Infrastructure Investments and Global Competitiveness

The past Thursday evening I was at a Northern New Jersey Urban Land Institute (ULI) meeting where, Bob Dunphy, ULI Senior Resident Fellow for Transportation and Infrastructure, gave a fascinating presentation on infrastructure investment in the United States and around the world. Its incredible how much money China is pouring into new infrastructure projects including high speed rail, airports and local infrastructure. Its also quite astonishing how much deferred maintenance has built up in the U.S. and how large the capital deficits are becoming on our core infrastructure. This has been a challenge in the U.S. since the 1980s and continues to get worse and worse. According to Mr. Dunphy the Federal Highway Trust is going to be bankrupt by 2009 under current policy and funding trends.

Where I live in Northern New Jersey and New York, there are many pressing infrastructure needs such as expanding commercial air capacity, improving freight movement, building commute corridors and strengthening the electrical grid and power supply. This got me thinking how foresighted Metro Denver has been in terms of core infrastructure investment over the last decade or so. Here are a few examples I came up with along with the rough costs of the projects (not in consistent year dollars):

• Building Denver International Airport (DIA) from scratch in the 1980s and early 1990s. The current plans to expand the terminal, build more gates, add rail transport etc. ($5.2 billion + $1.2 billion) See my July 30, 2007 blog entry (http://aviewoftherockies.blogspot.com/2007/07/dia-expansion-fullfilling-vision.html).
• The innovative transportation expansion (T-REX) project which jointly expanded light rail and the I-25 freeway along the same right of way ($1.67 billion);
• The ambitious FasTracks program, over 12 years, to construct 137 miles of new commuter rail, light rail and bus rapid transit service throughout the Denver Metro Area.($6.1 billion);
• The November 2007 infrastructure bond package approved by the voters at the City and County of Denver ($550 Million).

As Metro Areas around the world compete with each other for footloose talent, capital, businesses and jobs, having world-class infrastructure is a key source of competitive advantage. The Metro Denver Area is on a solid path of maintaining and improving its infrastructure and needs to continue moving in this direction in the coming years and decades. This is an issue I hope to follow closely in A View of the Rockies.

United Announces Daily Denver to London Flight

After years of speculation, United has announced the launch of a daily non-stop flight between Denver and London starting March 30, 2008. This is great news on several fronts: it will keep competitive pressure on the existing British Airways Denver to London route, promote global economic and cultural linkages between Denver and other parts of the world, increase Metro Denver’s international competitiveness as a location for global corporate headquarters, provides evidence that recent “open skies” treaties negotiated between the United States and other nations are starting to remove regulatory barriers to expanding international flights and may be an indication that United is planning to expand Denver International Airport’s role as an international hub instead of just using DIA as its second largest domestic hub.

In blog entries from September 23, 2007 (http://aviewoftherockies.blogspot.com/2007/09/relatively-low-international-air.html ) and September 5, 2007 (http://aviewoftherockies.blogspot.com/2007/09/international-air-traffic-at-dia.html) I discussed the relatively low volume of international flights into and out of Denver International Airport She the following Denver Post story for additional details regarding this announcement ( http://www.denverpost.com/business/ci_7345275 ).

Metro Denver's International Competitiveness: Ranking Denver with OECD Data

A basic premise of A View of the Rockies is that Metro Denver does not just compete with cities in the United States for capital, employees and businesses, but also with metro areas around the globe. This blog entry explores Metro Denver’s international competitiveness by examining the area's rankings compared to international metro areas based on key metrics such as population, productivity, GDP per capita, employment rate and educational achievement.

The Organization for Economic Cooperation and Development (OECD) (http://www.oecd.org/) is an international organization which “brings together the governments of countries committed to democracy and the market economcy from around the world to: Support sustainable economic growth; Boost employment; Raise living standards; Maintain financial stability; Assist other countries' economic development; and Contribute to growth in world trade.” Headquartered in Paris, the OECD has 30 member nations in Europe, North America and Asia.


The OECD produced a publication called Competitive Cities in the Global Economy in 2006 as part of the OECD Territorial Reviews series which defines and compares 78 international metro areas. The OECD uses a methodology which looks at population population density, commute patterns and total population size to define metro regions. Listing all the metro areas included by the OECD in this report would be too lengthy for this blog but the U.S metro areas include the following : Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, New York, Philadelphia, Phoenix, Pittsburgh, Portland, San Diego, San Francisco, Seattle, St. Louis, Tampa Bay, and Washington D.C. International cities come from Canada, Mexico, Europe, Japan, South Korea, etc.

Any attempt at comparing economic data across nations is fraught with challenges due to differences in data collection methodologies and definitions between governments in different nations. These issues should be kept in mind in viewing the data presented in this blog. Note also that the metrics presented below are not comprehensive measures of global competitiveness but do provide useful measurements and indications.

So how does Denver compare to other international cities across key metrics reported by the OECD? The following table summarizes Denver’s rankings. Note the table is constructed in such as way that higher rankings are always better. So, for example, a higher ranking on unemployment means the actual unemployment percentage is low.

Metro Denver's International Rankings Based On OECD Competitiveness Metrics

Metro Denver scores extremely well (4th) both in absolute terms and relative to the national U.S. population in the percent of its population with higher education (referred to as "Tertiary" education in the table above). This rating indicates that Denver's labor force is highly skilled and well-positioned to participate in knowledge-based economic activities. Denver also scored well in the GDP per Capita (7th) and Productivity (13th) metrics which are also both indicators of the quality of the regional labor force.

However, in total population, Denver is one of the smallest metro areas analyzed by the OECD (61st). Many of the other international metro areas in the survey which have relatively small populations have the advantage of being national governmental capital cities and/or the largest city in their respective nations (e.g. Prague, Vienna, Stockholm, Oslo, Helsinki, Dublin and Auckland). Metro Denver's relatively small population, lack of national capital status, and its spatial isolation from other large metro areas may make it relatively harder to market the Denver Metro Area to international businesses and investors because there is a smaller chance that international decision makers will either visit Denver directly or visit near-by metro areas and do a side trip to Denver (less spill over). I believe this disadvantage implies that Metro Denver may need to work relatively harder and smarter than global competitor metro areas to develop international brand awareness and attract the global financial capital and businesses that a city with its high quality labor force and natural amenities would normally justify.

Denver also scores in the bottom half (upper portion) of the rankings of employment and unemployment scores relative to the home country national average score. To some degree scoring in the lower mid-range in these metrics should not be viewed as major competitive determent because the United States overall has relatively lower unemployment than many other nations with cities included in the survey. However, Denver does score below other U.S. cities on the employment metric except for St. Louis, Houston, Chicago, Cleveland, Pittsburgh and Detroit. Metro Denver's relatively weak score here may be in part due to the Metro Area's reliance on air transportation and telecommunications industries both of which were in economic down cycles during the 2002 and 2004 time frame when this data was gathered. This points out a larger concern about the Metro Denver economy -- that traditionally the Denver economy has been very cyclical with heavy dependence on a relatively small number of industries. This issue is something which merits further exploration and discussion in a later blog entry.