Transcript WHERE IS THE KNOWLEDGE ECONOMY?

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
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?
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 living—more than
land, than tools, than labor. Today’s most technologically
advanced economies are truly knowledge-based.
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. It’s 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?
When they are not
naturally connected!
•
But still insure
Spontaneity, which
means creativity
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 works—the 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.
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
The World is Spiky: Patents
Map by Tim Gulden, University of Maryland.
From Richard Florida, “The World is Spiky,”
The Atlantic Monthly, October 2005
World Knowledge Indicators
College degree holders, total
Now
Then
212 million
82 million
1980
9.1%
5.3%
1980
9.1 million
4.3 million
1981
Doctoral degree graduates
293,085
114,808
1983
Science and engineering doctorates
154,710
57,217
1983
10,096
125
1985
8.5 million
3.8 million
1980
318
160
1980
5.1 million
1.9 million
1985
$667 billion
$276 billion
1981
698,726
466,419
1988
all 3.1 billion
0
1990
Wikipedia articles
5.3 million
0
2001
Patent applications
1.1 million
701,151
1985
$109.8 billion
$10.8 billion
1980
Share of population, ages 25+
Bachelor's degree graduates
Science and engineering doctorates in China
College professors worldwide
Think tanks
R&D researchers
Research and development spending
Scientific articles published
Human genome base pairs decoded
Licensing revenue
Lessons from the U.S. Economy
U.S. EMPLOYMENT: 1940
Non-Agricultural
GVT
13%
MIN
3%
MFG
34%
FIN & SVC
14%
TRADE
22%
CONST
5%
TPU
9%
U.S. EMPLOYMENT: 2006
MFG
11%
CONST
5%
TPU
4%
SVC &FIN
45%
TRADE
17%
MIN
0%
1%
GVT
17%
Percent Distribution of
US Nonfarm Employment
by Industry
December 2006
Government
16.2%
Construction
5.6%
Manufacturing
10.5%
Leisure and
Hospitality
9.6%
Education and Health
Services
13.1%
Professional and
Business Services
12.8%
Trade, Transportation
and Utilities
19.2%
Information
2.3%
Financial Activities
6.2%
Source: Bureau of Labor Statistics
20000
20000
18000
18000
16000
16000
14000
14000
12000
10000
SERVICES
MANUFACTURING
12000
10000
8000
8000
6000
6000
4000
4000
2000
2000
0
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Thousand Svcs.
Thousand Mfg.
EMPLOYMENT: MANUFACTURING AND BUSINESS & PROFESSIONAL SERVICES
1990-2006
Wages in Services & Manufacturing
1990-2006
21
25
23
19
21
17
$Wages
SERVICES
17
15
15
13
13
MANUFACTURING
11
11
9
9
7
7
5
5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
$Wages
19
Real Per Capita Disposable Personal Income
2005 dollars
$35,000
$30,429
28137
$30,000
25374
25036
23368
$25,000
19416
$20,000
20341
16828
14692
$15,000
12560
11420
9925
$10,000
10909
$7,334
$5,000
$0
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Since 1940
U.S. Population has doubled.
Real per capita Income has quadrupled.
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
1925
1920
1915
1910
1905
1900
1895
1890
1885
1880
1875
1870
1865
1860
1855
1850
1845
1840
1835
1830
1825
1820
U.S. Immigration to Naturalization
1820 to 2005
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Life Expectancy at Birth: 1930-2000
All race and both genders
77
80
68.2
70
69.7
70.8
73.7
75.4
62.9
59.7
60
50
40
30
20
10
0
1930
1940
1950
1960
1970
1980
1990
2000
TOTEM OF HUMAN TALENTS
HUMAN CONNECTIVITY
CREATIVITY
ANALYTICAL
REASONING
FORMULAIC
INTELLIGENCE
MANUAL DEXTERITY
BRUTE FORCE
Source: Michael Cox. Federal Reserve
Bank of Dallas
..1
..1940
..1947
..1950
..1952
..1957
..1959
..1962
..1964
..1965
..1966
..1967
..1968
..1969
..1970
..1971
..1972
..1973
..1974
..1975
..1976
..1977
..1978
..1979
..1980
..1981
..1982
..1983
..1984
..1985
..1986
..1987
..1988
..1989
..1990
..1991
..1992
..1993
..1994
..1995
..1996
..1997
..1998
..2999
..2000
..2001
..2002
..2003
..2004
00
5
Percent of U.S. Population 25 or Older
with 4 or more Years of College
1940-2005
30.0
25.0
20.0
15.0
10.0
5.0
0.0
dS
d
ala
nd
ma
ny
d
Fr
an
ce
No
rw
ay
Ge
r
er
lan
Ko
re
a
Ze
Sw
itz
Ne
w
lan
Sp
ai n
Fin
k
s
d
tat
e
lan
en
De
nm
ar
Un
ite
Ir e
da
pa
n
Sw
ed
Ja
Ca
na
Share
Share of Adults 25-34 with Education beyond High School, 2004
Sample of OECD Countries
60
50
40
30
20
10
0
GROWTH IN MANUFACTURING GDP: 2000-2005
INDUSTRY SPECIALIZATION INDEX: 2005
(100 is same as nation. Greater than 100
Is more specialized.)
