One of the challenges of globalization in the I-Cubed Economy is understanding why production is located where it is. It is especially important to figure out why production stays in one place or moves to another. This is at the heart one of the pillars of the economic development process (the other pillar is how to foster home-grown companies). In the industrial age, access to resources and transportation were often seen as the key. But in the I-Cubed Economy, the rules have changed -- and we are still trying to sort it out.
Take for example this story in today's New York Times -- When Foreigners Buy Factories: 2 Towns, 2 Outcomes:
HOLLAND, Mich. — Four years ago, a low-slung factory on the fringes of town here was stagnating and shedding workers. Then Siemens, the German industrial giant, bought the plant and folded it into a global enterprise. Today, the factory is shipping wastewater treatment equipment to Asia and the Middle East and employing twice as many workers.
“Globalization has been good for Holland,” said David J. Spyker, once the plant manager and now vice president of a Siemens unit with operations around the world.
About 60 miles to the northeast, such talk provokes contemptuous snickers. Two years have passed since a Swedish multinational shut down what had been the largest refrigerator factory in the country, a sprawling complex along the Flat River in Greenville.
The company, Electrolux, sent production to Mexico, eliminating 2,700 jobs from a town of 8,000 people.
The story gives little guidance in answering this key question. It talks about the general innovative climate in Holland and the lack of opportunity in Greenville. But other than this general impressionistic view, there is little hard analysis. Maybe it is the type of product? Maybe it is the skill level of the workers? Maybe it is the cluster effect?
Maybe we can get some bright graduate student to do their thesis on the issue? It would be a worthy project.
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