It’s not surprising that our local media is paying increasing attention to the health and future of the Washington regional economy (see examples here and here).
The National Capital Region has been a remarkable success story over the past few decades. The region ranks among the best in the country for economic output, wages, employment, economic attainment and much more. Yet we now face real concerns. Triggered by a significant shift in federal spending, the region is now underperforming compared to other large metro economies. The Washington area economy is projected to grow over the next five years at only two-thirds the rate of the largest 100 U.S. metro areas.
The Brookings Institution along with JPMorgan Chase recently published a report, Benchmarking Greater Washington’s Global Reach (part of their joint Global Cities Initiative) that paints a picture a region of great potential that underperforms compared to other large regional economies; an under-diversified economy whose major weakness is its over-reliance on federal spending.
Washington’s main asset is its talent. Thanks to the output of its excellent higher education system (including Mason’s 100,000 graduates in the area) and the ongoing attraction of highly educated professionals from around the country and the world, we have the most educated population of any major U.S. metropolitan area. The Washington region also has great global connectivity as 18 percent of air passengers in the region are traveling internationally. In addition to the web of federal agencies, multilateral organizations, advocacy firms and think tanks, the region is the home of a great number of high-tech industries, research centers, and university-based laboratories.
Yet the Washington region performs relatively poorly when it comes to trade. Exports of products and services represent only 6.1 percent of the total value of the Washington regional economy, well below other peer regions such as Austin (9.2 percent), Boston (10.8 percent), and Seattle (19.1 percent).
The Washington area is comparable to other large metro regions in employment by foreign-owned businesses. However, many of these firms are outside of high-tech industries and serve only local customers, which limits the amount and benefit of foreign direct investment.
In terms of quality of life, as noted elsewhere, Washington’s main struggle is traffic congestion. According to the Brookings/JPMorgan report the Washington area has the longest commute distances and the corresponding longest average commute times. Infrastructure and transportation remain a critical area for further investment.
As we have discussed here before, Mason is collaborating with The 2030 Group, a regional coalition of business leaders, in an effort to lay out a roadmap for the future of our region’s economy. There is growing evidence that business as usual will no longer suffice.
The keys to the continuing success of this rich and vibrant reason will be diversification of the economy, improvements in the innovation and entrepreneurial ecosystem, investments in transportation infrastructure, an improved regional collaboration. We stand ready to do our part.
One reply on “Steering the Washington regional economy”
My take. There are more than 700 foreign subsidiaries in the Commonwealth including 400 in Northern Virginia. GMU needs to do a lot more to engage them. Most actually use Virginia as a platform to enter the US marketplace as well as to produce and to serve as corporate headquarters. More internships with them would lead to more employment opportunities and support from them. They are an immensely underutilized resource that we can leverage for benefit of students, the university and economic development in Virginia.