What are the programmatic requirements that can establish the criteria for planning and designing communities and regions that attract creative and entrepreneurial people to build a knowledge economy?

What is a knowledge economy? How does the knowledge economy impact both high level emerging technology and added value to more traditional business? How might that change thinking of how we envision our future communities?

How can the entire state, urban and rural, north and south, participate in the knowledge economy? What are the assets to build on throughout the state? How can these assets be connected or linked to form local and regional knowledge clusters?

Collaboration is a virtue of the knowledge economy. How can this concept change the way we develop communities? How should communities be organized or function to support the concepts of collaboration?

Innovation / Entrepreneurs, Brainpower / Education, Quality Place / Uniqueness Values and Open Dialogue / Diversity are characteristics of Competitive Communities in a Knowledge Economy. How will we develop growth models and policies that shape these knowledge communities?

The following are excerpts from Knowledge Clusters and Entrepreneurship as Keys to Regional Economic Development, a conference report published by the Humphrey Institute for Public Affairs. This conference gathered many researchers and professionals to discuss current conditions, challenges, opportunities and nature of the knowledge economy:

“Because of economic integration, what happens in one region affects what happens in another. The movement of information, capital, services, and products presents new competitors and customers for companies and regions. “

“As large business enterprises threaten to shift their operations and jobs to lower cost locations, cities and regions grow anxious about losing what in many cases may be their main employer. Yet, with the emergence of India, China, and other low wage economies, it is clear that regions in Western Europe and North America cannot expect, nor should they wish, to compete on cost alone, as this will only result in a downward spiral of wages and standard of living. “

“Faced with these new economic realities, regional developers…are aware of the need to assess and build upon the social and human capital assets that already exist in their region, rather than relying on attracting mobile investment from elsewhere (sometimes called smokestack chasing). One promising model combines a focus on entrepreneurship with the strengthening of knowledge-based networks or clusters. With knowledge now the fundamental basis of competitive advantage, regional economic development agencies are looking for ways to grow and attract clusters of innovative, knowledge-based activity. Because the creativity and innovation of individual entrepreneurs and entrepreneurial teams often generate and sustain these clusters, strategies that focus on both entrepreneurship promotion and cluster development are worth a closer look. “

“Research suggests that entrepreneurial activity is largely place-based, a product of the local culture, institutional arrangements, business environment, and the unique skills and knowledge base in a particular area…successful entrepreneurs “do what they know,” but in innovative and marketable ways. Despite the mobility of business, knowledge tends to remain localized; therefore, regional economic developers must focus on improving the competitiveness of their “place.” They should have a strategic approach to building the local knowledge base, which will make their area attractive to entrepreneurs positioned to exploit it.” (David Audretsch)

A knowledge cluster strategy recognizes that local businesses, which share a common knowledge base, can promote regional growth, partly by providing a dynamic environment for entrepreneurship. Knowledge clusters and entrepreneurship alike revolve around creative people, so in the knowledge economy, the differentiating factor for both people and places is talent.“

“…regional developers should specifically focus on attracting the 25- to 34-year-old population, because they constitute the core of this talented class. They also are the most mobile and therefore, to some extent, “up for grabs.” The Global Entrepreneurship Monitor (GEM) research presented by Fitzsimons showed this age group to have the highest entrepreneurship rates in almost every country covered by the survey…rural or urban, regions should build on their own distinctive assets and use their uniqueness to attract this valuable population cohort.”

“An open culture is one that supports risk taking and gives people freedom to fail in an endeavor and try again... The demonstration effect that is evident in successful clusters can play an important role in encouraging both the acceptance and practice of risk taking. When one person undertakes successful entrepreneurial activity, others observe this activity and begin to feel that they too can do it (Audretsch, Fitzsimons).

As global integration shifted U.S. comparative advantage toward knowledge-based economic activity and value-added niche markets, entrepreneurship and small to medium size enterprises (SMEs) began to play an increasingly vital role. Global integration and technological change set the stage for the shift from slow-growth, bureaucratic corporations to the nimble, responsive, knowledge-based industries of the new economy. With factors such as speed, innovation, flexibility, and knowledge essential to economic growth and development, entrepreneurship has emerged as a key player in driving regional economic prosperity.” (From 60 to 80 percent of new net jobs are created by small businesses, especially those under two years old)

“Contrary to popular expectations, innovation occurs not only in the latest computer and biomedical products; it also can be a competitive advantage for low-tech entrepreneurs such as artisans” (Rosenfeld).

“One important need is for locally available financing. Examples of the effort to meet that need are the Regional Angel Investment Network (RAIN) funds in Minnesota (Mercil).”

“… knowledge clusters resemble a public good; they provide benefits for many but may be under produced if not encouraged by government and community involvement.
Knowledge benefits are not easily, automatically, or efficiently transmitted throughout a region. The fact that clusters are much stronger in some regions than others with similar assets suggests that local institutional arrangements, practices, and culture can do much to help or hinder knowledge spillovers.”

“The cluster phenomenon suggests that competitive advantage lies not solely within firms but also within specific locations. Firms in clusters benefit from linkages (among firms, workers, financiers, and so forth) and spillovers, as well as complementary assets in skills, technology, and economic information. The existence of externalities points to the need for private and public actors to work together to eliminate constraints to cluster development and to enhance the contributions of public assets, including educational institutions (Porter, 2000). Conditions and events with spillover benefits, such as the presence of serial entrepreneurs or the acceptance of calculated risk… can be considered a quasi-public good. Learning effects, in other words, are good for the private sector, but private actors do not have the incentive to provide sufficient learning for others.”

“Local proximity is essential for accessing knowledge spillovers. Both knowledge-based firms and workers place a greater value on locations with clusters than those without. Because of knowledge spillovers, the value of an entrepreneurial firm is greater in the (local) presence of other entrepreneurial firms. Yet individual firms and workers are reluctant to invest in the creation of such a cluster . . . due to the public nature of knowledge. Policy makers, whose interest lies in generating growth for a particular location, have to step in” (Audretsch 2003).

“Key Components to a Knowledge Cluster Strategy
·Understand your local knowledge base.
·Develop strategies for promoting innovation around knowledge clusters.
·Promote a regional basis for developing local strategies."

Additional information can be found at the Hubert H. Humphrey Institute and about the Knowledge Clusters Conference where online presenter presentations are available. MHSM has prepared a regional knowledge cluster plan that is proceeding to implementation, Shreveport’s Historic Music Village: A Regional Economic Development Strategy.