San Diego’s emergence as a mecca for biotechnology and wireless communications has primed the region for economic success, but the city isn’t up to national standards when it comes to foreign investment and exports. If the region fails to enter the global markets, it could handicap the region’s future growth.
That was the view offered by Mayor Kevin Faulconer at the March 11 Global Summit launching “Go Global San Diego,” an effort to boost the region’s global competitiveness coordinated by JPMorgan Chase, the Brookings Institution and a long list of local institutions.
“The foundation of cities is trade, from the beginning of time,” said Bruce Katz, vice president of the Brookings Institution. “It’s what makes cities rich and lifts up the prosperity rate. If you’re not thinking of leveraging the power of your metropolitan cities, you’re in the wrong century.”
The project to boost global trade was launched after Brookings began to study the economic recovery following the 2008 recession. Its research found that half of the United States’ economic growth in the first year of post-recession recovery came from exports.
Katz, along with a panel of local partners from the San Diego airport and port authorities, Qualcomm Inc. and the University of California, San Diego, recently unveiled the Global Trade and Investment Initiative based on research by Brookings and Chase. Leaders of the initiative hope it will act as a roadmap for bringing San Diego to the global stage.
San Diego has the 17th largest economy in the country, but ranks 61st when it comes to export intensity.
The initiative’s goals include breaking into the top 50 spots by increasing the region’s export value to $24 billion by 2020, up from the recorded $18.4 billion in 2013. Go Global leaders hope to boost total export-supported jobs from 110,000 in 2013 to 135,000 by 2020.
San Diego ranks 49th in the country in terms of jobs in foreign-owned firms, a number Katz said must improve. Foreign-owned firms pay their employees higher wages, and are a major source of U.S. productivity growth through the infusion of new technologies and practices, according to Brookings.
Success on the foreign direct investment side of things in San Diego will mean reaching total employment of more than 65,000 people in foreign-owned firms by 2020, up from roughly 49,000 in 2011.
San Diego’s poor performance on the global markets could be the result of a few factors, including infrastructure challenges and the region’s international reputation (or lack thereof), Katz said.
Changing the city’s image is a key part of solving the problem, said Mark Cafferty, chief executive of the San Diego Regional Economic Development Council.
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“Regions have to stop thinking they’re going to be the next Silicon Valley and start figuring out how to you project the best possible San Diego,” Cafferty said. “There are a couple things we know we do remarkably well and we’ve got to push them better.”
Elements of the initiative include strengthening the skills of the local workforce to attract more foreign investment, showcasing San Diego and Tijuana as one region, and improving the city’s infrastructure.
Thella Bowens, president and CEO of the San Diego Regional Airport Authority, said the airport’s mission is to support the regional economy, which is why the airport launched two long-haul flights to London and Tokyo.
“Those two flights have done a lot to support connectivity to markets, not just to London and Tokyo, but beyond to France, Singapore, Ho Chi Minh City and to other cities considerably beyond those destinations.” Bowens said.
While those two routes are performing well, Bowens said the region needs to further support them to ensure their success — a necessary selling point for the airport to expand its international routes.
In the short-term, Bowens said Central and South America are the top destinations being eyed by the airport, with China possible in the distant future.
Dan Malcom, chairman of the Port of San Diego, said that while the port sees $5 billion in imports a year, there are only $78 million in exports.
Malcom added that Dole Food Co. is acquiring larger, more efficient ships this year to increase its footprint in San Diego, and Pasha Automotive plans to put Marjorie C into service this year, doubling its trade services to Hawaii.
The resounding takeaway from the Global Summit was that focusing on the region’s strengths — rather than attempting to be the next Silicon Valley or Boston — is what will make San Diego successful in the global marketplace.
“Innovation, human capital and infrastructure; go home and keep saying those three words, because that’s what really matters, Katz said. “If we wait for Washington to do much of anything, we will be waiting a long time. Cities and counties really do have the capacity to step up and do more in this space.”