’l passenger connections strongest with Europe

International origin-destination flows are largest with the rest of North America

(Toronto, Mexico City, Montreal); Europe (London, Frankfurt, Munich, Paris); and

Asia (Shanghai, Tokyo, Delhi, and Seoul). Growth has been fastest with South

America, Africa, and Asia.

49

But a high share of passengers never leave CLT

Nearly 58 percent of passengers never step out of the airport, the highest share

of any region, limiting the economic impact of the airport.

50

0.4%

0.6%

0.7%

2.4%

2.5%

2.8%

3.0%

3.9%

6.3%

6.9%

7.3%

16.1%

17.0%

24.1%

24.9%

26.9%

29.6%

36.6%

47.4%

57.9%

Birmingham (UK)

Hamburg

Indianapolis

Melbourne

San Antonio

Stockholm

Austin

Kansas City

Montreal

Cleveland

Copenhagen

Zurich

Munich

Denver

Phoenix

Minneapolis

Frankfurt

Dallas

Atlanta

Charlotte

Share of passengers that pass through airport, Greater

Charlotte and peer regions, 2014

“Metro areas that serve as destinations for

large numbers of people are, implicitly, points

of convergence for new ideas and capital.

These places have the right mix of human

capital and other resources to incubate new

business ventures and to stimulate creativity.

The net effect is an employment boost

throughout local industries, from high-skill

services that rely heavily on air travel to more

stationary industries like manufacturing.”

- Tomer, Puentes & Neal, 2012

Source: Brookings analysis of Sabre aviation data.

Charlotte trades about $130 billion in goods

$130 billion in goods trade (domestic + international) starts or ends in Greater Charlotte, nearly 12 percent of which flows globally. Greater Charlotte firms rely on ports in other U.S. regions to send and receive international goods.

51

Largest port complexes used for Greater Charlotte’s

international goods trade, billions USD, 2010

$130 billionTotal goods trade value, 33/100 U.S.

metros

11.7%International trade share, 67/100 U.S.

metros

Port ComplexTotal Trade

(billions USD)

New York 2.2

Los Angeles 1.7

Miami 1.1

Detroit 1.1

Laredo 0.7

Houston 0.7

Savannah 0.5

Anchorage 0.5

Chicago 0.5

Buffalo 0.4

Source: Brookings analysis of Economic Development Research Group data.

Greater Charlotte is not yet a major port complex

The region is not a major international port, ranking behind most U.S. peers in terms of freight flow. Of the $2.7 billion in international freight that moved through Greater Charlotte’s ports in 2010, 99.7% travels via air, mainly higher value commodities.

52

Top 5 commodities moved by Greater Charlotte’s port

complex, millions USD, 2010

$833.9

$535.2

$438.8

$301.8 $293.2

Pharmaceuticals Chemicals/Plastics

Machinery Electronics PrecisionInstruments

$184

$449

$569

$800

$2,669

$3,830

$4,474

$5,591

$19,404

$26,736

$33,868

San Antonio

Kansas City

Austin

Phoenix

Indianapolis

Denver

Minneapolis

Cleveland

Atlanta

Dallas

Total international freight movement, Greater Charlotte

and peer port complexes, millions USD, 2010

Charlotte

Source: Brookings analysis of Economic Development Research Group data.

Broadband speeds lag and access varies by income

Quality broadband access allows students, workers, and firms to benefit from the power of the internet. Charlotte’s average download speeds trail most peers; overall broadband access is average and varies significantly by income.

53

Internet download speed, mbps, 2015 Share of households with broadband access, 2014

Broadband access, by income, 2014

Source: Brookings analysis of data from Ookla and U.S. Census Bureau.

Commuting times in Charlotte are about average

Transportation networks connect firms to global access points like airports and

ports, shuttle workers to jobs, and facilitate intra-metro commerce and

collaboration. Greater Charlotte’s average commuting times fall in the middle of its

peer group, suggesting that the proximity between workers and jobs is not a

significant weakness but could still be improved.

