In 1979, Seattle and Albuquerque were comparable regions, in population, in reputation and industry.
That year, young Bill Gates and team moved their fledgling computer company Microsoft back home to Seattle — and that changed everything. A generation later, Albuquerque native Jeff Bezos decided to move his own early ecommerce company Amazon to Seattle because Microsoft built an ecosystem there. Today, Seattle is a top-tier innovation economy, by my news organization’s own measure, and Albuquerque isn’t even on the map.
Where once regional economies sought physical capital, they now pursue human capital, and there’s a flywheel effect for people even more than the agglomeration effects of industry. So argues the influential 2012 book The New Geography of Jobs, written by economist Enrico Moretti.
This matters because like manufacturing in the 20th century, the knowledge sector is the driver of the economy today. All those “tradable jobs” create all the non-tradable ones that follow. Put another way, if you lcoate a tech firm or manufacturing plant in a town, then a Walmart will follow — but not the other way. All those productive workers make everyone else more productive too, for three big reasons: complementarity, better technology and externalities.
Globalization was supposed to mean “the world was flat” Instead, geography matters even more. Below find my notes for future reference.
Continue reading The New Geography of Jobs