The Agriculture Miracle:
An Example of Knowledge at Work
70
60
Share of Labor Force in U.S. Agriculture
1840 - 2000
50
40
30
20
10
0
1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Source: 1930 to 2000, Economic Report of President. 1840 to 1870. Jonathan Hughes,
American Economic History, 1990. 1870, 1910-1929. Stephen Broadberry. Agriculture and
Structural Change: Lessons from the U.K. Experience in an International Context, 2006.
Other years are estimates.
Number of U.S. Farms: 1910-2000
Real Product Prices Received by Farmers
Farm Income as Percent of Non-Farm Income
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 mutation—if I may use that
biological term—that 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
The Changing Industrial Scene
PRODUCTION-BASED INDUSTRY RANKINGS
What’s Hot and What’s Not
1972
1980
Iron/Steel
Apparel
Machinery
Food
Paper
Fab Metal
Chemicals
Autos
Printing
Plast/Rubb
Iron/Steel
Apparel
Paper
Fab. Metal
Paper
Food
Chemicals
Printing
Autos
Plast/Rubb
1990
2000
Printing
Apparel
Plast/Rubber
Food
Chemicals
Iron/Steel
Fab. Metal
Machinery
Plast/Rubb
Autos
Comp/El
Autos
Food
Fab. Metal
Machinery
Food
Chemicals
Printing
Paper
Iron/Steel
2004
2006
Comp/El
Comp/El
Autos
Machinery
Food
Aircraft
Chemicals
Petro/Coal
Iron/Steel
Food
Plast/Rubber Chemical
Machinery
Fab. Metal
Fab. Metal
Minerals
Paper
Elec. Eq’t.
Printing
Iron/Steel
Source: Economic Report of the President, 2005, and Federal Reserve Board.
19
19 19M
2 1
19 2M
1
19 25M
19 28M1
3 1
19 1M
1
19 34M
3 1
19 7M
1
19 40M
19 43M1
4 1
19 6M
1
19 49M
19 52M1
5 1
19 5M
1
19 58M
6 1
19 1M
1
19 64M
19 67M1
7 1
19 0M
1
19 73M
19 76M1
7 1
19 9M
1
19 82M
19 85M1
8 1
19 8M
1
19 91M
9 1
19 4M
1
20 97M
20 00M1
0 1
20 3M
06 1
M
1
Index
U.S. Manufacturing Output
1919-2006
Federal Reserve Index 2000=100
140
120
y = 4.5606e0.0032x
R2 = 0.9694
100
80
60
40
20
0
Percentage Change in Manufacturing Employment
1992-2003
5
-15
-20
-25
-30
Data for The Netherlands and China are for 1990-2002.
Source: W.A. Ward, Manufacturing Productivity and the Shifting U.S.,
China, and Global Job Scenes, 1990-2005. Center for International Trade,
Clemson University, Clemson, SC.
Japan
Australia
Germany
China
U.K.
U.S.
Belgium
Korea
France
Sweden
Italy
Taiwan
Netherlands
Rate
-10
Norway
-5
Canada
0
Looking for the New
Economy
US Unemployment Rate by
Educational Attainment
December 2005
Education is the key to labor market success –The unemployment rate for persons
with a bachelor’s degree or higher held steady at 2.2%.
