Our Economy

Structure of the Regional Economy

Globalization of the Regional Economy

Regional Economic Development Concerns

Structure of the Regional Economy

Historically, South Florida's economy has been strongly influenced by tourism and in-migration. Over time, the regional economy has become more service-oriented, with an increasing share of employment in the service-producing industries and a decreasing share of employment in goods-producing industries. In recent years, it also has seen a significant increase in international trade as integration with the global economy has accelerated.

Table 3
Distribution of Employment and Annual Payroll, 1974-91

Source: Bureau of the Census, County Business Patterns (1974, 1979, 1984, 1989, 1991).

The share of service-producing employment in total non-agricultural employment increased from 77 percent in 1970 to 86 percent in 1990 and is projected to further increase to 89 percent by the year 2005. Agriculture, which has been an important economic base sector in south Dade County, was severely damaged by Hurricane Andrew and is increasingly pressured by expanding urban communities. The share of service sector employment grew from 24 percent of the total in 1974 to 35 percent in 1991, while manufacturing employment fell from 16 percent to 10 percent in the same period (see Table 3). However, it is notable that average wages in the service sector continue to lag significantly behind those in other sectors. In 1991, the average annual payroll per employee in the service sector was approximately 60 percent of the average for the economy as a whole.

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Globalization of the Regional Economy

Economic development in the 1990s should not consist of competition among neighboring states or cities for a few scarce branch plants. The stakes are much higher and the opportunities much more vast. Those communities that are successful in economic development will possess a diversified economy, pursue global markets to strengthen their economic base and possess the necessary infrastructure to sustain a healthy economy. The creation and retention of quality jobs and dependable tax bases in the South Florida region will depend on such a healthy economy. Competitiveness in the global economy is a function of access to international markets, international orientation, organized support, general business vitality, information infrastructure, coordination and cooperation of and by trade-related organizations and players, and leadership.

Trade between South Florida and Latin America has grown a new leg: Europe. Figuratively, the emerging trading position for South Florida represents a right angle: Miami-Fort Lauderdale forms the axis for the global distribution of goods between the three continents. Furthermore, a broadening of trade is beginning to attract interest from the Far East. An overview of its trading partners reveals that South Florida is not only a Latin phenomenon. Of its top 25 partners, 11 are non-Latin countries. Three outcomes of trilateral trade include: 1) a diversity of global trading partners; 2) a broadened potential for direct foreign investment into the region; and 3) an expanded global market in which to participate.

In the past decade, South Florida's international business community has grown to include many companies from the European community and Asia, along with Latin America and the Caribbean. The tourism industry, trade, services, retail, banking, real estate and manufacturing, all the major sectors of the region's diversified economy, are taking an increasingly international orientation. Greater Miami is also the printing and publishing hub for the Americas, with a thriving industry in English-language and Spanish-language publications.

South Florida's service industries, including banking, legal, investment and accounting firms, serve a variety of international customers as well as the U.S. market. During the 1990s, more of these firms have begun to export their services to foreign markets.

The number of foreign tourists coming to the region has been growing. The recent revitalization of South Beach and its Art Deco hotels has helped to draw hundreds of thousands of European visitors every year. The numbers of Latin American, Canadian and Asian visitors are also rising. More than 4 million international visitors came to Dade County last year, up from 2.9 million in 1989. Almost one million foreign visitors came to Broward County in 1991, three times as many as in 1985.

More than 300 multinational companies have opened world, regional and Latin American sales, service, administrative, research, training and manufacturing facilities in Dade County. In 1993, $28 billion worth of exports and imports was processed through the Miami Customs District, which includes airports and seaports in Miami, Fort Lauderdale, West Palm Beach, Fort Pierce and Key West. This is up from $22 billion in 1991 and is almost triple the value of foreign trade in 1985. Over 70 percent of that trade is with Latin America and the Caribbean.

The region's integration into the global economy can be exemplified by Miami International Airport, where domestic and foreign carriers serve 24 cities in Europe and the Mideast, 29 cities in South America, 28 in the Caribbean and 10 in Central America, four in Mexico and four more in Canada. The Miami Free Trade Zone, the largest privately-operated trade zone in the world, has processed more than $11 billion in goods since its establishment in 1979. Two additional free zones have been licensed, but not yet activated.

Based upon these developments, South Florida is evolving as a conduit for goods and services. The value added to the region's economy is increasingly external. European and Latin countries converge upon the South Florida market to trade among themselves, rather than go direct to the individual countries of South America or the Caribbean. Consequently, South Florida is emerging as the administrative and managerial hub, a point of access to which companies are moving decision-making functions for Euro-Latin trade. South Florida now has 106 international banking offices (with import/export services), 55 foreign consulates and 25 foreign trade offices.

These 25 specialized chambers of commerce, called bi-national chambers, promote trade between their countries and the United States. They also provide an arena in which members, both Americans and foreign nationals, make contacts and do business with each other. More than twice that many countries have opened consulates or have diplomatic representation in South Florida.

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Regional Economic Development Concerns

In order to support the growing role of the region in the world economy, the region's economic base must be broadened and shifted toward higher value-added industries. International trade should also be further broadened to increase trade with European, Asian and African countries. Economic development efforts should target those higher value-added industries which have high barriers for the private sector to initiate. Those barriers could include labor force training, infrastructure, technology transfer and start-up venture capital.

