TheWashingtonRegion’sDecliningEconomicBrand

By

StephenS.Fuller,PhDDwightScharFacultyChairandUniversityProfessor

Director,TheStephenS.FullerInstitute

TheStephenS.FullerInstitute

forResearchontheWashingtonRegion’sEconomicFutureScharSchoolofPolicyandGovernment

GeorgeMasonUniversity

July12,2017

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TheWashingtonRegion’sDecliningEconomicBrandTheWashingtonregionhaslostpositionrelativetoitspeerssince2010.Theslowereconomic growth that has resulted from reductions in federal spending over thepast six years has generated concomitant reductions in many of the region’srankingsbasedonothereconomicmeasures.Understandingtheinterdependenciesbetween slower economic growth, thewage and salarymix of new jobs, personalincome change, the high cost-of-living and housing affordability, decliningpopulation growth rates and net domestic outmigration, and economiccompetitiveness will make it easier to formulate and undertake initiatives forreversingthesetrendsbybuildingontheregion’sconsiderableassetbase.Giventhelengtheningdurationoftheseunfavorableeconomictrendsandthecontinuinglossofpositioncomparedtothenation’smajormetropolitanareaeconomies, itshouldbe apparent that the Washington region’s structural economic problems are notself-correcting.Rather,theywillrequiretargetedinterventionbylocalbusinessandpublic sector leaders to reverse the region’s underperformance and decliningattractivenesstobusinessinvestmentanddomesticmigration.

TheWashingtonRegion’sEconomicRankingIsSlipping

TheWashington region’s experienced rapid economic growth between 1950 and2010. In1950, theWashingtonRegionwasthenation’sninth largestmetropolitaneconomy,asmeasuredby thevalueofgoodsandservices itproduced, theDetroitmetropolitanarearankedfifth,thePittsburghmetropolitanarearankedeighthandthe St. Louis metropolitan area ranked tenth. By 2010, the Washington region’seconomy had risen to fourth place among the top ten. It followedNewYork, LosAngelesandChicago;thesethreemetropolitanareashadheldthesesamerankingsin1950.TheWashingtonregion’seconomyhadovertakenfivelargermetropolitanareas over the sixty years between 1950 and 2010with St. Louis, Pittsburgh andDetroit falling out of the top ten having been replaced by Atlanta, Dallas andHouston.ThesechangingrankingsareshownonTable1.Thisgrowthpatternreflectstheanationaleconomyshiftingfromamanufacturingbasetoaprofessionalandbusinessservicesbase.Metropolitanareaeconomiesthatwere unable to shift their base frommanufacturing to professional and businessserviceseithergrewmoreslowlyorexperienceddecline.Incontrast,metropolitaneconomiesattractivetothegrowthofprofessionalandbusinessservicesrebalancedand diversified across their economies’ sectoral structures and have acceleratedoverthisperiod.

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Table1

AstheNation’sCapital,theWashingtonregionneverhadadominantmanufacturingbasebutratherwastheforerunneramongfuturemetropolitanareaeconomiesbuiltonaknowledge-basedfoundation.However,itsadvancedeconomicstructurehadamajorflaw;itwasnotadiversifiedeconomysuchasfoundinNewYork,LosAngeles,Chicago,Boston,Atlanta,DallasandHouston.Rather,itwasa“companytown”andinitsstructuralinterdependencieshadsimilaritieswithDetroit(autos),Pittsburgh(steel),andSt.Louis(distribution/transportation).

IncreasesinFederalSpendingDrivesGrowthThe Washington region’s economy was able to grow rapidly during the 1950 to2010 period because the federal government, its core business, was rapidlyexpanding itsnationalandglobal footprintsduring thisperiod. Thisexpansionofthe federal government can be seen in the growth of itsworkforce located in theCapitalCity.Itincreasedfrom227,300civilianemployeesin1950toitspeakinmid-2010of387,700employeesforanetadditionof160,400workersandagainof70.6percent.But the federal footprint actually grew even faster between 1950 and 2010 thanindicatedbyitssubstantialincreaseinitsworkforceasitbegantorelyincreasinglyon outsourcing as a substitute to expanding its workforce. Beginning in 1980,federal procurement spending within the Washington region began its steadyexpansionandbecametheprincipaldriveroftheregion’seconomicgrowthoverthefollowing thirty years. From 1980, when federal procurement spending in theWashington region totaled $4.2 billion, federal procurement spending increased

1950 2010 2016* New York New York New York

Los Angeles Los Angeles Los Angeles Chicago Chicago Chicago

Philadelphia Washington Dallas Detroit Houston Washington

SF/Oakland Dallas Houston Boston Philadelphia SF/Oakland

Pittsburgh SF/Oakland Philadelphia Washington Boston Boston

St. Louis Atlanta Atlanta Sources: U.S. Bureau of Economic Analysis, The Stephen S. Fuller Institute at the Schar School, GMU *Estimated; Houston’s economy (GRP) is projected to surpass Washington’s GRP in 2018 with Washington’s ranking falling to 6th place.

