Globalization is radically changing how we live, work and spend our money.
Some people are very disturbed about the effects of globalization on local economies.
Globalization is basically a process of eliminating trade and cultural barriers between different parts of the world. Today we buy cars from Korea and clothes from China. Children in Tokyo grow up with Disney characters and visit Disney World. In Russia, they find that things go better with Coke.
Globalization has been aided by the digital revolution in communications, which has made it possible to transmit information around the globe almost instantaneously.
Over the past 30 years, we’ve moved from an industrial economy where wealth was created by the production of goods, to a knowledge economy where wealth is created from the use of information.
Thomas Friedman coined the phrase “The World is Flat” to describe a globalized world economy, a place where products and services can be produced any place in the world and then sold any place in the world. Low cost and efficiency are the primary determinants of economic success.
Place had a special meaning in the industrial economy. Businesses clustered near raw materials, near ports, railroads, rivers, and highways, near large markets, near sources of strategic information. Workers went to where the jobs were located. The new Knowledge Economy fundamentally changes the definitions of how businesses make location decisions. Examples: the US, the largest market for textile products in the world, used to be the largest manufacturer of textile products; New York is the financial center of the US and, to a significant degree, the world. Who could have predicted that the largest bank in the US would be headquartered in Charlotte? Does place matter in the Knowledge Economy? If so, how?
Place has lost its importance in the digital world. It used to be that if you wanted to work in finance, you went to New York. If you wanted to work in movies, you went to Hollywood. These associations of work with place have changed to a significant degree. “ Even such centers of gravity as Wall Street, Hollywood, and Silicon Valley, though possessing functions and allures that are mutually reinforcing, are increasingly not mandantory for the building of a successful firm or career in finance, film, or the computer industry.”
Some experts, like William Mitchell, forecast a world where our “community” won’t be the people who live near us, but rather a group of people in the digital world with whom we share common interests.
Despite clear evidence that the World is Flat and that place doesn’t matter in certain industries, there is also evidence that place has become increasingly important, particularly for businesses requiring a highly educated, technically sophisticated workforce.
Why are some cities growing in income and wealth and others are in serious decline?
What are the attributes of place that are now critical in the knowledge economy?
The evidence is that manufacturing or service work can be performed anywhere in the world where the costs are lowest. Certain higher-lever economic activities don’t follow this pattern. Instead, these activities tend to cluster in a relatively small number of urban locations. Why do higher level economic activities cluster?
Clustering of creative people and companies has powerful effects on productivity and innovation.
According to Richard Florida, the clustering of talented and creative people, “the Creative Class”, is the primary determinant of economic growth. How does this clustering occur?
Earlier this year, Richard Florida published a new book entitled Who’s Your City? In it, Florida emphatically argues that the world is, in fact, anything but flat.
To demonstrate that the world is not flat, Florida begins with a map showing the distribution of the world’s population.
Measured by patents granted worldwide.
Proxy for scientific research and discoveries. Note: Japan leads the world in commercial innovation but is dependent on scientific breakthroughs occurring elsewhere.
Florida defines a mega-region as “a new, natural economic unit that results from city-regions growing upward, becoming denser and growing outward and into one another.” The mega-region, not the city, not state and not the nation is the fundamental economic unit of the knowledge economy.
Not on list: Toronto, San Francisco & Silicon Valley, Dallas-Austin-San Antonio, Houston-New Orleans, Florida, Paris, Shanghai, Taipei, Bejing
A world-wide competition is taking place among mega-regions for income and wealth in the knowledge economy.
Sound familiar? West Bend sounds like a nice community. Why is West Bend losing young talent to Milwaukee?
So, apparently the young knowledge workers would rather live in Milwaukee than West Bend. What if there are no jobs in Milwaukee? Cities with the highest concentrations of young adults 25-34: Austin, Atlanta, Raleigh-Durham-Chapel Hill, Dallas, Charlotte.
This is a fundamental shift in how businesses determine the place they will locate. Attracting a talented workforce will require businesses to locate or relocate to where the talented people want to live.
The competition for young knowledge workers will determine which cities succeed in the knowledge economy.
This does not bode well for cities and regions that seem to believe that they will be able to reattract young people who have moved away for fun and adventure once they hit their thirties and decide to settle down and start families. The numbers simply don’t add up. Places that lose young people will never be able to recoup, since moving slows down with age. The winning places are the ones that establish an edge early on, by attracting residents in their mid-twenties.” I think most people will agree that Rock Hill is a community, like West Bend, that tends to lose its young talent to other communities. In order to be successful in the knowledge economy, we have to change this. What are our resources for doing this?