International trade infrastructure is critical. This includes, among other things, airports and ports. The destruction of Homestead Air Reserve Base facilities by Hurricane Andrew in 1992 has provided an opportunity to begin rethinking the region's aviation system. A strong regional aviation system is necessary for the region to be competitive in a global economy.

The partnership between education and business must be reexamined and strengthened. Without a quality work force, there will be no prospect for the region to be competitive in the global economy. The racial and ethnic diversity of the regional work force is an asset to be built upon as incoming economic players search for culturally sensitive employees capable of conducting business in an increasingly diverse range of languages.

Growth management approaches have not integrated economic development considerations into the traditional physical development planning framework. Most local government comprehensive plans have given minimal (rarely explicit) consideration to economic development.

Currently, there are county-wide economic development agencies, however, there is no overall regional economic development coordination agency. A broader, effective partnership in economic development is not only desirable, it will be a necessity. Greater public/private partnership is needed so that limited government finances and authority can be used to engage other public and private institutions in meeting development needs.

Dade County has led the region both in absorbing the largest contingents of international migrants and in building linkages to the global economy. There are signs that the transition brings some substantial costs with it. The shifting economic base has not fully protected the region from unemployment. Since 1981, Dade County's unemployment rates have always been the highest in the region, and higher than the state average since 1988. In contrast, throughout the 1980s, unemployment rates in Broward and Monroe were substantially below those of the state, including the 1980-82 recession. However, during the 1991 recession, Broward's unemployment rate jumped above the state average for the first time in many years.

An important feature of a regional economy is its performance during national recessions. The region fell into the recent 1991 recession together with the nation, suffering a more significant economic decline thereby lagging the nation in the recovery. Even prior to Hurricane Andrew, Dade County's unemployment rate was above 10 percent.

As elsewhere in the nation, throughout the 1980s, African-Americans continued to have substantially higher unemployment rates than Whites. Hispanics, though generally having a higher unemployment rate than Whites, had a much lower unemployment rate than African-Americans. During 1990 in South Florida, youths (16-19 years old) and the elderly (65 years and older) generally also had higher unemployment rates than other age groups.

Table 4 provides a comparative picture of the structure of personal incomes in the region, the state and the country over the last two decades. Per capita incomes in the region remained slightly higher than both the state and the national averages between 1970 and 1990, although the advantage declined steadily over the period. In fact, in both the region and the state, earnings from wages, salaries and professional fees, net of taxes, have been lower than the national average and have fallen. At the same time, the share of transfer payments in personal income has been similar at the regional, state and national levels over the years. Lower earnings have been compensated by a significantly higher share for dividends, interest and rent in total income in South Florida and the state when compared with the national average. In 1990, more than one in every four dollars of personal income derived from this category, which is based to a significant degree on the holdings of the retirement population in the region.

Even so, the growing level of poverty among the elderly is a particular concern. Declining interest rates in recent years, under the impact of the recessionary economy, have reduced retirement incomes. The recession in the early 1990s brought high levels of unemployment and much more competition for the low-paying service sector jobs often sought by retired residents to supplement retirement incomes.

Table 4
Personal Income by Source, 1970-90

Source: Bureau of Economic Analysis, Regional Economic Information System (May, 1994).

The 1990 Census revealed a continuing pattern of occupational disparities among non-Hispanic Whites, African-Americans, and Hispanics with regard to higher- and lower-paying jobs. For example, African-Americans still remain significantly over-represented among lower-paid unskilled laborers.

Another indicator of concern with regard to the costs of the region's economic transition is the incidence of poverty. The percent of families below the poverty level in 1989 was much higher in Dade County (14 percent) than the state average (9 percent). Both Broward (7 percent) and Monroe (7 percent) were below that state average. Seven municipalities in the region had percentages of families below poverty level more than twice as high as the state average. A recent study found that about one in every three children in Fort Lauderdale and more than four out of every ten children in Miami live in poverty.

Unless strategic action is taken on a regional level, the net results of world trade and the globalization of South Florida will deepen the social and economic disparities that already exist.

For example, during the 1980s, the first and worst hit by global trade were manufacturing workers whose companies competed with foreign rivals. Only the college-educated did well. Real wages of high school dropouts have fallen by up to 20 percent since 1979, while real incomes of employees with more than four years of college have grown by 8 percent. All this will have a dramatic impact on lower-skilled workers in South Florida. The bottom half of South Florida society faces an ominous trend. Service industries, the region's largest employers, especially banks and insurers, are automating jobs and displacing lower skilled workers.

But the impact will reach much further than that. Declining pay for the bottom half may not slow South Florida growth, since average incomes should rise as the top half does better. But widening inequality poses other problems. The poverty rate could stay high. The cost of welfare and unemployment compensation could increase. Resentment of the wealthy could easily reach a boiling point as it did recently in Los Angeles, resulting in riots or what some would call insurrection. One possible scenario is that South Florida would become even more a class society, such as those that exist in Latin America which have unequal distributions of wealth and chronically unstable governments.

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This page and all contents prepared by the South Florida Regional Planning Council.
Updated on Nov. 23, 1996