“The region’s economic structure poses a central challenge to its current and future growth prospects,” the report’s authors write.
What’s the problem exactly? Here are five, from the report.
1. Local GDP has been slow to recover.
But with austerity ruling the day on Capitol Hill, the region has shown less growth than some of its peers and the nation at large, suggesting a lack of private sector growth.
2. High-tech jobs haven’t arrived.
A large portion of local jobs (13.5 percent) are in high-tech, research-based (or “advanced”) industries, a major positive to researchers because those jobs produce goods and services marketable to emerging markets around the world. On this point Washington is ahead of Boston and Austin, and nearly on par with San Francisco.
The problem is that despite leaders in the District and nearly every local county promoting their neighborhoods as tech hubs — with affiliated incubators, accelerators and co-working spaces — the region barely grew jobs (0.4 percent) in advanced industries between 2008 and 2014. Brookings researchers suggest a greater focus on computer system design, engineering, data processing and research and development.
3. Too much still relies on the federal government.
Virginia Gov. Terry McAuliffe (D) and other local leaders have talked repeatedly about the need to pivot away from reliance on the federal government in order to build a more sustainable economy but by last year the region’s advanced industries were almost exactly as reliant on federal dollars as they were in 2010.
For companies in these fields, write the Brookings researchers, “their considerable dependence on federal revenue poses risks in an era of increasingly constrained federal spending.”
4. Washington should be doing more business abroad.
The Washington region exported $26.7 billion in goods and services abroad in 2014, among the best in the country. But that made up only 6.1 percent of its GDP, less than Baltimore and barely more than Sacramento.
With three airports, a bevy of colleges and universities, plus natural foreign connections through international organizations (State department, World Bank, IMF) and embassies, there is room for improvement.
Only two regions in America — New York and Boston — rank ahead of Washington when it comes to employment in scientific research and development. About 46,000 people here are in those fields. According to Brookings, however, “that research prowess may not be translating into valuable technological innovation.”
For every 1,000 employees in these fields, Washington produces only 1.2 tech patents, a key indicator for small business growth.
“Some of this underperformance surely owes to the nature of research conducted in the region, such as the large presence of social science researchers whose work would not likely be the subject of a patent, and organizations developing sensitive technology that for national security reasons cannot be patented,” Brookings wrote. “Nonetheless, it raises legitimate concerns regarding the region’s ability to innovate in technologies with global commercial value.”
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz