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WHERE IS THE KNOWLEDGE ECONOMY? A State-by-State Analysis

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PRODUCTION-BASED INDUSTRY RANKINGS. What's Hot and What's Not. 1972 1980 1990 2000 2004 2006 ... Apparel Apparel Apparel Autos Autos Machinery Machinery Paper ... – PowerPoint PPT presentation

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Title: WHERE IS THE KNOWLEDGE ECONOMY? A State-by-State Analysis


1
WHERE IS THE KNOWLEDGE ECONOMY? A State-by-State
Analysis
  • What is it? What are we looking for?
  • How the U.S. Economy has Changed.
  • Knowledgeable Workers
  • Mapping and Modeling the Search

2
Key Concept/Questions
  • Knowledge economy What is it?
  • Why is the KE important?
  • What has happened to industrial economy?
  • How does the emerging knowledge economy show up
    across the U.S.?
  • What explains mobility choice?

3
But wait a minute. What is the Knowledge Economy?
  • A situation where value lies increasingly in new
    ideas, software, services and relationships.
  • An economy characterized by the recognition of
    knowledge as the source of competitiveness, the
    increasing importance of science, research,
    technology and innovation in knowledge creation,
    and the use of computers and the internet to
    generate, share and apply knowledge.
  • oOo
  • For countries in the vanguard of the world
    economy, the balance between knowledge and
    resources has shifted so far towards the former
    that knowledge has become perhaps the most
    important factor determining the standard of
    livingmore than land, than tools, than labor.
    Todays most technologically advanced economies
    are truly knowledge-based.

4
The Knowledge Problem
  • The KNOWLEDGE PROBLEM is the fundamental
    economic problem faced by all human communities,
    from the earliest origins to global community
    life today.
  • The problem is not only about ignorance. Its
    about the challenge of finding and organizing
    existing knowledge.
  • Knowledge is dispersed. Yet human challenges
    are concentrated in time and place.
  • How do we get all those brains connected?

5
  • When they are not
  • naturally connected!
  • But still insure
  • Spontaneity, which
  • means creativity

6
Every individual...generally, indeed, neither
intends to promote the public interest, nor knows
how much he is promoting it. By directing that
industry in such a manner as its produce may be
of the greatest value, he intends only his own
gain, and he is in this, as in many other cases,
led by an invisible hand to promote an end which
was no part of his intention. Adam Smith.
Inquiry into the Nature and Causes of the Wealth
of Nations. 1776. Book IV, Ch. 8. Guiding any
invisible hand there must be an invisible
brain. Its neurons are people. The more
neurons there are in regular and easy contact,
the better the brain worksthe more finely it can
divide economic labor, the more diverse the
resulting products. And, not incidentally, the
more rapidly technological innovations take shape
and spread. Robert Wright. Nonzero The Logic
of Human Destiny. 2000. Ch. 4, 48.
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8
The World is Spiky Light Emissions
Map by Tim Gulden, University of Maryland. From
Richard Florida, The World is Spiky, The
Atlantic Monthly, October 2005
9
The World is Spiky Patents
Map by Tim Gulden, University of Maryland. From
Richard Florida, The World is Spiky, The
Atlantic Monthly, October 2005
10
World Knowledge Indicators Now Then Then
College degree holders, total 212 million 82 million 1980
   Share of population, ages 25 9.1 5.3 1980
Bachelor's degree graduates 9.1 million 4.3 million 1981
Doctoral degree graduates 293,085 114,808 1983
Science and engineering doctorates 154,710 57,217 1983
Science and engineering doctorates in China 10,096 125 1985
College professors worldwide 8.5 million 3.8 million 1980
Think tanks 318 160 1980
RD researchers 5.1 million 1.9 million 1985
Research and development spending 667 billion 276 billion 1981
Scientific articles published 698,726 466,419 1988
Human genome base pairs decoded all 3.1 billion 0 1990
Wikipedia articles 5.3 million 0 2001
Patent applications 1.1 million 701,151 1985
Licensing revenue 109.8 billion 10.8 billion 1980
11
Lessons from the U.S. Economy
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14
Percent Distribution of US Nonfarm Employment
by Industry December 2006
Source Bureau of Labor Statistics
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Since 1940 U.S. Population has doubled. Real
per capita Income has quadrupled.
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Source Michael Cox. Federal Reserve Bank of
Dallas
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GROWTH IN MANUFACTURING GDP 2000-2005
26
INDUSTRY SPECIALIZATION INDEX 2005 (100 is same
as nation. Greater than 100 Is more specialized.)
27
Capitalism in Stages Industrial Financial Knowled
ge
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30
  • Mr. Fords Contribution
  •   
  • A Detroit newspaper as late as 1909 suggested
    that former coachmen made the best chauffeurs
    because of their ingrained habits of obsequious
    obedience they would always know exactly what
    is expected of them by their masters.
  •  
  • It will be to Henry Fords undying glory that he
    ended all that, that he made the automobile
    perhaps the most powerful instrument of
    classlessness, of egalitarian American democracy.
    Any man who owned a car was on equal terms with
    any other. And virtually anyone could afford to
    own a car. The Model T could perform as well as
    any.
  •  
  • As Ford said in one of his moments of raw wisdom,
    unadorned by his hovering ghost writers
  •  Everybody wants to be someplace he aint. As
    soon as he gets there he wants to go right back.
  •  
  • Jonathan Hughes. The Vital Few. New York
    Oxford University Press, 1986, 294.

