Arizona Sun Corridor is the Future

By Valerie Vinyard –

Arizona Sun Corridor is the Future

It was a bright and bountiful vision of our future – a grand corridor of economic prosperity linking resources and human capital from Nogales to Prescott and beyond. It was called the Arizona Sun Corridor.

That bold 2008 vision, laid out in part by Arizona State University’s Morrison Institute for Public Policy, called for rapid population and economic growth into a megatropolis that would make this region one of the most economically potent in the country.

Then the Great Recession unfolded with a vengeance and “thoughts of a distant megapolitan future took a back seat to hanging on until the economic storm had passed,” according to a 2014 update to that report.

Now, as economic indicators improve, Arizona economists are again looking toward the Sun Corridor megaregion as the backbone for building prosperity.

“The Arizona Sun Corridor is the future,” said George Hammond, research professor and director of the University of Arizona Eller College of Management Economic and Business Research Center.

“Megapolitan regions are where things are going to be happening nationally. Bigger is better,” he said. “The Sun Corridor is a way of thinking that is going to carry us into the future.”

The megaregion leverages assets that include transportation and other infrastructure that link to Mexico, strengths in manufacturing and technology, aerospace, bioscience, optics, agriculture and natural resources, higher education institutions, military assets and much more.

Power of Regional Thinking
Now is the time to mobilize efforts to build and brand the Sun Corridor and to maximize opportunities with the growing Mexican economy, according the lead authors of “Sun Corridor: A Competitive Mindset,” released last summer by ASU’s Morrison Institute.

The report said:

• “Given the fragility of Arizona’s economic turnaround and the pressure of extraordinary competitive threats, the Sun Corridor must capitalize on the power of regional thinking, branding and action, and unlock the potential of Mexico’s burgeoning economy.
• “The competition is fierce, fast and aggressive. Mexico isn’t waiting. Texas and Nevada and Southern California aren’t waiting.
• “To participate in a regional, national and global economy, we need to acknowledge that the business of our lives transcends lines on a map. We need to look beyond the neat compartments that have been artificially created for the sake of political convenience.”
• So just what is the Sun Corridor and how will it bring prosperity to the state?

The Sun Corridor has been defined as spanning six counties – Santa Cruz, Cochise, Pima, Pinal, Maricopa and Yavapai – with a strong connection to Mexico. It does not have fixed boundaries, however. Different boundaries may be employed for different purposes and objectives. As a megaregion, the Sun Corridor can leverage the combined assets of all communities.

Eight out of 10 Arizonans – or about 5.7 million people – call this corridor home.

Tremendous Growth Opportunity
The concept of megapolitans, or megaregions, as economic and population powerhouses was first explored about a decade ago. They most commonly share:

• Environmental systems and topography
• Infrastructure systems
• Economic linkages
• Settlement and land use patterns
• Culture and history

Arizona’s Sun Corridor quickly emerged as one of 10 megapolitans in the nation with tremendous opportunity for growth.

According to the Morrison Institute, population in the Sun Corridor is expected to grow by 60 percent between 2010 and 2040 to 9.1 million. Among megapolitan areas considered to be the Sun Corridor’s competition, only Las Vegas is expected to have a faster rate of population growth over the next 25 years.
UA’s Hammond forecasts that in the next nine years the Phoenix and Tucson metropolitan statistical areas will grow to 6.5 million – with the important linchpin of Pinal County and its business and infrastructure assets among them.

That growth benefits us all, Hammond said. He said larger metropolitan areas are more successful in attracting highly educated workers and investment in growing innovative industries.

Bigger Is Better
“Big cities are more and more becoming key to economic growth,” Hammond said.

“The larger, denser cities have done better over the last 30 years – particularly as human capital has become such an important driver of growth,” he said.
“Bigger is better for a lot of reasons. The larger metropolitan areas create a large internal market. There are a lot of people to sell things to, and that’s attractive. It means there is a lot of opportunity.

“And big, diversified labor markets are attractive both to people and to firms,” he said. “People like this because if your firm or industry starts to go downhill, there are lots of other firms and industries in that same labor market. You can switch horses and transition your skills into a different industry or a different firm within the same industry.”

Businesses benefit as well. “What they like to have is lots of individuals with a broad mix of skills. If one of their key employees leaves they can pick up another employee with a similar skill set without having to import them from the other side of the region or country, which is costly.”

Healthy growth and a vibrant business relationship with Mexico are keys to our economic future, Hammond said.

“There are firms, goods and labor in Mexico that are very valuable. The degree to which we can link with those firms will improve our overall competitive position. It makes the firms located in the U.S. more competitive to the extent that they can draw on really efficient, effective suppliers in Mexico.”
Mexico’s thriving domestic market is a boon to Arizona firms that export an array of goods, Hammond said.

Increased Trade With Mexico
Last year Arizona exported $8.6 billion worth of goods to Mexico, according to the Eller College Economic and Business Research Center’s recently launched website, Arizona-Mexico Economic Indicators (azmex.eller.arizona.edu).

