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
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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
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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?
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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.
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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?
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When they are not naturally connected! But still insure
Spontaneity, which means creativity
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Every individual...generally, indeed, neither intends to
promote the public interest, nor knows how much he is promoting it.
[B]y 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. [G]uiding 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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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
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The World is Spiky: Patents Map by Tim Gulden, University of
Maryland. From Richard Florida, The World is Spiky, The Atlantic
Monthly, October 2005
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World Knowledge IndicatorsNowThen College degree holders,
total212 million82 million1980 Share of population, ages
25+9.1%5.3%1980 Bachelor's degree graduates9.1 million4.3
million1981 Doctoral degree graduates293,085114,8081983 Science and
engineering doctorates154,71057,2171983 Science and engineering
doctorates in China10,0961251985 College professors worldwide8.5
million3.8 million1980 Think tanks3181601980 R&D researchers5.1
million1.9 million1985 Research and development spending$667
billion$276 billion1981 Scientific articles
published698,726466,4191988 Human genome base pairs decodedall 3.1
billion01990 Wikipedia articles5.3 million02001 Patent
applications1.1 million701,1511985 Licensing revenue$109.8
billion$10.8 billion1980
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Lessons from the U.S. Economy
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Source: Bureau of Labor Statistics Percent Distribution of US
Nonfarm Employment by Industry December 2006
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Since 1940 U.S. Population has doubled. Real per capita Income
has quadrupled.
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HUMAN CONNECTIVITY CREATIVITY TOTEM OF HUMAN TALENTS Source:
Michael Cox. Federal Reserve Bank of Dallas
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GROWTH IN MANUFACTURING GDP: 2000-2005
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INDUSTRY SPECIALIZATION INDEX: 2005 (100 is same as nation.
Greater than 100 Is more specialized.)
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Capitalism in Stages Industrial Financial Knowledge
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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.
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The Wonderful World of Work
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Agriculture in 20 th Century Farm Workers As % of Total YearUS
Employment 191932.8% 193029.8% 194025.3% 195018.0% 196011.5% 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
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The Agriculture Miracle: An Example of Knowledge at Work
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Number of U.S. Farms: 1910-2000
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Real Product Prices Received by Farmers
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Farm Income as Percent of Non-Farm Income
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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
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The Changing Industrial Scene
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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
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Source: Bureau of Labor Statistics US Unemployment Rate by
Educational Attainment December 2005 Employment status of the
civilian population 25 years and older by educational attainment
Education is the key to labor market success The unemployment rate
for persons with a bachelors degree or higher held steady at
2.2%.
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AVERAGE STATE GDP GROWTH: 2000-2005 Nominal Chained
Dollars
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STATE GDP FROM PROFESSIONAL & TECHNICAL SERVICES: 2005
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GDP GROWTH FROM PROFESSIONAL & TECHNICAL SERVICES:
2000-2005
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PERCENT OF POPULATION 25 AND OVER WITH A COLLEGE OR
PROFESSIONAL DEGREE IN 2000
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.
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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?
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Questions for Discussion 1.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. 2.Develop recommendations for your country that
will encourage rapid development of a knowledge economy.