Alaska Forward: Towards a Next Generation EconomyGeneration Economy

Dr. Kathryn DodgePresident, Alaska Partnership for Economic DevelopmentDevelopment Director, Fairbanks North Star Borough Alaska Regional Development Organization

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Regional Development Organization

S C• Alaska State Chamber• Alaska State Department of Commerce,

C it d E i D l tCommunity and Economic Development• 12 Alaska Regional Development Organizations

(ARDORs)(ARDORs)• Fairbanks and Juneau Economic Development

CorpsCorps. • University Center for Economic Development

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Alaska Forward: Towards a Next Generation EconomyTowards a Next Generation EconomyA two phase project:• Phase 1– Situational Analysis: an “economic

reality check”• Phase 2 — Strategy Development: developing

recommendations for new economic development di ti li i d tidirections, policies and practices.

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Phase I – Situational Analysis Report

• Economic Profile and ForecastA l i f i ti i d l t• Analysis of existing economic development objectives and strategiesA t f E t hi d B i• Assessment of Entrepreneurship and Business Climate

• Alaska's Industry Cluster Portfolio• Alaska s Industry Cluster Portfolio• Competitive Benchmarking

Gl b l M k t O t iti• Global Market Opportunities• Final Report - A Path to the Future

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What did the Situational Analysis tell us?The problem: accumulating levels of future risk and

declining economic resiliency:g y• Continuing declines in oil production (85% of state

revenue))• Uncomfortable trends in other natural resource

sectors• Downturns in tourism • Aging workforce g g• Weak culture of entrepreneurship• Remoteness and related infrastructure challengese o e ess a d e a ed as uc u e c a e ges• High energy and transportation costs

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Energy sector:no longer a source of growthno longer a source of growth

Source: IHS CERA - Cambridge Energy Research Associates

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The Key Problem: Alaska’s comparative stagnationAlaska s comparative stagnation

16,000 40History Forecast

Real Gross Domestic/State Product

14,000

15,000

34

36

38

U.S.

12,000

13,000

on 2

005

$

30

32

34

on 2

000

$

(left scale)

10,000

11,000Billi

o

26

28 Billi

oAlaska (right scale)

9,000

10,000

22

24

77

8,0001990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

20

Sources: Bureau of Economic Analysis (BEA) and IHS Global Insight

Employment - stability that tends to mask what is happening in the underlying economyis happening in the underlying economy

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Surprising degree of consensus from stakeholdersSurprising degree of consensus from stakeholders

• Lack of statewide leadership and coordination of economic development resources seen as obstacles, past and present

• Alaskans continue to view natural resources as the greatest opportunity for economic development

• Greatest barriers include high cost of transportation, cost of energy, and federal regulationsregulations

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Phase II: Strategy Development & Implementation p• Strategy Development – moving to an industry

cluster approachcluster approach —Identified:

• Eleven clusters in the state• Ten seed clusters

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Reducing Risk, Strengthening Economic Resiliency through Industry ClustersResiliency through Industry Clusters

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Alaska’s 11 Clusters

10

11

12

rage

= 1

)

Cash Cow StarU.S. Gross Output Growth, 3.7%

Fishing & Seafood

7

8

9

Rat

io, E

CR

(U.S

. Ave

Travel and Tourism

Mi i

Output Growth, 3.7%Seafood

4

5

6

men

t Con

cent

ratio

n R Mining Oil &

Gas/Pipeline/ Refinery

MilitaryCommunities

Federal Government

1

2

3

Empl

oym

F t /W d P d t

Specialized Machinery/Capital goods

Federal Government Machinery/Capital goods

-2

-1

0

-4 0% -2 0% 0 0% 2 0% 4 0% 6 0% 8 0%

Logistics and International

Forestry/Wood Products

OpportunityChallengeAdvanced Business Services

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4.0% 2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

Industry Dynamism (Gross Output, CAGR %), 2009-2019

Note:1.Size of circle represents employment in 20082. For Fishing and Seafood Processing, ECR=30.6

How do you develop a cluster?

• Bring together I d t l d—Industry leaders

—University research partnersIndustry regulators—Industry regulators

• Create environment supportive of—Putting old grievances behind—Putting old grievances behind—Identifying and resolving barriers; —Developing opportunitiesp g pp

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Turning it into a Strategic Plan

• Work with Leadership Council and political leaders to develop mission & visionto develop mission & vision

• Identify top actions recommended by clustersI t i t d i “St t i D i ” t f• Incorporate into dynamic “Strategic Doing” type of plan

Reflects current industry cluster—Reflects current industry cluster recommendationsUpdated semi annually—Updated semi-annually

—Used to support funding and legislative requests

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Fairbanks Clusters

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—Thank you!

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