The Top Ten: How Does the Washington Area Economy Rank

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each year to its peak level in 2010 of $81.5 billion, for a thirty-year increase of1840.5 percent. In 1996, federal procurement spending in theWashington regionexceeded the value of the federal payroll for the first time.At thepeak of federalprocurement spending in the region, federal contractors were estimated to haveemployedbetween450,000and500,000workers.Over this thirty-year period the almost $900 billion in federal procurementspendingwithintheWashingtonregionfueleditseconomicgrowth.Thecorrelationbetweenfederalprocurementspendingandtheregion’seconomicgrowthbetween1980 and 2000 has been calculated at 0.95; that is, the growth in federalprocurement spendingexplained95percentof theWashington region’seconomicgrowthduringthatperiod.Thereisnoquestionthatthegrowthinfederalspendingoverthisthirty-yearperiodsupported theWashington region’s rise in economic ranking fromninth to fourthplace.Thereisalsonodisputingthatwithreductionsinfederalspendingsince2010theWashingtonregionhasexperiencedadecreaseinitsrelativeeconomicposition.Bythebeginningof2012,theDallasmetropolitanareaeconomyhadsurpassedtheWashingtonregion’seconomywiththeWashingtonregionslippingoneplacetofifthamong the ten largest metropolitan areas. Until 2012, the Washington region’seconomyhadonlygainedintherankingsonitscompetition.Nowitseconomywasgrowingmore slowly thanmanyof itspeersand is likely to slide further in theserankings in coming years if these trends continue. Economic growth projectionshave the Houston metropolitan area economy moving ahead of the Washingtonregion’s economy in2018with theWashington region slipping to sixthplace justaheadoftheSanFrancisco-Oaklandmetropolitanareaeconomy.The key factor shaping the Washington region’s economic growth rate over theyearspreceding2010wasincreasedfederalspending.Thisever-increasingtrendinfederalspendingwasreversedin2011withthepassageoftheBudgetControlActof2011.With thedecline in federal spending,both federalpayrollandprocurement,theregion’seconomyhasbeenunabletokeeppacewithitspeers.Figure1showsthatduringthe2010-2016periodtheBostonregion’seconomygrewtwiceasfastastheWashingtonregion’seconomy, theAtlantaregiongrewthreetimesas fast, theSeattleregiongrewalmostfourtimesasfastandHoustonregionandDallasregioneachgrewapproximatelyfivetimesasfastastheWashingtonregion’seconomy.TheWashingtonregion’seconomyaverageda0.95percentannualgrowthrateoverthe 2010-2016 period. In contrast, during the 2000-2006 period, theWashingtonregion averaged 3.8 percent annual growth. What happened? During the earlierperiod,theWashingtonregionadded15,900additionalfederalworkersandfederalprocurementspendingintheregionincreasedfrom$29.3billionto$57.1billion,againof$27.8billionor94.9percent.Afterpeakingin2010anddrivenlowerbytheBudgetControlActof2011and theSequester, theWashington region lost12,800federal jobs during the 2010-2016 period and federal procurement spendingdeclinedby$8billion(-9.8%),from$81.5billionto$73.5billion.However,federal

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procurement spending in the Washington region declined more precipitouslybetween2010and2013,whenitdecreasedto$68.9billion(-15.4%fromthe2010peak)foritslowduringthisperiod.Itshouldbenotedthatin2013theWashingtonregion’s economy contracted by 0.5 percent while the US economy grew by 1.7percent.Beingacompanytownhasitsdownside.ThisreversalinfederalspendingisshowninTable2.

