Monday, January 28, 2008

Human Capital Advantage

Tech Futures stresses water assets as a way for Cleveland (and other Rust Belt Shrinking Cities) to spur economic development. I agree that any region could better utilize its natural resources and water is a key thread binding together what could be a Great Lakes mega-region. Chris Varley outlines a tremendous opportunity for Northeastern Ohio. However, I would challenge his hierarchy of priorities.

I recommend listening to the podcast (tip from Brewed Fresh Daily) of Vivek Wadhwa's presentation to The City Club of Cleveland. Better leveraging human resources, not natural resources, is the more pressing need. I'm not pushing for investing in human capital at the expense of water-centric economic development, but I recognize that each region only has so much bandwidth and I think that networking/attracting talent offers the better value proposition. Of course, "green" posturing could help accomplish this goal.

I have argued, as a matter of course for this blog, that Pittsburgh has unique human capital assets as a result of its historical geography. I would extend that perspective to other Rust Belt locations as I gain a better understanding of the shared landscape. But I predict that the city that best utilizes its Diaspora will emerge as the mega-regional hotspot for research and development, as well as entrepreneurship. Harvard Business School professor Tarun Khanna explains:

To put it bluntly, China has embraced its diaspora, and India has shunned it. While the numbers should always be taken with a grain of salt, it is said that about 50-plus million Chinese and 20-plus million Indians live outside their home countries.

India's tendency to shun its diaspora must rank as among the most disastrous decisions made by a nation in modern times: disastrous in the sense that a successful group of people is willing to give time, money, energy, and good will to their country of origin and is being pushed away. Fortunately, this situation has been changing in India in the last 4 to 5 years.

In China, by and large, the diaspora has played a much bigger role. In 1978, China didn't have the internal markets to rely on, so it turned to the overseas Chinese because they were the only people who could understand China well. To other people China seemed too difficult, too alien, too foreign.

In the case of both countries, there is a broad spectrum of people in the diaspora, so we should be careful about not lumping them all together. That said, the success of the Silicon Valley community and the massive wealth that some people have accumulated have caught the eye of India. And as in most things in life, timing is everything: In some sense the combination of India having its back to the wall in the early 1990s and rejuvenating its reform process, and the wealth accumulating among the diaspora, were the supply and demand side for getting the diaspora together with its home country.

Which Rust Belt city will best embrace its geographically scattered human capital? My mission is to make Pittsburgh the answer to that question and I believe I know how to do it.

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