The presence of Winthrop University in Rock Hill provides a deep resource of talented young people. Few of them choose to stay in Rock Hill after graduation. In fact, few of them even get to know Rock Hill during their 4 (or more) years here. Rock Hill isn’t yet the classic college town.
Despite the importance of young knowledge workers in the knowledge economy, very few communities have consciously focused on creating an environment that is welcoming to recent college graduates.
The presence of Winthrop in Rock Hill offers many other opportunities for success in the knowledge economy. We haven’t done a good job in the past of capitalizing on this opportunity. When was the last time you saw a Winthrop student in having lunch in downtown Rock Hill, or attending a festival or event?
Here’s a summary of what we know about successful places in the knowledge economy. Can Rock Hill be one of these places?
In 2008, Next Generation Consulting surveyed young professionals in eight cities. These interviews and focus groups revealed that they choose where to live based on the following seven indices, listed in order of importance. Can we build economic development strategies for the knowledge economy on these foundations? “ Next Cities™ are places with the assets and amenities that attract and retain a young educated work force. They have bustling city centers, walkable neighborhoods, diverse career opportunities, and vibrant art and music scenes.”
..Even large cities are increasing their efforts to retain students after graduation: Campus Philly, for example, is a leading effort to match Philadelphia’s more than 90,000 college students with local jobs and improve quality of life in line with their particular needs.”
Opportunities for clusters in certain areas: Graphic design, web design (Springs Creative, Lavalla Maddox, Insignia Design, Revenflo, Barry Grant, Winthrop) Financial services (Williams and Fudge, Todd, Bremer & Lawson, ECO Financial, Inc.) Marketing Services (The Start Group, Lavalla Maddox, Revenflo, Titan, Inc., Insignia Design) Visual Arts (Arts Center, Gettys Center, Gallery Up, Pottery Center numerous artist studios, public art) Performing Arts (Community Performance Center, School of Ballet, RH Community Theater, Old Town Amphitheater) High-tech manufacturing and prototyping (3D Systems, others?) Telecommunications (Comporium, others?)
Old Town Rock Hill is listed as the 6 th largest Knowledge Worker Meetup Group in the world . (Ahead of us are groups from Toronto, Japan and New York)
Knowledge workers care more about where they live than where they work. They are attracted to a particular living-working-learning environment. One author speaks of the development of “knowledge cities” in which “the information and knowledge architecture is at least as important as, and possibly more important than, the physical architecture….”
The Knowledge Worker and the Local Economy Old Town New World Conference October 23, 2009
What experts say: <ul><li>“The wireless revolution is ending the dictatorship of place in a more profound way.” </li></ul><ul><li>(The Economist, 1999 as quoted in Who's Your City, p. 18) </li></ul>
<ul><li>“ By its very nature, the emerging postindustrial economy – based primarily on information flows in an increasingly seamless net – frees location from the tyranny of past associations...Increasingly, companies and people now locate not where they must but where they will.” </li></ul><ul><li>(Kotkin, The New Geography, p. 5) </li></ul>
<ul><li>“ Ultimately this leads to a notion that, over time, our compelling connections will be not with our physical neighbors but with those with whom we share business, cultural, or other interests. The “cities of the future,” argues William Mitchell, are by nature antispatial: “The worldwide computer network – the electronic agora – subverts, displaces and radically redefines our notions of gathering place, community and urban life.” (Kotkin, The New Geography, p. 6) </li></ul>
Conclusions <ul><li>Place doesn’t matter – work can be performed anywhere. The lowest-cost producer wins. </li></ul><ul><li>If Place doesn’t matter, then cities and regions possessing specialized skills and resources in support of a key industries (Detroit, New York, Hollywood, etc.) may be threatened. </li></ul><ul><li>Key relationships (“communities”) will be based on digital communications not spatial relationships. </li></ul><ul><li>What will be the role of cities in the Knowledge Economy? </li></ul>
The Location Paradox <ul><li>Place Doesn’t Matter </li></ul><ul><li>Certain places are experiencing unprecedented levels of growth in population, incomes and wealth </li></ul>What is the solution to this paradox?
