Books: Rebirth of the Rustbelt – The Smartest Places on Earth

How yesterday’s industrial graveyards are turning into today’s hotbeds of innovation

Akron and Albany, Dresden and Eindhoven, Oulo and Portland – if you have ever heard of these places, it was probably not in connection with cutting-edge research, industrial prowess and high-tech innovation. But you should have.

Antoine van Agtmael and Fred Bakker, an American economist and a Dutch journalist, respectively, traveled to all these cities to document how defunct industrial regions in developed countries are increasingly churning out ideas, companies and products that are highly competitive on the world stage. The new emerging markets, they say, are actually close to home.

In The Smartest Places on Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation, the two authors take the reader on a ride from the shores of New England to the icy coast of Finland, from North Carolina to Saxony. Their message is hopeful: Not only is not all lost for the old manufacturing cities of this world, many in fact have the ingredients to make it big again – and this time with all the wisdom of hindsight, since they have already lived through the cycle of rise and decline.

Underlying their optimism is the observation that new ideas, technologies or apps are no longer developed by isolated geniuses or in the siloed research and development departments of big conglomerates, but through a tightly-knit process of collaboration among many different groups. Top-notch universities, research institutes, companies large and small, and creative young minds can be united to create an innovative ecosystem by what van Agtmael and Bakker call “a connector” – someone with a big vision for the entire region.

If all works together, as it did and still does in many of the places mentioned, something new and special emerges, and the products that henceforth are created will be innovative, connected, customized and of high-quality. Even emerging Asia with its cutthroat wage competition and enormous economies of scale cannot compete with that, they say. To take on the complex, multidisciplinary and expensive challenges of our age, singular actors are no longer enough. Only a collaborative ecosystem that is sharing knowledge can accomplish things that are this difficult.

Blemished utopia
It’s an enticing vision, and the authors present a plethora of encouraging examples and case studies.

Still, three big caveats are barely dealt with. First, the easiest: A collaborative environment is great for a small number of very successful entrepreneurs, programmers and researchers. However, it hardly replaces the security of post-war social systems, and while it is true that the way up is now open, so is the way down.

This leads to the second and bigger caveat, the state of education. The people taking part in this new world of hyper-productive and collaborative labor reality need an extremely high level of skills, which must be continually improved. Unless education levels also rise, the bright new economy seems set to produce some winners, but may also leave a lot of people behind.

While some areas are thriving, it seems increasingly difficult to transform regions with severe structural problems into places of affluence, when the preconditions are so hard to come by. Not every city can offer a good university, big investor or connector with a vision.

Still, the authors suggest, these problems can be solved with savvy, forward-looking public policies. The key, then, is to learn from “the smartest places on earth.”