San Diego Fishing Industry and the Theory of Transactional Clusters (The National Advantage Section 3)

Any system that seeks perpetual renewal must find a way in which to regenerate itself by using existing resources and converting them into useful capital. Each level of development will be better than the previous platform of existence bringing with it new ways of looking at the world and the commercial opportunities that lie within. Systems that continue to grow will need to also become more innovative and better stewards of the resources they have. As investors seek to obtain returns on these pockets of innovation they also fuel the mechanisms of change that encourage greater sophistication and additional returns. When these systems gain international interest and resources they attract a wider pool of interlopers. 

Revitalizing American Towns

Revitalizing Small Towns Through Stakeholder Analysis and Strategy:

Revitalization downtown areas is an important public policy initiative based on the declining Midwestern towns displaced by globalization and migrations to metropolitan areas. The study entitled How to Revitalize a Small Rural Town? An Empirical Study of Factors for Success. University-Community Collaboration with a Small Historic Rural Tourism Town in the Journal of Rural and Community Development offers valuable information on how university-community collaboration can impact the revitalization of small towns (Grunwell & Ha, 2014).

Public officials of Dillsboro, NC reached out to local university staff to help it with staggering declines in economic activity as a result of the tourist train no longer stopping at their station. Local employment consisted of education, healthcare, social assistance, entertainment, art, recreation, food services, and public administration. With limited business attractions and an average household income of $33,500, 8% unemployment rate, and many of its shops closed it needed help in sparking new growth. 

To understand what stakeholders needed and wanted university staff to put together three questionnaires to help gauge the fundamentals of decline. The questions were directed toward:

 (1) town business owners, 

(2) university faculty/staff and students,

(3) visitors to the town.

By cross-examining the similarities of the three different survey results, it was found that people wanted the return of the tourist train, consistent business hours, occasional extended hours during events, stronger marketing campaigns, additional entertainment, a variety of businesses, visible town signage, and enhanced attractions.

Based on these results and university analysis it was determined that the town needed a more robust marketing strategy, business plans that spurred local growth, and many more activities that attract visitors. The marketing strategies that seemed to attract the most people were signage, regional magazines, newspapers, signage, and word-of-mouth. 

Creating small towns of interest relied heavily on the community business owners collaborating under a formal plan and agreeing that each should move in the same direction so that all members can reach higher levels of growth and wealth. They bought into the marketing plans and pushed for greater awareness. Different types of shops that offer were encouraged to join the area, and a partnership with the train company was created to bring it back to town. 

Functional Downtown Spaces: Culture and Functionality as a Branding Opportunity:

The downtown for small and medium towns are an important center of commercial activity but are ill-prepared to take on the challenges of a more modern global environment.  As city leaders decide the fate of the future of their towns by considering the benefits of downtown revitalization projects, it is helpful to move beyond just commerce and services to see how a downtown can also be a cultural center that creates new opportunities in business, values, and branding.

Research on medium sized towns found that it is beneficial to include cultural space in the overall efforts of revitalizing downtown districts (Pazder, 2011). Business districts should be seen through a lens of commerce and culture to help ensure they are vibrant and functional. Cultural identity becomes part of the town's heritage and can make it attractive to new businesses.

Small and medium towns should seek ways to differentiate themselves from larger cities that attract their own demographic. Small town success is rooted in its ability to offer something unique that can't be easily copied by competing areas. Connecting the business district with its historical past blends the new and the old in a way which creates a sense of deep value for residents.

The world is changing through acculturation and globalization. When towns can formulate a sense of identity and a functionality that is attractive to new business and residents, will have an easier time rejuvenating. Skill professionals are often attracted to cultural based cities that provide a valuable lifestyle and business are more likely to invest when the commercial district offers the best chances for success.

Across the country, the old downtown that has sustained commerce for hundreds of years must change to meet modern demands. Transforming the city center into a cultural and functional space offers new opportunities for branding and investment. In turn, that branding can be used to market the town to regional, national and international stakeholders that can put dollars in where common sense city management prevails.

Coming Digitization and Manufacturing Shifts:

Think Tank Scholars at McKinsey Global Institute believe that we may soon experience a boom in worker productivity and increased advanced digitization that will transform society. Their hypothesis is that as the labor market becomes tighter companies will be forced to adapt new technologies that will improve labor productivity and innovation. It is believed that a productivity boom will improve overall output of the country and its subsequent wealth (McKinsey & Company, 2018). You can Read the Research Here

They argue that there has been limited labor productivity growth since the 1960s. There was a brief productivity growth boom between 2000 and 2004 and it was followed by productivity slowdowns. Their argument is that another productivity boom is likely in the near future based on technological advancements.