54

Distribution of travel time to work for all commuters*, minutes, 2014

8%

10%

9%

11%

10%

11%

11%

11%

12%

11%

13%

10%

12%

11%

13%

13%

13%

13%

13%

13%

13%

14%

33%

36%

38%

39%

38%

39%

40%

41%

39%

40%

42%

25%

25%

26%

23%

25%

23%

23%

22%

24%

24%

21%

12%

10%

9%

8%

9%

8%

8%

7%

7%

7%

6%

12%

8%

7%

7%

6%

6%

5%

6%

5%

5%

4%

Atlanta

Dallas

Denver

Austin

Phoenix

Minneapolis

San Antonio

Indianapolis

Cleveland

Kansas City

0 to 19 minutes 0 to 14 minutes 15 to 29 minutes 30 to 44 minutes 45 to 59 minutes 60+ minutes

Charlotte

Source: Brookings analysis

of U.S. Census Bureau data.

Bottom Line – Infrastructure

55

The Charlotte-Douglas International Airport is a significant global asset. It is

one of the fastest-growing airports among Charlotte’s peer regions. However, a high

share of passengers never leave the airport, limiting its impact on the local economy.

The airport also anchors freight movement, although Greater Charlotte is not

yet a significant port complex. The region tends to rely on the nation’s largest ports

to send and receive goods internationally, underscoring the importance of the new

intermodal facility at the airport.

Digital infrastructure quality and access could be improved. Charlotte’s average

internet download speeds trail most peers, and access varies significantly by income.

Infrastructure CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

Aviation passenger growth, 2004-2014 4 14 6 8 20 2 16 9 12 7 19 18 1 15 10 11 17 13 3 5

Share of passthrough aviation traffic, 2014 20 19 7 1 10 11 18 14 17 2 3 8 4 16 9 13 15 5 6 12

Total international freight movement, 2010 7 2 9 - 3 - 1 5 - - 6 10 - 4 - - 8 11 - -

Internet download speed, 2015 18 10 3 8 20 4 13 12 9 6 14 5 19 15 16 11 7 17 2 1

Share of hosueholds with broadband access, 2014 6 4 1 - 10 - 7 2 - - 9 5 - 3 - - 8 11 - -

Share of commuters traveling more than 45 minutes to work, 2014 6 11 8 - 2 - 10 9 - - 3 1 - 5 - - 7 4 - -

Lower Higher

Peer Rank






Bottom Line – Charlotte’s competitive position

56

Economic performance: Overall economic growth has been robust over the past decade, but on metrics of inclusion Greater Charlotte has lagged.

Trade and Investment: Greater Charlotte is very globally-oriented. Exports and foreign direct investment account for a disproportionate share of the regional economy, led by tradable anchors like machinery, transportation equipment, and financial services.

But the region is at risk of losing ground to peer metropolitan economies unless it shores up its competitive drivers:

• Innovation: Build up very low levels of research and development, technology commercialization, and venture capital investment;

• Talent: Help employers overcome challenges in filling job vacancies, especially occupations that require STEM skills; and

• Infrastructure: Address lagging broadband speeds and disparities in broadband access by income.

Conclusion

57

This comparative global benchmarking analysis reveals that Greater Charlotte has significant assets on which to build: globally engaged companies in key advanced industries; a highly-educated workforce; and an internationally-connected airport.

But that same perspective yields other areas that warrant improvement: upgrading the region’s system for innovation and entrepreneurship; addressing employer difficulties in finding STEM workers; and bridging disparities in broadband access.

Going forward, whatever their course of action, Charlotte leaders should ensure they are focusing on what Brookings’ Amy Liu calls the “markets and civics”:

“Markets: Economic development should prioritize building strong business ecosystems for core

industries, improving the productivity of firms and people, and facilitating trade—the market

foundations from which growth, prosperity, and inclusion emerge.

