Current Affairs: The Next American Economy by William Holstein Technology Clusters and Ecosystems
The US Bureau of Labor Statistics reported an unemployment rate of 9.2 percent in June 2011. That number remains frustratingly constant each month as millions of Americans struggle to find work.
It is clear that many of the jobs lost in recent decades and during the Great Recession of 2008 have been extinguished. It is said that the definition of insanity is repeatedly doing the same thing, but expecting 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 the US economy. Holstein has traveled the United States writing on globalization and the economy for major trade publications.
How will our country reinvent its workforce for the 21st century, and in what industries? Holstein believes that our economic renaissance lies in technology clusters and ecosystems.
Below is a cross-sectional synopsis of the United States and how it is being revitalized with tech clusters and ecosystems. Lessons for all Americans that Holstein addresses regarding the country’s current economic challenges are also discussed.
Clusters promote knowledge sharing and product innovation. They also defend technical and business processes by providing dense networks of formal and informal relationships between organizations. Clusters tend to happen by accident and are difficult to create.
The Orlando technology group relies on computer modeling and simulation; and has its roots in part in the decision by US military and defense contractors in the 1950s to locate operations in the Orlando area. Disney’s influence on computer games and entertainment is also influential. Every cluster needs an idea factory, and Orlando has approximately 140 research and development companies located near the universities. The “cross pollination” of ideas is easily promoted. Simulation and modeling are used in multiple industries. Medical care is included as it uses virtual reality to help rehabilitate stroke victims.
Pittsburgh is reinventing itself from a city of steel (steel mills don’t exist today) to a dominance of advanced robotics. Making advanced robotics systems is complex and challenging. They beat performing repetitive tasks in a car factory, which is simple closed-loop automation. The nascent industry lacks a Google or Apple presence in the city. But, the area’s universities, engineers and government are among their collaborative group, committed to seeing the industry prosper and create new jobs.
San Diego is home to more than 600 life sciences companies and 700 wireless communication companies. In the 1970s, science and medicine rarely collaborated. Today, the combination of biotechnological expertise and massive computing power helps San Diego master medical research and development, including genomics. The opportunity is excellent for “creative collisions” between university students and professors, business leaders and the government of the area. San Diego has a high percentage of entrepreneurial risk takers and venture capital funding, which is continually sought to fuel new technological advances.
Technological ecosystems are factories of ideas that embody different scientific and academic disciplines located in close proximity. They include the presence of large, established companies that often invest in startups, license their technology, and/or serve on their board of directors. CEOs mentor less experienced leaders of small businesses. Government agencies are partners, but businesses are not solely dependent on them. Angel investors and private sector investors are also key players. There are no guarantees in any ecosystem.
North Carolina has divested itself of its furniture, textile, and tobacco industries. Today it is a state whose small and medium-sized companies are committed to exporting, the key to generating economic growth, wealth and employment. Companies that export tend to pay higher wages and stay in business longer. Holstein says that exporting is a huge untapped economic potential. The US export promotion and financing system is fragmented and ineffective. North Carolina wins as agencies at the local, state and federal levels are collaborating to promote export. They provide information to CEOs of small businesses about trade shows in foreign capitals. They also liaise with distributors and potential customers, and help companies translate their sales materials into local languages, among other things.
Atlanta, like many US cities that depend on manufacturing for their economic viability, has relied heavily on offshoring and outsourcing in recent decades to reduce costs. Today, the city is an example of companies that are returning their operations to US soil, a trend known as “backshoring.” This is especially true for high-tech, telecommunications, and healthcare organizations. Traveling around the world for production modification and design changes is expensive and time consuming. Shipping costs, 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 are among those committed to revitalizing the area’s job market.
Cleveland is at the forefront of the 1,200 community colleges in the United States for job retraining. Cleveland’s strength is reskilling dislocated workers in their forties and fifties, a demographic hard hit by global employment trends. Current and future workers need a greater set of knowledge-based skills to be competitive; and Cleveland delivers. The city’s community colleges treat education less like a business and more like education, allowing the unemployed to quickly transition into viable new careers. Cleveland’s educational ecosystem includes local business leaders and government officials. Community colleges can often be more flexible than the four-year academy. Funding flows from federal, state, and local governments, as well as from private foundations.
Lessons for all Americans
Holstein concludes that the United States is the center of a global economy and competitive pressure is permanent. He believes that we are a culture of creativity, innovation and freedom. Our comparative advantage is our ability to outperform existing technologies by being disruptive. To maximize that advantage, future generations will need to master math and science-based skills. It is the only way to prosper in a knowledge-based economy. “This is a defining moment for America, similar to the Great Depression, when we had to invoke a new vision for our future,” he says. “I really believe that we can regain the optimism that many seem to have lost.”
To stay on top of America’s upcoming economy, visit, http://www.williamholstein.com.