<ul><li>“ In truth, the importance of geography is not dwindling to nothing in the digital era; in fact, quite the opposite. In reality, place – geography – matters now more than ever before. If people, companies, or industries can truly live anywhere, or at least choose from a multiplicity of places, the question of where to locate becomes increasingly contingent on the peculiar attributes of any given location.” </li></ul><ul><li>(Kotkin, The New Geography, p. 6) </li></ul>
<ul><li>“ The reality is that globalization has two sides. The first and more obvious on is the geographic spread of routine economic functions such as simple manufacturing or service work (for example, making or answering telephone calls). The second, less obvious side to globalization is the tendency for higher-level economic activities such as innovation, design, finance, and media to cluster in a relatively small number of locations.” (Florida, Who's Your City, p. 19) </li></ul>
<ul><li>“Creative people and companies cluster because of the powerful productivity advantages economies of scale and knowledge spillovers such density brings...geographic concentration remains a prerequisite for cutting-edge innovation.” (Florida, p. 30) </li></ul>
<ul><ul><li>“When people – especially talented and creative ones – come together, ideas flow more freely, and as a result, individual and aggregate talents increase exponentially: the end result amounts to much more than the sum of the parts. This clustering makes each of us more productive, which in turn makes the place we inhabit even more so – and our collective creativity and economic wealth grow accordingly...the multiplier effects that stem from such talent clustering [are] the primary determinant of economic growth .” (Florida, p. 66) </li></ul></ul>
The World Is Not Flat
Economic Activity in a Spiky World
Innovation in a Spiky World
Star Scientists in a Spiky World
Most of world’s production (value creation) takes place in a few dozen mega-regions
The Top 40 Mega-Regions Share of the World’s: Population Economic Activity Patents Scientists 18% 66% 86% 83%
<ul><li>“The world economy of the future is likely to take shape around an even smaller number of mega-regions and specialized centers, while a much larger number of places will see their fates worsen as they find themselves struggling just to stay in the game.” </li></ul><ul><li>(Florida, p. 75) </li></ul>
Winners and Losers <ul><li>Among mega-regions </li></ul><ul><li>Within mega-regions </li></ul><ul><ul><li>Detroit and Cleveland (Chi-Pitts mega-region) </li></ul></ul><ul><ul><li>Buffalo (Tor-Buff-Chester mega region) </li></ul></ul><ul><li>What about places like Rock Hill, Gastonia, Hickory and Spartanburg? </li></ul>
West Bend, Wisconsin (Population 30,000, 39 miles from Milwaukee) <ul><li>“ Despite the fact that work can be done nearly anywhere, only a handful of cities are benefiting from global digitization. For example, simply being able to work from West Bend, Wisconsin, does not mean that employers and their next generation work force want to. This is not to dismiss West Bend’s charm: one of the authors of this article was raised there and loves to visit. However, West Bend, like many formerly vibrant towns, is losing young talent and becoming a bedroom community to Milwaukee, its closest Next Cities™ regional neighbor.” </li></ul><ul><li>(Area Development Online, “Where are the Next Cities?”) </li></ul>
<ul><li>“Young knowledge workers said that where they lived was more important than where they worked.” </li></ul><ul><li>(Area Development, “Where are the Next Cities?”) </li></ul>
What’s important to young knowledge workers? <ul><li>Why young people move: “…while economic growth is important, highly educated young adults place a “higher priority on quality of life factors.” </li></ul><ul><li>( The Young and the Restless by Joe Cortright and Carol Coletta, quoted by Florida, p. 228) </li></ul>
<ul><li>With the aging of the Baby Boom generation, the number of workers aged 35-44 is actually declining. “In light of these trends, the next generation of knowledge workers will be able to leverage their reduced work force numbers to influence where businesses locate or relocate knowledge work. Unlike previous generations of knowledge workers, who chose where to live based on the availability of job opportunities, the next generation will decide where to work based on where they want to live. The next generation can, in the words of The Wall Street Journal, “pick a place to live and then find a job.” </li></ul><ul><li>(Area Development, “Where are the Next Cities?”) </li></ul>
<ul><li>Only a handful of cities had a net in-migration of young knowledge workers, while 90 percent of America’s cities suffered a net loss. In other words, cities that can attract and retain these highly mobile young knowledge workers will reap economic gains.” </li></ul><ul><li>(Area Development Online, “Where are the Next Cities?”) </li></ul>
<ul><li>“ The likelihood that one will move peaks at around age twenty-five and then declines steeply…For cities and regions, it means that places that attract young people end up being the winners in the nationwide competition for talent. (Florida, p. 227) </li></ul>
<ul><li>“So, one place that’s a big draw for recent college graduates is the classic college town . </li></ul><ul><li>(Florida, p. 242) </li></ul>
