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A Search for the New Knowledge Economy
• Establishing a Baseline: The Economy Today…
and Tomorrow
• When they Vote with their Feet, where do they go?
• A New Entrepreneurship Index
What about
the Great
American
Bread
Machine?
United States
Indonesia
Brazil
Pakistan
Bangladesh
Nigeria
Russia
Japan
Mexico
Philippines
Vietnam
Ethiopia
Germany
Egypt
Turkey
Iran
Congo (Kinshasa)
Thailand
France
United Kingdom
Italy
Burma
South Africa
Korea, South
Spain
Ukraine
Colombia
Sudan
Tanzania
Argentina
Kenya
Poland
Algeria
Canada
Uganda
Morocco
Peru
Iraq
2010 Population, Top 40 Countries,
absent China & India
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
Percentage of all Families
Share of U.S. Families with annual Income equal to or greater than $75,000
Constant 2006 Dollars
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Source: Crews (2010, 38).
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
1958
1956
1954
1952
1950
1948
1946
1944
1942
1940
100000
Federal Register Pages: 1940-2010
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
Federal Deficit as Percent of GDP
1930-2009
9.00%
6.00%
3.00%
0.00%
-3.00%
-6.00%
-9.00%
-12.00%
-15.00%
-18.00%
-21.00%
-24.00%
-27.00%
-30.00%
-33.00%
-36.00%
U.S. 8.9%
Alabama 9.3%
Huntsville 8.2%
Total Employed, 16 and Over, Seasonally Adjusted
Household Survey, with Trend
1/1991 - 3/2011
150000
145000
140000
Thousand
135000
130000
125000
120000
115000
110000
105000
Housing Starts
Seasonally Adjusted Annual Rate, In Millions
2.4
2.4
2.2
2.2
2.0
2.0
1.8
1.8
1.6
1.6
1.4
1.4
1.2
1.2
1.0
1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
Housing Starts: Aug @ 598K
0.0
0.0
01
02
03
04
05
06
07
08
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
09
10
2001q1
2001q2
2001q3
2001q4
2002q1
2002q2
2002q3
2002q4
2003q1
2003q2
2003q3
2003q4
2004q1
2004q2
2004q3
2004q4
2005q1
2005q2
2005q3
2005q4
2006q1
2006q2
2006q3
2006q4
2007q1
2007q2
2007q3
2007q4
2008q1
2008q2
2008q3
2008q4
2009q1
2009q2
2009q3
2009q4
2010q1
2010q2
2010q3
2010q4
Growth
8.0
Real GDP Growth, 2000-2010
with 4-quarter moving average
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
GDP Forecast, 2011
Organization
Date
2011
FRB
11/2010
3.0-3.6
NBE
11/2010
3.2
Wachovia
12/2010
2.5
BOA
12/2010
2.0-2.5
Economy.com
12/2010
3.8
Kiplinger
12/2010
3.5
CBO
1/2011
3.1
Bank of America
1/2011
3.1
Wachovia
2/2011
3.2
Economist Mag.
3/2011
3.3
TWO KEY U.S. INDICATORS
National Mortgage Delinquencies, 1Q2010, 90+ Days
County Unemployment Rate
Unemployment Rate
December 2010
Greater than 12.5%
6.0% to 8.0%
10.0% to 12.5%
Less than 6.0%
8.0% to 10.0%
Source: US Department of Labor and Wells Fargo Securities, LLC
15
I wonder
what’s going
on inside the
Huntsville
economy.
Huntsville MSA, Per Capita Income,
% of U.S., 1969-2008
Huntsville MSA, Per Capita Real
GDP, % of U.S. Metro, 2001-2009
Huntsville/Madison AL MSA Sectors, 2010
Government
24%
Mining/Logging
Const 4%
Mfg.
11%
Trade, Trans, Util
14%
Other Svcs.
4%
Info.
1%
Finance
3%
Liesure/Hosp.
8%
Educ/Health
8%
Prof. Bus. Svcs.
23%
U.S. Employment Sectors, 2010
Government
17%
Mining/Logging
1%
Construct
4%
Mfg.
9%
Trade, Trans, Util
19%
Other Svcs.
4%
Liesure/Hospitality
10%
Info.
2%
Educ/Health
15%
Finance
6%
Prof. Bus. Svcs.
13%
What of the
next two
Years???
Alabama?
Huntsville?
U.S.?
