Archive for the ‘International Creative Class’ Category

Richard Florida
by Richard Florida
Fri Jan 9th 2009 at 9:34am UTC

Happy New Year… of Creativity and Innovation

Friday, January 9th, 2009

The European Commission has made 2009 the European Year of Creativity and Innovation. I’m delighted to be one of the ambassadors. After the finance capital debacle of 2008, it’s high time to place real emphasis on the most productive form of human capital we have – our human creative and innovative capital.  Let’s look forward to a creative, productive, and sustainable year – and perhaps the dawn of a new era.

Click here for details.

Richard Florida
by Richard Florida
Wed Dec 31st 2008 at 11:14am UTC

Creative Europe

Wednesday, December 31st, 2008

In this newly published article, two Dutch researchers, Roel Rutten and John Gelissen, test the creative class theory for Europe and find it holds. I especially like the last line.

[W]e test the creativity and diversity hypothesis of Richard Florida for European regions. Florida argues that the level of regional economic development depends on the levels of technology, talent, and tolerance that regions harbour. Tolerance, in this case, is a measure for diversity of lifestyles, the creativity that results from it and population’s openness towards non-traditional lifestyles. Using data for 94 European regions we investigate whether differences in creativity and diversity are a good predictor of differences in regional wealth in additive and multiplicative regression models. The results indicate that regional differences in diversity are directly related to differences in regional wealth. Moreover, we find that the synergetic effect of technology and talent on the level of regional wealth depends on the degree of diversity that resides within regions. Our findings support the idea that creativity and diversity deserve a more prominent place in economic geography.

Rana Florida
by Rana Florida
Sat Dec 13th 2008 at 4:12pm UTC

Entourage in Moscow

Saturday, December 13th, 2008

We just returned from Moscow where Richard was the keynote speaker at the Federal Agency on Youth Affairs, Government of The Russian Federation alongside other notables including Virgin’s Richard Branson, Apple guru Guy Kawaski, and best-selling author John Naisbitt. The conference focus was the role of innovation among the country’s youth, with audience members ranging in age from 14-25 years old. We enjoyed a fabulous dinner at the famed Cafe Pushkin and Kawaski was lucky enjoy to get his shoes shined by Branson. What do you think of Moscow’s Creative Class?

Richard and Rana at dinner at Cafe Pushkin with Naisbitt, Kawasaki and our hosts

Richard and Rana at dinner at Cafe Pushkin with Naisbitt, Kawasaki and our hosts

Opening Keynote by Richard

Opening Keynote by Richard

Rana and Richard with conference organizer, Mikhail

Rana and Richard with conference organizer, Mikhail

Richard Florida
by Richard Florida
Fri Dec 12th 2008 at 9:17am UTC

Talent and the Crisis

Friday, December 12th, 2008

With all eyes focused on the crisis, we forget that the key axis of economic competitiveness remains the global competition for talent. In my 2005 book, I argued the greatest threat to U.S. long-run competitiveness was the twin pincers – on the one side, increased ability of the emerging economies – particularly India and China – to retain or re-attract their top talent and on the other side by growing efforts among a slew of advanced countries to compete more aggressively for global talent.

What I did not or could not know is how the crisis would accentuate and accelerate these forces. The Financial Times provides this report on how the crisis appears to be accelerating the flow of expat talent from the U.S. Here’s another from the Globe and Mail:

Precise figures of professionals returning home aren’t available, but reverse migration has become a major issue in a number of countries. The financial sectors in India and China are being bolstered by a reverse exodus of highly trained but suddenly jobless bankers and analysts. Brazil and Turkey have observed the same effect. The trend is also visible in smaller developed countries, such as Israel and Australia, that have avoided the worst of the crash. And Malaysia may have gone the furthest in exploiting the phenomenon: Its higher-education minister announced recently that his country’s institutions should launch an international program “to identify Malaysian professionals who lost their jobs abroad to return and work.”The reversal is particularly dramatic in India, where human resource managers for finance firms are reporting hundreds of résumés from New York and London arriving on their desks each week.

The places that are best able to retain and attract talent during and coming out of the crisis will gain significant long term advantage.