Figure1

Table2

100

105

110

115

120

125

2010 2011 2012 2013 2014 2015 2016

Dallas (1st)

Houston (2nd)

Seattle (4th)

Atlanta (6th)

Boston (11th)

Washington (15th)

GRP Growth in Washington and Peer Metros, 2010 – 2016 100 = 2010

Sources: U.S. Bureau of Economic Analysis, IHS Economics (January 2017), The Stephen S. Fuller Institute at the Schar School, GMU

2000 - 2006 2010 - 2016 # % # %

Federal Employment + 15,900 + 4.9% - 12,800 - 3.4%

Federal Procurement + $27.8 b + 94.9% - $8.0 b - 9.8%

Sources: U.S. Bureau of Labor Statistics, Consolidated Federal Funds Report, USAspending.gov , The Stephen S. Fuller Institute at the Schar School, GMU

Change in Federal Spending in the Washington Region 2000-2006 and 2010-2016

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TheMixofJobshasBecomeLessFavorableThe reductions in federal spending since2010havehada concomitant impactonthemixofjobsthattheregionhasgenerated.Ratherthangrowingfederaljobsandfederalcontractorjobs,withsalariesaveragingnear$100,000,theregionhasbeengrowingmore jobs in local-servingsectors—educationandhealthservices, leisureand hospitality services (includes restaurants), and retail trade—having averagesalariesaboutone-halfofthosefoundinthefederalandprofessionalandbusinessservicessectors.Duringtherecession,theWashingtonregionlost180,300privatesectorjobsacrossall but one of its sectors; educational and health services did not lose any jobsduring the recession. Since 2010 throughMay 2017, theWashington region hasgenerated 382,200 private sector jobs or 201,900more jobs than it lost. Three,largely local-serving sectors—educational and health services, leisure andhospitality servicesandretail trade—accounted for221,500 jobsor58percentofthese382,200new jobs.Threesectorshavenotgeneratedanynew jobssince therecession and are still contracting or holding steady at their post-recession lows,onesectorhasreplaced60percentofitsjoblosses(construction),andtwosectorshavejustzeroedouttheirjoblossesexperiencedduringtherecession.The professional and business services sector, the region’s largest sector with752,600jobsand22.9percentofallpublicandprivatesectorjobsintheregion,hasadded88,900 jobssince therecessionaccounting for23.2percentof the jobgain.However, ithasbarelyincreaseditsshareoftheregion’stotal jobbasesince2010andthissectoristheregion’smostimportantsectorforadvancingitseconomy.The professional and business services sector includes most of the federalcontractors’jobs,andthesehavedeclinedsince2010.Thissectoralsoincludesmostof the region’s jobs in non-federally dependent, export-based, high-value addedbusinesses, the foundation for a more diversified economy to compensate forreductions in federal spending going forward. However, these non-federallydependent,non-localserving(export-based),high-valueaddedbusinesseshavenotperformed as well since 2010 in the Washington region as their counterpartbusinesses have elsewhere in the U.S. (SFI, The Roadmap for the WashingtonRegion’s Economic Future: Comparative Performance of Regional and NationalClusters,March30,2017).

PersonalIncomeGrowthIsSlowingTheconsequencesofslowereconomicgrowthoverallandtheless-favorablemixofjobgrowthsince2010areapparentinrecentpersonalincometrendsfortheregion.Oneof themostsimpleandmostrevealingcalculations is theaverageperworkercontribution to the region’s total gross regional product (GRP), the value of thegoodsandservicesthatareproducedintheWashingtonregion(seeFigure2).

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Fortheperiod2002-2006,theaverageperworkercontributiontotheregion’sGRPincreased1.9percentannually.Incontrast,theaverageperworkercontributiontotheregion’sGRPduringthe2011-2015periodwasanegative0.5percentperyear.TheWashingtonregionhadaddedasignificantnumberofnewworkersduringthisperiod but the resulting mix of workers—fewer higher-value added and morelower-valueadded—reducedtheaverageperworkercontributiontotheeconomy’stotaloutput.