Digitization will transform many companies because the tight labor market will force them to invest in digitization that is hitting the market. The end result is a boost in productivity that could impact the labor market as we know it. The needed skills and infrastructure may not be available. 

Self-driving cars, greater connectivity, kiosks, and mobile technology are just some of the new technologies that have not yet made their way into full integration. They will likely do so within the next 10 years thereby revolutionizing the economy. Capital investments and experimentation are also likely to rise during this period.

There will be a evolution and revolution to an advanced economy paradigm where companies invest heavily in digitization that improve productivity in order to not be restricted by a tight labor market. This will displace workers without high demand skills and education. It is possible there will be more wealth but that wealth will be concentrated again in fewer hands contributing to income disparity. The positive side is that new innovation leads to greater corporate profits and also results in improved investment and job growth.

While the authors content this is from the labor market there is also the need of corporations in the U.S. to compete. The technology is available and becoming more practical as time continues. There will be a point where it will make business sense to implement it. 

The change to digitization will put new stresses on our current infrastructure that was designed more for the movement of large industrial products from the Industrial Age. Now the infrastructure will need to be improved to include data high way, small production, as well as the ability to move people and large production outputs into the international market. Preparing for these changes allows the U.S. to move into a new level of output potential that can supersede other nations development capacity as well as improve on general productivity and price. 

Influence of Globalization:

Globalization is a trend that has been fully embraced by some and treated as an unwelcome guest by others. The concept of globalization entails the need for change and further development in order to meet its widespread market pressures. Understanding globalization creates a stronger framework for understanding how it impacts international business and underlying perceptions of human capital. Through the development of a greater understanding there is the possibility of better management of global alignment.

Globalization was first mentioned in 1983 when Theodore Levitt explained how technology would drive the world into a single conversational platform that would result in global markets and brands (Govil & Rashmi, 2013). Markets begin to consolidate and new forms of business develop in order to compete in and traverse those markets. Those businesses that do not factor in the changing market and its globalizing effects may be end losers in the international game. 

There are many different ways in which to view the concept of globalization. Globalization can be seen as moving a national state into a global state (Stojanov, 2012). During such transition local workers align skills to the needs of the international community and are capable of working within firms that have international products and services. Companies seek out such local candidates when considering choices of expansion and international investment. 

Globalization is a concept of free trade that fits within a Capitalistic structure (van Meerhaeghe, 2012). Such free trade comes with the movement of products, money, labor, and businesses from one part of the globe to the next. Countries are no longer defined simply by their country of origin but become defined by a more transient global business environment.  More competitive structures create more business interest and investment.

As these products, business, labor, and investment shift from one place to the next there will be locations that naturally lose out on the benefits globalization has to offer. For example, income equality can result in places like South-East Europe or the Commonwealth of Independent States (Elmawazini, 2013). This is due to the loss of investment, poor governmental structures, tax structure, human capital, infrastructure and other factors that make such places more difficult to conduct business and therefore less lucrative for investment. 

As a by-product of greater global awareness human rights and worker rights also become more globalized. For example, globalization of law, legal accountability, human rights, conflict resolution, and doctrines of equal standings become more common (Brysk & Jimenez, 2012). Economics and value systems exist together and as economics become porous across borders the concepts of ethics and human rights also become defined by those new economic assumptions. 

At present, there is no single way to measure globalization. Some indexes measure investment, some economic output, some educational attainment, and others human capital earning power. Each of these indexes has advantages and disadvantages but is limited in scope and effectiveness. Using multiple indexes of important key indicators is more accurate than relying exclusively on a few single benchmarks.

Globalization has both positive and negative effects on economic strength. Those countries that are more capable of aligning their systems to the new global structure are more likely to succeed in the long run. As this transition occurs there will be challenges of basic assumptions, adjustments of wealth, needs for new skills, and times of political upheaval.  What we believe today may not be what we believe a few decades down the road. Times are changing and with this come new opportunities for success or failure.

Developing Hubs with Global Value and Appeal:

Economic hubs provide new opportunities for international significance. Unique products and innovations provides some of the greatest advantages to national growth. Ha and Swales (2012) found in Scotland  that an increase in efficient value-laden products for exportation can help improve the economic development of the region and nation. When products are exported, and profits are realized there is an increase in both the GNP and labor employment levels. The benefits reach into government coffers, corporate profits, investment capital, labor income and national saving rates. Hubs have the power to create collective action through mutual self-interest. 