Question: Is the crisis altering the global playing field for competing for talent and, if so, how?

Richard Florida
by Richard Florida
Wed Dec 3rd 2008 at 12:19pm UTC

Flight of the Creative Class

Wednesday, December 3rd, 2008

When I wrote it way back in 2005, I argued that the biggest competitive threat facing the U.S. – and in fact the key to economic competitiveness – is the continued ability to attract global talent. Many simply smirked – thinking not a problem, really, because the world is flat – in a flat world after all, you no longer have to emigrate in order to innovate. Check out this ABC News Report:

Job losses and fears of a recession could lead more foreign workers and students in the United States to move back to their home countries – and that has some economic observers worried.
Vivek Wadhwa, an executive resident at Duke University and a senior research associate at Harvard, believes that the United States is headed for a massive reverse brain drain … “It’s a ticking time bomb for the U.S.,” the former entrepreneur said. “If they [foreign nationals] go back to their home countries, not only will we lose critical talent we need for the future, we will also bolster our competition.” … In the current climate, when hiring has declined, visa restrictions – which make it harder for workers to stay in the U.S. without a job – create significant challenges for foreign workers. … Large companies that traditionally recruited foreign talent on visas has declined as many have cut back on hiring. … Foreign students and workers tend to go back to their home after a certain period of time – often because of family – but that trend is likely to accelerate.

It’s usually the best and brightest who come to U.S. universities to study, and when they go back to their home countries, they tend to move to industries that compete with those in the United States, such as engineering, information technology and research and development.”They are fueling the rise of India and China,” said Wadhwa, who predicts that in the next five years, 100,000 Indian and Chinese workers and students will move back. That would be a considerable number, given that it matches the amount who have left over the last 20 years. But it is not just the economic downturn and visa issues that are keeping foreigners from working in the United States. Educators say opportunities abroad, specifically in Asia, also are luring both foreigners and U.S. citizens.

Economic and financial crises are one thing. But they hurt far worse when they begin to redirect the global flow of talent. In his seminal history of global economic and financial centers, Capital of Capitals, Youssef Cassis argues that the shift from one economic and financial center to another usually requires a catacylismic event like a war or economic crisis and  accompanying restrictions on global inflows of talent. The financial crisis is really just the tip of the proverbial iceberg.

Richard Florida
by Richard Florida
Mon Nov 24th 2008 at 1:20pm UTC

Go Canada

Monday, November 24th, 2008

Canada’s banks provide a model for the U.S. and the world according to none other than Time magazine.

Why has Canada withstood the subprime tornado better than other countries, and should the Canadian banking system be a model for G-7 and G-20 leaders when they gather in Washington on Nov. 15? Consider that the Geneva-based World Economic Forum … earlier this month ranked Canada’s banking system as the soundest in the world. The U.S. came in at No. 40, and Germany and Britain ranked 39 and 44, respectively.

The average capital reserves for Canada’s Big Six banks — defined as Tier 1 capital (common shares, retained earnings and non-cumulative preferred shares) to risk-adjusted assets — is 9.8%, several percentage points above the 7% required by Canada’s federal bank regulator. That’s a little better than major U.S. commercial banks like Bank of America, but significantly higher than an average capital ratio of about 4% for U.S. investment banks and 3.3% for European commercial banks.

Another factor that helped make Canada the new gold standard in banking was Ottawa’s decision in the late 1980s to allow commercials banks to acquire investment dealers on Toronto’s Bay Street, the country’s financial hub. As a result, these institutions are subject to the same strict rules as commercial banks, while U.S. investment dealers are subject to only light supervision from the Securities and Exchange Commission. Morgan Stanley and Goldman Sachs, of course, will now be under the U.S. Federal Reserve’s supervision since they have been chartered as bank-holding companies …

There is, of course, a flip side to Canada’s regulatory system. When the global economy was flying high, Canadian banks complained about not being allowed to merge to become more significant international players. “In hindsight, that decision may have saved Canada from having a Royal Bank of Scotland on its hands,” says Lawrence Booth, a finance specialist at the University of Toronto’s Rotman School of Management, referring to the overly ambitious bank’s bailout earlier this month by the British government …

Perhaps when world leaders sit down in Washington to forge a 21st-century New Deal for the global financial system, it may have more than a smattering of Canadian banking know-how.

