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Magazine / Q&A

As Economy Recovers, Will Exporters Have Edge?

Brookings' Bruce Katz believes the future belongs to cities that think globally.

September 11, 2010

As the director of the Brookings Institution's metropolitan policy program, Bruce Katz hesitates to specify the cities that he expects to thrive as the economy recovers. But he is happy to describe them. They are the ones that can satisfy a rising demand for exports or supply the industries of the future. For the past generation, government erred in promoting real estate, finance, and consumption as the engines of economic growth, he says, and "we're not going back" to that kind of economy.

Katz: There is an emerging macro vision of where the economy needs to go. The United States is going to export more. We're going to move to a low-carbon, clean-tech economy as a market proposition. We're not just going to do this for sustainability reasons. We are going to do this because there are jobs and markets to serve. We are going to innovate in what matters, and we are going to produce and deploy more of what we invent. So manufacturing actually is going to become more of the American narrative again.

 

If the U.S. pursued the right policies, manufacturing would stop its long decline?

Katz: We are going through a disruptive period where demand is coming from abroad -- and will be for the foreseeable future. China, India, and Brazil are urbanizing at the same time, and they are building a middle class that is going to consume more. As they do, they need to buy products and services, some of which we actually have a competitive advantage in. We've so down-talked ourselves that we don't realize that aircraft, spacecraft, advanced machinery, precision surgical instruments, high-quality pharmaceuticals -- there are a whole bunch of things on which the United States stands out as being a very substantial producer, both domestically and globally.

You are saying that clean technology itself will be a major source of economic growth?

Katz: Absolutely, and it is going to extend from renewables -- solar, wind, and nuclear. It is going to involve sustainable infrastructure, high-speed rail, transit, rapid bus, the smart grid, energy-efficient appliances. For a long time, the only thing anyone heard about the green economy was energy retrofits, which is only one element of this. We think that the effect of the low-carbon transformation will be as dramatic as the information revolution. And like info-tech, it will cluster in certain metros.

Give an example of a cluster, and the role that government might play in promoting it.

Katz: Take Wichita [Kansas], for example, which is the most export-intensive metropolis in the country. Twenty-eight percent of its gross metropolitan product comes from aviation, and 65 percent of that comes from aircraft parts. You've got all the firms, Cessna and Hawker Beechcraft, you've got all the suppliers, Cox Machine and Perfekta, and then you've got the National Institute for Aviation Research at Wichita State [University]. You've also got the Wichita Technology Corp., which gives low-cost capital to either the main firms or some of the suppliers, as they have to redo facilities, as they constantly innovate.

Which cities are better positioned for exports than others?

Katz: I would say the places that are the most export-oriented, and they are intensely innovative, are places like Seattle, San Jose [California], and even some of these smaller metro areas, such as Wichita, which understand their position in the global market.

The starting point for any metro area is, where do you fit in the global market? What do you trade with whom? If you know the answer to that question, you are probably pretty well positioned to leverage off of it. If your answer is, "We don't really know," then you're probably not as focused on the productive and sustainable economy as you need to be.

The author is a former staff correspondent for National Journal.

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