A Challenge for the 21st Century: The Transformative Impact of Globalization

Globalization is the widening, intensifying, accelerating, and expanding impact of worldwide interconnectedness. Globalization has fundamentally changed economic development for regions, communities, and nations. Regions are now competing globally in a fierce race for talent, capital, and high-value investment across the globe. As a result, the drivers of economic growth are also changing dramatically and swiftly. The intensity of global and regional competition and connectivity throughout the world will increase rapidly in the coming years.

Yet, while the drivers of economic growth have changed, our nation continues with policies, organizational structures, and investment strategies built for an economic era that is gone. It is time to align our federal economic and community development policy with the new paradigm for regional economic growth and competitiveness. Federal policy must recognize that growth is likely to be driven at the regional level, beyond the local jurisdictions that have prescribed past efforts — and, indeed, beyond state lines. Every region of the United States must craft a regional economic and community development strategy to build and sustain a competitive edge in a rapidly changing global marketplace.

Recognizing that every region is inextricably linked to this global economy, regions must now harness comparative advantage and create new value. Distinct economic assets will drive this strategy, as will recognition of the market niches that a region can tap in building new and transformational value propositions.

There are two keys to success in economic development in this era of globalization:

The first is fueling the engines of entrepreneurship, which focuses on the ability of firms and individuals to take fresh ideas to the marketplace swiftly and to transform them into new products, new services, and new business models. According to the Kauffman Foundation, entrepreneurship “flourishes in more dynamic and technologically sophisticated industries” and is “associated with products and services in the introductory stage of their life cycle,” unlikely to be found “where there are low barriers to entry.” ¹ One of our nation’s greatest economic assets is its entrepreneurial spirit and tangible success. Our risk-taking spirit is at the heart of our regional prosperity.

There are hundreds of diverse examples of how entrepreneurship has added new energy and economic growth to communities and entire regions across the nation. To cite a few:

• In 1939, at a time when Stanford University engineering graduates typically left California to begin their careers in the East, Stanford classmates Bill Hewlett and Dave Packard founded Hewlett Packard. The company’s first product, built in a Palo Alto garage, was an audio oscillator — an electronic test instrument used by sound engineers. One of the first customers was Walt Disney Studios, which purchased eight oscillators to develop and test an innovative sound system for the movie Fantasia. The company’s success led to the formation of a microelectronics cluster that further evolved into the diverse technology region called Silicon Valley.

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