Civics: To get the markets right requires good civics: the work to organize and implement

strategies and initiatives that engage stakeholders and partners to achieve long-term goals. A

data-driven economic narrative and sense of urgency, networked leadership with high capacity

organizations for implementation, and engagement of diverse stakeholders and perspectives to

ensure strategies are inclusive are all essential.”

- Amy Liu, “Remaking Economic Development,” 2016

Benchmarking results

58

Trade and Investment CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

Export share of GDP, 2014 1 8 7 - 4 - 3 11 - - 2 5 - 6 - - 10 9 - -

% change in export share of GDP, 2003-2014 1 7 10 - 6 - 2 8 - - 4 5 - 9 - - 11 3 - -

Annualized export growth, 2003-2014 4 7 3 - 10 - 2 5 - - 8 6 - 9 - - 11 1 - -

Share of jobs in foreign-owned establishments (FOEs), 2011 1 2 8 - 9 - 5 7 - - 3 4 - 6 - - 10 11 - -

Change in share of jobs in FOEs, 1991-2011 10 4 3 - 11 - 7 8 - - 1 2 - 5 - - 9 6 - -

Greenfield FDI per capita, 2009-2015 10 8 1 2 20 9 15 18 6 14 13 16 3 19 5 11 17 12 7 4

Innovation CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

R&D conducted at universities per $1,000 of GDP, 2013 18 6 4 12 8 1 17 13 11 7 14 19 5 9 2 10 16 15 3 -

Business-funded R&D conducted at universities per $1,000 GDP, 2013 10 3 1 - 7 - 8 2 - - 4 11 - 5 - - 9 6 - -

Percentage of university scientific publications cited in top 10 percent, 2010-2013 20 7 4 9 5 11 8 2 15 10 13 19 12 3 18 6 16 17 14 1

Percentage of university scientific publications conducted with industry, 2010-2013 20 5 6 16 7 1 10 2 8 12 3 18 19 14 17 9 15 11 4 13

Patents per 10,000 inhabitants, 2008-2012 18 14 7 16 9 3 12 11 5 10 8 19 17 2 15 4 13 20 1 6

Startup activity rank, Kauffman Foundation, 2015 7 4 1 - 10 - 6 2 - - 8 9 - 11 - - 5 3 - -

Venture capital investments per capita, 2005-2014 16 5 1 20 10 7 6 2 17 19 9 12 18 3 8 14 13 15 4 11

Share of jobs in advanced industries, 2014 8 9 1 - 7 - 2 3 - - 6 4 - 5 - - 10 11 - -

% change in advanced industries employment, 2008-2014 5 7 1 - 11 - 6 3 - - 8 4 - 9 - - 10 2 - -

Talent CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

Share of 15+ population with tertiary education, 2013 10 8 5 16 15 6 12 2 17 20 14 7 9 1 18 11 13 19 4 3

Median duration of job openings, 2013 11 4 9 - 3 - 8 2 - - 10 6 - 1 - - 7 5 - -

Share of workers in STEM occupations, 2013 6 9 2 - 5 - 8 1 - - 3 7 - 4 - - 10 11 - -

Median duration of STEM job openings, 2013 9 4 11 - 3 - 6 2 - - 5 8 - 1 - - 7 10 - -

Labor force participation rate, 2014 16 17 12 19 13 3 14 7 5 4 15 8 10 6 11 9 18 20 1 2

Change in labor force participation rate, 2000-2014 18 20 15 9 11 6 14 10 3 2 16 13 5 17 8 4 20 12 1 7

Foreign-born share of total population, 2013 17 13 8 12 20 9 7 14 6 11 19 18 1 16 3 4 10 15 5 2

Share of foreign-born population with at least some college or associate's degree, 2013 8 7 4 - 6 - 10 9 - - 2 3 - 5 11 1 - -

H-1B guest worker visias per 1,000 workers, 2010-2011 4 3 1 - 8 - 2 7 - - 10 9 - 5 - - 6 11 - -

F1 student visas approved per 1,000 higher education students 7 4 3 - 6 - 1 2 - - 8 9 - 5 - - 10 11 - -

