cedp the knowledge economy kenneth e. corey and mark i. wilson michigan state university march 19,...
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CEDP
THE KNOWLEDGE ECONOMY
Kenneth E. Corey and
Mark I. Wilson
Michigan State University
March 19, 2004
CEDP
Knowledge Economy
• An economy that relies increasingly on technology and knowledge as factors of production & wealth creation – in addition to labor & capital
• Technology & knowledge are transforming wealth-creation work from physically-based functions to knowledge-based functions
CEDP
Knowledge Economy
• Pre-eminence of knowledge and information as drivers of economic growth and development
• Part of the structural change process, and the changing significance of occupations and industries
• Challenge for planners is to understand the many dimensions and possible applications of the knowledge economy
CEDP
Economic Change
• There are jobs, and there are jobs• Job loss due to technology, outsourcing
and economic change• Loss of manufacturing jobs and low
wage/low skill technology jobs
• High-paying IT occupations generally have expanded since 1999
• More than 70,000 computer programmers lost jobs since 1999; More than 115,000 higher paid computer software engineers gained since 1999
CEDP
Economic Change
• Each qtr, US economy generates more jobs than are projected to be lost to offshore outsourcing over the next decades
• Outsourced and offshore jobs also benefit US based firms
• Underscores the need to understand how firms are changing the way they function
CEDP
Development Defined
• A widely participatory process of social change in a society intended to bring about both social and material advancement (including greater equality, freedom, and other valued qualities) for the majority of people through their gaining greater control over their environment. (Rogers, Communication Research, 1976, P. 225)
CEDP
EDA Investment Guidelines
• Market based
• Proactive in nature & scope
• Plan beyond immediate horizon, anticipate economic changes & diversify local & regional economy
• Maximize attraction of private sector investment & would not otherwise come to fruition absent EDA’s investment
• Have a high probability of success
• Higher-skill, higher-wage jobs are created
• Maximize return on taxpayer investment
CEDP
World Knowledge Regions
Biotech/Pharma Specialization
Tech Clusters: Brennan & Smart Zones
Biosciences Firms Specialization
Tertiary Education
Empty Areas/New Areas/New Spaces
Mediated by E-Responsive Regions
Mediated by Spatial Distribution of Distressed Areas
Hierarchy of Multiple Layers
CEDP
E-Business Spectrum: In the Information Age and the Global Knowledge
EconomyProduction Functions Consumption
(e-commerce) FunctionsAmenity and Quality
of Life Factors
Science & Technology-driven Research & Development (C)
Online Procurement: B2B & B2G (D)
Social, Cultural and Institutional Activities (C & D)
Commercialization of Products & Services (C)
Online Retailing: B2C & G2C (D)
Natural Environmental Attributes (C)
Business & Producer Services (C) & Manufactured Products (D)
Value-Added Complementarities between Electronic and Physical Channels (C & D)
Educational and Human Capital Capacity Building and Quality (C & D)
The functions and factors that are characterized by clustering and spatial concentration are identified with a “C.” Those that are characterized by dispersion and spatial deconcentration are identified with a “D.”
Relations & Processes
CEDP
Responsiveness
• How well prepared are Michigan’s cities and regions?
• The importance of recognizing change and preparing for new conditions
• ‘Learning Regions’ are areas where residents and firms are upgrading skills and competitiveness
• Responsiveness is built into institutions and public and private organizations
CEDP
Regional E-Readiness
• Survey of directors of Michigan’s 14 planning regions by James Brueckman
• Many recognized the importance of technology, but many not well versed in its characteristics.
• Need for increased awareness and ICT oriented strategic planning.
CEDP
Economic Development
• Review of web sites of Michigan’s 83 counties and 14 planning regions for economic development content by Karan Singh
• 25% of counties and 14% of planning regions did not have a web presence
• Based on their web sites, counties classified as leaders (8%), contenders (13%), followers (24%) and laggards (46%)
CEDP
E-Responsiveness
• Combine e-Readiness and Web-based economic development effectiveness to produce the e-responsiveness measure
• Most e-responsive areas in Michigan are in the southern and most populous regions of the state
• Least e-responsive areas bracket north and south and nearby the most populous and developed southern corridor of the state
CEDP
Intelligent Development
• Draws on contemporary research and theory
• Aware of best planning practice• Investments in places and regions for
wealth creation, higher wage employment and improved quality of life
• Development planning, therefore, is “intelligent” when these best practices are influenced by appropriate theory and the latest science and technologies are utilized fully to develop a community and region holistically and multifunctionally, including amenity factors
CEDP
Implications
• Scenarios for intelligent development• State/regions as passive or proactive?• Focus not only on success at advanced
end of spectrum, but there is the need for benefits also to serve distressed areas of the state
• Regional planners can engage in intelligent development to plan for more competitive sub-state planning regions in the global knowledge economy
CEDP
Distressed Communities
Geography of Economic Distress
+
Geography of E-Responsiveness
Scenario 1
CEDP
Scenario 1
• Action options:
• Most e-responsive and economically distressed.
• Somewhat e-responsive and Economically distressed.
• Least e-responsive and Economically distressed.
• Most e-responsive and Not economically distressed.
CEDP
Human Resources Linkages
Education Institutions + Performance
+
Enterprise Culture + Smart Zones
+
Distressed Cities
Scenario 3
CEDP
Action
• Invest in human resources and education at all levels
• Develop and sustain an enterprise culture of innovation and entrepreneurship
• Develop transition programs & incentives to address local job dislocations & new job opportunities
• Insist on leveling the playing fields at outsourcing locations abroad as those economies prosper, i.e., wages, environmental & labor regulations, etc.
• In the end, it boils down to creativity & competitive advantage, a diversified local economy and flexibility and adaptability !!
CEDP
Action
• When You Leave Today:• Human Resources & Human Capital• Development of an Enterprise
Culture• Private-Public Partnerships of
Stakeholders: Leadership, Vision, Champion(s)
• Change Mindsets & Governance of Leaders & Planners: Embed Behavior
CEDP
NEXT WAVE PRODUCTIVITY GROWTH
Globalization (jobs being done abroad) of IT software & services (rather than emphasis on hardware) = more cost-effective & superior services; lower prices = greater use of IT & transformation throughout the economy will propel US toward 2nd wave of faster productivity growth = greater demand for IT-related jobs spread throughout the economy
Sufficient skilled workers at home can retain & attract superior jobs
Early IT adopters deepen IT investment & transformation
Extend IT investment & transformation to economic sectors that did not participate in the productivity growth of the 1990s, i.e., health services, construction & SMEs
Interdependence of these factors & dynamics should not be broken by protectionism & insufficient skilled workers at home