I feel pretty darn comfortable with them personally. But it remains to be seen how Canada’s economy and currency will fare during the recession. Your thoughts?

Kwende Kefentse
by Kwende Kefentse
Tue Nov 18th 2008 at 1:20pm UTC

From Toronto to Rome: The Education Situation…

Tuesday, November 18th, 2008

While I know that Richard is the official ”Global Trends” guy around here, I hope that he won’t mind my pointing one out; if not a trend, a global synchronicity at least. In two of the world’s great cities – Toronto and Rome – disagreements in educational policy have led to strike situations.

In Toronto, from the Globe and Mail:

The campus was a ghost town yesterday, the first day of the strike by contract faculty, teaching assistants and graduate students, with classes for more than 50,000 students cancelled and pickets letting cars onto university grounds only every few minutes.

There are no plans to resume negotiations.

Christina Rousseau, chair of the Canadian Union of Public Employees Local 3903, said the striking workers are waiting for a signal from university administrators that they are ready to return to talks.

“Right now the ball is in their court,” she said. “We feel it is their turn to make a move.”

The university has offered a 9.25-per-cent wage increase over three years. A university spokesman said the administration is willing to go to binding arbitration.

The workers have asked for a two-year contract with a wage increase of 11 per cent over that period. The demand for a two-year deal is part of a broader strategy by CUPE Ontario to co-ordinate bargaining on all Ontario campuses in order to gain leverage at the negotiating table.

And in Rome from the BBC:

Sleeping bags in lecture theatres, lessons in parks, people wearing plasters on their faces. They are just some of the ingredients in Italy’s hugely divisive row over education.  The sleeping bags are being used by students, who have taken over a number of buildings. Lessons in some places are being held in parks, as classrooms are occupied, and the plasters are the symbolic sign of the “cuts” the students and staff are protesting against.

But these are not just isolated protests by a few disgruntled hardliners.  A number of recent marches in Rome have attracted up to half a million demonstrators.  Seasoned Italian commentators say they are the biggest in 15 years.

The protests are not just for university students. Secondary school teachers and pupils are also on the streets, as their slice of the education budget comes under threat as well.  The government is pushing its reforms because it believes universities and schools are inefficient and producing lacklustre results.

I also did a little bit of Facebook reconnaissance and found popular groups for and against the strike in Toronto, while Italy Education Minister Mariastella Gelmini’s page has been flooded with comments from young people on the situation.

While both are complex and ultimately different situations, one of the few comparables is popular support: In Rome it is overwhelming, while in Toronto it’s very divided. With starkly different political climates, I can’t speak on how well this bodes for either side, but it will be interesting to see how both situations are resolved. They each represent what the prospective futures of significant numbers of young people within their respective regions will be like. In turn, this will ultimately affect the overall prosperity of the regions.

And now, as always, some music.

CCE Editor
by CCE Editor
Fri Oct 3rd 2008 at 8:35am UTC

Why Place Matters

Friday, October 3rd, 2008

Torhild Eide Torgersen, an artist from Norway, drew “Why Place Matters” during Richard’s recent speech in Larvik. What do you think of her interpretation?

Martin Kenney
by Martin Kenney
Thu Oct 2nd 2008 at 8:36pm UTC

Global Financial Crises Need Humility from the Insolvent

Thursday, October 2nd, 2008

Rich Florida has just put an interesting post on this blog about understanding the current crisis. I am in complete agreement with his analysis, but what are some of the other dimensions of this crisis?

I want to reflect upon three largely unrecognized changes that this crisis is driving in global finance. This also links back to a portion of my post on the necessity of a global new deal.

First, one of the most interesting features of the current “Wall Street Golden Parachute Bill” that will probably pass the U.S. House of Representatives tomorrow is that any global bank with a U.S. subsidiary will be able to sell its bad U.S. securitized debt to the Federal government. This feature is a critical part of the Bill because it places the U.S. government’s full faith and credit (what little there is) behind these toxic securities. This was necessary as both European and Chinese leaders have demanded that the U.S. government “clean up the mess” that it allowed U.S. banks to create.

