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The New Economy, High Tech Industries and the Role/Limits of State Economic Development Policy. The New Economy. “ The Information Economy ” “ The Digital Economy ” “ The Risk Society ” “ The Knowledge Economy” “ The Network Economy ”. What is New about the New Economy?. - PowerPoint PPT Presentation
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The New Economy
• “The Information Economy”• “The Digital Economy”• “The Risk Society”• “The Knowledge Economy”
• “The Network Economy”
KEYS TO THE OLD AND NEW ECONOMIES
OLD ECONOMY
• Stable
• National
• Hierarchical
• Mass Production
• Capital and Labor
• Mechanization
• Lower Costs
• Go-it-alone Business Culture
• A Skill or Degree
• Adversarial Relations
NEW ECONOMY
• Dynamic
• Global
• Networked
• Flexible Production
• Innovation and Knowledge
• Digitization
• Innovation, Quality, Speed
• Alliances and Partnerships
• Lifelong Learning
• Collaboration
Implications of New Economy for ED
• Importance of Technology to all firms• Innovation• Entrepreneurship• Boost Firm and Worker Learning• Agglomeration or clusters of firms matter• “Entrepreneurial” Strategies, aka growth
from within strategies will drive development
--Progressive Policy Institute
Factors that attract and sustain high-tech industries
Traditional measures• Tax structure
• Compensation costs
• Space costs
• Capital costs
• Business climate
Specific to High-tech• Proximity to research
institutions
• Access to venture capital
• Educated workforce
• Network of suppliers
• Technology spillovers
• Quality of life
-- Milken Institute
High Tech Economic Development
• What is “high-tech” industry?
• How important is to regional economic prosperity?
• Is high tech a silver bullet?
What is High-Tech?
• Varying definitions• Workers
• Scientists, engineers, programmers
• Processes • Manufacturing vs. Services?
• Products• Computers vs. Shoes
3 Organizations Measuringthe New Economy
These three, plus others, have either developed measures of local economic performance in the new economy, or include new economy data points in their measures:• Progressive Policy Institute
• Milken Institute
• Corporation for Enterprise Development
Miliken Institute’s Definition
• High Technology Industries• Spend above average amount of revenue on
R&D
• Employ above average # of technology using occupations (scientists, engineers, etc)
HT Manufacturing Industries
• Drugs
• Computer and Office equipment
• Communications equipment
• Electronic components
• Aircraft
• Guided missiles,
• Search equipment
• Medical supplies, lab instruments
HT Service Industries
• Telephone Communications Services
• Computer programming, data processing
• Motion picture production
• Engineering,
• Research, Development and Testing services
High-tech Industries(1987 SICs)
• 283 Drugs
• 357 Computer equipment
• 366 Communications equipment
• 367 Electronic components
• 372 Aircraft & parts
• 376 Guided missiles
• 381 Navigation equip
• 382 Laboratory apparatus
• 384 Medical instruments
• 481 Telephone services
• 737 Computer programming
• 781 Motion pictures
• 871 Engineering services
• 873 R & D services-- Milken Institute
New Economy Index
• More Expansive View• Industrial and Occupational change
• Globalization
• Dynamism and Competition
• Information Technology Revolution
Missing?
• Significant technology users • Finance (banking and securities)• Insurance• Publishing
• Processes are changing • Back offices (Citibank in SD)• E-publishing • Data bases
• Important consumers of high technology
Knowledge Industries
Producers
• Software
• Bio-tech
• Information technology hardware
Source: PPI
Users• Telecommunications• Banking• Insurance• Advertising• Law• Medicine• Government• Education
High-tech Occupations
Producers
• Engineers
• Scientists
• Programmers
• Designers
Users
• Managers
• Lawyers
• Bankers
• Sales reps
• Accountants
• Teachers-- PPI
High-tech Occupations(BLS Major Groups)
Primary
• Computer & Mathematical
• Architecture & Engineering
• Life, Physical, Social Sciences
Secondary
• Management
• Business & Financial Operations
• Legal
• Education, training, library
• Healthcare practitioners & technical
Who Collects This Stuff?
• Bureau of Economic Analysis
• Bureau of Labor Statistics
• Standard Industrial Classification (SIC), now (NAICS)• I.e. Drugs SIC 283
Why States Focus on HT?
• Boosts long term growth of US economy
• Determines relative economic success of regions
• Source of Good Jobs
4 Limits to High Tech Strategies
• Produce small numbers of jobs
• Geographically concentrated
• Not immune to business cycles
• Public policy tangential to growth of industries?
Small # of Jobs 5.3% Avg
% HT employment
0.00%2.00%4.00%6.00%8.00%
10.00%12.00%
Wyo
ming
Alaska
Tennes
see
Main
e
Wisc
onsin
Rhode
Islan
d
Illinois
New Mexic
oUta
h
New Jers
ey
Mas
sach
uset
ts
% HT employment
High Technology Employment
• U.S. Average is 5.3% (Miliken Institute)
• Only 18 states are above average • (Where are the states?)
Key Factors of Economic Growth
• Science & technology
• World-class education and skills
• Organizational innovation
• Robust competition
• Open global trade
-- Progressive Policy Institute