Showing posts with label economic development. Show all posts
Showing posts with label economic development. Show all posts

Monday, July 13, 2015

Two Benefits of Hosting Comic-Con in San Diego

Over a hundred and thirty thousand people attended this year’s Comic-Con convention in their enthusiasm to submerge themselves in the spirit of “geekhood”. Comic enthusiast contributed $203 million and booked over 378,000 rooms in the area over the past three years (1). This means big windfalls for hotels, restaurants and other businesses in the area. 

There are two benefits from Comic-Con that helped to steer a course for San Diego. The first is the immediate benefits to local businesses and the second is the long-tail of marketing of San Diego to the world. Businesses may see a short burst of revenue but also may find their environment improving over the long-run. 

Sometimes people need an excuse to see the beauty of San Diego. Conventions such as Comic-Con give young people a reason to visit San Diego who might have otherwise have optioned for another place. Some of those people will be impressed by the area and may come back for a vacation or another time when a large event is being held. 

Just in the same way as Comic-Con grew from a small event in the 70’s, to the powerhouse draw of celebrities today, areas also grow in appeal. Because we are creatures of habit, visiting once often perks our interest into visiting again. The same mental processes occur in consumer choices in events or any other buying behavior. 

Some businesses will receive enough revenue during this period that it makes a difference between hiring another employee and laying off another employee during the year. Small businesses need this revenue to increase their profit margins and make small changes in their expansion. Hotels, restaurants, bars, retail, and other associated establishments should have seen a spike in revenue. 

Comic-Con offers value for the area and should be encouraged. Whether we are concerned about marketing the area to the rest of the world or getting a little extra cash into the hands of local businesses owners the value of similar events cannot be underestimated. With San Diego’s vacation weather it should be a popular option for future events.

Tuesday, February 3, 2015

Advanced Industries Power Exports

Advanced industries are those that develop innovative solutions to market problems. When matched with labor skills, education, business clusters and progressive policies spur exports and employment at a levels unseen in other industries. A report by the Brookings Institution finds that advanced industries only account for 9% of employment but accounts for 60% of exports and 17% of Gross Domestic Product.

The development of products requires a level of innovation where research, skill, investment, and industry come together to create an exportable product. Many of the county's strongest industries are clustered in metro areas which make it possible to rejuvenate these areas while still strengthening the nation. We can see this example in places like Detroit and San Jose California.

As to date national economic policy has not been focused on developing hubs and clusters that are better able to meet market needs and push the nation even further ahead of the competition. There have been some movement in that direction but not enough pro cluster policies have made their way into public debate and government policy. 

America's strength relies on its ability to lead the market with new products. Without offering a competitive advantage such as a highly innovative industries there is less reason to invest in the U.S. when production costs are cheaper in emerging nations. Market leaders are not as influenced by costs as copy cat market followers. 

It would be wise to consider other supporting literature that confirms Brookings Institution's findings and consider incorporating such ideas into policy making. Focusing on advanced clusters in cities that have appropriate core competencies and infrastructure can raise the U.S. from a net importer to a net export. Doing so across multiple hubs and clusters can create sustainable growth.

Brookings Institution (Februrary 3rd, 2015). Americas Advanced Industries. Retrieved from

Friday, January 9, 2015

A Few Thoughts on the Free 2-Year College Degree Proposal

The White House recently announced an idea to provide free tuition for 2-year college degrees in an effort to educated the American workforce. Potentially 9 million students could save approximately $3,800 annually in student loan payments. Cost would be somewhere around $60 billion dollars and would need to be approved through the congressional budget. A well intentioned policy with a few thoughts about the benefits and detractors of the idea.

It is true that Americans need to retool their workforce to ensure that they stay competitive on the international market. This generally means that they will need to learn new skills to match the marketplace in a way that will improve upon the growth and expansion of competitive industries. Growth requires a workforce that can actually do the work without burdening companies with excessive training costs.

There is a problem with understanding which type of skills students will be learning. Those students that will be working in labor positions should be learning very focused technical skills that give them direct competitiveness in the industry. Even though Russian Literature is beneficial for everyone it isn't going to have the same impact as a metal working or industry math class at this level.

Because community colleges are designed around certain characteristics it may be necessary to encourage such colleges to offer more industry focused education with only a brief introduction to other aspects of higher education. Theoretical concepts and great literature classes may be less beneficial in occupational courses than in bachelor degrees. 

