INCLUSIVE ECONOMIES UNDERSTANDING THE ATTRIBUTES OF INCLUSIVE METROPOLITAN ECONOMIES Report to the Rockefeller Foundation May 3, 2016 Tuesday, May 3, 16 1
Objectives Explore the evidence base for the Rockefeller Foundation’s “Inclusive Economy” framework through the prism of U.S. metropolitan areas Assess large U.S. metropolitan areas’ performance across the five inclusive economy characteristics, and reveal interrelationships between characteristics by building on Brookings’ existing data and analysis Advise the Rockefeller Foundation on its plan to identify, pursue, and measure characteristics of an inclusive economy Stimulate public interest in the inclusive economy framework and make the framework concrete for U.S. regions by offering typologies and benchmarking tools 2 Tuesday, May 3, 16 2
Contents I. Characteristics of Inclusive Economies Defining the five characteristics as they apply to U.S. metropolitan areas involves an iterative process of conceptualization and data analysis II. Analytical Approach Data availability constrains the aspects of inclusive economies that can be measured, and in turn shapes the assumptions and research approach III. Findings Patterns between characteristics and places provide insights on the nature of inclusive economies in a regional context 3 Tuesday, May 3, 16 3
SECTION I CHARACTERISTICS 4 Tuesday, May 3, 16 4
Section I: Characteristics of Inclusive Economies Research Approach 1 Apply the Rockefeller Foundation’s thinking on inclusive economies to the context of U.S. metropolitan areas. While inclusive economy characteristics can be used to describe the attributes of countries, this project focuses instead on variations across metropolitan areas to shed light on the inclusive economies framework at the sub- national scale and learn more about relationships between characteristics in a data- rich context. 2 Apply understanding of how economies evolve to inform categorization of indicators and analytical design, without requiring that characteristics fit within a rigid change model. While all five characteristics matter to inclusive economies, they may variously be interpreted as inputs to an inclusive economy, outcomes that describe such an economy, or processes within a model of economic change. Situating the characteristics within a theory of change also hinges on the availability of indicators to capture different facets of inclusive economy inputs, processes, and outcomes. 3 Animate dimensions of inclusive economies using data. This analysis seeks to reveal patterns and interrelationships between inclusive economy characteristics as manifested across large U.S. metropolitan areas. 5 Tuesday, May 3, 16 5
Section I: Characteristics of Inclusive Economies Characteristics of Inclusive Economies in Metropolitan America Brookings’ conceptualization of the five inclusive economy characteristics attempts to acknowledge the broad and fluid nature of each category while distilling a distinct idea behind each. A further consideration was the ability to furnish each concept with available data on U.S. metropolitan areas. Brookings’ interpretation of the characteristics emerged from an iterative process of concept definition and data analysis. Subsequent slides unpack the sub-dimensions underlying the characteristics, and provide examples of indicators used. Equity: producing a fair distribution of income and affording residents access to resources that are essential for upward mobility Participation: empowering residents to participate in economic life as workers or entrepreneurs through knowledge and access to jobs and social networks Growth: expanding the size of the economic pie, particularly in ways that expand average wealth Sustainability: valuing long-term environmental health and resilience to economic disruptions Stability: providing the safety and socioeconomic security that enables long-term planning and investment, particularly in one’s own human capital 6 Tuesday, May 3, 16 6
Section I: Characteristics of Inclusive Economies Family of Concepts Characteristic Subgroup Microgroup Inequality Outcomes Outcomes Social mobility Equity Equity Education barriers Access Access Cost barriers Labor market participation Web connectivity Participation Participation Economic Economic Minority entrepreneurship Commute to work Macro growth Quantity Quantity Business dynamics Quality of life Growth Growth Quality Quality Good job creation Trade Transformation Transformation Innovation Renewable energy Carbon Footprint Carbon Footprint Carbon Footprint GHG emissions Green transit Sustainability Sustainability Disasters Vulnerability Vulnerability Vulnerability Pollution Volatility Family planning Youth opportunity Stability Stability Stability Socioeconomic Distress Socioeconomic Distress Socioeconomic Distress College access Crime Housing 7 Tuesday, May 3, 16 7
Section I: Characteristics of Inclusive Economies Equity Many “ecosystem goods” serve as essential conduits to opportunity for marginalized individuals, and one’s levels of access to them can enable or inhibit economic success. Infrastructure, education, and services such as health care and shelter are among the resources individuals need to achieve upward mobility. The analysis considers people’s access to resources that enable them to thrive, as well as the extent to which places achieve an equal distribution of economic outcomes . Access: Are the resources of upward mobility within reach for all people? • Availability of affordable transportation, jobs, food, health care, housing • Education barriers for reaching middle class Outcomes: Is basic economic well-being broadly shared? • Income distribution, income segregation, poverty • Intergenerational mobility 8 Tuesday, May 3, 16 8
Section I: Characteristics of Inclusive Economies Participation Being able to participate means being able to take part in markets through the use of networks and platforms that connect people to employment and entrepreneurial opportunities. Economic participation concerns one’s access to the knowledge needed to successfully utilize markets, the ability to physically access jobs and to engage in entrepreneurial activities, as well as broader labor market outcomes. Economic: Do people have the know-how and wherewithal to participate in markets? • Access to know-how: Web connectivity • Physical ability to participate: Commute times • Entrepreneurial access: Minority business ownership • Participation outcomes: Labor force participation, minority business ownership, place-specific intergenerational mobility 9 Tuesday, May 3, 16 9
Section I: Characteristics of Inclusive Economies Growth Economic growth serves as a foundation for achieving broadly shared well-being. While the quantity of job and GDP growth matters, the quality of growth and the economic transformations through which growth is achieved may also position a place for success along the other dimensions of an inclusive economy. Quantity: Is there enough expansion to support broader well-being? • Job and GDP growth rates • Business dynamism Quality: Is growth enhancing people’s well-being? • Standard of living (GDP per capita) • Growth in low- vs. high-wage industries Transformation: Are the means of achieving growth productive and innovative? • Exports and FDI • Advanced industries, venture capital, patenting 10 Tuesday, May 3, 16 10
Section I: Characteristics of Inclusive Economies Sustainability Sustainability is decision-making with an eye to long-term environmental health and economic resilience . While the values underlying decision-making are difficult to quantify, they are revealed in the infrastructure and systems places have built, and the everyday behavior of their residents. Sustainability is reflected in the choices places and people make regarding energy consumption, environmental health, disaster preparedness, and economic diversity. Carbon Footprint: To what extent is the economy carbon dependent? • Use of renewable energy sources • GHG emissions • Low- vs. high-carbon commuting behavior Vulnerability: To what extent is the economy exposed and adaptable to environmental and economic disturbances? • Environmental hazards and pollution • Emergency preparedness • Economic resilience 11 Tuesday, May 3, 16 11
Section I: Characteristics of Inclusive Economies Stability A stable place is one in which individual and socioeconomic security give people confidence to invest in their future. Socioeconomic stresses , from teen births to violent crime, impose externalities on individuals within a community, and weigh against their propensity to invest by raising social discount rates. Socioeconomic distress: To what extent are individuals subject to wider socioeconomic failures and risks? • Teen births, poverty among single-female householders • Attachment to work and education among young adults • College access and student loan default rates • Violent crime • Severe housing problems, foreclosure rates 12 Tuesday, May 3, 16 12
SECTION II ANALYTICAL APPROACH 13 Tuesday, May 3, 16 13
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