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Leveraging Rhode Island Emerging Hispanic Market

Toms A. vila Milenio Associates, LLC 03/26/2013 Similar to global emerging markets such as the BRIC countries, (Brazil, Russia, India, China) Mexico, and Korea to Indonesia and South Africa have proven that they have certain attributes in common: a young population, increasing productivity, rising per capita income, and an appetite for consumption that will fuel new spending. Rhode Island has an emerging market within its borders in the Hispanic American market. In fact, according to the united nation the coming decade will be the first in 200 years when emerging market countries contribute more to global growth than developed countries. Taking lessons from the global emerging markets and applying it to the emergence of the Hispanic community in the state and the country, Rhode Island should adapt it to catalyze similar growth in the states struggling economic development eco system. To truly reinvent Rhode Islands economy, we need to integrate the Hispanic community into the states main stream commerce, and economic development agenda and create a Hispanic emerging market strategic plan, which leverages the thriving Latino entrepreneurial spirit that without much encouragement or assistance from government and other established institutions continues to thrive. Back in 1992, Magic Johnson and Ken Lombard went to see Peter Guber then CEO at Sony Pictures with a proposal to invest in the development of a movie theater in a foreign county, and proceeded to ask him. What if we can tell you about a land, a foreign country which is the most vibrant market place for new theatre? Let us tell you about this country, it's got one of the most robust market places for films ever, as much as any group in the United States or the world, it has a very aggressive market. This land's citizens don't care about movie reviews, the citizens all are a close-knit community. Then they included the facts, viz: how often people went to the movies, how much they spent on concessions, etc After they finished the story, Peter Guber said, "Yes, let's build movie theatres there; and asked them where is it? Magic responded it is six miles from here in Baldwin Hills, the African American community in South Los Angeles that has been ignored for a long time, and it has the perfect metrics of where you want to build a theater. The story by Magic Johnson became the foundation of the partnership established between Johnson Development and Sony Pictures and Guber green-lighted the development of Magic Johnson Theatres at Baldwin Hills Crenshaw Plaza in the mid-1990s. The shining success of the theatres in a South Los Angeles neighbourhood overlooked by traditional investors led to a partnership with Howard Shultz, chairman of Starbucks, who arranged a special deal with Johnson to open Starbucks in urban neighbourhoods. Johnson was Starbucks only franchise operator until the agreement expired in 2010. Partnering with our local world class talent and our experience nurturing entrepreneurial communities, I envision the Hispanic market creating critical mass in Rhode Island s emerging market space of high growth market that will truly empower Rhode Island economy for the next 20-40 years in the same fashion that previous immigrant communities have done. Rhode Island needs to amplify resources that already exist to accelerate the creation and expansion of successful, scalable Hispanic business in areas of our economy where we already have significant but unrealized market potential, and help policy makers, Toms A. vila