December
2007
April 2011
June 2009
Voting with their Feet
Voting with their Feet
When voting with
their feet.
Where do the
brains head?
Toward freedom?
security?
•
NET 1995-2000 INTERNAL MIGRATION OF PEOPLE WHO WERE 25-39, SINGLE &
COLLEGE EDUCATED
PERCENT OF 2000 POPULATION
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
NM
NJ
RI
CT
DE
WV
MO
VA
KY
MD
NC
TN
OK
AZ
MA
MI
WY
CA
VT
NH
AR
SC
MS
AL
GA
TX
LA
AK
FL
0.09% plus
0% to 0.089%
HI
-0.1% to 0%
-0.2% to -0.11%
Below -0.2%
CREATIVITY INDEX 2003 RANKINGS
WA
MT
M
E
ND
OR
MN
ID
SD
NY
WI
PA
IA
NV
NE
IL
UT
IN
OH
CO
KS
AZ
NM
MA
MI
WY
CA
VT
NH
DE
WV
MO
KY
VA
MD
NC
TN
OK
NJ
RI
CT
AR
SC
MS
AL
GA
TX
LA
AK
FL
1 to 10 (10 states)
11 to 20 (10)
21 to 30 (10)
HI
31 to 40 (10)
41 to 50 (10)
How did we model migration?
MIGRATION = f(PCI, PBS, EFI, FFI, CRI)
Migration
PCI
PBS
EFI
FFI
CRI
:
:
:
:
:
:
Share of 2000 population for 25-39 year old in-migrants, 1995-2000.
Per capita income, 2000.
Professional Business Services, share of employment, 2000.
Economic Freedom Index, 1999.
Fiscal Freedom Index, 1999.
Richard Florida Creativity Index, 2003.
What did we learn?
1.
2.
3.
4.
5.
Go-getters are not attracted by higher income locations.
They are highly attracted to large PBS states.
Economic freedom is a strong positive
They love “cool” states.
They hate taxes.
When they move, what moves them?
Freedom?
Cool?
Income?
Cities?
Knowledge
Economy?
We asked this question by way of statistical models. Our
final model included a new Knowledge Economy Index.
We also included a Freedom Index, a creativity index, and
other economic variables.
Knowledge Economy Index
Index is based on statistical modeling of per capita income
across the 50 states. Variation in income is explained by 1)
education variable, 2) industry R&D expenditures weighted
by employment, and 3) the relative number of fast growth
firms (INC 500 & Deloitte Technology fast 500).
Regression coefficients are used as weights applied to
state data to build index
2008 Economic Freedom & Knowledge Index Rankings
55
New York
50
Rhode Island
California
New Jersey
45
Alaska
Pennsylvania
Michigan
Connecticut
Vermont
Kentucky
New Mexico
40
Economic Freedom Ranking
Ohio
North Carolina
Washington
W. Virginia
Maine
35
Maryland
Massachusets
30
Louisiana
Oregon
Texas
Minnesota
Nebraska
Illinois
25
Tennessee
Florida
Hawaii
Iowa
Indiana
Wisconsin
20
Delaware
South Carolina
Arizona
N. Dakota
15
New Hampshire
Virginia
Georgia
Arkansas
Oklahoma
Kansas
Nevada
Utah
Colorada
Alabama
Montana
10
5
Mississippi
Missouri
Idaho
S. Dakota
Wyoming
0
0
5
10
15
20
25
30
Knowledge Economy Ranking
35
40
45
50
55
State Ranks for Average Migration Rate Rank 2004-08
50
New York
Michigan
Massachusetts
Louisiana
New Jersey
Rhode Island
Connecticut
California
Ohio
Illinois
Alaska
Hawaii Maryland
North Dakota
Kansas Nebraska
Vermont
Wisconsin
MinnesotaIowa
Mississippi
Indiana Pennsylvania
Maine
New Hampshire Missouri
West Virginia
Kentucky
VirginiaNew Mexico
Oklahoma
South Dakota
Colorado
Washington
Alabama
Texas
Utah
Arkansas Wyoming
OregonDelaware
Florida
TennesseeMontana
Georgia
South Carolina
Arizona
Idaho
Nevada North Carolina
45
40
Domestic Migration
35
30
25
20
15
10
5
0
0
5
10
15
20
25
30
International Migration
35
40
45
50
MIGRATION = f(KEI, OFI, CRI, COL, PCI , POP)
Migration: Average annual in-migration of 25-39 year olds,
2004-2008.
