What is the Economy?
An economy is the sum total of an area’s production
and exchange of goods and services
resulting from investments of labor and financial capital
in the use of that area’s natural, human and technological resources.
Levels of consumption, savings and investment
among the for-profit, non-profit and public sectors across localities and income groups determine an economy’s dynamism, equilibrium, fairness and sustainability. The “real economy” refers to the production, use and exchange of actual goods and services, while the “paper economy” describes the activity of financial markets.
THE ECONOMY IN BOSTON
Unusual among US cities, Boston is the financial, cultural, economic and governmental capital of Massachusetts and the economic hub of New England – a “small large city” with outsized global reach. One of the first cities to shift from a manufacturing to knowledge base, Boston today is a global node of innovation centered on its high concentration of institutions of higher education and health care, with a robust regional network of innovation economy clusters from high tech to biotech. Boston is also a very livable city, with a beautiful natural built environment, recent infrastructure investment and revitalized neighborhood business districts.
These assets both reflect and attract a disproportionate share of high-skilled talent, federal R & D funding, venture capital and business spin-offs. They also create a two-tiered economy that richly rewards those with a good education and harshly punishes those without.
Boston’s economy anchors the Boston-Cambridge-Quincy Metropolitan Statistical Area (MSA). With about 4.5 million residents as of the 2010 US Census, the Boston metro region ranks 10th in the nation in population. The Boston-Worcester-Manchester/Nashua Combined Statistical Area (CSA) region and economy, with more than 7.6 million residents, ranks fifth.
The nation’s 22nd largest city, with a population of about 620,000 in 2010, Boston is job-rich, with about and about 680,000 jobs, and city doubles its workforce with commuters. As of 2010, about 38% of those with a job in Boston resided within the city limits, 52% commuted from Greater Boston and about 10% commuted from Providence RI, Nashua NH, York ME or beyond. Boston contains less than 10% of Massachusetts' population but about 16% of its jobs and generates about 20% of its tax revenues. Moreover, in 2008, Boston generated more than $87 billion in total economic activity, accounting for 24% of Massachusetts' total economic output and 10% of New England’s.
As Massachusetts’ governmental capital, Boston also contains the central offices of state agencies mandated to strengthen the state’s economy and competitiveness such as the Massachusetts Executive Office of Housing and Economic Development, which includes the Massachusetts Department of Economic Affairs, the Massachusetts Office of Business Development and the Massachusetts Office of Consumer Affairs and Business Regulation and the Massachusetts Office of International Trade and Investment, the agency charged with promoting trade and investment with global partners in Massachusetts and around the world. In addition, the Massachusetts Office of Travel and Tourism works closely with the Greater Boston Convention and Visitors Bureau to boost the region’s Hospitality and Leisure sector.
The Commonwealth’s economic development resources are augmented by federal agencies with New England-wide regional offices such as the US Small Business Administration, the new Bureau of Consumer Protection and the Federal Reserve Bank of Boston, with its New England Public Policy Center, which provides a high quality research capacity to inform regional policy and practice.
Boston’s primary economic agencies are the Boston Redevelopment Authority (BRA), primarily responsible for planning and downtown development, and the Department of Neighborhood Development, which oversees many of the City’s economic policies and programs.
Greater Boston and Massachusetts benefit from a robust network of business leadership and advocacy organizations, with missions that range from improving the business climate generally to stimulating innovation and achieving “triple bottom line” goals of jobs, profits and environmental sustainability. They range from the Greater Boston Chamber of Commerce, Associated Industries of Massachusetts (AIM), Massachusetts Business Roundtable to the Massachusetts High Tech Council, Massachusetts Alliance for Business Leadership, Massachusetts Technology Leadership Council (MassTLC), and Massachusetts chapter of the National Association of Industrial and Office Properties (NAIOP).
Increasingly, Boston’s workforce training needs are being addressed through collaborative strategies developed among local businesses and the Massachusetts Executive Office of Labor and Workforce Development, Commonwealth Corporation, the Boston Private Industry Council, regional vocational-technical high schools, community colleges such as, in Boston, Bunker Hill Community College and Roxbury Community College, four-year institutions of higher education and special initiatives such as Skill Works, a funder collaborative. These resources are augmented by targeted programs such as YouthBuild Boston, which trains low-income young people to learn job skills by building affordable housing in their communities. The Commonwealth is also learning to leverage the economic dynamism of immigrants’ skills, aspirations and entrepreneurship through such organizations as the Immigrant Learning Center.
The new economic dynamism and in some cases transformation of Boston’s neighborhoods reflects the hard work of Boston’s 26 community development corporations, which are members of the Massachusetts Association of CDC’s and among the most innovative and accomplished in the nation. Together or singly, they have renovated anchor buildings, built and renovated affordable housing and planned and constructed mixed-use transit-oriented developments -- many over decades.
Recent examples of their impact include the collaborative revitalization of Dudley Square in Roxbury, the redevelopment of Jackson Square in Jamaica Plain and planned five-CDC collaboration in housing and commercial development surrounding the five new or renovated stations on the MBTA' new Fairmount/Indigo Line and breakthrough projects as the Pearl Street Food Center in Uphams Corner.
Other essential organizations, too, are dedicated to strengthening Boston’s neighborhood economies. These include the City of Boston’s Main Streets Program, the Local Initiatives Support Corporation (LISC), the Boston Community Loan Fund, Interise and the Initiative for a Competitive Inner City. These organizations, often through public-private partnerships or in close collaboration with Boston’s CDC's, local banks and public agencies, have revitalized many of Boston’s neighborhood business districts over two and sometimes three decades. Increasingly, Boston's 22 health centers also serve as economic anchors in their neighborhoods, and new ones are increasingly being designed to play that role, such as the Mattapan Community Health Center.
Greater Boston’s innovation economy’s eco-system of talent and expertise, social and professional networks, venture capital and business start-ups is deep and resilient and continues to expand and diversify in such places as Cambridge's Kendall Square, Route 128 and Boson's Longwood Medical Center, the Boston Innovation District and pockets throughout the region.
Boston’s economic resources are augmented by its wealth of world-renowned business schools and economics departments, from Harvard’s Business School, MIT’s Sloan School, BU’s School of Management, Northeastern University’s College of Business Administration, the University of Massachusetts-Boston’s College of Management, business programs at Bentley and Babson colleges and research institutes.
A number of new organizations have formed in the region to incubate new ideas and businesses. Mass Challenge, a public-private partnership, runs an annual global accelerator program and startup competition for novice entrepreneurs and is proving to be a highly effective exemplar locally and globally. It has been joined by the MassTLC Innovation unConference and Harvard’s Innovation Lab (I-Lab), which encouraging innovation across disciplines and facilitates commercialization. The Cambridge Innovation Center offers state-of-the-art facilities and services to small and growing businesses and the Boston Innovation Center, on Boston’s waterfront, offers a public space for innovators and entrepreneurs to meet, exchange ideas, and convene programs and events. The website and blog BostInno offers a rich platform for information and dialogue about Boston’s innovation eco-system and a new media approach to news.