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The New Economy in Indianapolis
The New Economy in Indianapolis
Rob Atkinson
Vice President and Director, Technology and New Economy Project
Progressive Policy Institute
www.ppionline.org
The New Economy in Indianapolis
• Founded in 1989 by the Democratic Leadership Council
• 501 (c) (3)
• Mission is to define and promote a ‘Third Way’
progressive politics for the Information Age
• An alternative to the liberal impulse to defend the
bureaucratic status quo and the conservative bid to
dismantle government
The Progressive Policy Institute
The New Economy in Indianapolis
“The Information Economy” “The Network Economy”
“The Digital Economy”
“The Knowledge Economy”“The Risk Society”
“The New Economy”
The New Economy in Indianapolis
• A New Economy Has Emerged
• It Will Change The Nature And Practice Of Economic Development
• It Will Affect All Regions And Communities
• There’s No Going Back
The New Economy in Indianapolis
The New Economy is a knowledge and idea-based economy where the keys to wealth and job creation are the extent to which ideas, innovation, and technology are imbedded in all sectors of the economy.
The question to ask is not “do we have ‘New Economy’ industries,” but rather, “are our industries New Economy?”
6The New Economy in Indianapolis
Economist Joseph Schumpter DescribedHis Era’s (1940's) New Economy
“These [economic] revolutions periodicallyreshape the existing structure of industry byintroducing new methods of production -- themechanized factory, the electrified factory,chemical synthesis, and the like; newcommodities, such as railroad service, motorcars,electrical appliances; new forms of organization --the merger movement; new sources of supply -LaPlata wool, American cotton, Katanga copper;new trade routes and markets to sell in and soon.”
7The New Economy in Indianapolis
Today’s New Economy Transformation isJust as Profound
These revolutions periodically reshape the existingstructure of industry by introducing new methods ofproduction -- the networked office, computer-aidedmanufacturing, biotechnology production and thelike; new commodities, such as the Internet, cellulartelecommunications, the PC; new forms oforganization -- the venture capital movement; therise of “high-performance work organizations”; thegrowth in business alliances and partnerships; andnew sources of supply - high-skilled H1-Bimmigrants, solar power; new trade routes andmarkets to sell in (Nafta, Asia) and so on.
8The New Economy in Indianapolis
The Reports of the Demise of the New
Economy are Premature
9The New Economy in Indianapolis
GDP Growth: What Recession?
0.0
1.0
2.0
3.04.0
5.0
6.0
7.0
1998 1999 2000 2001
% G
row
th
10The New Economy in Indianapolis
Productivity Growth
0
1
2
3
4
5
1998 1999 2000 2001
% C
hang
e
11The New Economy in Indianapolis
The Stock Market
0
2000
4000
6000
8000
10000
12000
1996 1997 1998 1999 2000 2001
Dow Jones
Nasdaq
12The New Economy in Indianapolis
IT Expenditures
0
100
200
300
400
500
600
700
1998 1999 2000 2001
Bill
ions
13The New Economy in Indianapolis
Telecom Investment
0
20
40
60
80
1998 1999 2000 2001* 2002*
* Projections
Bill
ions
14The New Economy in Indianapolis
Venture Capital Still Higher than in 90’s
0
20
40
60
80
100
120
1996 1997 1998 1999 2000 2001
Bill
ions
15The New Economy in Indianapolis
Industry R&D Expenditures
1.80%
1.85%
1.90%
1.95%
2.00%
2.05%
1997 1998 1999 2000
% o
f GD
P
16The New Economy in Indianapolis
Patents Issued
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1995 1996 1997 1998 1999 2000
17The New Economy in Indianapolis
The Digital Economy is Alive
and Well
18The New Economy in Indianapolis
Rapid E-Commerce Growth
300
400
500
600
700
800
900
Billions o
f D
ollars
1998 1999 2000
U.S. Internet Economy
19The New Economy in Indianapolis
Mushrooming Internet Hosts
020406080
100120140
Mill
ions
20The New Economy in Indianapolis
More People Online
0
10
20
30
40
50
60
1997 1998 2000 2001
% O
nlin
e
21The New Economy in Indianapolis
More People Can Get Broadband
0
20
40
60
80
100
1999 2000 2001 2002 2003 2004 2005
% o
f Hou
seho
lds
DSL and/or Cable Modem Cable Modem DSL
22The New Economy in Indianapolis
More People Have Broadband
02468
101214
99 00 01 02* 03* 04* 05** Projections
Mil
lio
ns
of
Su
bsc
rib
ers
Cable-to-PC DSL
23The New Economy in Indianapolis
0
0.5
1
1.5
2
2.5
1999 2000 2001
Bill
ions
of D
olla
rsBanner Ad Sales
The New Economy in Indianapolis
Metropolitan and State New Economy Indexes used 5 groups of indicators to measure how well places are adapting to the New Economy:
Knowledge Jobs Globalization Economic Dynamism Digital Economy Technological Innovation
How Are Indiana and Indianapolis Doing in the New Economy?
