Knowledge and Information in Economic Development
Just as information and knowledge are changing the nature of our economy, they are also changing the practice of local economic development. Companies are changing how they operate and what drives their location decisions. Local economic development strategies must adapt to these changes. In additio n, we are gaining a better understanding of how information and knowledge affects both the economy in general and the economic success of specific localities. As a result, there is a rise in new theories of economic development, such as economic clusters, that can be useful in guiding local economic development activities.
Changing factors in location decisions
The shift to a knowledge/information-based economy in changing what business needs as inputs to the production process. No longer are business location decisions based simply on the availability of cheap land, cheap energy, a low-cost labor force, availability of raw materials, or access to transportation. The ability of a locality to supply a company’s need for information and knowledge assets has become paramount in economic development. There are at least three elements involved in the process: an up-to-date IT infrastructure, availability of skilled workers, and a good quality of life.
The IT infrastructure
The starting point for economic development in the information age is the existence of a suitable IT infrastructure. Many people see the Internet as a consumption tool—as a means of recreation, information gathering and shopping. Economic development practitioners know that the information technology infrastructure is also a production tool. Advanced information technologies can make businesses more productive and efficient as well as expand their markets. To take advantage of those opportunities, companies must have access to high-speed telecommunications connections, known as “broadband.”
Having access to broadband is especially important in attracting technology-creating companies. It is also important for the heavy IT using companies. More and more companies are able either to locate so-called back office operations in distant areas or to outsource those operations entirely to companies located in lower-wage areas. On an individual basis, the location of back office operations in more distant areas leads to a sort of telecommuting.
In some areas, especially current commercial and business hubs, broadband has been and is being installed as a matter of course. Other areas, especially rural areas and parts of the inner city, are in danger of being left behind.11 According to a joint study by National Telecommunications and Information Administration (NTIA) and the Agriculture Department’s Rural Utility Service (RUS), “rural areas are currently lagging far behind urban areas in broadband availability. Deployment in rural towns (populations of fewer than 2,500) is more likely to occur than in remote areas outside of towns. These latter areas present a special challenge for broadband deployment.”
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