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Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
Understanding Our New Economy
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Understanding Our New Economy

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    • 1. UNDERSTANDING OUR NEW NEW ECONOMY Joseph Cortright November 2005
    • 2. The Challenge <ul><li>In a world of competing metropolitan economies, who will be the leaders, and who will lag behind? </li></ul>
    • 3. Roadmap <ul><li>Globalization </li></ul><ul><li>Technology </li></ul><ul><li>Regions </li></ul><ul><li>Clusters </li></ul><ul><li>Talent </li></ul><ul><li>Distinctiveness </li></ul><ul><li>Strategy </li></ul>
    • 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 <ul><li>A Threat </li></ul><ul><li>An Opportunity </li></ul><ul><li>Reality </li></ul>
    • 7. The US Position <ul><li>PAST: Cost competitive producers in a national economy dominated by production of stuff </li></ul><ul><li>PRESENT: A high cost location in a global economy dominated by the creation of ideas </li></ul>
    • 8. Global Competitors <ul><li>The era of effortless superiority is over </li></ul><ul><li>Rest of the world is catching up </li></ul><ul><ul><li>Education </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Income </li></ul></ul><ul><li>Anything that is routine can be globalized </li></ul><ul><ul><li>Then: Apparel, Assembly </li></ul></ul><ul><ul><li>Now: Call Centers, Tax Returns </li></ul></ul>
    • 9. More Skilled Workers Worldwide <ul><li>English Speaking </li></ul><ul><ul><li>470 Million Speak English Worldwide </li></ul></ul><ul><ul><li>One-quarter of world’s population speak or understand some English </li></ul></ul><ul><li>More Educated </li></ul><ul><ul><li>US Accounts for just 14 million of world’s 88 million college students </li></ul></ul><ul><ul><li>60% of the world’s population will attend secondary school </li></ul></ul><ul><ul><li>Secondary school: nearly universal in Europe, Korea, Japan & 70% in China, 64% in Mexico, 60% in Brazil, 50% in India </li></ul></ul>
    • 10. Global Opportunities <ul><li>A majority of US high tech revenue comes from exports </li></ul><ul><ul><li>Intel, HP get most revenue from outside North America </li></ul></ul><ul><li>Our ideas and inventions are more valuable because more people can make use of them </li></ul>
    • 11. Knowledge The Key to Our Economic Future
    • 12. Technology <ul><li>A knowledge economy . . . </li></ul><ul><li>Not an information economy </li></ul><ul><li>What you know matters </li></ul>
    • 13. The Economy is Changing <ul><li>19th Century: </li></ul><ul><li>Objects </li></ul><ul><li>Transforming & Moving stuff </li></ul><ul><li>Infrastructure </li></ul><ul><ul><li>Power, Highways, Railroads, Ports, Pipes </li></ul></ul><ul><li>21st Century: </li></ul><ul><li>Ideas </li></ul><ul><li>Creating Ideas </li></ul><ul><li>Infrastructure </li></ul><ul><ul><li>Education, Entrepreneurship, Clusters, Community </li></ul></ul>
    • 14. What Drives Economic Growth? <ul><li>The economists’ answer to this question is changing </li></ul>
    • 15. Capital: More & Bigger Factories
    • 16. More & Smarter Workers
    • 17. Why are we richer today?
    • 18. So, if its all about ideas . . . <ul><li>Does it matter where you are . . . </li></ul><ul><li>“ Any economic activity can occur anywhere” </li></ul><ul><li>“ The Death of Distance” </li></ul>
    • 19. Information v. Knowledge <ul><li>Information </li></ul><ul><li>Data, facts -- “codifiable” </li></ul><ul><li>Knowledge </li></ul><ul><li>Know-who, know-how -- “tacit” </li></ul>
    • 20. What can stay, what will go? <ul><li>Can Stay </li></ul><ul><ul><li>Research </li></ul></ul><ul><ul><li>Design </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Proprietary </li></ul></ul><ul><ul><li>Creative Core </li></ul></ul><ul><ul><li>Sand box </li></ul></ul><ul><li>Will Go </li></ul><ul><ul><li>Routine </li></ul></ul><ul><ul><li>Low Value </li></ul></ul><ul><ul><li>Cost Sensitive </li></ul></ul><ul><ul><li>Large Volume </li></ul></ul>
    • 21. Regions The Competitive Unit of A Global Economy
    • 22. Regions <ul><li>Nations are less important, but the world isn’t flat </li></ul><ul><li>Regions are the key competitive units </li></ul><ul><li>Ideas get created in regions </li></ul><ul><li>Different places specialize in different things </li></ul>
    • 23. The Paradox of Globalization <ul><li>As nations become less important </li></ul><ul><li>Regions become more important </li></ul><ul><li>Businesses depend more on regional and local attributes—especially workforce and ideas—for success </li></ul>
    • 24. “The World is Flat” <ul><li>It isn’t so much that the US competes against China and India </li></ul><ul><li>Regions compete against other similar regions </li></ul><ul><li>In high tech, San Jose & Austin compete against Bangalore and Guangdong </li></ul>not ^
    • 25. The World is Spiky Source: R. Florida
    • 26. Competing Regions
    • 27. Clusters The Importance of Specialization
    • 28. Clustering is Critical <ul><li>Economic success isn’t random </li></ul><ul><li>Similar and related businesses draw advantages from proximity </li></ul><ul><li>Clustering holds for most “traded” goods: autos, carpets, RVs, others </li></ul>
    • 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 <ul><li>Las Vegas, Orlando dominant centers of convention business </li></ul><ul><li>Both have more than 100,000 hotel rooms </li></ul>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)
    • 36.  
