Industry and Local Trends

Atlanta’s Role in the Global Economy

Night view of Atlanta skyline for Atlanta’s Role in the Global Economy
 

Atlanta’s profile as a global city is rising, with more than one ranking putting the city alongside New York, London and Tokyo in terms of economic growth and appeal to foreign investors. Atlanta ranked sixth in A.T. Kearney’s 2016 Global Cities Outlook, jumping from 16 the previous year.1 And fDI, a publication of the Financial Times, ranks Atlanta 15th on its list of Global Cities of the Future, with New York, San Francisco and Houston as the only higher-ranked U.S. cities.2

But these rankings only tell part of the story. For a city to attain and maintain global status in today’s services-driven economy, it must attract people to live, work and visit.

Key components of a global city

Cities earn global reputations not just from their positions as trade hubs but also their airports, according to Rajeev Dhawan, Ph.D., who is both the Zwerner Chair of Economic Forecasting at Georgia State University’s J. Mack Robinson College of Business and director of the college’s Economic Forecasting Center in Atlanta. Airports facilitate international tourism, which boosts both the city’s global reputation and its local economy by creating demand for tourism services, dining and retail.

“People like to go to places like Los Angeles and San Francisco from abroad because they can find a hotel, go sightseeing, go shopping and do other things. It’s easy. They can fly in from anywhere. They can do the same thing here in Atlanta, and we are seeing a lot more international tourists,” Dhawan says.

Atlanta’s Hartsfield-Jackson airport, the busiest in the world, accommodated more than 100 million passengers in 2015.3 Plus, Atlanta plans to complete nearly $800 million in airport construction this year alone, adding parking and gates and modernizing terminals.4 That extraordinary capacity gives Atlanta an edge, according to Dhawan.

“There are a lot of places in the U.S. that can never develop as a hospitality center because they just don’t have the capacity to bring in many people at a time. If I need to put on a convention for 10,000 people in Atlanta, I would not even blink because I would not only have the space to do it, but I can also bring in those people very quickly,” Dhawan says. “But in a place like New Orleans, which is a great city, you can’t have that kind of event because the airport just doesn’t have the capacity to bring in 10,000 people in one go.”

As important as tourism services are, other services—including financial, legal and medical—also bolster any global city’s status. Together, they attract businesses, workers and visitors and create more momentum that’s hard for other places to replicate, says Dhawan. Home to Emory University and the Centers for Disease Control as well as several financial services firms, the Atlanta area has the services infrastructure to expand its global reach.

Challenges and risks

Being a global city or a global company does come with risk, though. “Whatever happens in the global economy is going to impact you much more quickly,” Dhawan says. “You’re not isolated, and that’s happening with Atlanta.” For example, some of the cars manufactured by Atlanta-area plants will be sold internationally, so tariffs, trade agreements and exchange rates can all potentially affect these companies, their employees and the local economy.

Atlanta differs from other global cities such as London, New York and Amsterdam in two important and related ways: population density and public transportation. In places like densely populated Amsterdam, expanding the subway, train or bus system is financially viable because there is sufficient demand to pay for new investments. In less densely populated Atlanta, plans to expand the Metropolitan Atlanta Rapid Transit Authority (MARTA) can face challenges.

At the same time, Atlanta has a relatively small number of districts where most people work. “People have to come from all over to work here, and that’s where congestion comes in. How you solve that will be a challenge,” Dhawan says. However, he also notes that people will tolerate congestion if they see sufficient local economic opportunity.

Power in the workforce

It’s access to workforce that attracts companies to Atlanta. Indeed, some companies have chosen to locate their operations in the area despite being offered large financial incentives to locate elsewhere.

For example, if a company relocates and doesn’t transfer all of its workers, it needs to find new employees. “Compared to a lot of other places, we have a huge educational system, lots of universities, lots of technical colleges: Georgia State, Georgia Tech, Emory University and University of Georgia, the flagship,” says Dhawan. “Within them, you can easily find people to fill those jobs.”  


Still, for companies to make the most of an Atlanta base and to become global themselves, they’ll need to consider devoting more resources to training. Over time, Dhawan has seen many companies delegate education to universities, forgetting the value in investing in at least some company-specific training. Yet, he believes companies willing to spend on training will see those investments pay off in the future.

As Atlanta continues to play a more global role, business leaders should also keep their eyes on momentum within the city because mini-hubs—for technology or financial services, for example—often develop over time. These mini-hubs appeal to workers in the relevant industry and help reinforce momentum. Some companies have relocated from more rural areas outside Atlanta to within the city limits, Dhawan says, because the workforce graduating from the local universities didn’t want to live so far outside the city. “The workforce likes to go where it’s already happening,” he says.

See the trends shaping Atlanta

Learn more about key business insights in the Atlanta region.

1 “Global Cities 2016,” May 2015, A.T. Kearney

2 “Global Cities of the Future 2016/17,” Jan. 2017, fDi

3 “2015 ACI World Airport Traffic Report,” Sept. 9, 2016, Airports Council International

4 “Hartsfield-Jackson plans for nearly $800 million of construction in one year,” Dec. 4, 2015, AJC.com

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