understanding our new economy
DESCRIPTION
TRANSCRIPT
![Page 1: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/1.jpg)
November 2005
UNDERSTANDING OURUNDERSTANDING OUR NEW NEW NEW ECONOMY NEW ECONOMY
Joseph Cortright
![Page 2: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/2.jpg)
The ChallengeThe Challenge
In a world of competing metropolitan
economies, who will be the leaders,
and who will lag behind?
![Page 3: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/3.jpg)
RoadmapRoadmap
GlobalizationTechnologyRegionsClustersTalentDistinctivenessStrategy
![Page 4: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/4.jpg)
Traded Sector Drives GrowthTraded 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
![Page 5: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/5.jpg)
GlobalizationGlobalization
The New Reality
![Page 6: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/6.jpg)
GlobalizationGlobalization
A ThreatAn OpportunityReality
![Page 7: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/7.jpg)
The US PositionThe 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
![Page 8: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/8.jpg)
Global CompetitorsGlobal 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
![Page 9: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/9.jpg)
More Skilled Workers WorldwideMore Skilled Workers Worldwide
English Speaking– 470 Million Speak English Worldwide– One-quarter of world’s population speak or
understand some English More Educated
– US Accounts for just 14 million of world’s 88 million college students
– 60% of the world’s 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
![Page 10: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/10.jpg)
Global OpportunitiesGlobal 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
![Page 11: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/11.jpg)
KnowledgeKnowledge
The Key to Our Economic Future
![Page 12: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/12.jpg)
TechnologyTechnology
A knowledge economy . . .Not an information economyWhat you know matters
![Page 13: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/13.jpg)
The Economy is ChangingThe 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
![Page 14: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/14.jpg)
What Drives Economic Growth?What Drives Economic Growth?
The economists’ answer to this question is changing
![Page 15: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/15.jpg)
Capital: More & Bigger FactoriesCapital: More & Bigger Factories
![Page 16: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/16.jpg)
More & Smarter WorkersMore & Smarter Workers
![Page 17: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/17.jpg)
Why are we richer today?Why are we richer today?
![Page 18: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/18.jpg)
So, if its all about ideas . . .So, if its all about ideas . . .
Does it matter where you are . . .“Any economic activity can occur
anywhere”“The Death of Distance”
![Page 19: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/19.jpg)
Information v. KnowledgeInformation v. Knowledge
Information Data, facts -- “codifiable”
KnowledgeKnow-who, know-how -- “tacit”
![Page 20: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/20.jpg)
What can stay, what will go?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
![Page 21: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/21.jpg)
RegionsRegions
The Competitive Unit of A Global Economy
![Page 22: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/22.jpg)
RegionsRegions
Nations are less important, but the world isn’t flat
Regions are the key competitive units
Ideas get created in regionsDifferent places specialize in
different things
![Page 23: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/23.jpg)
The Paradox of GlobalizationThe Paradox of Globalization
As nations become less importantRegions become more importantBusinesses depend more on regional
and local attributes—especially workforce and ideas—for success
![Page 24: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/24.jpg)
““The World is Flat”The World is Flat”not^
It isn’t 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
![Page 25: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/25.jpg)
The World is SpikyThe World is Spiky
Source: R. Florida
![Page 26: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/26.jpg)
Competing RegionsCompeting Regions
![Page 27: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/27.jpg)
ClustersClusters
The Importance of Specialization
![Page 28: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/28.jpg)
Clustering is CriticalClustering is Critical
Economic success isn’t random
Similar and related businesses draw advantages from proximity
Clustering holds for most “traded” goods: autos, carpets, RVs, others
![Page 29: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/29.jpg)
High Tech CentersHigh Tech CentersSeattle
Portland
Silicon Valley
San Diego
Austin
Salt Lake CitySacramento
Minneapolis
Boston
Research Triangle Park
Denver
AtlantaPhoenix
![Page 30: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/30.jpg)
High Tech is SpecializedHigh Tech is SpecializedSeattle- SoftwarePortland
- Semiconductors- SME/EDA- Display- Computers
Silicon Valleyeverything!
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
![Page 31: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/31.jpg)
Biotechnology: 9 Metros DominateBiotechnology: 9 Metros DominateSeattle
San Francisco
San Diego
Washington-Los Angeles
N. Y.Philadelphia
Research Triangle Park
Boston
Source: Brookings Institution, 2005
![Page 32: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/32.jpg)
Convention CentersConvention Centers
Las Vegas, Orlando dominant centers of convention business
Both have more than 100,000 hotel rooms
Source: Brookings Institution, 2005
![Page 33: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/33.jpg)
Specialization of ClustersSpecialization of Clusters
Source: Council on Competitiveness
![Page 34: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/34.jpg)
Traditional Metro Portland ClustersTraditional Metro Portland ClustersCluster EmploymentHigh Tech 62,000Metals/Machinery 36,786Agriculture Food Processing 26,398Forest Products 13,737“Travel” 31,800*
Source: Oregon Employment Department, 2001 data(* Dean Runyan & Associates, Estimated on a different basis than other data, 2000)
![Page 35: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/35.jpg)
Emerging Metro Portland ClustersEmerging Metro Portland Clusters
Cluster EmploymentCreative Services 13,000Apparel/Sporting Goods 9,000 Nursery Products 7,500Pharma/Life Science R&D 1,200Professional Services 26,000*
Source: Oregon Employment Department, 2001 data(* Legal, Engineering & Management Services, Estimated on a different basis than other data, 2000)
![Page 36: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/36.jpg)
![Page 37: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/37.jpg)
A conventional viewA conventional view
0
20
40
60
80
100
120
0 10 20 30 40 50 60
Supply
Demand
Quantity
Price
![Page 38: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/38.jpg)
Theory: How Economies WorkTheory: How Economies Work
The efficient invisible handvs.
