American Economy
Current Affairs: The Next American Economy by William Holstein Technology Clusters and Ecosystems
The U.S. Bureau of Labor Statistics reported an unemployment rate of 9.2 percent in June 2011. That number remains frustratingly consistent each month as millions of Americans struggle to find work.
It’s clear that many of the jobs lost over the last several decades, and during the Great Recession of 2008, are extinct. It’s said that the definition of insanity is repeatedly doing the same thing, yet hoping for different results.
Government stimulus packages and extended unemployment benefits are Band-aids for what, William Holstein, author of the new book, “The Next American Economy-A Blueprint for a Real Recovery,” identifies as structural challenges in America’s economy. Holstein has traveled the United States writing about globalization and economics for major business publications.
How will our country reinvent its workforce for the 21st century, and in what industries? Holstein believes our Economic rebirth lies in technology clusters and ecosystems.
Following is a cross-sectional synopsis of America and how it’s revitalizing itself with technology clusters and ecosystems. Discussed too, are lessons for all Americans Holstein addresses regarding the country’s current Economic challenges.
Technology Clusters
Clusters promote knowledge-sharing and product innovation. They also champion technical and business processes by providing thick networks of formal and informal relationships across organizations. Clusters tend to happen by accident and are difficult to create.
Orlando’s technology cluster is based on computer simulation and modeling; and is rooted in part by U.S. military and major defense contractors’ decision in the 1950s to locate operations in the Orlando area. Disney’s influence in computer gaming and entertainment is also influential.
Every cluster needs an idea factory and Orlando has approximately 140 research and development companies located near universities. “Cross-pollination” of ideas is easily promoted. Simulation and modeling are being used in multiple industries. Healthcare is included, as it uses virtual reality to help rehabilitate stroke victims.
Pittsburgh is reinventing itself from a city of steel (the mills are non-existent today), to one of advanced robotics dominance. Making advanced robotics systems is complex and challenging. They surpass performing repetitive tasks in an auto factory, which is simple, closed loop automation. The nascent industry lacks a Google or Apple presence in the city. But, area universities, engineers and government are among its collaborating cluster, committed to seeing the industry thrive and create new jobs.
San Diego is home to over 600 life science companies and 700 wireless communication companies. In the 1970s, science and medicine seldom collaborated. Today, the blend of biotech know-how and massive computing power helps San Diego dominate in medical research and development, including Genomics.
The opportunity is great for “creative collisions” among university students and faculty, business leaders and area government. San Diego boasts a high percentage of risk-taking entrepreneurs and venture capital funding, which is continually pursued to spark further technological advancements.
Ecosystems
Technology ecosystems are idea factories that embody different scientific and academic disciplines located in close proximity. They include a presence of large, established companies that often invest in start-ups, license their technology, and/or sit on their board of directors. CEOs mentor less experienced leaders of small companies. Government agencies are partners but companies don’t depend on them solely. Angel investors and private sector investors are key players too. There are no guarantees in any ecosystem.
North Carolina has shed its furniture, textiles and tobacco industries. Today it’s a state whose small and medium-sized companies are committed to exporting, which is key to creating Economic growth, wealth, and jobs. Companies that export typically pay higher wages and stay in business longer. Holstein says exporting is a huge untapped Economic potential.
America’s export promotion and finance system is fragmented and ineffectual. North Carolina triumphs, as agencies from the local, state and federal levels are collaborating to promote exporting. They provide information to small business CEOs about trade shows in foreign capitals. They also play matchmaker with potential distributors and customers, and help companies translate their sales materials into local languages, among other things.
Atlanta, like many U.S towns dependent on manufacturing for Economic viability, in the past decades, relied heavily on offshoring and outsourcing to cut costs. Today, the city exemplifies companies that are returning operations to U.S. soil, a trend known, as “backshoring.” It’s especially true of high-end technology, telecommunications and healthcare organizations. Jetting around the world to tweak production and design changes is both costly and time-consuming.
Shipping expenses, complicated logistics, political unrest and the threat of intellectual property theft are also motivators. Atlanta’s ecosystem of regional government, universities and supplier and logistics experts is among those committed to revitalizing the area’s job market.
Cleveland is at the forefront of America’s twelve hundred community colleges for workforce retraining. Cleveland’s strength is retraining displaced workers in their forties and fifties, a demographic hit hard by global employment trends. Current and future workers need a higher set of knowledge-based skills to be competitive; and Cleveland delivers.
The city’s community colleges treat education less as a business, and more as schooling, enabling the unemployed to quickly transition into new viable careers. Cleveland’s educational ecosystem includes local business leaders, and government officials. Community colleges can often be more flexible than four-year academia. Funding flows from federal, state and local government, and private foundations too.
Lessons for All Americans
Holstein concludes that America is the center of a global economy and the competitive pressure is permanent. He believes we’re a culture of creativity, innovation and freedom. Our comparative advantage is our ability to leapfrog over existing technologies by being disruptive.
To maximize that advantage, future generations will need to master math and science-based skills. It’s the only way to thrive in a knowledge-based economy. “This is a defining moment for America, similar to the Great Depression, when we had to summon forth a new vision of our future,” he says. “I truly believe that we can recover the optimism many seem to have lost.”
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