investors, foundations and private investors leverage such a big market opportunity right in front of our eyes but ignored for so long, and help foster an improve economic future for every Rhode Islander. Rhode Islands Hispanic-owned businesses are a bright spot in the states economy that needs to be integrated into the state's economic development strategy and business development vision to capitalize on this momentum, vibrant, dynamic market looking to grow and create jobs in our state. According to figures from the U.S. Census Bureau 2007 Survey of Business Owners, Rhode Island Hispanic-owned business jumped from 3,415 in 2002 to 5,764 in 2007, an increase of 68.8 percent. Over the same time period, revenues increased by 115.4 percent, from 213.7 million in 2002 to 460.4 million in 2007. This data helps to make more informed decisions to work towards integrating the Hispanic economic development in the state agenda and capitalize on the momentum of this thriving sector of our economy. Most importantly looking at the emerging market of Hispanic America, the U.S. Census projects that Hispanic purchasing power, will top $1.5 trillion by 2015. That means the Hispanic market in America would be the 11th largest economy in the world just below France, Italy and Mexico and above Korea, Spain, Indonesia and Turkey. Put another way, if Hispanics were a nation, it would be a member of the "G-20," the international forum of the world's richest nations. In fact, Hispanic America's purchasing power per capita (at $20.4 thousand) exceeds the GDP per capita of every one of the four BRIC countries Russia ($15.9), Brazil (10.8), China($7.6), India ($3.5) and most of the remaining "G-20" nations: South Africa, Mexico, Argentina, Indonesia and Turkey (excepting only Korea, Saudi Arabia and Australia). According to research by the Federal Reserve Bank of Boston, there is untapped potential in Rhode Island that could help business owners more while boosting economic growth. Nationally, Latinos are experiencing more entrepreneurial activity than other groups. The report further states that policymakers would be well advised to make Latino entrepreneurship a priority, leveraging its past success and embracing its potential. Government, technical-assistance providers, and lenders should capitalize on the Latino communitys strengths and try to broaden the availability of services to Latino entrepreneurs. Hispanic America's future growth is perhaps even more important than its current size and wealth. According to U.S. Census forecasts, the US Hispanic population is poised to grow by 83 million by the half century mark 2050 from the current 52+ million to 133 million, making Hispanic America larger than the current population of Japan and just short of the current population of Russia. Put another way, the growth of Hispanic America over the next 40 years will be the equivalent of adding 10 additional New York Cities populated only with Hispanics. Indeed, Census Bureau Director Robert Groves opined that the growth of the Hispanic population is one of the big stories from the 2010 Censusand he was absolutely correct. A major opportunity for economic growth lies with the scores of Hispanic businesses throughout Rhode Island that manufacture unique ethnic products, import foreign goods for distribution or provide specialized services to immigrant communities. Many of these firms could easily expand their operations and create new jobsby exporting their goods and services to other parts of the country that have emerging immigrant populations but few ethnic businesses of their own. With minimal support, some of the state's small Hispanic-run firms might become the next Goya or Golden Krust. Rhode Island should create a new initiative to actively target these businesses and provide resources to help them develop the expertise and capacity to export into new markets. Toms A. vila

The Hispanic business community continues to grow; yet their true economic potential is still unrealized. Hispanic firms can become an engine of Rhode Island job creation, with paid employment growing in the state. Foster innovation and entrepreneurship within the Hispanic community in high-growth industries such as: Clean and Renewable Energy, Green Technology, Healthcare and Information Technology that will create needed jobs, expand Rhode Island tax base while creating future wealth in the Hispanic community thereby improving our future economic outlook. Growth in wealth is advanced not only by population growth but also by expanding entrepreneurship and international business. According to a report by the Fourth Economy, Economic Development Data Analysis and Assessment, Economic, demographic and cultural diversity has strong associations with economic growth, performance and sustainability is critical for states to consider. This is especially important given the shifting dynamic of Rhode Island s demographics, according to research done by PolicyLink finding that over the last 30 years, the percentage of Rhode Island residents of color has increased from seven to 24 percent. In just the last decade, Rhode Islands Latino population grew 44 percent, the Asian population grew 28 percent, and the African American population grew 23 percent; meanwhile, the non-Hispanic white population declined by six percent. Furthermore the PolicyLink reports that By 2040, 41 percent of Rhode Islands residents will likely be people of color, with Latinos reaching more than a quarter of the total population. The entire state will continue to diversify and it is expected that Providence will be majority people of color. Communities of color are the driving force in Rhode Islands population growth and essential to the states economic success now and into the future. Despite the states many economic strengths, wide racial gaps in income, education, health, and opportunity coupled with a shrinking middle class place the states economic future at risk. Despite the recession and the huge disparities in access to capital, the number of Hispanic businesses in Rhode Island continues to rise. The rise in Hispanic businesses provides the State with an opportunity to better its economy and job market. Based on the latest data, the growth of Hispanic small business has far surpassed the average growth for all small businesses. And just as the Hispanic business community continues to grow, we are also seeing an increase of Hispanic customers for all Rhode Island businesses, which has a very positive economic impact for the state. As the data demonstrates, Rhode Island s Emerging Hispanic Market is a bright spot for the states economy. We need to align the state economic development strategy and business development efforts to capitalize on this momentum so vibrant, dynamic market looking to grow and create jobs in our state have the necessary tools and resources to succeed Achieving greater integration of Hispanics business into the fabric of Rhode Island economic development is a public policy imperative with obvious benefits for the state bottom line.

Toms A. vila