![Page 39: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/39.jpg)
Or . . .Or . . .
![Page 40: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/40.jpg)
TalentTalent
People Matter for New Ideas
![Page 41: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/41.jpg)
Best Educated Metros Had Higher Best Educated Metros Had Higher Income Growth Income Growth
0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%
Ten Best Educated Ten Least Educated
Source: Gottlieb & Fogarty
Per Capita Income Growth in the 1990s
Best and Worst Educated Large Metropolitan Areas, 1990
![Page 42: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/42.jpg)
Smart Cities?Smart Cities?
(1) Seattle 48.8% (12) Portland 36.8% (13) Albuquerque 36.5% (18) Denver 33.8% (44) Phoenix 23.5% (58) Las Vegas 18.7%Source: American Community Survey, Rank Among 70 Largest Cities
City Adult 4-Year College Degree Attainment, 2002
![Page 43: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/43.jpg)
Talented Young Workersand the Prospects for
Metropolitan Prosperity
DemographicsDemographics
![Page 44: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/44.jpg)
Fewer 25 to 34 year-oldsFewer 25 to 34 year-olds
U.S. 25 to 34 Year Old Population– 1990: 43.5 Million– 2000: 39.6 Million
Today– 3.9 Million Fewer– a 9% Decline
![Page 45: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/45.jpg)
Future Outlook: Labor ShortageFuture Outlook: Labor Shortage
Last 30 Years– Boomers enter
prime work years– Women’s labor
market participation nearly doubles
– Educational attainment up sharply
= Labor Surplus
Next 30 Years– Boomers retire;
many early– Women’s labor
market participation plateaus
– Educational attainmentplateaus
= Labor Shortage
![Page 46: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/46.jpg)
-40% -20% 0% 20% 40%
% Change 25-34 year-olds, 1990 to 2000
50 Most P
opulous Metro
Areas
Average of Top 50 Metros
Big Shifts Among Metro AreasBig Shifts Among Metro Areas
![Page 47: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/47.jpg)
Biggest Shifts in Talented 25-34sBiggest Shifts in Talented 25-34s
Rank Metropolitan Area Change, 1990-2000
2 Charlotte, NC MSA 56.6%
3 Austin--San Marcos, TX MSA 56.2%
4 Portland--Salem, OR--WA CMSA 50.0%
5 Atlanta, GA MSA 46.2%
6 Denver--Boulder--Greeley, CO CMSA 40.1%
42 St. Louis, MO, MSA -0.7%
45 New Orleans, LA MSA -4.3%
49 Providence, RI MSA -7.0%
Change in College Educated 25-34s
![Page 48: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/48.jpg)
Shifting sources of wealthShifting sources of wealth
ResourcesCostsProximityClustersKnowledgeTalentQuality of Life
Current
Traditional
Inherited Assets
Created Assets
![Page 49: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/49.jpg)
DistinctivenessDistinctiveness
The Economic Importance of Being Different
![Page 50: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/50.jpg)
It’s clear what won’t workIt’s clear what won’t work
“Me too, cheaper”Poor imitations of othersFollowing the herd
And what has a chanceAnd what has a chance• First• Best• Only
![Page 51: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/51.jpg)
Being DifferentBeing Different
In a global economy, local distinctiveness is one important source of the new ideas that can help drive economic prosperity
![Page 52: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/52.jpg)
Different Places, Different PathsDifferent Places, Different Paths
Global Hubs - New York, Chicago New Ideas – Seattle (Microsoft, Amazon,
Biotech, Starbucks)
High Tech Centers – Austin, Boise
Entertainment Machine – Las Vegas, Orlando Education Centers - Providence, Philadelphia
Retirement Mecca – Phoenix, S. Florida
![Page 53: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/53.jpg)
Public Policy: Institutions Public Policy: Institutions MatterMatter “As the world becomes more closely
integrated, the feature that will increasingly differentiate one city or country from another will be the quality of public institutions. The most successful will be those that support collective interests, especially the creation of new ideas.”
Paul Romer
![Page 54: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/54.jpg)
Next StepsNext StepsDo you have a strategy for your
region’s globally competitive clusters?Do you view your people as a critical
economic asset?In what ways is your city
“First, Best or Only?”Is your city a fertile environment for
innovation and entrepreneurship?
![Page 55: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/55.jpg)
ConclusionsConclusions
Regions are the key building blocks of a global economy
Ideas and innovation are key to success Talent is the critical resource Each city has different opportunities Building a great city for entrepreneurs,
workers, consumers, citizens
![Page 56: Understanding Our New Economy](https://reader030.vdocuments.net/reader030/viewer/2022013003/5453cab1b1af9f95228b4764/html5/thumbnails/56.jpg)
For More InformationFor More Information
www.ImpresaConsulting.com