Supporting & strengthening the knowledge economy

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Supporting & strengthening the knowledge economy

The Next Generation Economy2009 Legislative Policy ConferenceMinneapolis, MinnesotaJanuary 14, 2009


The economic context: Minnesota’s industry

clustersIndustries thrive when clustered….…as a geographic concentration of interdependent companies and institutions that have sufficient scale to generate external economies.


Minnesota has many leading —and growing —

clusters Including:- Medical devices- Alternative energy- Wood products/forestry- Recreation and related products- Creative enterprises- Printing- Health care


Effects of Globalization on Minnesota’s Clusters

1.On organization of clusters

2.On competitive advantage3.On workforce & education4.On importance of place5.On environment


1. Increasing globalization AND localization

Diminishing importance of proximity to supply chains, information, expertise, research, and markets.Retaining importance of of proximity to skills, startups, schools, know how, talent, and schmoozing.


2. Shifting competitive advantage

60s-70sMakingThingsCheaper

80s-90sMakingThingsBetter

2000sMakingBetterThings


“When people talked about innovation in the ‘90s they invariably meant technology. When people speak about innovation today, it is more likely to they mean design. Consumers, who are choking on choice, look at design as the new differentiator”

Business Week , 7-4-05


3. Changing workforce — both supply and demand

• Emerging industries need: - more creative employees - entrepreneurs - amenities to entice and keep talent - educational institutions to prepare the workforce & entrepreneurs - workplace learning opportunities


Benefiting from a more diverse workforce: Languages in Minnesota’s

schools

Helping people and places innovate, collaborate, and prosper. ©RTS, Inc. 2007

Immigrant-founded venture-backed U.S. public companies,

2005

Industry % of immigrant-founded firms

Hi-tech manufacturing

42%

Information technology

24%

Life sciences 21%


4. Place matters more thanever before

• Provides an experience, brings tourists• Establishes an identity/brand• Attracts & retains talent


5. The environment: “a series of great opportunities disguised as

insoluable problems”

Subcluster Jobs, 2008 Projected, 2020

Renewable energy 9,477 16,000

Green products 9,541 11,500

Green services 22,441 27,000

Environmental conservation

11,367 11,700

Total 52,826 66,200

Minnesota’s Green Jobs, 2008-2020

Firsts in Minnesota . . .

“Farmers plan to build the first U.S. biomass ethanol

plant in Luverne.”

"We'll also fund additional research in cutting edge methods of producing ethanol….Not just from corn, but from wood chips and stalks or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years."


Where can Minnesota invest to prosper in the global

economy?1.In supporting sustainable clusters2.In higher education, particularly

its community colleges3.In innovation, including user-driven4.In its arts & artisan-based

enterprises5.In amenities and distinctive places 6.In extending global connections


1. Supporting sustainable clusters

• Minnesota has a number of distinctive clusters in its cities and rural areas.

• Minnesota already has more officials and experts in cluster analysis (HIPA cluster workshops).

• Minnesota’s workforce development in sector (and cluster) oriented.


Minnesota cluster analysesHumphrey Institute,2007


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Clusters in 21st Century

• Greater importance of talent & knowledge

• Emphasis on design- and place-based assets

• Changing definition, structure, functions of clusters

• Valuing triple bottom line (economic, equity, environmental) outcomes


It’s difficult to find emerging clusters with conventional dataNo NAICSHolistic healthArts & cultureAlternative energyArtisanal foodGreen buildingLog homesMotorsports


Government roles

• Support civic infrastructure• Fill market gaps in specialized services

• Build more intentional connections to educational institutions

• Encourage a balance among economic, social, &environmental outcomes


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2 The workforce imperative in a knowledge economy

• The mid-skilled work force is least portable/importable factor.

• Labor is important and underappreciated source of innovation.

• Competencies in existing clusters can be used to develop new and competitive clusters

• Postsecondary institutions are critical cluster partners.


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North Carolina’s Community College Cluster Hub Strategy• BioNetwork (5 colleges) $ 9.5 m• Hosiery Technology Center $400,000/yr(Catawba Valley CC)

• Textile Training Center (PCC) $400,000/yr• Marine Training Center (Carteret CC) • Aerospace (Haywood CC) $1.5 m• Advanced Materials (Wilkes CC) $1.5 m• Digital Interactive Entertainment and Simulation Technology (Wake tech)

• Motor Sports (3 colleges) $500,000


3. Invest in all forms of innovation

• R&D to maintain competitive positions of clusters and develop new strengths

• Product and environmental design that appeals to special tastes

• Incremental improvements that come often come from workforce


“It dawns on consumers that your product—be it jeans, socks, or a high-end gas range—is a meaningful symbol of their personal aesthetics, their inner selves”

“We all know that no one in their right mind would ever pay $300 for socks. But having a right mind is so yesterday.”

Fast Company Magazine, Sept 2007


Design that appeals to differentiated consumer base

Artisan breadsBarista coffeesMicrobrewed beers

Fashion jeansNovelty shoesSwatches

Green homesArchitectural artHandmade goods


4. Support artisan firmscompete small, grow

large• Recapture the artisan economy• Recognize lifestyle and sector-style entrepreneurs

• Grow by aggregation rather than acquisition


Creative economies in 5 states

NC Bigger than biotech or IT, earns about $3.2b; median income and population grew with proportion of arts and design workers.

AR 3rd largest cluster in state; 57% of manufacturers say design important to success

WY 9% of firms, 6% of employment, $21.5M in earnings

CO 122,000 in cluster, bigger than ag, defense, in top 10 states in architects, designers, writers

MT 5% of employment, 11% of self-employed


Self-employment in selected sectors

Sector Percent self-

employedMultimedia artists and animators

53

Architects 22Commercial & industrial designers

31

Photographers 60Graphic designers 32Craft artists 90


5. Invest in amenities and brand

Intrinsic identityDistinguishing spaces

• Handcrafted architectural elements

• Craft and Garden Trails• Small Production Facilities

• Revival of NC Furniture and Textile Industry

• Reusing space and energy

Place-based responses in Western NC


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Portland’s Green LabelGreen Building Cluster• Highest number of LEED certified buildings in US• Direct wages estimated $350-960M in 2006• 821 LEED accredited professionals• 125 projects underway• High growth rate• Local demand and exports• Large % of supplies local

Compared to other metro areas:-bike 7x as much-more hybrids per capita-drive 16% fewer miles/capita-buy local campaigns-hi consumption organic foods


6. Invest in global connections

• Joint participation in trade shows

• Study tours• Collaborative R&D• International student exchanges and international internships

• Regional and cluster partnerships


Regional Technology StrategiesCarrboro, North Carolina Stuart Rosenfeld919 [email protected]

“Imagination is more important than knowledge.”

Albert Einstein

Supporting & strengthening the knowledge economy

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