WHERE IS THE KNOWLEDGE ECONOMY? A State-by-State Analysis

1. 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

2. 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?

3. 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.

4. The Knowledge Problem The KNOWLEDGE PROBLEMis 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?

5. When they are not naturally connected! But still insure Spontaneity, which means creativity

6. 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.

8. 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

9. The World is Spiky: Patents Map by Tim Gulden, University of Maryland. From Richard Florida, “The World is Spiky,” The Atlantic Monthly, October 2005

11. Lessons from the U.S. Economy

14. Percent Distribution of US Nonfarm Employment by IndustryDecember 2006 Source: Bureau of Labor Statistics

18. Since 1940U.S. Population has doubled.Real per capita Income has quadrupled.

22. Source: Michael Cox. Federal Reserve Bank of Dallas

25. GROWTH IN MANUFACTURING GDP: 2000-2005

26. INDUSTRY SPECIALIZATION INDEX: 2005 (100 is same as nation. Greater than 100 Is more specialized.)

27. The Agriculture Miracle:An Example of Knowledge at Work

31. Number of U.S. Farms: 1910-2000

32. Real Product Prices Received by Farmers

33. Farm Income as Percent of Non-Farm Income

34. 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

35. The Changing Industrial Scene

36. PRODUCTION-BASED INDUSTRY RANKINGS What’s Hot and What’s Not 1972 1980 1990 2000 2004 2006 Iron/Steel Iron/Steel Printing Comp/El Comp/El Comp/El Apparel Apparel ApparelAutosAutosMachineryMachinery Paper Plast/Rubber Food FoodAircraft Food Fab. Metal Food Fab. Metal Chemicals Petro/Coal Paper Paper Chemicals MachineryIron/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 AutosPlast/Rubb Paper Paper Elec. Eq’t. Plast/Rubb Plast/RubbAutos Iron/Steel Printing Iron/Steel Source: Economic Report of the President, 2005, and Federal Reserve Board.

41. Looking for the New Economy

42. US Unemployment Rate by Educational AttainmentDecember 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%. Employment status of the civilian population 25 years and older by educational attainment Source: Bureau of Labor Statistics

43. AVERAGE STATE GDP GROWTH: 2000-2005 Nominal Chained Dollars

44. STATE GDP FROM PROFESSIONAL & TECHNICAL SERVICES: 2005

45. GDP GROWTH FROM PROFESSIONAL & TECHNICAL SERVICES: 2000-2005

46. PERCENT OF POPULATION 25 AND OVER WITH A COLLEGE OR PROFESSIONAL DEGREE IN 2000

47. Voting with their Feet Voting with their Feet