Regional economic competitiveness is a result of five drivers: Traded Sectors, Talent, Innovation, Infrastructure and Governance. When all five work in tandem, the effect is a dynamic regional economy where businesses thrive and workers prosper.
What are Traded Sectors?
At B3K Prosperity, we think of industries and the jobs they create belonging to one of three types of sectors: Traded Sectors, Local-serving Sectors and the Public Sector.
Traded Sectors are industries that sell their goods and services to customers outside of the region where they are located. Businesses in these industries bring new money into the local economy.
- Traded Sectors include industries like energy production, agriculture and food production, life sciences, manufacturing and software development.
Local-serving Sectors cater primarily to the needs of other local businesses and consumers. They’re a critical component of quality of life. But since they don’t bring new money into the local economy, Local-serving Sectors do not drive economic growth. Instead, they generally grow alongside the local population and income of households.
- Retail, hospitality, real estate and healthcare are examples of Local-serving Sectors.
Why Traded Sectors matter
Traded Sectors are critical for economic growth because they bring new money into a local economy. When this wealth is spent, it creates a multiplier effect that can create between three and five new local-serving jobs.
In addition to the multiplier effect, trade makes businesses and regions more productive. Businesses that connect and learn through global value chains grow faster, create more jobs with better wages and are more resilient to economic downturns.
- A 1 percent increase in international trade generates a 0.5 to 2 percent gain in per capita income
Traded Sectors in Kern County
Kern County’s Local-serving, Traded and Public Sectors all saw job growth from 2009 to 2019. However, it was our Local-serving and Public Sectors that exceeded average national job creation during this period, adding about 18,000 more jobs than expected. This growth defied nationwide trends and was driven by growth of jobs in government and education.
Our Traded Sectors, on the other hand, were not as competitive. They grew just slightly faster than expectations. Over the decade, Traded Sectors netted just 2,400 new jobs due to local competitiveness, representing only 12 percent of our region’s performance above national baselines.
This balance is concerning. Traded Sectors are a critical driver of regional economic growth, but ours are only slightly competitive compared to national baselines and account for a relatively small portion of our economy.
Our growing reliance on jobs in Local-serving Sectors is also alarming because they disproportionately generate jobs that do not provide for self-sufficiency. Further, the growth we have experienced in Traded Sectors has been concentrated in the Agriculture and Logistics sectors, two industries that mainly create low-skill, low-income jobs.
In order to achieve inclusive growth and help more local workers achieve self-sufficiency and upward mobility, we have to focus on growing Traded Sectors that produce a relatively high number of Good and Promising Jobs.
What are Opportunity Industries?
B3K’s ambition is to achieve enduring economic growth in the Bakersfield-Kern region and encourage the creation of jobs that enable all local workers to achieve self-sufficiency and upward mobility.
Historically, economic development activities have focused on attracting new businesses to a region and used total job creation as a metric of success. However, this approach doesn’t take into account job quality. As a result, a region can experience remarkable job growth without seeing improvements in the lives of its workers and families.
Opportunity Industries are Traded Sectors that both concentrate Good and Promising Jobs and for which a region is positioned to compete for investment and realize growth.
Our regional economy simply does not generate enough Good and Promising jobs to enable our struggling workers to achieve self-sufficiency for their families. In fact, fewer than 1 in 3 jobs offer self-sufficiency (Good Jobs) or a pathway to achieve self-sufficiency (Promising Jobs).
We estimate that the Bakersfield-Kern region needs nearly 100,000 additional Quality Jobs to cut in half the number of children in struggling working families. That means growing or upgrading about one-third of our current job base.
Opportunity Industries in the Bakersfield-Kern region
During our Research and Planning Phases, we undertook an Opportunity Industry analysis to identify and prioritize Traded Sectors with the greatest potential to help achieve our goals for inclusive economic growth.
B3K identified four Traded Sectors as Opportunity Industries during our Research and Planning phases:
In addition to the four sectors identified above, B3K has also chosen to focus on Entrepreneurship as an Opportunity Industry, because of the significant, positive effects that thriving and innovative young firms generate across a regional economy.
These Traded Sectors have the best potential to grow the number of Quality Jobs, building on our region’s existing assets and helping more local families achieve self-sufficiency and upward mobility.