    • 37. A conventional view
    • 38. Theory: How Economies Work <ul><li>The efficient invisible hand </li></ul>vs.
    • 39. Or . . .
    • 40. Talent People Matter for New Ideas
    • 41. Best Educated Metros Had Higher Income Growth Source: Gottlieb & Fogarty Per Capita Income Growth in the 1990s Best and Worst Educated Large Metropolitan Areas, 1990
    • 42. Smart Cities? <ul><li>(1) Seattle 48.8% </li></ul><ul><li>(12) Portland 36.8% </li></ul><ul><li>(13) Albuquerque 36.5% </li></ul><ul><li>(18) Denver 33.8% </li></ul><ul><li>(44) Phoenix 23.5% </li></ul><ul><li>(58) Las Vegas 18.7% </li></ul><ul><li>Source: American Community Survey, Rank Among 70 Largest Cities </li></ul>City Adult 4-Year College Degree Attainment, 2002
    • 43. Demographics Talented Young Workers and the Prospects for Metropolitan Prosperity
    • 44. Fewer 25 to 34 year-olds <ul><li>U.S. 25 to 34 Year Old Population </li></ul><ul><ul><li>1990: 43.5 Million </li></ul></ul><ul><ul><li>2000: 39.6 Million </li></ul></ul><ul><li>Today </li></ul><ul><ul><li>3.9 Million Fewer </li></ul></ul><ul><ul><li>a 9% Decline </li></ul></ul>
    • 45. Future Outlook: Labor Shortage <ul><li>Last 30 Years </li></ul><ul><ul><li>Boomers enter prime work years </li></ul></ul><ul><ul><li>Women’s labor market participation nearly doubles </li></ul></ul><ul><ul><li>Educational attainment up sharply </li></ul></ul><ul><li>= Labor Surplus </li></ul><ul><li>Next 30 Years </li></ul><ul><ul><li>Boomers retire; many early </li></ul></ul><ul><ul><li>Women’s labor market participation plateaus </li></ul></ul><ul><ul><li>Educational attainment plateaus </li></ul></ul><ul><li>= Labor Shortage </li></ul>
    • 46. Big Shifts Among Metro Areas % Change 25-34 year-olds, 1990 to 2000 50 Most Populous Metro Areas Average of Top 50 Metros
    • 47. Biggest 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
    • 48. Shifting sources of wealth <ul><li>Resources </li></ul><ul><li>Costs </li></ul><ul><li>Proximity </li></ul><ul><li>Clusters </li></ul><ul><li>Knowledge </li></ul><ul><li>Talent </li></ul><ul><li>Quality of Life </li></ul>Current Traditional Inherited Assets Created Assets
    • 49. Distinctiveness The Economic Importance of Being Different
    • 50. It’s clear what won’t work <ul><li>“Me too, cheaper” </li></ul><ul><li>Poor imitations of others </li></ul><ul><li>Following the herd </li></ul><ul><ul><li>And what has a chance </li></ul></ul><ul><li>First </li></ul><ul><li>Best </li></ul><ul><li>Only </li></ul>
    • 51. Being Different <ul><li>In a global economy, local distinctiveness is one important source of the new ideas that can help drive economic prosperity </li></ul>
    • 52. Different Places, Different Paths <ul><li>Global Hubs - New York, Chicago </li></ul><ul><li>New Ideas – Seattle (Microsoft, Amazon, Biotech, Starbucks) </li></ul><ul><li>High Tech Centers – Austin, Boise </li></ul><ul><li>Entertainment Machine – Las Vegas, Orlando </li></ul><ul><li>Education Centers - Providence, Philadelphia </li></ul><ul><li>Retirement Mecca – Phoenix, S. Florida </li></ul>
    • 53. Public Policy: Institutions Matter <ul><li>“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.” </li></ul>Paul Romer
    • 54. Next Steps <ul><li>Do you have a strategy for your region’s globally competitive clusters? </li></ul><ul><li>Do you view your people as a critical economic asset? </li></ul><ul><li>In what ways is your city “First, Best or Only?” </li></ul><ul><li>Is your city a fertile environment for innovation and entrepreneurship? </li></ul>
    • 55. Conclusions <ul><li>Regions are the key building blocks of a global economy </li></ul><ul><li>Ideas and innovation are key to success </li></ul><ul><li>Talent is the critical resource </li></ul><ul><li>Each city has different opportunities </li></ul><ul><li>Building a great city for entrepreneurs, workers, consumers, citizens </li></ul>
    • 56. For More Information www.ImpresaConsulting.com

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