Infrastructure CLT ATL ATN BIR CLE CPN DAL DEN FRT HAM IND KC MEL MPLS MON MUN PHX SA STK ZUR

Aviation passenger growth, 2004-2014 4 14 6 8 20 2 16 9 12 7 19 18 1 15 10 11 17 13 3 5

Share of passthrough aviation traffic, 2014 20 19 7 1 10 11 18 14 17 2 3 8 4 16 9 13 15 5 6 12

Total international freight movement, 2010 7 2 9 - 3 - 1 5 - - 6 10 - 4 - - 8 11 - -

Internet download speed, 2015 18 10 3 8 20 4 13 12 9 6 14 5 19 15 16 11 7 17 2 1

Share of hosueholds with broadband access, 2014 6 4 1 - 10 - 7 2 - - 9 5 - 3 - - 8 11 - -

Share of commuters traveling more than 45 minutes to work, 2014 6 11 8 - 2 - 10 9 - - 3 1 - 5 - - 7 4 - -

Lower Higher






Peer Rank

Peer Methodology

59

Global peer cities were selected based on economic characteristics and competitiveness factors. Classifying and identifying peers

allows policymakers and stakeholders to better understand the position of their economies in a globalized context as well as to conduct

constructive benchmarking.

To select peers we utilized a combination of principal components analysis (PCA), k-means clustering, and agglomerative hierarchical

clustering. These commonly used data science techniques allowed us to group metro areas with their closest peers given a set of

economic and competitiveness indicators. For this report we selected 14 economic variables: population, nominal GDP, real GDP per

capita, productivity (defined as output per worker), total employment, share of the population in the labor force, and industry share of

total GDP (8 sectors). We included seven additional variables that measure one of the four quantitative dimensions of the

competitiveness analysis framework used in this report. The variables included are: share of the population with tertiary education

(talent), stock of greenfield foreign direct investment (FDI) (trade), number of international passengers in 2014 (infrastructure), number

of highly cited papers between 2010 and 2013 (innovation), mean citation score between 2010 and 2013 (innovation), and average

internet download speed in 2014 (infrastructure).

Our analysis proceeded in three steps. First, we applied PCA to reduce the number of dimensions of our data by filtering variables that

are highly interrelated while retaining as much variance as possible. PCA generates “components” by applying a linear transformation to

all the variables. To successfully perform our clustering algorithm we selected the number of components that explain 80 to 90 percent

of the variance of a dataset. For this report we selected the first seven components, which accounted for 84 percent of the total variation

of the data. The second stage applied a k-means algorithm to the seven components, a process which calculates the distance of every

observation in our dataset to each other, then generates a cluster centroid and assigns each data point to the closest cluster. K-means

repeats this procedure until a local solution is found. This algorithm provides a good segmentation of our data and under most

circumstances it is a sufficient method for partitioning data. However k-means sometimes generates clusters with multiple observations,

thus obscuring some of the closest economic relationships between metro areas. To improve the results of k-means we implemented a

third step, hierarchical clustering, which follows a similar approach to k-means. Hierarchical clustering calculates Euclidean distances to

all other observations, but generates a more granular clustering that permits clearer peer-to-peer comparison.

Data Sources

Oxford Economics: Economic indicators as well as selected indicators corresponding to talent for non-U.S.

metropolitan areas were provided by Oxford Economics (OE). Economic variable such as GDP, Gross Value Added

(GVA), employment, unemployment rates, educational attainment, and industry-level employment and output were

collected by OE from national statistics bureaus in each country or from providers such as Haver, ISI Emerging

Markets, and Eurostat. Population estimates and the share of the foreign-born population were based on official

population projections produced by national statistical agencies and or organizations such as Eurostat, adjusting

migration assumptions on a case-by case basis. The study uses gross value added (GVA) and Gross Domestic

Product (GDP) in nominal terms at purchasing power parity rates, and in real terms at 2009 prices and expressed in

U.S. dollars. All the indicators were provided at the metropolitan level.

