Wednesday, September 26, 2012

Visualizing Convergence Of Innovation Economy

"The New Geography of Jobs" has affected the way I see the world. I've tried to apply the concepts of convergence and divergence so I might better understand Enrico Moretti's book. Aaron Renn (The Urbanophile) has a meaty review that can help illuminate the theoretical framework:

I wonder too whether the trends Moretti cites, while valid over a 40 year cycle, are less true today. One way economists measure clusters is by using a metric called Location Quotient. This measures the concentration of employment in a particular industry in a specific industry relative to America as a whole. But the math works for lots of things. So we can look, for example, at literal clusters of talent by looking at the location quotient of college degree attainment. [Here is a map of changes in the location quotient for college degree attainment from 2000 to 2011.]

This is certainly interesting. Many of Moretti’s talent hubs actually are less concentrated in brainpower relative to America today than they were in 2000. Out of 51 metro areas with more than a million people, Austin ranked 50th on this metric. San Jose and San Francisco were 42nd and 43rd respectively. (Pittsburgh was #1, incidentally).

Emphasis added. I wondered the same thing. Moretti (and Richard Florida) is describing yesterday's dominant economic geography. Winds of change are blowing. "The California Rust Belt":

The graph explained:
I collected data on startup businesses from Form D filings made with the Securities and Exchange Commission for the last decade (2002-2012). These filings are made by startup companies that raising funds in private markets, especially companies in California’s hallmark high-tech and venture capital sectors. The companies that file Form Ds are the Googles and Facebooks of the future, as those companies’ pre-IPO Form D filings can be found here and here. Thus, these filings provide a unique and previously unexamined source of information into the geographical distribution of startup companies raising funds in private markets—a window into what a state’s economic future might look like.

Emphasis added. Someone correct me if I'm wrong. This looks like the picture of convergence. The upward trend of New York State and the downward trend of California provide a stark contrast, a sudden shift in economic gravity. All hail Greater Greater New York.

I'm convinced that the status quo of divergence is breaking down. Divining where we are headed is a free for all. Suffice to say, "The New Geography of Jobs" is now the old geography of jobs.

No comments: