The Latest in Economic Development

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This week’s blog discusses a different kind of university business park, manufacturing in Silicon Valley, the future of economic growth, a new report from Deloitte on fixing joblessness, and a closer look at the last jobs report.

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How do you mix academics, nonprofits and businesses to bring research to market?  According to Bill Fulton in Governing, the Centennial Campus at North Carolina State is doing it right. “Centennial — located just south of the main North Carolina State campus in Raleigh — is now everybody’s poster child for how a university business park should work.” As expected, because of Centennial’s success, “it seems every university wants to create a mixed-use research/commercialization campus within walking distance of faculty labs.” Universities like Arizona State and Nebraska have followed suit in their own way.  Fulton exclaims the future of economic development lies not in research parks with “proprietary innovation on closed corporate campuses, but in the walking, strolling and random interaction of Centennial.”

Silicon Valley is a place dominated by the “knowledge economy,” with firms churning out apps and software like hotcakes,  but there are more companies making tangible stuff there than you may think. Silicon Valley actually has the second highest concentration of production jobs among America’s big cities. But of course, this isn’t the manufacturing of yore; these firms are “boutique manufacturing operations relying on fewer workers, more computer code and mind-boggling machines.” So, some of these firms definitely provide opportunities for lower-skilled workers, but the article points out that “as manufacturing becomes more sophisticated they’ll need more training for the best jobs.”

A recent post on Ezra Klein’s Wonkblog asks an intriguing question: Have we reached the end of economic growth? Brad Plumer summarizes the work of Northwestern economist Robert Gordon, who postulates that before the industrial revolution, there was hardly any growth whatsoever followed by a relatively short period of extremely high growth (aided by technological progress) leading us to today. Could we hypothetically be headed for another long period of low/no growth? Probably not. As expected, there are many in the economics community who don’t share this unconventional view, and Plumer does a nice job boiling down the responses of John Cochrane, Matt Yglesias, and Chris Dillow, among others.

This week, Deloitte released a report on fixing joblessness through education, employment regulation, immigration, foreign investment, and unemployment insurance. The report stresses continual learning, making the case that “specific job skills learned through a BA will last for five years, and will then have to be renewed” – not necessarily through formal education, though. The report also calls for removing licensing restrictions on a host of occupations; this has been well documented recently. Other suggestions the report makes are to increase FDI inflows and relax immigration rules to encourage entrepreneurs to stay in the US.

In the last jobs report, the unemployment rate declined from 8.25% in July to 8.11% in August; what accounts for this improvement? Unfortunately, some of this was due to people exiting the labor force – “the labor force participation rate hit a new post-1980 low.” Initial reactions perceived this as a sign that people are giving up, sitting home and doing nothing because they can’t find work. But according to the Atlanta Fed, “the number of discouraged, marginally attached people corresponds to… approximately 1 percent of those not in the labor force.” So, although the unemployment rate improves in many cases because of people leaving the labor force, it is usually not for reasons which we most often think.