Understanding Our New Economy

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Transcript of Understanding Our New Economy

  • 1. UNDERSTANDING OUR NEW NEW ECONOMY Joseph Cortright November 2005
  • 2. The Challenge
    • In a world of competing metropolitan economies, who will be the leaders, and who will lag behind?
  • 3. Roadmap
    • Globalization
    • Technology
    • Regions
    • Clusters
    • Talent
    • Distinctiveness
    • Strategy
  • 4. Traded Sector Drives Growth Traded/Export Sector Suppliers Local Sales to the rest of the world Most jobs are here: schools, hospitals, grocery stores, restaurants But firms in this sector drive the economy
  • 5. Globalization The New Reality
  • 6. Globalization
    • A Threat
    • An Opportunity
    • Reality
  • 7. The US Position
    • PAST: Cost competitive producers in a national economy dominated by production of stuff
    • PRESENT: A high cost location in a global economy dominated by the creation of ideas
  • 8. Global Competitors
    • The era of effortless superiority is over
    • Rest of the world is catching up
      • Education
      • Technology
      • Income
    • Anything that is routine can be globalized
      • Then: Apparel, Assembly
      • Now: Call Centers, Tax Returns
  • 9. More Skilled Workers Worldwide
    • English Speaking
      • 470 Million Speak English Worldwide
      • One-quarter of worlds population speak or understand some English
    • More Educated
      • US Accounts for just 14 million of worlds 88 million college students
      • 60% of the worlds population will attend secondary school
      • Secondary school: nearly universal in Europe, Korea, Japan & 70% in China, 64% in Mexico, 60% in Brazil, 50% in India
  • 10. Global Opportunities
    • A majority of US high tech revenue comes from exports
      • Intel, HP get most revenue from outside North America
    • Our ideas and inventions are more valuable because more people can make use of them
  • 11. Knowledge The Key to Our Economic Future
  • 12. Technology
    • A knowledge economy . . .
    • Not an information economy
    • What you know matters
  • 13. The Economy is Changing
    • 19th Century:
    • Objects
    • Transforming & Moving stuff
    • Infrastructure
      • Power, Highways, Railroads, Ports, Pipes
    • 21st Century:
    • Ideas
    • Creating Ideas
    • Infrastructure
      • Education, Entrepreneurship, Clusters, Community
  • 14. What Drives Economic Growth?
    • The economists answer to this question is changing
  • 15. Capital: More & Bigger Factories
  • 16. More & Smarter Workers
  • 17. Why are we richer today?
  • 18. So, if its all about ideas . . .
    • Does it matter where you are . . .
    • Any economic activity can occur anywhere
    • The Death of Distance
  • 19. Information v. Knowledge
    • Information
    • Data, facts -- codifiable
    • Knowledge
    • Know-who, know-how -- tacit
  • 20. What can stay, what will go?
    • Can Stay
      • Research
      • Design
      • Management
      • Marketing
      • Proprietary
      • Creative Core
      • Sand box
    • Will Go
      • Routine
      • Low Value
      • Cost Sensitive
      • Large Volume
  • 21. Regions The Competitive Unit of A Global Economy
  • 22. Regions
    • Nations are less important, but the world isnt flat
    • Regions are the key competitive units
    • Ideas get created in regions
    • Different places specialize in different things
  • 23. The Paradox of Globalization
    • As nations become less important
    • Regions become more important
    • Businesses depend more on regional and local attributesespecially workforce and ideasfor success
  • 24. The World is Flat
    • It isnt so much that the US competes against China and India
    • Regions compete against other similar regions
    • In high tech, San Jose & Austin compete against Bangalore and Guangdong
    not ^
  • 25. The World is Spiky Source: R. Florida
  • 26. Competing Regions
  • 27. Clusters The Importance of Specialization
  • 28. Clustering is Critical
    • Economic success isnt random
    • Similar and related businesses draw advantages from proximity
    • Clustering holds for most traded goods: autos, carpets, RVs, others
  • 29. High Tech Centers Seattle Portland Silicon Valley San Diego Austin Salt Lake City Sacramento Minneapolis Boston Research Triangle Park Denver Atlanta Phoenix
  • 30. High Tech is Specialized Seattle - Software Portland - Semiconductors - SME/EDA - Display - Computers Silicon Valley everything! San Diego - Communications Austin - Semiconductors - Computers - SME Salt Lake City - Software - Medical Devices - Storage Technology Sacramento - Computers Minneapolis - Computers - Medical Devices Boston - Computers Research Triangle Park - Software Denver - Telecommunications - Satellite - Storage Atlanta - Database - Telecommunications Phoenix - Semiconductors
  • 31. Biotechnology: 9 Metros Dominate Boston Source: Brookings Institution, 2005 Seattle San Francisco San Diego Washington- Los Angeles N. Y. Philadelphia Research Triangle Park
  • 32. Convention Centers
    • Las Vegas, Orlando dominant centers of convention business
    • Both have more than 100,000 hotel rooms
    Source: Brookings Institution, 2005
  • 33. Specialization of Clusters Source: Council on Competitiveness
  • 34. Traditional Metro Portland Clusters Cluster Employment High Tech 62,000 Metals/Machinery 36,786 Agriculture Food Processing 26,398 Forest Products 13,737 Travel 31,800* Source: Oregon Employment Department, 2001 data (* Dean Runyan & Associates, Estimated on a different basis than other data, 2000)
  • 35. Emerging Metro Portland Clusters Cluster Employment Creative Services 13,000 Apparel/Sporting Goods 9,000 Nursery Products 7,500 Pharma/Life Science R&D 1,200 Professional Services 26,000* Source: Oregon Employment Department, 2001 data (* Legal, Engineering & Management Services, Estimated on a different basis than other data, 2000)