Figure2

With value-added per worker declining, the region’s household and personalearnings trends should have become less favorable since 2010 and they have.Interestingly, the Washington region continues to rank number 1 among the 15largest metropolitan areas when measured by average household income. Onereasonforthistoprankingisthattheregionhasmoreworkersperhouseholdthanitspeersandcontinuestoranknumber1forthenumberofworkersperhousehold.The region also has substantial wealth and household income includes earningsfrominvestments,transferpaymentsandotherunearnedsources.Personal income data, recently released by the U.S. Bureau of Economic Analysis(BEA), reflect the effects of the region’s changing jobmix that has favored lower-value added, local-serving jobs growth over higher-value added, export-based jobgrowth. Fortheperiod2010-2015,percapitapersonal incomeintheWashingtonregion increased11.6percent.Thisgrowthrate ranked15thamong the15 largestmetropolitanareas.TheSanFrancisco-Oaklandmetropolitanarearanked1stwitha30.3percentincreaseinpercapitapersonalincomeoverthisperiod. AsshowninTable3,duringthe2000-2006period,whentheWashingtoneconomywasgrowing

2.3% 1.9%

2.7% 2.3%

0.2% 0.8%

1.7% 1.7%

2.9%

0.1%

-1.1% -1.4%

0.4%

-0.6%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GRP per Worker in the Washington Region Annual Percent Change

Sources: U.S. Bureau of Economic Analysis, The Stephen S. Fuller Institute at the Schar School, GMU

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rapidlywithrealGRPaveraging3.8percentannualgrowth,theWashingtonregionranked4thamongthenation’slargest15metropolitanareasforitsrateofincreaseinpercapitapersonalincome.

Table3

Cost-of-LivingRemainsHigh

TheU.S. Bureau of EconomicAnalysis also has calculated the cost-of-living for allmetropolitanareas in theU.S. Theseestimatesconfirmwhat iswellknownabouttheWashingtonarea;thatis,theWashingtonregionisanexpensiveplaceinwhichtolive.Overall,thecost-of-livingintheWashingtonregionwas19.1percenthigherthantheU.S.averageplacingitin3rdplaceamongthelargest15metropolitanareasfollowingtheSanFrancisco-OaklandandNewYorkmetropolitansthatweretiedfor1stplacewithacost-of-living21.9percentgreaterthantheU.S.average.Thiscost-of-livingcalculationbrokeoutrentalhousingcosts:rentalhousingintheWashingtonregioncost69.1percentabovetheU.S.averageandranked2ndtoSanFrancisco-OaklandwithNewYorkinthirdplace.ThepricelevelintheWashingtonregion for Other Services (excluding rent) also ranked 2nd; this time New Yorkranked1standSanFrancisco-Oaklandranked3rd.

PopulationGrowthHasSlowedThehighcost-of-livingandanemergingemploymentstructurecharacterizedbyanincreasing percentage of lower-value added and, therefore, lower-wage jobs havediminished the Washington region’s attractiveness for domestic migration.

2000-2006 2010-2015 Los Angeles SF-Oakland

Miami Seattle Phoenix Dallas

Washington Detroit Philadelphia Chicago SF-Oakland Houston

Boston Los Angeles Houston New York New York Minneapolis Seattle Philadelphia

Minneapolis Boston Chicago Phoenix Atlanta Atlanta Dallas Miami Detroit Washington

Sources: U.S. Bureau of Economic Analysis, The Stephen S. Fuller Institute at the Schar School, GMU

Per Capita Personal Income Growth Rank

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Populationisalwaysinmotion,movingfromonejurisdiction(andothercountries)to another for various reasons. One of the principal motivations for these inter-jurisdictionalmovesistoseekgreatereconomicopportunitiesand/oranimprovedquality-of-living. Research has confirmed that on average better-educatedmoversarewillingtomovethegreatestdistancestoachieveabetterreturnonthecostofrelocating.Thisresearchalsoconfirmedthatthesebetter-educatedworkerstendtobe working in services, such as professional and business services, to a greaterextentthanmanufacturingorotheroccupationswithbelow-averagewages.It is said that residents votewith their feet. If the quality-of-life or the economicopportunities are better in another jurisdiction, the tendency will be that thesemore-competitive jurisdictionswill attract anet increase inmigration; that is, thepopulationwillgrowfasterthanthenationalaverageandexceedpopulationgrowthattributabletonaturalincrease(birthsminusdeaths).PopulationgrowthhasslowedintheWashingtonregionsince2010,decliningfromanannualrateof1.9percentto0.9percentin2016.Thisisworrisomeastherateofpopulationgrowthishighlycorrelatedwitheconomicgrowth.Newresidentsdrivethe housingmarket, swell theworkforce, and increase the demand for goods andservicesthatfuelsfurthergrowthinlocal-servingbusinesses.The sources of the Washington region’s recent population change confirm thedecliningcompetitiveattractivenessof theWashingtonregionasadestination forU.S. residents on the move. The sources of population change are presented inFigure3forthelastsixyears.