Moody’s Analytics: Economic indicators for U.S. metro areas were provided by Moody’s Analytics. Moody’s uses

data published by the Bureau of Labor Statistics (BLS) and by the Bureau of Economic Analysis (BEA) to generate

their estimates of employment and GDP at the county level. We aggregated those estimates to metropolitan areas

using the current Census Bureau definition. For real GDP, both total and at the industry level, Moody’s provides 2009

chained dollars. For nominal analysis they report their estimates in current dollar.

60

Data Sources

Advanced Industries: Brookings identifies 50 four-digit NAICS industries as “advanced” in the U.S. economy.

For more information: Mark Muro and others, “America’s Advanced Industries: What they are, where they are, and

why they matter” (Washington: Brookings Institution, 2015).

61

Advanced Industries

NAICSCode

IndustryNAICS code

Industry

2111 Oil & Gas Extraction 3351 Electrical Lighting Equipment

2122 Metal Ore Mining 3352 Household Appliances

2211 Power Generation & Supply 3353 Electrical Equipment

3241 Petroleum & Coal Products 3359 Misc. Electrical Equipment

3251 Basic Chemicals 3361 Motor Vehicles

3252 Resins & Synthetic Rubbers 3362 Motor Vehicle Body & Trailers

3253 Pesticides & Fertilizers 3363 Motor Vehicle Parts

3254 Pharmaceuticals 3364 Aircraft Products & Parts

3259 Misc. Chemicals 3365 Railroad Rolling Stock

3271 Clay & Refractory Products 3366 Ships & Boats

3279 Stone & Mineral Products 3369 Misc. Transportation Equipment

3311 Iron & Steel Products 3391 Medical Equipment & Supplies

3313 Aluminum Products 3399 Jewelry, Sporting Goods

3315 Foundries 5112 Software Products

3331 Agri., Constr., Mining Machinery 5152 Cable & Other Programming

3332 Industrial Machinery 5172 Wireless Telecom Carriers

3333 Commercial & Service Machinery 5174 Satellite Telecommunications

3336 Engine & Power Equipment 5179 Other Telecommunications

3339 General Purpose Machinery 5182 Data Processing & Hosting

3341 Computer Equipment 5191 News & Media

3342 Communications Equipment 5413 Architecture & Engineering

3343 Audio & Video Equipment 5415 Computer Systems Design

3344 Semiconductors 5416 Management Consulting

3345 Precision Instruments 5417 R&D Services

3346 Magnetic & Optical Media 6215 Medical & Diagnostic Laboratories

Data Sources

Exports: Export data are derived from a number of sources including: Census, BEA, Moody’s analytics, BLS,

NAFSA, IRS, EIA, and Sabre. The estimates include both goods and services and are adjusted to reflect the export

value-add at the point of production using the local share of national output to allocate national exports for each

industry and county. For more information: Nick Marchio, “Brookings export database methodology” (Washington:

Brookings Institution, 2015). www.brookings.edu/~/media/research/files/interactives/2015/export-

monitor/brookingsexport-series-methodology-nm-5715.pdf

Foreign Direct Investment: Jobs in foreign-owned establishments are derived from data from Dun and Bradstreet

(D&B), the National Establishment Time Series (NETS), and the Bureau of Economic Analysis (BEA). The estimates

include all foreign investment activity into the United States between 1991 and 2011, excluding real estate and EB-5

investment. Brookings utilized Moody’s private-sector employment totals to calculate the shares of domestic jobs in

foreign-owned establishments. For more information: Nick Marchio, “Methodological Appendix for FDI in U.S. Metro

Areas: The Geography of Jobs in Foreign-Owned Establishments” (Washington: Brookings Institution, 2014).

www.brookings.edu/~/media/research/files/reports/2014/06/20-fdi-us-metro-areas/method-appendix.pdf

The source of the greenfield FDI data is the Financial Times’ fDi Markets database. This database tracks all cross-

border investment into new physical projects or expansions of an existing investment, otherwise known as

