REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - SOUTHWEST FLORIDA ECONOMIC DEVELOPMENT LUNCHEON FORUM - FT. MYERS, FLORIDA

THURSDAY, OCTOBER 18, 2007

AS PREPARED FOR DELIVERY

Introduction by: Collier County Commissioner James Coletta, Chairman, Southwest Florida Regional Planning Council

OPENING

Thank you, Commissioner Coletta, for that kind introduction, and thank you for the invitation to be here today in beautiful Southwest Florida.

I’d like to recognize my colleague, Phil Paradice, EDA’s Regional Director for the Southeast region of the United States, who is here with me today.

I’m pleased to join you here today to consider the economic future of Southwest Florida. And as we contemplate economic development strategies for this region, a little context can be helpful. I would like to help frame our discussions by, first, providing a snapshot of the national economic environment and priorities, and then discuss some of the realities of our 21st century economy.

OUR ECONOMY IS STRONG AND GETTING STRONGER

Looking at the national economic context, we have good reason to be optimistic. Thanks to the hard work and innovation of American workers and businesses, our national economy is strong. 110,000 jobs were created in September, marking the 49th consecutive month of job growth, making this the longest, most robust record of job growth in our nation’s history – ever.

The national unemployment level remains at a low 4.7% – and Florida is lower yet, with 4%. These are impressive figures, considering that back when I was in school, my economics professors told me that the level of full employment was about 5%.

The economy has created about 2 million jobs over the past year. For those of you keeping score at home, that’s over 8 million new American jobs since August 2003, more jobs than all the other major industrialized countries – combined.

The American economy grew at 3.8% in the second quarter of 2007, providing for nearly 6 straight years of uninterrupted economic growth, showing that we have a very resilient, diversified, and flexible economy.

EXPORT GROWTH

One of the key reasons for America’s economic strength is the growth in U.S. exports – a reflection of our nation’s ability to succeed in the 21st century worldwide marketplace.

U.S. exports have increased by 11% over 2006, and for the first time in memory, the rate of growth of our exports is greater than our growth in imports. This has led to a narrowing of our trade deficit by nearly 8% or $30 billion compared to the same period in 2006.

Here in Florida, exports in 2006 totaled nearly $39 billion, up 57% from 2002. Florida companies are selling their goods and services in 222 countries.

This is important, because the jobs associated with exports have higher wages than other jobs, which helps drive our national prosperity.

That’s why it is important to open worldwide markets to U.S. goods and services. A key tool to accomplish this is Free Trade Agreements – FTAs. FTAs help our companies, farmers, manufacturers and workers sell American goods and services to new markets around the world.

When President Bush took office, we had Free Trade Agreements with just 3 countries – Israel, Canada and Mexico. Today, we have free trade agreements with 16 countries with 4 more under consideration.

The critical role exports play in the Florida economy highlights the importance of the Free Trade Agreements the President is pursuing with Columbia, Panama, Peru and South Korea. These FTAs will provide U.S. companies, farmers, manufacturers and workers access to over 126 million consumers in emerging markets across the globe – representing a combined GDP of over $1 trillion. Taken together, these FTAs would represent the U.S.’s 6th largest trading partner.

So, thanks – at least in part – to our strong export performance, it is clear that the American economy is resilient and strong. This is good news not just for the nation, but for Southwest Florida as well – because a strong, growing national economy allows economic regions and individuals to tap into this expanding economic pie and share in our national prosperity. It takes both smart national policies and forward-thinking regional action in order for economic growth to occur.

THE 5 NEW REALITIES OF 21ST CENTURY ECONOMIC DEVELOPMENT

So, with a strong national economic foundation and the realization that our economy is interconnected with the rest of the world, what is the environment that we will encounter as work to strengthen the Southwest Florida regional economy – or any regional economy – in the 21st century?

I believe that there are 5 realities of the 21st century we must understand and respond to.

Having just mentioned America’s strong export performance, let’s begin with New Reality #1 of the 21st century economy: While perhaps the most obvious, it’s also the most important; and it’s the that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says – the world is…flat. In the new flat global marketplace, competition is not just from the firm down the road; our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

Our economy today is interconnected:

• We think of Airbus as a European manufacturer of airplanes – while this is true, did you know that some of the most important components for the Airbus products are built in the Midwest – in Kansas?

