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GEOG 240: Day 17 Chapter 11
Housekeeping Items • A good example of what we were talking about vis-à-vis Chapter 10, and the fact that some companies choose to remain in their original homes was provided in the film, Poor No More. Despite the high taxes and power of the labour unions, Scania and IKEA have chosen to remain headquartered in Sweden. • Any other feedback on the film? • In addition to discussing Chapter 11, Gerald and Zuneza will be presenting on economic alternatives. • If you have read the chapter on Argentina, please return it so I can pass it on to someone else.
Chapter 11: The Knowledge Economy • Resurgence of interest in regions and localities. • Ironically, while globalization has undermined the power of nation-states, it has made regions more important. Moreover, with the collapse of Keynesianism, regions have increasingly been thrown back on their own resources. • Geographers study the counterbalancing forces of aggregation and dispersal in a local and regional context, which differ from sector to sector. • While firms have always found advantages in aggregating – for instance, the constellation of auto parts manufacturers and design firms in the Detroit of yore, critical knowledge has become an even more important part of the mix.
Chapter 11: The Knowledge Economy • A key element of agglomeration are the ‘knowledge spillovers’ that occur between firms. This has become a focus of the new regional policy discourse. • Between firms there is both competition and cooperation, but individuals are also seen as increasingly important – skilled workers, entrepreneurs, software developers, etc. These folks – part of a group Richard Florida dubs the creative class – are increasingly mobile. In the old days, when resource sector and manufacturing jobs were predominant, people followed the jobs. Nowadays, or so the theory goes, talented people go to desirable cities and towns and the jobs follow them. • According to Lundvall (1994), “knowledge is [now] the most important resource and learning the most important process.”
Chapter 11: The Knowledge Economy • The authors define knowledge “as a framework or structure in which information is stored, processed and understood.” Know-ledge shapes how people respond the situations and can itself generate new knowledge. Can you think of examples? • They note that there are two types of knowledge: tacit and codified. Tacit is direct and experiential, while codified is systematic and often conveyed in written form. You can follow a computer program manual (codified), but you need direct experience to actually understand how it works. • Codified is often global in reach while tacit often remains localized. • Firms have long been interested in innovation and research and development.
Chapter 11: The Knowledge Economy • In the old model, the development of a new product went from R & D to design to production to marketing (see Figure 11.1). In the new model, there is constant interaction amongst product ‘stakeholders’ (see (Figure 11.2). • A big challenge for companies – and indeed for governments – is making sure all departments are on the same page and can talk to one another. This is partly a matter of cross-disciplinarity, but also of geographical proximity (see 11.2 for the story of how Apple stole the idea of the personal computer from IBM because the latter was too disorganized to realize what they had).
Chapter 11: The Knowledge Economy • By contrast, the development of Apple’s iPod is a successful example of the different components of a company working well together and also with outside contractors and other firms. • The new model of innovation is much more experimental, trial-and-error, than linear. • The firm is the repository of learning, and its learning process has been described by Japanese management theorists as involving four stages (see Figure 11.4): socialization, externalization, combination, and internalization.
Chapter 11: The Knowledge Economy • Socialization- “the articulation and exchange of tacit knowledge, requiring face-to-face interaction between experts within a firm.” Difficult to harness. Can involve brainstorming sessions. • Externalization- Turning tacit knowledge into codified knowledge – for instance, creating a unified concept. • Combination- Recombining knowledge and integrating throughout the company, thus leading to new strategies. • Internalization- Embodying the new knowledge in workers’ skills, routines and work practices.
Chapter 11: The Knowledge Economy • All of this relies on a company’s absorptive capacity – its ability assimilate and make use of external and internal knowledge and put it to good use in a cooperative fashion. • Of late, geographers have been reinterpreting the agglomeration theory of Alfred Marshall.
Chapter 11: The Knowledge Economy • His theory was based on three components: • subsidiary industries supplying inputs (e.g. auto parts); • a pool of skilled labour; • information and knowledge spillovers between firms. • The presence of these factors provide advantages for firms. • In addition to individual industry localization economies, there are also urbanization economies when a number of different industries gather together in the same locale.