For example, according to Bloomberg, the British Prime Minister directly intervened in supposedly “sovereign” U.S. discussions about internal economic matters when he said, “The rescue plan for the United States is an essential element now for the U.S. to build confidence in its financial system. This plan has got to go through, and I think it will in the next few days. People are starting to realize that we {read the U.S.} must take action.” Merkel of Germany and Sarkozy of France openly doubt the U.S. model, while the Chinese have demanded the U.S. meet its financial obligations. Bloomberg reported that Russian Prime Minister Vladimir Putin said yesterday that U.S. “irresponsibility” led to the global financial crisis, discrediting the country’s claims to world leadership.” Further, there seems little doubt now that the takeover of Fannie Mae and Freddie Mac were in some important measure driven by demands by foreign creditors.

Second, the rash of collapsed European banks is challenging the European Union itself. For example, many of the largest European banks are so large that even an economy like Germany might not be able to save its largest banks. Can the EU stay together and cooperate to save their banks.

Third, U.S. and European banks are desperate to get Asian and Middle Eastern banks and sovereign wealth funds to bail them out. However, they wish to surrender no control to the rescuers. In other words, these nations should be philanthropists, while, if the shoe was on the other foot, our banks are more than willing to extract a pound or two of flesh.

The previous suggests that the crisis and any solution must be global. But, unfortunately for the U.S. and Western Europe, this global solution will require that all parties are treated with respect. Those that control the bankroll will no longer be treated as second-class citizens when it comes to decision making. Those that are bankrupt cannot dictate the rules for the solvent.

Do you think the U.S. “gets” this yet? Do the Europeans and the Canadians get it?

Richard Florida
by Richard Florida
Wed Oct 1st 2008 at 3:49pm UTC

Cities and the Financial Crisis

Wednesday, October 1st, 2008

Over at the Financial Times, Michael Skapinker writes that New York and London will rebound for three reasons:

[O]ne day, with new regulations in place, companies will return to raising funds, banks to lending and financiers to making money. New York and London will remain the best places to do this because they retain the advantages they had before. The first is language. Lehman Brothers may have gone overnight, but it takes centuries for a language to disappear. A global generation has invested years learning English, which has no ready challenger. The two cities’ second advantage is law. The US may be excessively litigious and lawyers may charge outrageous fees in both cities, but where else would you look to the law to defend your corporate rights? Shanghai? Moscow? The third advantage is collective brain power. This may seem laughable, given where bankers’ supposed intelligence has landed us now, but the solutions to this crisis will come in cities most open to raucous debate from whoever has anything to contribute. The next 30 years will be different, but New York and London will rise again.

Maybe – but we’re also likely to see some shift in financial power, especially to Asia, over this time. I also think it’s a huge mistake to read NY and London as financial centers. My own sense is that it is their broadly based creative economies that have propelled NYC and London to economic heights. I’d like to see the two cities spread their bets even more broadly across entertainment and creative industries and other forms of innovation.

And Charlotte looks to be hard-hit, according to the Wall Street Journal:

“The sale of Wachovia bank to Citigroup Inc. has thrown this city — obsessively proud of its status as the nation’s second-leading banking center behind New York City. Construction continues on the new Wachovia headquarters in Charlotte, N.C., even as the bank is absorbed. Overnight, Charlotte faces the prospect of losing not just thousands of jobs but its civic identity.”

Worse yet, cities and states are already feeling the effects of tight credit, according to the New York Times:

“Cities, states and other local governments have been effectively shut out of the bond markets for the last two weeks, raising the cost of day-to-day operations, threatening longer-term projects and dampening a broad source of jobs and stability at a time when other parts of the economy are weakening. The sudden loss of credit, one of the ripple effects of the current financial turmoil, is affecting local governments in all parts of the country, rich and poor alike.”

This will surely get worse in the weeks and months ahead so expect more cutbacks. And it will hit everything from badly needed infrastructure projects to schools and even great state universities. This kind of retrenchment will surely affect the ability of U.S. cities and regions to compete globally for investment, business, and talent in the long run.