How Globalization, Innovation, and Culture are Changing ...

How Globalization, Innovation, and Culture Are

Changing Arizona’s Economy

May 7, 2015

Dr. Robert D. Atkinson, President, ITIF

@RobAtkinsonITIF

ITIF: Who We Are

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The Information Technology and Innovation Foundation is a think tank at the cutting edge of designing innovation policies and exploring how innovation will boost economic growth and competitiveness. ITIF focuses on: • Innovation processes, policy, and metrics, • Internet, big data and IT policy, • IT and economic productivity, • Science and tech policy, and • Innovation and trade policy

Today’s Presentation

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Understanding Economic (R)evolution Geography-Driven (R)evolution Technology-Driven (R)evolution Culture-Driven (R)evolution Taking Advantage of (R)evolution

Arizona Then…

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Arizona Now…

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Arizona Next…?

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Economies: “Engines” That Get Bigger?

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Or Systems That Evolve?

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During My Talk …

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• 25 Patents Will be Issued

• 18 New Products Released

• 18 New Production Processes Adopted

• 150 Firms Will Go Out of Business

• But 166 Firms Will Start Up

Drivers of Economic Evolution

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• Geography and movement of firms and people

• Technological innovation

• Culture and demography


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Geography Drives Economic Evolution

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• Economies are entities that evolve over both time and space

• The U.S. has to generate new industries to replace the ones it loses to low-wage nations

• Competition for “replacement” firms is much stiffer

Real output loss, 2000 to 2010 for selected U.S. manufacturing industries. Source: Bureau of Economic Analysis

Migration of Firms Used to Be National

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Now It’s Global

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Fewer Relocations to Target

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Major Industrial Manufacturing Relocations & Expansions in U.S.

Arizona Has Long Been Lower Cost

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Arizona per-capita income as share of US per-capita income (Source: BEA)

But Low Costs are Less of an Advantage

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Arizona production costs as share of US vs. Mexico’s

Future of Geographic Evolution

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• Continued competition from low

cost commodity nations

• Growing competition from innovation-based economies

Routine Production Metros Will Lag Innovation Metros

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People Move

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Five fastest growing metros (2000-2014): • San Antonio • Las Vegas • Riverside-San Bernardino • Houston • Austin

Immigration of U.S. Knowledge Workers

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Arizona Ranks 41st (2014)

Score: 2014: 12.2 2012: 12.1 2010: 10

Migration of U.S. Knowledge Workers

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Arizona Ranks 34th (2014)

Score: 2014: 13.3 2012: 13.1 2010: 12.9


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Technological Innovation Drives Evolution

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• New production processes

• New products and services

• New business models

IT Drives Innovation

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• 1,200 quintillion transistors in the world: (1,215,500,000,000,000,000,000)

• Up 14,300 times in the last 15 years

IT Changing Enterprises and the Economy

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• Social

• Mobile

• Internet of Things

• Analytics

• Cloud

• Kiosks

Technology Drives Evolution

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Changes in real industrial output by industry and cause

*1998-2011 data Source: Bureau of Economic Analysis

Technology is Making Industries That Were Local…

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National…

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Where’s Technological Evolution Going?

Software Is “Eating the World”

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End of Moore’s Law or Robots Taking Over?

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Changes in Culture Drive Evolution

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Changes in real industrial output by industry and cause. *1998-2011 Source: Bureau of Economic Analysis

As Industries Become More Footloose, Culture and Quality of Life Enable Growth

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Mid-sized Metros are Growing Faster

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Top 20 20-50

Percent employment growth, 2000-2014, top 50 metros (BLS)

Large Metros are Losing Employment Share

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0.00%1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77

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Largest Statistical Metro Areas (by 2001 employment data)


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Taking Advantage of Economic Evolution Means Embracing Innovation In…

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Culture

So Now a Region’s Culture and Quality of Life is You Don’t Want This…

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You Do Want This

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Institutional Innovation: Doing new things in new

ways

Culture Institutions


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Economic development policies

• Innovation vouchers (German lander) • Refundable and collaborative R&D tax credits (Norway,

Australia, Ontario) • Design assistance (Ontario)

• “On the spot” new firm registration (Portugal, Chile)

• Industrial Ph.D. program (Alberta)


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Culture

Institutions,

Economic development policies, and

Government

Some Useful Questions to Ask About Innovation in Your Government

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• Do I know my own innovation track record?

• Do I understand the innovation patterns in governments like mine around the world?

• Do I have a process in place where crazy, out of the box ideas (e.g., innovations) can get a hearing?

• Do I have clear metrics for innovation?

• Do I have effective incentives and rewards for innovating?

Most governments have no answers.

www.globalinnovationrace.com

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Rob Atkinson [email protected]

Thank You Rob Atkinson [email protected]

Twitter: @robatkinsonitif

Facebook: facebook.com/innovationpolicy

Blog: www.innovationpolicy.org

Website: www.itif.org

Follow ITIF:

Thank You

How Globalization, Innovation, and Culture are Changing ...

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