Making college an extension of high school is probably not a great idea. There is currently significant criticism of high school, its curriculum, and its ability to prepare students for the workforce. Reforming high school and ensuring that graduates can actually function in the workplace upon graduation helps to ensure that an additional 2-year college degree has some industry benefit.

Which type of institutions have access to this money will also make a big difference. At present it appears that community colleges have access but larger universities would not. In such a case it could be an advantage for community colleges. Knowing the overall impact is important to ensure that government money doesn't skew or damage the competitiveness of the entire industry or lessen the pressures for innovative change.

Free money can sometimes make institutions lazy about change. Shoring up and supporting the capacity of an industry hobbling along is great for students but does come with a problem of poor development when resources are plentiful. Colleges should not become complacent and should continually seek to develop and adjust to create greater levels of development for the future. Free money should not be a "fat cat" issue.

We know that the government budget is bloated with all types of things we don't need and don't help people move up the economic ladder. I have no personal problem with government taking the useless funding found in other locations and placing it into something beneficial like education that has a long-term impact on the nation. It will require legislators to think long and hard about what type of spending is beneficial and where it should be allocated.

If the type of education helps supply industry with the necessary skills to compete then the free 2-year college program has some merit. This assumes that people are earning the actual skills that can be employed right after graduation in engineering, service management, manufacturing, etc... The educational programs offered by community colleges should be focused specifically on industry needs and offer the greatest amount of immediate return on investment.

Few seem to have formulated a full or concise opinion on the proposal to offer free 2-year degrees. Many of the details have not been released which makes it wise to not jump into opinion making until more information is present. With such a large program the devils are all in the details as financing, impact, and outcomes still need to be discussed. The idea of strengthening America's educated workforce to maintain competitiveness has its advantages but will come with some costs. Stay tuned for additional details and debate!

A fact sheet from the White House

Tuesday, December 30, 2014

Treaties that Foster Economic Growth and American Values

Treaties determine what type of international commercial activity is likely within a country. The design of these treaties can determine the access to raw materials, investment opportunities, and export opportunities. Countries like the U.S. can develop stronger treaties that are more advantageous to an export market while ensuring that American values are important to partnering countries.

Developing countries are regularly looking to attract investment. Investment money is used to fuel their economies, fill government coffers, and create a connection to a larger world. Because of America’s strong economic position it has the capacity to create more advantageous treaties (Chikere Azubuike, 2013). The value of these investments puts the U.S. in a better bargaining position than the other country(s).

This position of power is not necessarily a bad thing. When done well it can help the U.S. fuel its economic hubs for greater development. Such hubs rely on natural resources and international supplies to fuel new product development and manufacturing. Ensuring that treaties consider the needs of these Hubs helps create jobs and encourage higher levels of local economic activity.

As with all negotiations the position of power often determines the terms and agreements of the two parties. Having an advantage in negotiation can help ensure that the right pressure points are being used that determine the outcome of negotiations. That power can help U.S. located firms obtain the resourced they need to grow and create jobs in the local economy.

Treaties are not all about economics and resource obtainment. Treaties can also promote human rights and values (Choudhury, 2009). In this case, solid treaties can also help ensure that American values are considered in business dealings. Such legal frameworks help orientate supplier nations to U.S. interests and perspectives which can further the spread of fundamental American values.

The development of strong American treaties that help turn bi-lateral trade agreements into a wider multi-lateral framework to ensure the anchoring of resources to economic hubs can help foster American interests. Each supplier nation is provided access to sell supplies to the U.S. while obtaining investments into the development of those supplies. The end result is a more efficient and well-developed economic hub that can obtain resources at a lower cost.

Chikere Azubuike, E. (2013). The place of treaties in international investment. Annual Survey of International & Comparative Law, 19.

Choudhury, B. (2009). Democratic implications arising from the intersection of investment arbitration and human rights. Alberta Law Review, 46 (4).

Saturday, December 6, 2014

As World's Largest Economy Does China Gain New Advantages? Should We be Worried?

For the first time in decades the U.S. is no longer the largest economy in the world. Despite industry experts throwing up red flags for years the inevitable happened. According to new data by the IMF the total output of goods and services by China is $17.6 trillion versus $17.4 trillion for the U.S. This leaves experts scratching their heads and wondering how this could happen and what it means for the future. Should we be worried?