Figure3

49.0 49.2 47.8 48.7 46.4 43.9

37.7 38.9 36.7 40.1 42.2 40.6

23.0

(26.4) (29.4) (31.0)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

120.0

2010- 2011

+1.9%

2011- 2012

+1.6%

2012- 2013

+1.5%

2013- 2014

+1.1%

2014- 2015

+1.0%

2015- 2016

+0.9%

Net Domestic Migration

Net International Migration

Natural Increase

Total

Population Growth By Component Change Washington Region (in 000s)

Sources: U.S. Census Bureau (v2016 Population Estimates); The Stephen S. Fuller Institute at the Schar School, GMU

Total Increase:

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Forthelastthreeyears,sincetheSequester,theWashingtonregionhasexperiencednetdomesticoutmigrationwithanaverageof28,933moreresidentsmovingouttoanotherlocationoutsideoftheWashingtonmetropolitanareathanmovingintotheWashingtonregion fromelsewhere in theU.S. And, this trendhasworsenedeachyearoverthisthree-yearperiod.TheWashingtonregionhasbecomedependentoninternationalmigrationtogrowits adult population, to increase the region’s labor pool, and to drive housingdemand.Whilenaturalincreaseremainsanimportantsourceofpopulationgrowth,the region’s fertility rates are below the U.S. average, consistent with the higherlabor force participation rates forwomen in theWashington region. And, naturalincreasedoesnotincreasetheworkforceinthecurrentperiodsotheregion’sabilitytogrowitseconomy,fillvacantjobs,anddiversifyawayfromitslong-termfederaldependencewillbeconstrainedbytheabsenceofnetdomesticmigration.ResidentsareeithermovingawayatafasterrateornotmovingtotheWashingtonregion to the extent that they did historically or doing both. What is mosttroublesomeisthatitistheyounger-agecohorts,includingthemillennials,whoaremovingoutand/ornotmovingin.Thisoutmigrationofyoungerworkerswillresultintheresidentworkforcebecomingolderandtheregionbecomingmoredependenton daily in-commuting from outside the metropolitan area boundaries to fill theeconomy’sgrowinglaborforcerequirements.TheWashingtonregionranks1stinthepercentageofitsworkforcethatconsistsofnon-residents. This significant and growing dependency on non-residentworkers(commuters) adds to the traffic congestion and long-distance commutingrequirements that have resulted in theWashington region ranking1st among thelargest15metropolitanareasfortheannualhoursofvehicledelayandranking2ndfor thepercentof commuting trips thatexceeds60minutes (eachdirection).Thistrendinlong-distancecommutingiscompoundedbytheregion’shighhousingcosts.

TheWashingtonRegion’sDecliningRankingsThe Washington region’s rankings across a variety of metrics have declined orworsenedoverthepasttenyearsasshownbycomparingthecompetitivepositionof theWashingtonregionamong thenation’s largest15metropolitanareas in thepre-recession and post-recession periods. For many of the economic, income,comparative attractiveness, cost-of-living and quality-of-life measures, theWashington region has clearly lost position relative to its peers since the GreatRecession with this decline having been accelerated in some cases by theunfavorableconsequencesoftheSequesterin2013.AselectionofthesemetricsispresentedonTable4.

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Table 4. Ranking the Washington Region Pre- and Post-Recession Rank among 15 Largest Metropolitan Areas Pre-Recession Rank

Current Rank Change in Rank Economy

Job Growth, 3-Year Average 7 15 Worsened Gross Regional Product 4 5 Worsened Employed Resident Growth (3-Year Average) 6 14 Worsened

Household Wealth

Median Household Income 1 1 No Change Per Capita Personal Income Growth (3-Year Average) 4 15 Worsened

Competitive Attractiveness

AFIRE, Top 5 U.S. Cities 2 unranked Worsened AFIRE, Top 5 Global Cities 2 unranked Worsened Net Domestic Migration Rate 10 12 Worsened Net Foreign Migration Rate 2 3 Worsened

Cost-of-Living

Regional Cost of Living (Price Parity, all items) 3 3 No Change Regional Rental Costs (Price Parity, rents) 3 2 Worsened % of Renters Paying 30%+ of Income on Rent 14 10 Worsened % of Owners Paying 30%+ of Income on Owner Costs 8 9 Improved