Many economic theories have come and gone but most recognize the activity of trust and interaction of economic elements. Using hubs steps outside static theory to focus the microscope on a single engine within the economy. The boundaries of the hub may be within a geographic region of a state(s) but it has implications for sales and development much beyond its overall locality. When the hub becomes the central location for the development and investment in similar products and services internationally it has reached maturity. 

Competitive countries can create products that solve customer problems and sell on the international market. When products are sold resources are drawn back to the developers  profits. It is often a circular affair of development and income which furthers future development. The success of the local economy can be summed by the totality of its ability to generate relevant products and services for profit. As the frequency of profit rises and the volume of that profit rises a manufacturing area grows in wealth and takes on higher levels of significance for international investors. 

Those hubs that are more focused on market relevance through developing advanced economies will find themselves growing and employing people faster than other locations. According to the Brooking Institute the nation's 50 most advanced industries employed 9% of the labor force, 17% of GDP ($2.7 Trillion), 85% of patents, 90% of private sector R&D, 30% growth rates, 65% of new jobs, clustered in cities, and account for 60% of trade exports (Brooking Institute, 2015).  

Advanced economies understand where their central focuses should be and design their policies to encourage maximum economic impact. For example, manufacturing is a solid start but manufacturing products no one else can produce creates greater competitive advantages. It is these advantages that lead to reinvestment and growth that eventually come to have global relevance.

Such global hubs have scientific and the entrepreneurial capacities that continue to seek advantage and benefit. It is this type of leading edge industries and employers that will continually earn higher profits because they are the first to capitalize on new ideas and information. Hubs that have an abundance of industries that attract people with forward thinking ideas can quickly grow when markets shift and new opportunities present themselves. 

Economic hubs are developed in part by fostering innovation through higher education, creating more efficient governmental over-site,  and fostering the skills needed to maintain the industry (The Global Competitiveness Report, 2013-2014). Even though they have a financial outcome the process that leads to this development includes human motivation that invests the money, starts businesses, attend jobs, and learn new skills.

Hubs are made of varying components but the human being (i.e. the fisherman) is the main entity within the system. If the person is in an environment that rewards motivation, provide resources for development, and capitalizes on entrepreneurial spirit the hub will grow. Like-minded people sharing similarities of knowledge and working in proxy with each other and learning from each other create a cluster of business activity. These clusters become the internal mechanisms of the hub it self just like cells are part of a body, and cells contain components that have specific functions. Strong cells will grow and develop while dysfunctional cells will decline. 

Bottom-Up Cluster Management Style:

Each country managers their clusters in different ways depending on their cultural and economic backgrounds. A study in the Administrative Sciences analyzes six biotech clusters in Japan, Germany, and France helped to determine which approaches each uses (Okamuro & Nishimura,2015). What they found was that clusters typically take a bottom-up versus top-down approach to management that leads to different costs and benefits.

Bottom-up driven clusters are initiated, driven, and financed mainly by local firms that seek self gain within the system. Top-down clusters are publicly funded and pushed by policy makers.  Cluster management can run the whole range between these two approaches.

Bottom-up clusters appear to be more cost effective for countries that seek to develop homegrown skills based on previous businesses within the region. It doesn't require high amounts of excess capital to "force" these clusters to emerge but instead uses policies that seek to set in place the right conditions that lead to organic growth.

1. Government incentives in terms of tax breaks and research funding support are positively associated to private-driven clusters.

2. Private-driven clusters tend to support private-driven bottom-up management styles.

3. High-incentive cluster policies is consistent with private-drive bottom-up cluster management.

The study helps us understand that the development of clusters doesn't need to be an expensive proposition but that government should put in place appropriate incentives to create the right environment that supports cluster growth. Government has a significant place in passing pro-cluster policies and supporting research that comes out of such clusters. They should pave the way through tax breaks and better city management that leads to attracting and locating businesses in close proximity to each other based on shared similarities.

America's Need for a Pro Business Environment:

Successful environments foster small, medium, and large businesses to provide both growth and stability. Small businesses offer innovation, medium size businesses flexibility with their resources, and larger business offer greater resources to fuel higher global penetration. The economic system should ensure a pro-business environment that sponsors the development of different sized businesses for maximum stability and expansion.

Fostering the innovative development of small business with hubs fosters national innovation. Even though there is a delayThe activities of entrepreneurs become pitry dishes for new mixes of ideas, knowledge, skill, financial capital, and physical resources.