31
The Wonderful World of Work
32
Agriculture in 20th Century
  • Farm Workers
  • As of Total
  • Year US Employment
  • 1919 32.8
  • 1930 29.8
  • 1940 25.3
  • 1950 18.0
  • 1960 11.5
  • 1970 6.0
  • 1980 3.9
  • 1990 2.6
  • 1999 1.3

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U.S. LEADING INDUSTRIES
  • 1860 1899
    1920
  • 1. Cotton Crude Iron
    Motor Car
  • 2. Lumber Packing
    Iron
  • 3. Boots Foundry,
    Mchy. Packing
  • 4. Flour Lumber
    Printing
  • 5. Mens Clothing Flour
    Petroleum
  • 6. Iron Mens
    Clothing Electrical Mchy.
  • 7. Machinery Printing
    Bread
  •  
  •  

35
The Agriculture Miracle An Example of Knowledge
at Work
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Number of U.S. Farms 1910-2000
40
Real Product Prices Received by Farmers
41
Farm Income as Percent of Non-Farm Income
42
Creative Destruction
The opening up of new markets, foreign or
domestic, and the organizational development from
the craft shop and factory to such concerns as
U.S. Steel illustrate the same process of
industrial mutationif I may use that biological
termthat incessantly revolutionizes the economic
structure from within, incessantly destroying the
old one, incessantly creating a new one. This
process of Creative Destruction is the essential
fact about capitalism. Joseph A. Schumpeter.
Capitalism, Socialism and Democracy. 1942
43
The Changing Industrial Scene
44
   
PRODUCTION-BASED INDUSTRY RANKINGS Whats Hot and
Whats Not     1972
1980 1990 2000 2004
2006  
Iron/Steel
Iron/Steel Printing Comp/El
Comp/El Comp/El
Apparel Apparel
Apparel Autos Autos
Machinery
Machinery Paper
Plast/Rubber Food Food
Aircraft Food
Fab. Metal Food
Fab. Metal Chemicals Petro/Coal


Paper Paper
Chemicals Machinery Iron/Steel
Food Fab Metal
Food Iron/Steel Food
Plast/Rubber Chemical


Chemicals Chemicals
Fab. Metal Chemicals Machinery
Fab. Metal Autos
Printing Machinery
Printing Fab. Metal Minerals

Printing Autos
Plast/Rubb Paper
Paper Elec. Eqt.
Plast/Rubb Plast/Rubb Autos
Iron/Steel Printing
Iron/Steel    
Source Economic Report of the
President, 2005, and Federal Reserve Board.
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U.S. Manufacturers are Disintegrating
  • From doing it all to doing one thing
  • And bringing down costs
  • While maintaining world leadership

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Looking for the New Economy
53
US Unemployment Rate by Educational
Attainment December 2005
Education is the key to labor market success The
unemployment rate for persons with a bachelors
degree or higher held steady at 2.2.
Employment status of the civilian population 25
years and older by educational attainment
Source Bureau of Labor Statistics
54
AVERAGE STATE GDP GROWTH
2000-2005 Nominal Chained Dollars
55
STATE GDP FROM PROFESSIONAL TECHNICAL SERVICES
2005
56
GDP GROWTH FROM PROFESSIONAL TECHNICAL
SERVICES 2000-2005
57
PERCENT OF POPULATION 25 AND OVER WITH A COLLEGE
OR PROFESSIONAL DEGREE IN 2000
58
Voting with their Feet
Voting with their Feet
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Source Atlantic Monthly Oct. 2006
62
Source Atlantic Monthly Oct. 2006
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Modeling Migration SHARE MOVING F(CREATIVTY,
FREEDOM, PBS, INCOME)
MODELING MIGRATION
69
Migration F(Creativity, Freedom, PBS, Income)
70
CREATIVITY INDEX 2003 RANKINGS
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73
What did we learn?
  • Go Getters are
  • Highly attracted by larger PBS sector.
  • Repelled by state taxes.
  • Attracted by cool locations.
  • Are not sensitive to high versus low income
    locations.

74
Key Concept/Questions
  • Knowledge economy What is it?
  • Why is the KE important?
  • What has happened to industrial economy?
  • How does the emerging knowledge economy show up
    across the U.S.?
  • What explains mobility choice?

75
Questions for Discussion
  • Information technology people argued that it did
    not matter where we are located. We can be
    linked technically to the world. Knowledge
    economy people say it does matter. Discuss.
  • Develop recommendations for your country that
    will encourage rapid development of a knowledge
    economy.

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