This represents a 22 percent increase from the previous year – one of the highest export growth rates in the U.S. – which is garnering national attention, according to the website.

Overall, U.S.-Mexico trade flows reached record-high levels in 2014 at more than $530 billion, representing exports plus imports. Forty-one percent of Arizona’s merchandise exports go to Mexico, dwarfing Arizona’s other top export partners, which include Asia at 25 percent, Europe at 18 percent and Canada at 10 percent, according to Eller.

Export growth to Mexico has shifted in recent years from computer and electronic products and electrical equipment and appliances – which previously were Arizona’s long-standing top exports to Mexico – to minerals and ores.

The value of exported minerals and ores between Arizona and Mexico was $2.3 billion in 2014, according to Arizona-Mexico Economic Indicators – compared to $1.2 billion for computer and electronic products and $1 billion for electrical equipment and appliances.

The minerals and ores share of total exports to Mexico rose from 0.2 percent in 2004 to 26.6 percent in 2014.

Export of gas to Mexico also increased, growing from a 0.1 percent share in 2004 to 7.6 percent of total exports last year.

Together, exports of minerals, ores and gas accounted for 34.2 percent of the total dollar value of Arizona’s exports to Mexico in 2014, according to Arizona-Mexico Economic Indicators.

Arizona’s Top Foreign Market
Mexico has long been Arizona’s top foreign market. This latest increase suggests that Arizona businesses are increasingly taking advantage of the proximity to Mexico’s markets and its growing economy.

“The relationship with Mexico is a real opportunity for the state of Arizona,” Hammond said. “Building that relationship, strengthening it, making sure we have the infrastructure that will support that trade, making sure we invest in human capital on both sides of the border to improve our competitiveness are all very important.”

He believes people “forgot that Mexico is such an important trading partner for the nation. I think people are coming back to that realization, and that’s a good thing.”

He sees significant potential for cross-border growth, particularly in the manufacturing of electronic components and aerospace and transportation equipment.
Hammond said while bigger is better, the Sun Corridor must be smart about how we grow.

Invest in Education, Infrastructure
“The big things that will be key going forward, in my opinion, are education and infrastructure. We must invest in education and make sure we have infrastructure at the border and around the state to support the economic growth.”

In 1940, Arizona ranked fourth in the nation in share of residents with bachelor’s degrees or better. Today the state ranks 30th in the nation, Hammond said.
That drop could cost us a bright future.

“Over the past 30 years it has become clear companies are targeting highly educated people,” Hammond said. “Firms are looking to locate in megapolitan areas that have a lot of highly educated people because that is where the employment growth is going to be. The regions that have those highly educated people are going to have a much easier time attracting firms.”

He said the Making Action Possible for Southern Arizona – or MAP – dashboard provides hard data as to what needs to improve to support economic growth. The innovative website (mapazdashboard.arizona.edu) is a collaboration of Eller, Southern Arizona Leadership Council, Community Foundation for Southern Arizona and other partners.

Transportation infrastructure, water, sewer, power, broadband, healthcare and “all the stuff that matters to companies and people” are all crucial.
“This is our future and we have to plan well,” Hammond said.

ASU President Michael Crow has shared the vision of the Sun Corridor with regional business and community leaders over the past several years.

“The Sun Corridor illustrates the vast potential for diversifying and accelerating our state’s economy,” Crow said. “Investing in regional economic cooperation efforts, such as the Sun Corridor, establishes an economic base and helps build a skilled workforce. It also has a ripple effect.

“All regions are interconnected by trade, infrastructure and movement of goods. What is good for the Sun Corridor is good for all of Arizona.”

He also said the importance of Mexico as a neighbor cannot be overestimated.

“Mexico is one of our largest trading partners, and its growing economic power and strength make it more important than ever,” Crow said. “We need to maximize our strong trade relations with our neighbor so that we share in that growth.”

ASU’s Morrison Institute helped lead the way with its 2008 report – one of the first efforts to brand the urban heart of Arizona. Its 2014 update was prepared by principal authors Grady Gammage Jr. and Dan Hunting. Their policy recommendations include:

• Aggressive pursuit of trade with Mexico
• Improved freeway infrastructure
• Introduction of passenger rail between Phoenix and Tucson
• Increased international flights from Sky Harbor International Airport

The report raises concerns about issues that could mitigate the success of the Sun Corridor, including a lack of a global profile, limited water resources, a need for more coordinated leadership and improved public systems and spaces.

And while thoughts that Phoenix and Tucson might one day merge have long been the topic of cocktail party conversations, that is a common misunderstanding of the Sun Corridor concept. The corridor along Interstate 10 between the two cities will see increased development, but a continuous uninterrupted swath of development will never happen because of protected land, according to the report.

An economic merging of the two cities and surrounding counties, however, could make the region competitive on the national and global stage.

“By thinking of the Sun Corridor as a unit, urban Arizona becomes more important than the individual cities of Phoenix, Tucson, Mesa, Glendale, Prescott Valley or Sierra Vista,” the report said.

“The Sun Corridor becomes an entity which can be compared to other great urban concentrations. It becomes a brand to use when competing at the global level.”