The effects of this constant experimentation and growth is realized on a national stage. As new businesses generate and grow they encourage stronger in-state and regional economies (Donald, et. al., 2009). When states build the right business environment they begin to create larger synergy among proximal states much like an expanded version of businesses development within a particular hub.  

We can see this occur in regional manufacturing centers that may revolve around a particular city but stretch into neighboring states and cities. The automotive industry being a perfect example how how core competencies and success in one area stretched to suppliers, colleges, and politics throughout the region. Hubs are designed to foster this synergistic growth and raise the wealth and wealfare of an area.

A report by the European Commission (2011) found that 50% of job growth can from 4% of high growth SME businesses. These same small businesses also contributed to 50% of the innovation. Small businesses have the ability to be nimble and adaptable in the market which fosters their growth. Taken together these businesses can be a catalyst to ensure economic growth and development when larger organization have become fossilized.

Small business supports the economy and larger businesses by providing job opportunities to obtain new skills. Goldman Sachs estimates that nearly 64% of all new jobs over the past 15 years were from small and entrepreneurial businesses (Shepardson, Nov. 22nd 2013).  Small businesses hired the most new employees, 40% of all high technology workers, and produce 13X the patents of other employees.

Likewise, according to the Small Business Administration 66% of all new jobs since the 1970’s and 8 million jobs (big business eliminated 4 million jobs) since the 1990s were generated from small business (United States Small Business Administration, 2014).  Small business not only employs many Americans but also further develops skills that make their way into other businesses as workers seek out new opportunities and move to other regional companies.

Small business act as a point of investment and innovative development. Chang and Cui (2013) found that national innovation has three common factors that include direct foreign investment, international trade, and R&D development. Hubs are created through developing the intellectual, social, and economic capital to export products on a global basis. As more products are sold on the international market the economic system continues to expand through reinvestment. 

This level of development is difficult unless new skills are being developed. The entreprenuerial mindset tries, fails, and continues to develop. Knowledge can be learned through studying through universities or through actual practice. Strong universities and a pro-business environment offer the entreprenure greater opportunities to develop new ideas and products. 

A report by the UK Department of Business and Innovation Skills (2013) states that higher education brought forward 20% of economic growth between 1982 and 2005. Likewise, it brought 1/3rd of labor productivity increases between 1994 and 2005 as well as lowered costs related to crime and increased societal cohesion. A strong university system matched with an entreprenurial spirit and an SME medium is most beneficial for economic development.

  Knowledge, entreprenurial mindset and business all convert resources to higher value products/services. The development of technology and improvement of the productivity of labor can turn lower value natural resources into higher level exports that raise the financial sustainability of a nation (Brestschger & Valente, 2011). A probusiness environment must have an essential framework, as envisioned within a hub, to continue to develop to higher systematic existence.

Stronger nations are produced by drawing in all of the economic components in synergistic development. Each person enters the market with their own needs, desires and wishes. Engaging in the economic market means that the development of a system is partly psychological (Raines and Leathers, 2011). Without development oriented micro-decisions made by entreprenuers the macro system will not develop. Small business and individual employees are just as much a part of development as large corporations and the political environment should foster a pro-business environment for sustainable economic development.

Creating National Advantages:

Over the centuries societal development transformed our way of life in ways we were not aware would happen. We move societies that were agriculture (resource based), to urban centers (production), to a mix of production and services (post-industrial society) (Tvaronaviciene & Lankauskiene, 2013). Technology keeps changing and with it the social structure adjusts in ways that create new economic patterns and platforms. Governments who are rigid often find themselves unable to adjust and keep up with market forces. 

 Trying to thwart societal change and development has never worked and perverts national competitiveness in a way that leads to difficult adjustment problems later. Legislation should seek to make the changing process easy and fluid in order to keep the nation innovative and on top of the market. 

The strongest nations are willing to change their policies based on environment developments creating just enough stickiness in decision making to maintain social stability and encourage  integration of economic adaptation. The process of change and adaptation should continue moving forward as a national imperative or future economic lethargy is likely. 

Three Useful Economic Theories for Integration: 

Three useful theories for understanding changing economic development include Adam Smith's invisible market forces as outlined in his book An Inquiry into the Nature and Causes of Wealth of Nations (1776), Joseph Schumpeter's concept of Creative Destruction as discussed in Theory of Economic Development (1911) and Keynes ideas on infrastructure improvements as postulated in his work General Theory of Employment, Interest and Money (1936) (Willis, 2005).  Each theory acts as a pool of knowledge in the academic community but can be bridged with appropriate economic research and development where ideological 'truths' have positive contribution to understanding.