• The number one selling car in America is a Toyota – and all those Camrys sold in the United States are built right here in the United States.

• The new, popular Ford Fusion is built in Mexico, using a Mazda platform. And Mazda, by the way, is owned by Ford.

Determining what is “American” and what is “foreign” becomes more difficult every day – but it is the American consumer that wins in the global marketplace. The global marketplace is paying off for the American consumer by providing us greater product choice, improved access to new technologies – regardless where on the planet they come from – lower prices, and vast opportunities for American businesses and workers to sell our products and services to those outside America. These benefits are not just on paper. The respected Financial Services Forum reports that the annual household income for the American family is $10,000 a year higher as a result of our engagement in the global marketplace.

So, yes, our competition is indeed global, but with global competition comes opportunities for global partnerships – opportunities to expand our markets and increase our competitiveness. And, with 95% of potential customers for American products outside the United States, this reality becomes more important every passing day.

New Reality #2: Competition is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the U.S. population. It took only 7 years for the Internet to reach that same milestone. Imagine how quickly we will adopt the next big thing.

The nature of innovation itself is changing: innovation is becoming multidisciplinary as different technologies converge, creating new fields. Fields that didn’t even exist just a few decades ago. People smarter than me debate where bioinformatics or nanotechnology will take us, but all agree that they will become major drivers of the U.S. economy.

This new reality where cycle times for products and ideas continue to shrink will require all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do have the opportunity for reward.

New Reality #3: Yes, the world becomes a bit more complicated every day. In order to respond to this increased complexity, we must realize that we have reached a point where the components of competitiveness can no longer be pursued separately. Just as technologies are converging to create new fields of innovation, so are the components of competitiveness merging to shape economic growth in the 21st century. This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs occurring in separate silos can no longer be tolerated. The interconnected challenges of these components of competitiveness must be tackled in concert.

Second, in our new 21st century global economy, we must acknowledge what we all learned on the school playgrounds of our youth, that we are stronger when we stand together than when we stand alone.

Standing together means that we need to look beyond traditional political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

New Reality #4: Public-Private partnerships become more critical every day. While governments at all levels, universities and other non-profit institutions are important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur, regardless of how much government spends. The private sector should not just have a seat at the table, but should actively be engaged as full partners in strategies for economic growth.

The private sector should be helping to shape – within the parameters of public accountability, of course – the development strategies that will lead to more higher-skill, higher-wage jobs.

New Reality #5: At the end of the day, it is the ability to innovate that is the only possible sustainable competitive advantage in the 21st century. It’s not location. It’s not even the cost of doing business. Factors such as these will continually shift in a dynamic worldwide economy. But if a nation can maintain its edge in innovation, it will grow and prosper.

America is clearly the world’s leader in innovation. The spirit of discovery is one of our national strengths. From Edison's light bulb to Jarvik’s artificial heart to the iPod to the frozen pizza, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive and more prosperous.

Companies – by necessity – must continually innovate to stay one step ahead of their global competitors, especially as the pace of change in our global marketplace continues to accelerate. If they don’t, they will cease to exist. There are no pit stops in this race. And the challenge will not go away by ignoring the reality or by closing off America to the rest of the world.

Meanwhile, government, university, and nonprofit leaders at all levels have the same responsibility to adapt their approach to fit the changing times. Government – by design – moves slowly, and that can be a problem in our fast-moving economy. Unless government can offer flexible and innovative programs and tools to economic regions, we risk putting these areas that we are responsible for at a competitive disadvantage in the global marketplace. Innovation is just as important in the public and nonprofit sectors as it is in the private sector.

So, these are some of the “new realities” we collectively face in the 21st century – filled with opportunity and challenge:

• We are in a global economy.

• The pace of change will continue to accelerate.

• The components of competitiveness can no longer be pursued separately – and we must work collaboratively.

• Partnership with the private sector is critical.

• And innovation is the only sustainable competitive advantage.

I am confident that, working together through collaborative initiatives like the Southwest Florida Regional Planning Council, we can rise to the challenges and maximize the opportunities presented by these new realities, and reach new levels of prosperity in the 21st century.

It is a pleasure to be here today, and thank you for the invitation.

# # # # # #