“greenfield” investment. Company announcements form the basis for the database and each submission is manually

verified before being published. In cases when the capital investment and job counts are not publicly released,

analysts impute the value invested and jobs created using an econometric model. The primary sources of the data

are newswires, internal sources, top business journals, industry organizations, investment agencies, and data

purchased from private vendors. Brookings’ analysts assigned metro areas to the city-level information available in

the database and processed the flows between different investor and recipient geographies and industry levels. The

preferred metric is the cumulative stock of FDI invested and jobs created over the reference period from 2009 to

2015. All value measures were inflation-adjusted to 2014 dollars. For more information see

http://www.fdimarkets.com/faqs/

62

http://www.brookings.edu/~/media/research/files/interactives/2015/export-monitor/brookingsexport-series-methodology-nm-5715.pdf

http://www.brookings.edu/~/media/research/files/reports/2014/06/20-fdi-us-metro-areas/method-appendix.pdf

http://www.fdimarkets.com/faqs/

Data Sources

Patents: Patents data are derived from the OECD’s REGPAT database. The OECD manages this database as part

of the Patent Cooperation Treaty, which offers patent protection to organizations and individuals planning to do

business in multiple countries. A number of research decisions went into the construction of the patent estimates.

Patent locations correspond to the inventor’s place of residence or workplace. In cases when there are multiple

inventors, the patent was apportioned in equal shares to each co-inventor. Patents that fall under multiple

International Patent Classification (IPC) technology codes were also apportioned in equal shares to each technology

class in order to account for the cross-cutting nature of technological development. To mitigate year-to-year

fluctuations in invention activity, patents were summed in five-year intervals. The time dimensions represent the

“priority year” when the patent was first filed. This year is closest to the actual date of invention and is the most

relevant reference date when assessing an area’s technological activity at a specific point in time. Since patent filing

is a costly and administratively burdensome process the analysis excludes patents submitted in 2013 and 2014

since patents filed in these years only account for a portion of patents actually invented and may bias places and

organizations with better systems for shortening lag time between the date of invention and the application year.

For more information: Stephane Maraut and others, “The OECD REGPAT Database: A Presentation” (Paris:

OECD, 2008). www.oecd.org/sti/inno/40794372.pdf

63

http://www.oecd.org/sti/inno/40794372.pdf

Data Sources

University Research Impact: University scientific impact data come from the Centre for Science and Technology

Studies (CWTS) at Leiden University. This publicly available database tracks bibliometric performance data for 750

universities with the largest publication output in internationally recognized journals. The database relies on the

Thomson Reuters Web of Science citations indices which researchers cleansed, geocoded, and classified into fields

of study. CWTS reports publications based on full-counting methods which gives equal weight to all publications from

a university and fractional counting methods which apportion shares to each collaborator.

For more information: L. Waltman and others, “The Leiden Ranking 2011/2012: Data collection, indicators, and

interpretation.” Journal of the American Society for Information Science and Technology 63(12), 2419–32.

www.leidenranking.com/methodology

Venture Capital: Venture capital data are derived from PitchBook, a private financial research firm that collects and

tracks global private equity activity. PitchBook analysts deploy web crawlers to perform a daily systematic scan of

media reports and public filing information on deals which they then record and validate through a manual review

process. In assembling their database they include address-level data for both investors and recipient companies,

industry, investor details along with the deal value. Brookings took the data and then assigned the investors and

recipients to metropolitan geographies. The primary statistic in the analysis is the cumulative stock of venture capital

which is the sum total of year-to-year investment flows. Secondary statistics examine the number of investors and

companies along with data between different geographies, deal categories, and industries. The advanced industries

classification is an approximate grouping based of detailed industry categories matched to Brookings’ NAICS-based

definition. All value measures were inflation-adjusted to 2014 dollars.