Successful use of economic theory rests on the ability to enact solid policies and actions that lead to beneficial results. Science has been pushing for integration of fields and more depth in theory that can comprehensively explain phenomenon in our environment.  Long standing discussions and disputes related to theories developed by Adam Smith, Joseph Schumpter and Keynes have led to political encampment and limited perspective on how these theories represent a more unified explanation in the greater economic discussion.

While John Maynard Keynes brought forward the notion that government should spend money during downswings to boost the economy his theories have been somewhat discredited while many governments still use these theories to justify poor fiscal policies. Theories by economists like Milton Friedman moved forward in the field as their explanations held more true to market events. Despite this, some of Keynes concepts still maintain their validity when discussing infrastructure but should be used in appropriate relation with other successful explanations.

It isn't that his theories are all wrong it is that they only represent the economic phenomenon under limited conditions where it isn't used as a justification to operate continuously in "crisis" mode. For example, government investment in projects that don't produce a return contribute to national debt by arguing more spending stimulates the economy. The argument is truly dependent on the cost and return of projects. All theories are only possible explanations that are adjusted as new knowledge and information are created. Combined with entrepreneurship and the free market models it can be beneficial in explaining the need for future infrastructure investments in ways that lead to national growth.

Theories As Applied to Clusters and Infrastructure:

Businesses that are profit oriented will do what they need to earn revenue. However, they are not always collaborative beyond short-term projects and interests. Large scale investments and development are created by government to enhance quality of life and economic growth. Roads, Internet, sewers, sidewalks, etc... have an impact on multiple stakeholders at one time and contribute to both quality of life and business development.

These expenditures should be based on long-term market and business trends that have the best chance of improving the economy and jobs. Infrastructure becomes a platform by which human ingenuity and ability create new products. Adam Smith understood the powerful effect of the free market and intellectual/human capital contribution to global competitiveness.

As the invisible hand exerts pressure on existing companies, it is intellectual/human capital that helps these companies adapt and regain their position in the market. This becomes increasingly difficult without appropriate infrastructure to share knowledge and resources in a way that allows for socially additive construction of new ideas and products. Businesses that desire to lead the market will need information rich environments for fast pace adaptations.

Market changes offer opportunities for companies to hedge skilled workers to create competitive advantages that lead to additional revenue and jobs. A change in market forces changes everything around it and how people approach the market. Maximizing opportunities to receive and share knowledge and innovation leads to higher levels of adaptation. Efficient infrastructure encourages the millions of transactions that result in growth.

Businesses function best within clusters that help them capitalize on infrastructure and work within socio-economic system that further cross feeds industries. People share knowledge and resources in their cycles of growth and further business interests. Joseph Schumpter believed these states of stagnated growth and entrepreneurial regeneration became a cyclical method of creative destruction whereby the old die and the new are created in a way that advances the entire system.

Solid infrastructure that speeds transactions helps businesses move faster through these cycles of growth and development . Wile some will develop and some will fail when they don't meet market needs the process will be faster. The right environment helps companies to develop faster and bring their products to market through greater rejuvenation and innovation. Infrastructure speeds up transactions and in turn catalyses the natural cycles that lead to significant national advancement.

Keynes theory helps us understand the importance of infrastructure investment that leads to socio-economic development that supports the quality of communities.  When local entrepreneurs start businesses using the existing infrastructure they create core competencies and societal improvement much like the Invisible Hand Adam Smith proposed.   Schumpeter helps us understand that self-interest leads to innovative boom and bust cycles that keeps the economy growing. This innovation comes from sharing ideas and resources within efficient clusters that maximize the interactions of economic elements. Business can only be as strong as the socio-economic networks in which they exist that encourage the millions of transactions that lead to growth.

The next level of economic development is not well defined and may rest in the Information Age where the inter-connectivity of business, government, education and entrepreneurial citizenship coordinate to hedge  new technologies that create national competitive advantages. A new theoretical system will require capitalizing on the knowledge of the past, successful integration of leading models, and real life information that ensure national decisions are most likely to achieve their targets and protect America's future economic interests.

Emerging technologies offer greater opportunities for product and service development on a global scale that contributes to economic expansion. Information moves freely across borders creating new economic connections (vines) and reordering economic structures in a way that most people today are not familiar with. Creating models of how businesses act and react with the global market helps government develop stronger fiscal policies. 

