Your Regional Knowledge Economy Strategy: Is it Succeeding?

by Eva Klein, President, Eva Klein & Associates, Ltd., and Managing Partner, IDEA Partnerships, LLC

Evaluation of success in economic development today is far more complicated than ever – requiring, first, a regional perspective; second, metrics for elements of a complex, long-term strategy that includes asset-building; and third, measures of both inputs and outcomes. Following is a discussion of why we need new metrics, what is measured now, what should be measured and how to go about it.

Why we need new metrics

New ways to measure success are needed for four reasons:

The global knowledge economy functions differently than the industrial economy.
The base for measurement now must be regional, not local.
Human resource inputs are a new imperative.
Given globalization of production, innovation capacity and outcomes are essential.

Global and historical perspective
In the short space of about two decades, we have entered a transition from the industrial economy to the global knowledge economy – a transition so huge that it is hard to see it fully. To properly appreciate why we feel challenged, we must observe ourselves from a larger, longer perspective:We are in a transformation as great as the one our society underwent about 200 years ago, when parts of the world’s ubiquitous agrarian economy entered the industrial economy. Innovations of industrialization brought with them entirely new social and economic structures – inventions such as new corporate organizations, labor laws, assembly processes and K- 12 public education.

Today, our global economic context is characterized by rapid flows of information; globalization of financial, product and service markets; and reorganization of real economies into natural regions that cross political jurisdictions. As with industrialization, the knowledge economy requires invention of new social and economic responses— including invention of new metrics for our new context.

The essentiality of regionalism
Regionalism alone has presented stiff challenges, for good reasons. Our state, county, and municipal boundaries were established long ago, when the world seemed much larger than it does today. But they still dictate that elected officials devote themselves to advancing revenues and jobs for voters in the jurisdictions in which they are elected. In the industrial economy – when competition for manufacturing jobs could be considered a matter of local, regional or national competition – counting jobs, capital investment, and revenues at a local level was reasonable. Today, in vastly enlarged worldwide competition for knowledge-based enterprises, counties, for the most part, are too small for effective visibility in global marketplaces. It is necessary to position a region, with capabilities and assets that include at least one urban center; at least one major university; and many small towns, rural communities and amenities.Measuring progress and achievement on a regional basis is harder, but now necessary.

The human resource imperative
The second major challenge today centers on population and the skills level of that population.Much is written lately about challenges that rural areas face, with most analyses concluding that the presence of skilled, creative, entrepreneurial people makes the difference for such regions. Simply put, if the knowledge economy turns on ideas and innovation and, thus, on the presence of entrepreneurs and highly skilled people, then having more population and higher educational attainment levels are critical success factors in both urban and rural strategies.

The innovation imperative
In a world in which labor cost drives the location of low-tech product manufacturing and in which emerging economies are becoming effective in competing for skilled production and producer service industries, continuous innovation is the order of the day. A regional economy must cultivate the assets with which it produces innovation and then measure innovation outcomes.

Innovation is a complex process, operating in the domains of universities, government and industry. On the university side, measures of research and technology performance are helpful, but typical university practices in technology transfer are not yet focused on the goal of creating regional impact. On the industry side, measures of innovation also leave something to be desired. The matter is further complicated by the need to measure innovation in both products and services.

At present, this is perhaps the weakest area of measurement in our economy. The need to create new metrics for innovation is one of the clearest examples of the inventions required by our transition into the knowledge economy. In fact, this need is so great that in early 2007, the U.S. Secretary of Commerce impaneled a special Advisory Committee, comprising business and academic members, to develop an accepted set of innovation metrics.

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