The New Economy in Indianapolis The New Economy in Indianapolis Rob Atkinson Vice President and Director, Technology and New Economy Project Progressive.

The New Economy in Indianapolis


Rob Atkinson

Vice President and Director, Technology and New Economy Project

Progressive Policy Institute

www.ppionline.org


• 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 Information Economy” “The Network Economy”

“The Digital Economy”

“The Knowledge Economy”“The Risk Society”

“The New Economy”


• 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 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.”


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.


The Reports of the Demise of the New

Economy are Premature


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


Productivity Growth

0

1

2

3

4

5

1998 1999 2000 2001

% C

hang

e


The Stock Market

0

2000

4000

6000

8000

10000

12000

1996 1997 1998 1999 2000 2001

Dow Jones

Nasdaq


IT Expenditures

0

100

200

300

400

500

600

700

1998 1999 2000 2001

Bill

ions


Telecom Investment

0

20

40

60

80

1998 1999 2000 2001* 2002*

* Projections

Bill

ions


Venture Capital Still Higher than in 90’s

0

20

40

60

80

100

120

1996 1997 1998 1999 2000 2001

Bill

ions


Industry R&D Expenditures

1.80%

1.85%

1.90%

1.95%

2.00%

2.05%

1997 1998 1999 2000

% o

f GD

P


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


The Digital Economy is Alive

and Well


Rapid E-Commerce Growth

300

400

500

600

700

800

900

Billions o

f D

ollars

1998 1999 2000

U.S. Internet Economy


Mushrooming Internet Hosts

020406080

100120140

Mill

ions


More People Online

0

10

20

30

40

50

60

1997 1998 2000 2001

% O

nlin

e


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


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


0

0.5

1

1.5

2

2.5

1999 2000 2001

Bill

ions

of D

olla

rsBanner Ad Sales


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?


Indianapolis

Rank

29

Overall New Economy Scores

Indiana 40


Overall Metropolitan New Economy Scores (2001)


2nd Quartile

1st Quartile

3rd Quartile

4th Quartile

Overall State New Economy Scores (1999)


Score Rank

39% 15

Managerial, Professional, and Technical Jobs

IndianapolisIndiana 22.1% 47


Managerial, Professional & Technical Jobs


Rank

33

Workforce Education

IndianapolisIndiana 33


Workforce Education


“Gazelle” Jobs

Rank

38IndianapolisIndiana 37


“Gazelle” Jobs


New Publicly Traded Companies

Rank



New Publicly Traded Companies


Online Population

Score Rank

42% 23

IndianapolisIndiana 56% 2

7


Online Population


Broadband Telecommunications

42

Rank

28Providers Per Zip Code

2.76IndianapolisIndiana 40Composite Score


Broadband Telecommunications


High-Tech Jobs

Score Rank

2.7% 30

IndianapolisIndiana 3.4% 3

3


High-Tech Jobs


Scientists and Engineers

Rank



Scientists and Engineers


Patents

Rank



Patents


R&D Funding

Rank



Academic Research and Development Funding


Venture Capital

Rank



Venture Capital


A New Economy Requires a New Economic Policy

OLD ECONOMY MODEL

Get Big

Get Cheap

NEW ECONOMYMODEL

Get Prosperous

Get Better


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


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


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


The Old Economy Model: Location, Costs, and Resources


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


• 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:


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.


WWW.PPIONLINE.ORG

The New Economy in Indianapolis The New Economy in Indianapolis Rob Atkinson Vice President and Director, Technology and New Economy Project Progressive.

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