<ul><li>“When people rated their city’s openness to various groups, guess which group came in at the bottom of the list? …young recent college graduates looking to enter the job market… Nearly 45 percent of survey respondents said that their communities were either “bad” or “very bad” places for recent college graduates while just 7.3 percent said they were “very good.” </li></ul><ul><li>(Florida, p. 177) </li></ul>
<ul><li>“ University cities represent a key engine for our nation’s economic emergence. But perhaps more importantly, they serve as vibrant centers of liveability, built upon partnerships between higher education institutes and civic institutions; between academic researchers and businesses, and between students and the community.” </li></ul><ul><li>(Michael Scott, Newgeography.com, 00979) </li></ul>
Tenets of Place In the Knowledge Economy <ul><li>Talented, creative people can choose to live and work anywhere </li></ul><ul><li>Talented, creative people tend to cluster in diverse, compact urban places that encourage informal interaction and exchange of ideas and which provide desired lifestyle amenities. </li></ul><ul><li>Clusters of talented, creative people enhance productivity, innovation (and wealth creation) in the communities where they reside </li></ul><ul><li>The ability of communities to attract recent college graduates based on lifestyle considerations is critical to economic growth. </li></ul><ul><li>The presence of universities is an important determinant of where young, creative people cluster. </li></ul>
Creating an Environment for Young Knowledge Workers <ul><li>Cost of lifestyle </li></ul><ul><li>Employment opportunities </li></ul><ul><li>Vitality (air and water quality, green space, recreation) </li></ul><ul><li>After hours (places to go, things to do) </li></ul><ul><li>Learning (educational opportunities) </li></ul><ul><li>Around town (walkability, transit, commuting) </li></ul><ul><li>Social Capital (diversity, crime, civic engagement) </li></ul>Source: Next Generation Consulting, www.areadevelopment.com
<ul><li>How should our economic development programs change for success in the knowledge economy? </li></ul><ul><li>Some initial ideas… </li></ul>
<ul><li>The College Town Action Plan: </li></ul><ul><li>Create a dynamic social, cultural, living and working environment in Old Town Rock Hill that is appealing to college students and young professionals. </li></ul><ul><li>Create knowledge economy economic development strategies (including public policy initiatives as needed) focused on attracting, educating and employing talented young professionals in the Rock Hill community. </li></ul>1. Renew partnerships with Winthrop to focus on the knowledge economy
<ul><li>The College Town Action Plan: </li></ul><ul><li>Identify resources as well as potential partnerships and collaborations to invest in plans, infrastructure and amenities that support the development of knowledge economy businesses in the vicinity of the Winthrop campus (including Cherry Road and the Textile Corridor). </li></ul><ul><li>Create social, cultural, transportation and development linkages between the Winthrop campus and downtown Rock Hill that promote and physically represent the interaction between the University and the community. </li></ul>
<ul><li>Refocus downtown development efforts on creating an environment that is attractive to students and young professionals </li></ul><ul><li>Housing </li></ul><ul><li>Arts </li></ul><ul><li>Events </li></ul><ul><li>Inexpensive dining </li></ul><ul><li>Entertainment </li></ul>
<ul><li>Internships, fellowships, artist in residency, entrepreneurship support </li></ul><ul><li>Support in job placements </li></ul><ul><li>“Campus Philly” </li></ul><ul><li>Create strategies for retaining Winthrop graduates in Rock Hill </li></ul>
“Campus Philly is a 501(c) 3 non-profit organization fueling economic growth by encouraging college students to study, explore, live and work in the Greater Philadelphia tri-state region.”
5. Capitalize on Outdoor Recreation <ul><li>Cherry Park </li></ul><ul><li>Manchester Meadows </li></ul><ul><li>Tennis Center </li></ul><ul><li>Cycling and Outdoor Center of the Carolinas </li></ul><ul><li>Bicycle and pedestrian trails </li></ul>
Can Rock Hill become a center for the knowledge economy?
“ Ultimately, the viability of place…relies on the measure of commitment among individuals, especially those who are in a position to lead.” (Joel Kotkin, The New Geography )
<ul><li>What matters most to singles in choosing a place to live? </li></ul><ul><li>“The number of other singles” </li></ul><ul><li>“Great job prospects” </li></ul><ul><li>(Forbes survey of best places for singles, quoted in Florida, p. 227) </li></ul>
What determines which cities will succeed? <ul><li>“ Knowledge workers are highly mobile, and are tending to be more loyal to their peer communities than to an employer… The key to success is the understanding that an attractive work environment alone is not sufficient to attract, retain and grow an increasingly global, and mobile, knowledge workforce. A total environment that integrates key elements of living, working and learning is needed. </li></ul><ul><li>(Murray and Greenes, “From the knowledge worker to the knowledge economy: Six billion minds co-creating the future”, www.emeraldinsight.com ) </li></ul>
<ul><li>“For recent college graduates, one obvious choice is to stick around where you went to school, at least for a year or two. Most young graduates eventually move on, but many do choose to stay for at least a while – to engage in research, hang out with friends, or take advantage of a school-related job opportunity.” </li></ul><ul><li>(Florida, p. 241) </li></ul>