Quality-of-Life

Annual Hours of Vehicle Delay 1 1 No Change % Commuting 60+ Minutes (to job in metro area) 2 2 No Change % of Households with 1.51+ occupants per room 11 9 Worsened

Average Workers Per Household 2 1 Worsened

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ThesemetricsconfirmthatastheWashingtonregion’seconomyhassloweditspaceof growth and experienced a less-favorable mix of job growth, that the personalincome growth of the region’s residents also has slowed, migration rates havediminished to the point that net domestic migration has been negative for threeconsecutive years, and the ranking of the region for domestic and internationalcommercialrealestateinvestmenthassignificantlydeclined.TheeconomicweaknessesthathavemadetheWashingtonregionlesscompetitiveasadestinationfordomesticmigrationaremagnifiedbytheregion’suncompetitivecost-of-livingandhighhousingcosts,especiallyrentalcostswheretheWashingtonregionrankssecondamongallmetropolitanareaswithrentalcostsaveraging69.1percentgreater than theU.S.average.Withhighercosts-of-living, includinghigherhousingcostsandhighercostsofOtherService(bothranking2ndhighestrelativetothe 15 largestmetros in the U.S.), and the region’s number 1 ranking for annualhours of vehicle delay—time lost to congestion and its number 2 ranking forcommutingtimeexceedingonehoureachdirection,thequality-of-lifeofferedbytheWashingtonregionhasbecomeincreasinglylesscompetitivewiththenation’sothermajormetropolitanareas.Lower relative income growth and above-average cost-of-living do not present afavorablebrandfortheWashingtonregion.Consideredinthatcontext,thefactthatWashingtonregionranksfirstinthenumberofworkersperhouseholdmaynotbesomuchapositivemeasureoftheregion’seconomicvitalitybutrathermayreflectthe reality of living in theWashington region that requires almost every adult towork in order to be able to afford the region’s attractive quality-of-life. In otherwords,thatagreaterpercentageoftheWashingtonregion’sage-eligibleresidentsisworkingthaninitspeermetropolitanareasmaybeanecessityratherthanachoice.

CounteringTheWashingtonRegion’sDecliningEconomicBrandThe Washington region possesses significant assets to drive its future economicgrowthanduponwhichamorediversifiedandgloballycompetitiveeconomycanbebuilt.Ashortlistoftheassets,thatdistinguishtheWashingtonregionfromitspeers,ispresentedinTable5.Theseassetsshouldprovidethefoundationforpublicandprivate sector efforts to diversify the region’s economy away from its federaldependencyandtoacceleratetheexpansionoftheregion’snon-federallydependent,export-based,high-valueaddedbusinesses.ButjustknowingthattheWashingtonregionhasimportantassetsandapotentiallycompetitivepositionamongitspeerswillnotguaranteethattheWashingtonregioncan escape the consequences of being a company town. Rather, it will requiretargeted initiatives that likelywill disrupt existing business patterns and historicinstitutional relationships with the intended result that the Washington regionbecomesnationallyandgloballyrecognizedasanattractiveplaceinwhichtoresideand to invest.TheWashington regionwill alsoneed tooffer competitivebusinesscostsandanaffordablequality-of-life.Also, toachieveandmaintainacompetitive

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position in the national economy, the qualities and capacities of theWashingtonregion’s fundamental infrastructure must be able to support an advancedknowledge-basedeconomy.

Table5

In order to respond to and reverse the Washington region’s declining economicbrand will require collaborative efforts among the region’s business leaders andestablished business organizations and local public officials and governmentprofessionals.Theregion’sleadershipmustbeeffectiveinworkingacrossstateandlocalpolitical boundaries andacross jurisdictional self-interests. TheWashingtonregionisnotlikelytoescapethelimitationsofitscompanytowneconomywithouttargetedinitiativestochangethetrajectoryofaneconomythathasbeenshowntobe lagging its competition. TheWashington region has the fundamental assets toachieve its economic potentials. The question remains whether it has the will toundertakethestrategicinterventionrequiredtoredirecttheregion’seconomicpathgoingforward.

Capital City/Federal Government Center International Governments and Institutions

Connectivity to the World Concentration of Government and Business Leaders

High Quality-of-Life Diverse Population

Breadth of Higher Educational Services Educated Work Force

High Level of Labor Force Participation Advanced Occupational Specializations

Washington Region’s Competitive Advantages