The New Economy in Indianapolis
Indianapolis
Rank
29
Overall New Economy Scores
Indiana 40
The New Economy in Indianapolis
Overall Metropolitan New Economy Scores (2001)
27The New Economy in Indianapolis
2nd Quartile
1st Quartile
3rd Quartile
4th Quartile
Overall State New Economy Scores (1999)
The New Economy in Indianapolis
Score Rank
39% 15
Managerial, Professional, and Technical Jobs
IndianapolisIndiana 22.1% 47
The New Economy in Indianapolis
Managerial, Professional & Technical Jobs
The New Economy in Indianapolis
Rank
33
Workforce Education
IndianapolisIndiana 33
The New Economy in Indianapolis
Workforce Education
The New Economy in Indianapolis
“Gazelle” Jobs
Rank
38IndianapolisIndiana 37
The New Economy in Indianapolis
“Gazelle” Jobs
The New Economy in Indianapolis
New Publicly Traded Companies
Rank
35IndianapolisIndiana 38
The New Economy in Indianapolis
New Publicly Traded Companies
The New Economy in Indianapolis
Online Population
Score Rank
42% 23
IndianapolisIndiana 56% 2
7
The New Economy in Indianapolis
Online Population
The New Economy in Indianapolis
Broadband Telecommunications
42
Rank
28Providers Per Zip Code
2.76IndianapolisIndiana 40Composite Score
The New Economy in Indianapolis
Broadband Telecommunications
The New Economy in Indianapolis
High-Tech Jobs
Score Rank
2.7% 30
IndianapolisIndiana 3.4% 3
3
The New Economy in Indianapolis
High-Tech Jobs
The New Economy in Indianapolis
Scientists and Engineers
Rank
37IndianapolisIndiana 38
The New Economy in Indianapolis
Scientists and Engineers
The New Economy in Indianapolis
Patents
Rank
15IndianapolisIndiana 39
The New Economy in Indianapolis
Patents
The New Economy in Indianapolis
R&D Funding
Rank
49IndianapolisIndiana 34
The New Economy in Indianapolis
Academic Research and Development Funding
The New Economy in Indianapolis
Venture Capital
Rank
48IndianapolisIndiana 36
The New Economy in Indianapolis
Venture Capital
The New Economy in Indianapolis
A New Economy Requires a New Economic Policy
OLD ECONOMY MODEL
Get Big
Get Cheap
NEW ECONOMYMODEL
Get Prosperous
Get Better
The New Economy in Indianapolis
Getting big meant trying to get more jobs and companies even if:
- the jobs were bad, and - the region was choking from growth (high housing prices, air pollution, shortage of workers, traffic gridlock)
The Old Economy Model: Getting Big
The New Economy in Indianapolis
Getting cheap meant tax holidays, big subsidies and other giveaways to companies that only cared about cost.
The result were low wage jobs and companies that were just as likely to leave after a decade for even cheaper pastures.
For example, almost half the jobs of companies in one Midwestern city that got tax subsidies paid less than 8$ per hour.
The Old Economy Model: Getting Cheap
The New Economy in Indianapolis
Getting prosperous means focusing on creating jobs with higher wages and better working conditions, reducing poverty and increasing economic opportunities for all of the region’s citizens.
The New Economy Model: Getting Prosperous
54The New Economy in Indianapolis
The Old Economy Model: Location, Costs, and Resources
The New Economy in Indianapolis
Getting better means boosting the skills of the region’s workforce, ensuring a technologically advanced infrastructure, fast and responsive government, and ensuring a high quality of life that will be attractive to knowledge workers.
The New Economy Model: Getting Better
The New Economy in Indianapolis
• Help companies get skilled workers
• Help Companies Access Technology
• Foster a Climate of Innovation
• Encourage a Robust IT Infrastructure
• Boost Quality of Life
• Foster New Economy Governance
What To Do:
The New Economy in Indianapolis
Metropolitan regions that meet the challenges of the New Economy focusing on innovation, learning, and constant adaptation… will be the ones that succeed and prosper.
The New Economy in Indianapolis
WWW.PPIONLINE.ORG
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