Resource Advantages:

With China accounting for 16.5% of the world economy in terms of real Purchasing Power Parity (PPP) and the U.S. at 16.3% of PPP it means that China has a little more leverage in their treaties and purchasing behavior. They will be able to obtain and receive resources at a slightly lower rate than the U.S. giving them an economic advantage.

The advantage they have in obtaining cheaper resources for their manufacturing can be sufficient when systematically applied across multiple industries year-after-year. A few cents on every dollar means products can be produced a little cheaper and growth can be fueled at a slightly lower cost. Pennies can add up over millions of transactions.


When a country has more economic muscle they will also find that they can negotiate and enact more advantageous treaties than other nations. The power of the dollar,  or in this case the Chinese Yuan Renminbi, changes the fundamentals of the terms. Countries seeking growth will latch onto and make deals with powerful countries that they wouldn't have done otherwise. 

An Axis of Political Power:

China is not a stand alone nation that developed its power in isolation. It is intimately connected to other Asian countries and nations throughout the world. Country leaders look toward China for direction in fiscal, social, governmental, and military affairs. Being the biggest kid in the school yard offers a further reach for influence beyond willful intent. Nations looking for alternatives will find an ally in China. 

Should We be Worried?

America is making a reemergence unseen in the past few decades. As other economies are slowing the U.S. is improving. Exports are increasing and hiring is picking up. The U.S. has nearly reached cost parity in manufacturing with China. Mammoth budgeting problems in the country are starting to be looked at and analyzed for an effective solution. It is possible that a close race of leader and follower swapping positions in an all out sprint with China will emerge for some time. 

Where We Should Improve

To capitalize on the growth and improve on opportunities for the next generation it is important for the U.S. to fix problems and dysfunction where and when they occur. Improvements could be sought in educational reform; systematic law enforcement policies that foster people's capabilities; better management of budgets/debt to lower interest costs that could be better spent somewhere else; a rational economic policy that focuses on exports (i.e. hubs, innovation and jobs); responsive government that better serves the needs of the populace vs. special interests; higher technology/functionality of the military that lowers costs and enhances capabilities to combat amoebic groups; social justice and eradication of racism/religious bigotry to ensure full economic engagement and alignment to national interests; and better treaty making that strengthens U.S. manufacturing and knowledge development.

Should we be worried? That depends if you trust that people can put down their petty differences and move into collective action. The U.S. faces difficult challenges in today's world but these are surmountable challenges that require a little forethought and elbow grease. Political gridlock and dysfunction should give way to higher levels of enlightenment that creates environments where both business and people can accomplish their goals for the collective benefit of all. As a nation, we may have forgotten the spirit of what it means to be American and the core values we all believe in. It will be these values, if refreshed, that can lead the country to higher levels of performance.

Tuesday, December 2, 2014

U.S. Consumer Confidence Rises with Economic Growth

The economies of the world’s nations are on a slow stroll while America has quickened its pace to a leading role as one of the only bright Northern lights for others to follow. Improvement is so significant that GNP has been revised upward from 3.5% to 3.9% (As cited in CNN Money). Other nations are increasingly concerned about lower inflation and the potential for deflation. The U.S. is doing so well it may start to raise interest rates in alignment with growth.

Americans are becoming increasingly positive about their future prospects within the economy. According to a recent gallop poll consumer confidence rose to -7 which is the highest it has been in 17 months (Gallop, 2014).  The poll is a combination of how people view the economy. According to the poll 24% said the economy is excellent while 30% said it is poor leaving the total balance at -7. 

The U.S. economy is also moving forward with some of that growth coming from lower energy and oil costs. Morgan Stanley’s global economist stated, “Lower energy costs boost broad economic activity in the near term and fiscal policy becomes a bit more supportive of growth in 2015” (as cited in Market Watch). Oil is a significant cost that impacts everything from shipping to production throughout the economic system.

The economy is a whole system that incorporates financial metrics as well as difficult to define human feelings, emotions, and neuro-economic choices. Improvements in oil and economic conditions are one benefit while improvements in consumer and investor mood are another. Getting investors and employees on the same page is terms of investment and skill is beneficial. 

Those not feeling positive are likely suffering from job displacement related to economic transitions in the market. Using economic hubs as a method to bit size policy to match investment in business with new learning in job skills to create new products is beneficial. Fiscal policy should focus on hedging the power of the new found economic growth to foster competitive clusters that can compete on the international market.