Which is more vital to economic growth in cities and regions: trade or talent? Economist Richard Florida revived the debate between the two in a recent post on The Atlantic Cities blog.
Traded industries — those with goods and services that can be exchanged outside of their region of origin — have a reputation for creating more economic vibrancy and growth than local industries, which mostly produce products for the regional market. That’s why economic leaders work so aggressively to recruit them.
But talent — the development, attraction and retention of it — is also touted as a key factor in spurring growth across metros of all sizes. Where the workforce is highly skilled, for example, higher rates of innovation and entrepreneurship often follow.
So which matters more?
Florida and his team examined both and how they work separately and in conjunction with each other to advance economic growth. Talent-wise, everything from wages, individual productivity and patents per 10,000 people to percentages of college graduates and creative-class workers were measured. For trade, formulas were used to isolate its effect on the local economy, controlling for population, density and high-tech industry.
The result? Talent variables showed a much greater impact on regional economic performance than trade did, especially when talent was controlled for. In terms of productivity and wages, talent equally affected both traded and local industries, with a slightly greater impact on the latter. Talent also seemed to spur the highest level of innovation in traded industries.
Collectively, the research showed that talent left a bigger mark on its own and through both industry structures than trade alone on regional economic performance.
Talent as a Strategy
In some regions, the pursuit of talent has already taken prominence as an economic development strategy. Take Kannapolis, N.C., for example, where biotechnology and life sciences work at the North Carolina Research Campus is attracting knowledge-based workers. The facility, located in one of the state’s largest former textile mills, has already drawn 300 workers and is expected to attract up to 5,000 by the time it’s fully built out.
In Albuquerque, N.M, Sandia National Laboratories and the University of New Mexico are partnering to attract and retain more research talent to expand their expertise in specialties such as quantum information, energy technologies and nanoparticle-based drug delivery. And though Nashville, Tenn. has a healthy mix of traded and local industries, its high concentration of universities and colleges as well as college graduates play a big role in its economic success.
What’s your view? Is attracting talent a more effective strategy than focusing on trade? Please share your views below.