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Friday, June 6, 2008

Phila. must work hard to boost its comparative advantage

All kinds of cycles have a beginning and an end. It’s predicting them that’s so elusive.

None of us can guess the best time to get a job, or buy or sell a house. But we do know when we are prepared for a new career challenge, or to take on a mortgage.

The economists at Moody’s Economy.com decided to set aside the vagaries of the business cycle and look at the long-term growth prospects of 389 U.S. cities.

That meant looking at 40 different factors, such as demographics, workforce, income growth and business costs, to forecast how they’ll fare over the next decade.

“An area’s comparative advantage will help shape its response as new cycles appear,” said Steve Cochrane, the research firm’s senior managing director.

At 1,200 pages, this report isn’t the kind the West Chester firm will just give away. They see a ready market for hospital systems, utilities and other industries.

But I did talk with the economist who analyzed Philadelphia, and I wish I could tell you that he found us at the start of a 10-year renaissance. Ryan Sweet thinks the region will continue to underperform the national economy over the long term.

Here’s what’s holding us back: The population will continue to grow at a crawl, Sweet said, as it has for nearly two decades. What growth there is will continue to happen in the suburbs as the city’s population declines.

Philadelphia has “above-average living and business costs” as well as weak immigration trends, Sweet said. Employment and income growth are expected to lag the pace nationally.

The key for Philadelphia is to make itself even more of a center for global commerce than it is today. Our strengths? Philadelphia has a large concentration of accounting, legal, advertising and consulting businesses. These are services in demand worldwide.

However, if you notice, those are also industries dependent on very bright people — the kind who can work from anywhere.

To keep them, Philadelphia will have to make sure few of its 388 competitors can compare to its advantages.
Posted by Mike Armstrong @ 3:05 AM  Permalink | Post a comment
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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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