Chapter 11: The Knowledge Economy • There is some similarity, but with less geographical content, to Canadian historian Harold Innes’ theory of the staple economy. • This involved a resource staple – fish, timber, minerals, etc. – and various linkages from it: backward linkages (machinery and equipment needed for production), forward linkages (how the staple is used as a raw material in other industries), and final demand linkages (the final producer and consumer products that result).
Chapter 11: The Knowledge Economy • A number of writers have added to and modified Marshall’s model. Business writer, Michael Porter, focuses on clusters, which he describes as “geographical concentrations of interconnected companies, specialised suppliers, service providers, forms in related industries, and associated institutions (for example universities, standards agencies and trade associations) that compete but also co-operate.”
Chapter 11: The Knowledge Economy • In this context, he has developed the diamond model (see Figure 11.5). • Demand conditions relate to global (but also ‘leading edge’ local) customers. • Supporting and related industries provide opportunities for learning and knowledge transfer. • Factor conditions – availability of land, labour and capital. • Firm structure, strategy and rivalry (including spin-off of new firms). • The example of Emilia-Romagna exemplifies this model, but with co-ops taking the form of corporations.
Chapter 11: The Knowledge Economy • An example of such a cluster would be the movie industry (see Figure 11.6). • Some suggest that geographical proximity is not as important as it once was because firms can create “global pipelines.” While highly localized, Hollywood also maintains such pipelines (see Figure 11.7). • Pipelines and global linkages are important to avoid firms and industries becoming too inward and parochial, as was probably the case with the auto industry in Detroit.
Chapter 11: The Knowledge Economy • Richard Florida, author of 2002’s The Rise of the Creative Class and other subsequent volumes, has made a big splash in the field of economic geography. • His basic hypothesis is that the fate of urban prosperity rests on the role of what he calls the creative classes – “highly skilled and educated workers who have distinct lifestyle preferences,” and who are said to comprise about 12% of the U.S. workforce. • Knowledge and creativity are now said to be the driving force of the new economy, and cities must become the kinds of environments that will attract this class since they can and do choose where they want to live. This adds a new element of regional competition.
Chapter 11: The Knowledge Economy • He offers this description: “the super-creative core of this new class includes scientists and engineers, university professors, poets and novelists, artists, entertainers, actors, designers, and architects, as well as the thought leadership of modern society: non-fiction writers, editors, cultural figures, think-tank researchers, analysts and other opinion-makers.” • What kind of individuals come to mind when you hear this list, and where might they be found? • If one adds in all those with a higher education, one arrives at a figure of 30% of the workforce, up tenfold from 1900.
Chapter 11: The Knowledge Economy • To succeed cities and regions must possess the “3 Ts”: a concentration of high technology, a pool of talented human capital, and a tolerant atmosphere. • Florida argues that cultural creatives wish to live in an environment characterized by diversity and cultural amenity. This has been measured through such means as the ‘gay index’ (proportion of people who are gay) and the ‘bohemian index’ (proportion of people who are artists in the broad sense of the word). • Based on these factors, cities have been rated for their position on “The Creativity Index” and how talent correlates with cultural amenities (see Figure 11.8 and Table 11.1).
Chapter 11: The Knowledge Economy • There have been a number of critiques of Florida’s work: • that the notion itself and the enthusiasm with which it has been embraced by regions is overly shallow and trendy; • that the cultural class concept is too broad; • that creatives’ presence may create conditions of tolerance as much as the other way around; • that his work overlooks how the presence of this group leads to gentrification and forces out the very people (including artists!) who make cities funky and interesting; • and I would add that some cultural creatives may value natural amenities as much as cultural ones.
Chapter 11: The Knowledge Economy • Markusen’s study found that artists do concentrate in certain neighbourhoods, using Minneapolis-St.Paul as her case, that they tend to choose low-rent areas, and are seemingly indifferent to high tech (see Figure 11.11). • Cities with a high artist population are increasing their relative advantage in this regard (see Table 11.2). • Are there cities that you consider more desirable to live in than others and for what reasons? How are these factors related to your sense of your own needs and identity?