KEI
: Knowledge economy index, 2008, Watkins-Yandle.
OFI
: Overall freedom index, 2008, Mercatus.
CRI
: Creativity index, Richard Florida, updated 2008.
COL
: Cost of living index, 2009, Council for Community
& Economic Research.
PCI
: Per capita income, 2008.
POP
: Average population, 2004-2008.
What did we learn?
1. Domestic and international movers prefer
urbanized states.
2. International movers head toward highly ranked
knowledge economy states; domestic movers
are indifferent.
3. Domestic and international movers are high on
overall economic freedom.
4. “Cool” locations matter to domestic movers but
not to international movers.
5. Personal freedom matters to international
movers, but not to domestic movers.
OVERALL: Freedom matters.
Southern MSA Knowledge Economy Index
MSA
State
Rank
Austin
Charlottesville
Lexington
Raleigh-Durham-Chapel Hill
Atlanta
Huntsville
Gainesville
Tallahassee
Charlotte-Gastonia-Rock Hill
Texas
Virginia
Kentucky
North Carolina
Georgia
Alabama
Florida
Florida
North & South Carolina
1
2
3
4
5
6
7
8
9
Richmond-Petersburg
Fort Walton Beach
Columbia
Naples
Dallas-Fort Worth-Arlington
Jackson
Norfolk-Virginia Beach-Newport News
Virginia
Florida
South Carolina
Florida
Texas
Mississippi
Virginia
10
11
12
13
14
15
16
Orlando
Melbourne-Titusville-Palm Bay
Florida
Florida
17
18
Asheville
Sarasota-Bradenton
Auburn-Opelika
Charleston-N. Charleston
Houston-Galveston-Brazoria
Wilmington
Cincinnati-Hamilton
North Carolina
Florida
Alabama
South Carolina
Texas
North Carolina
Ohio
19
20
21
22
23
24
25
Regional MSA Index Ranking
State
Raleigh-Durham-Chapel Hill
Huntsville
Atlanta
Charlotte-Gastonia-Rock Hill
Columbia
Auburn-Opelika
Asheville
Charleston-North Charleston
Wilmington
Greenville
Savannah
Nashville
Knoxville
Athens
Birmingham
Tuscaloosa
Greenville-Spartanburg-Anderson
Montgomery
Memphis
Fayetteville
NC
AL
GA
NC-SC
SC
AL
NC
SC
NC
NC
GA
TN
TN
GA
AL
AL
SC
AL
TN-AR-MS
NC
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
FINDING THE
NEW
ENTREPRENEUR
ONE-PERSON FIRMS
Toward a Nonemployer Entrepreneurship Index
Firms & Establishments, 2008
Nonemployers Establishments Prof., Scientific, Tech
U.S.
ALA
Huntsville
N/E
PST/Non
21,351,320
311,388
25,760
7,601,169
103,875
9,557
3,028,695
30,897
3,603
2.80
2.99
2.70
14.0%
9.9
13.9
Auburn
Tuscaloosa
8,464
12,005
2,464
4,469
1,099
1,202
3.43
2.70
13.0
10.0
Austin
Durham
Greenville
130,728
35,923
40,780
40,134
11,680
15,781
26,275
7,864
5,295
3.28
3.01
2.58
19.9
21.8
12.9
Nonemployer Firm Entrepreneurship Index
MSA
Nonemployers/
Enterprises
Prof. Technical
& Scientific/
Nonemployers
In dex = P,T&S
share of total
enterprise
Rank
Austin, TX
3.28
19.9%
.65
1
Durham, NC
3.01
21.8
.65
1
Houston-Galveston-Brazoria,
TX
3.77
14.2
.54
2
Gainesville, FL
2.64
19.8
.52
3
Dallas-Ft. Worth-Arlington,
TX
3.48
14.8
.52
3
Atlanta, GA
3.33
14.7
.49
4
Auburn-Opelika, AL
3.43
13.0
.45
5
Tallahassee, FL
2.64
16.7
.44
6
Naples, FL
2.91
14.6
.42
7
Charlottesville, VA
2.67
21.0
.42
7
Lexington, KY
2.70
15.6
.42
7
Sarasota-Bradenton, FL
2.81
14.1
.40
8
Cincinnati-Hamilton, OH/KY
2.67
15.0
.40
8
Jackson, MS
3.17
12.2
.39
9
Huntsville, AL
2.70
13.9
.38
10
QUESTIONS