7.5
Less than a HS Diploma
4.6
HS graduate, no college
Some college or associate
degree
3.9
Bachelor's degree and
higher
2.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
percent
Employment status of the civilian population 25 years and older by educational attainment
Source: Bureau of Labor Statistics
AVERAGE STATE GDP GROWTH: 2000-2005
Nominal Chained Dollars
STATE GDP FROM PROFESSIONAL &
TECHNICAL SERVICES: 2005
GDP GROWTH FROM PROFESSIONAL & TECHNICAL
SERVICES: 2000-2005
PERCENT OF POPULATION 25 AND OVER WITH A
COLLEGE OR PROFESSIONAL DEGREE IN 2000
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
AZ
NM
MO
KY
VA
MD
NC
TN
OK
NJ
RI
CT
DE
WV
KS
MA
MI
WY
CA
VT
NH
AR
SC
MS
AL
GA
TX
LA
AK
FL
Beyond 35.01%
31.01% to 35%
27.01% to 31%
HI
23.01% to27%
19.01% to 23%
Voting with their Feet
Voting with their Feet
NET 1990-2000 INTERNAL MIGRATION,
PERCENT OF 2000 POPULATION
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
NM
NJ
RI
CT
DE
WV
MO
VA
KY
MD
NC
TN
OK
AZ
MA
MI
WY
CA
VT
NH
AR
SC
MS
AL
GA
TX
LA
AK
FL
6.01% plus
2.01% to 6.00%
HI
0.01% to 2.00%
-2.99% to 0.00%
Below -3.00%
NET 1995-2000 INTERNAL MIGRATION
OF PEOPLE WHO WERE 20 TO 34,
PERCENT OF 2000 POPULATION
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
AZ
NM
MA
MI
WY
CA
VT
NH
DE
WV
MO
VA
KY
MD
NC
TN
OK
NJ
RI
CT
AR
SC
MS
AL
GA
TX
LA
AK
FL
0.61% plus
0.171% to 0.60%
HI
-0.34% to 0.17%
-0.8% to -0.35%
Below -.8%
NET 1995-2000 INTERNAL MIGRATION OF PEOPLE WHO WERE 25-39, SINGLE &
COLLEGE EDUCATED
PERCENT OF 2000 POPULATION
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
NM
NJ
RI
CT
DE
WV
MO
VA
KY
MD
NC
TN
OK
AZ
MA
MI
WY
CA
VT
NH
AR
SC
MS
AL
GA
TX
LA
AK
FL
0.09% plus
0% to 0.089%
HI
-0.1% to 0%
-0.2% to -0.11%
Below -0.2%
MODELING MIGRATION
Modeling Migration
SHARE MOVING = F(CREATIVTY, FREEDOM, PBS, INCOME)
Migration = F(Creativity, Freedom,
PBS, Income)
CREATIVITY INDEX 2003 RANKINGS
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
AZ
NM
MA
MI
WY
CA
VT
NH
DE
WV
MO
KY
VA
MD
NC
TN
OK
NJ
RI
CT
AR
SC
MS
AL
GA
TX
LA
AK
FL
1 to 10 (10 states)
11 to 20 (10)
21 to 30 (10)
HI
31 to 40 (10)
41 to 50 (10)
U.S. ECONOMIC FREEDOM INDEX, 1999
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
AZ
NM
MA
MI
WY
CA
VT
NH
DE
WV
MO
KY
VA
MD
NC
TN
OK
NJ
RI
CT
AR
SC
MS
AL
GA
TX
LA
AK
FL
1 to 10 (10 states)
11 to 20 (10)
21 to 30 (10)
HI
31 to 40 (10)
41 to 50 (10)
U.S. FREEDOM FISCAL INDEX, 1999
WA
M
E
ND
MT
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
AZ
NM
MA
MI
WY
CA
VT
NH
DE
WV
MO
KY
VA
MD
NC
TN
OK
NJ
RI
CT
AR
SC
MS
AL
GA
TX
LA
AK
FL
1 to 10 (10 states)
11 to 20 (10)
21 to 30 (10)
HI
31 to 40 (10)
41 to 50 (10)
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.
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?
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.