Saturday, July 14, 2007

Flat World Follies

Via the Wall Street Journal's blog, "The Informed Reader", I learned about an article in BusinessWeek discussing an aspect of the developing Flat World economy. The story isn't exactly about a new migration pattern for the Creative Class, but the fight between struggling regions for a piece of the knowledge economy:

The digital titan, based in Mountain View, Calif., has been hunting for places to plant new server farms: vast, immaculate warehouses filled with row upon row of computers that allow Google to offer faster online searches and advertisements. Lenoir (pronounced like the woman's name Lenore) boasts resources at the top of Google's list: cheap, abundant electricity; excess water capacity to keep the computers cool; and lots of inexpensive land.

The problem is, like talent, the kings of the knowledge economy are highly mobile. Thus, regions are engaged in a cutthroat game of packaging incentives in order to attract industry. A Pittsburgh example was the successful courtship of US Airways to land the flight operations center, snatching the business from Phoenix and Charlotte. You might consider the Penguins power play as part of the same trend.

What is lacking is a true regional competitive advantage, which is what Richard Florida's Spiky World effectively maps. If you don't harbor some unique asset, you are vulnerable to the whims of a bidding war. Furthermore, the industry could relocate at some point further down the road, once again taking advantage of a lucrative opportunity.

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