For more information: http://blog.pitchbook.com/wp-content/uploads/2014/06/3Q-2014-PEBreakdown-

Methodology.pdf

64

http://www.leidenranking.com/methodology

http://blog.pitchbook.com/wp-content/uploads/2014/06/3Q-2014-PEBreakdown-Methodology.pdf

Data Sources

Aviation: Aviation data are derived from Sabre Aviation Solutions’ global demand dataset (GDD). The dataset

includes a record for every international itinerary entering and leaving the United States or any large global metro

area with output of at least $100 billion in 2014. Each record includes the origin and destination airports, plus up to

three connecting airports with the number of passengers and total revenue generated from that specific itinerary for

that year. The GDD is based on a variety of sources including information developed from direct business relations

between Sabre and over 400 global airlines. For international itineraries not reflected in their database, Sabre

imputes missing flights and passenger levels based on additional market data. The result is a complete dataset of

travel into and out of major global aviation centers. Brookings assigned all airports to global metropolitan areas,

obtained latitude and longitude coordinates to derive distance measures, cleaned anomalous records, and

aggregated the passenger and revenue flows to better facilitate regional analysis. All value measures were inflation-

adjusted to 2014 dollars.

For more information: Adie Tomer, Robert Puentes, and Zachary Neal, “Global Gateways: International Aviation in

Metropolitan America” (Washington: Brookings Institution, 2012).

www.brookings.edu/~/media/research/files/reports/2012/10/25-global-aviation/25-globalaviation.pdf

Freight: This analysis uses a unique database measuring goods traded among U.S. metropolitan areas,

nonmetropolitan regions, and international geographies. We used the data foundation and design scheme of the

publicly available Freight Analysis Framework (FAF). The database provides a comprehensive view of freight

movement to, from, and within the United States. Originally based on calendar year 2007, Version 3.2 has been

provisionally updated to estimate 2010 total freight volumes, or flows, by annual tonnage, value, and ton-mileage.

With an interest in showing domestic and international freight flows in, out, and among all of the country’s

metropolitan areas, Brookings worked with the EDR Group to estimate freight movement across combined statistical

areas (CBSAs). For more information: Adie Tomer, Robert Puentes, and Joseph Kane, “Metro-to-Metro: Global and

Domestic Goods Trade in Metropolitan America” (Washington: Brookings Institution, 2013).

www.brookings.edu/~/media/Research/Files/Reports/2013/10/21-metro-freight/SrvyMetroToMetro.pdf?la=en

65

http://www.brookings.edu/~/media/research/files/reports/2012/10/25-global-aviation/25-globalaviation.pdf

http://www.brookings.edu/~/media/Research/Files/Reports/2013/10/21-metro-freight/SrvyMetroToMetro.pdf?la=en

Acknowledgements

This report is made possible by funding from the Central Piedmont Community College. Special thanks go to Dr. Tony Zeiss and Mary Vickers-Koch for their supportand guidance.

This presentation was prepared by Joseph Parilla, Senior Research Associate, Brookings Metropolitan Policy Program. For their research support and advice, he would like to thank Alan Berube, Jesus Leal Trujillo, and Nick Marchio.

ABOUT THE METROPOLITAN POLICY PROGRAM AT BROOKINGS

The Metropolitan Policy Program at Brookings delivers research and solutions to help metropolitan leaders build an advanced economy that works for all. To learn more visit www.brookings.edu/metro.

FOR MORE INFORMATION

Metropolitan Policy Program at Brookings

1775 Massachusetts Avenue, NW

Washington, D.C. 20036-2188

Telephone: 202.797.6000

Fax: 202.797.6004

Website: www.brookings.edu

Joseph Parilla

Senior Research Associate

Metropolitan Policy Program at Brookings

[email protected]

The Brookings Institution is a private non-profit organization. Its mission is to conduct high quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views of the Institution, its management, or its other scholars. Brookings recognizes that the value it provides to any supporter is in its absolute commitment to quality, independence and impact. Activities supported by its donors reflect this commitment and the analysis and recommendations are not determined by any donation.

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