We are no longer isolated nations where decisions in one country only impact that country. Ideas travel from one side of the globe to the other within minutes and this will have a significant effect on how we work, learn, and live. Finding ways to navigate that world in a way that creates a solid framework for making economic policy that maximizes the country's ability to increase jobs and opportunities for its people should be an important consideration for national leaders. 

This is not the first time major economic transitions occurred in ways that changed economic fundamentals. Movements including the Renaissance, Age of Enlightenment, Industrial Revolution, Post Industrial Society and.....(an undefined era of the near future). The development of virtual technologies will shift our fundamental economic trajectories creating periods of chaotic adjustments and then economic homeostasis. New winners and losers will be created based on their competitiveness on new economic factors. Obtaining a grasp of that change and learning how to capitalize on it will determine which countries will win and which will loose in the global arena.

Economic Growth Influencers

Market forces will ultimately determine the success of any national system. If restrictive policies damage entrepreneurship and business growth it will leave the nation less competitive over the long run. Government has the responsibility to ensure that all of its people engage the economic system and that infrastructure improvements have the greatest impact for national development. When market forces, infrastructure and entrepreneurial development come into alignment the system grows rapidly and dominates the market.

Market Forces: All forces that impact local, national, and international activity. Market trends and consumer demands that impact purchasing behavior.

Entrepreneurship: All activities that are designed to turn a profit or improve current products. Research, innovation, business, investment, micro-business, stock market, etc. are part of the same profit-seeking behavior that motivates people to improve their financial position. Free markets are generally better at promoting financial gain.

Infrastructure: All large scale and institutional aspects of a society that create a competitive playing field. This includes roads, highways, electricity, universities, tax systems, quality of government, democratic structures, information, education, Internet, etc. Investing in infrastructure has an impact on the entire grid and the businesses connected to it.

When each of these components are in balance there will be significant growth. For example market forces will push nations to adjust their products and services to meet those market needs. This can only happen if the entrepreneurial spirit is strong and fostered within the system. The right infrastructure investment and development is needed to lower total transaction costs among a wide variety of competing businesses.

When countries cannot adjust their infrastructure in a way that leads to greater entrepreneurial activity or the entrepreneurs within the country don't speed up profit-seeking behaviors to meet market needs then decline will occur. Nations can be locked out when other nations fill these market needs and make market entry more difficult.

Likewise, inefficient and/or corrupt government takes away needed resources from infrastructure development. Instead of putting the money where it makes the biggest impact the money is spent on unrelated pet projects and programs that produce little return for the nation.

There are a number of ways a balanced economic system can produce more value and contribute to national development. Labor and entrepreneurship are similar in this discussion. According to John Kenneth Gabraith in his book The Affluent Society (1958) the output of the economic system can be improved in five different ways:

1. More engagement of productive resources such as labor and capital (including materials) by eliminating idleness. 

2.  Labor and capital can be combined in a way that can better meet consumer tastes in products and services. 

3. Increasing the supply of labor. 

4. Increasing the supply of capital. 

5. Technological innovation can be better used to improve labor and capital. 

Growing systems will use their technology and intellectual capital to enhance labor and capital through higher development in education, innovation, technology, efficient use of resources, and greater development of international market competencies. New theoretical models are needed to ensure policies lead to lasting development and change that improves upon labor and capital utilization in a way that maximizes wealth and opportunities. 

In alignment with the ideas brought forward in The Affluence Society highly skilled labor is better able to thrive in the new economy than those of the past and will are able to adapt new tools of trade. Labor skill is enhanced through increasing technology and the efficient improvement in supply of necessary resources. When the factors combine with increased investment and market relevant production the economic system begins to grow in strength. 

Local economic hubs are a beneficial focus for theory application and analysis. It is possible to better vision how the entrepreneur, market, and government influence on a city and its surrounding communities. It creates a "chewable" system of management that allows investors and stakeholders to formulate a clear understanding of how their actions contribute to and influence the entire system. The American democratic system is based on the layers of social, political, and economic influence that start at the local level but contribute to national competitiveness. Raising the stature of local hubs through ground up initiatives helps to create sustainable economic systems that dominate the market.

Hubs as Experimental Designs: 

One of the best places to enact change is within the definable transactional borders of regional hubs. Economists have begun to realize that by focusing on regional economic development they are able to create greater competitiveness and integration with world markets on a manageable scale (Flynn, 2014). This development has an impact on the immediate geographic area and can be used to foster national growth based on the measurements of equitable income distribution, GNP increases, GDP increases, productivity enhancement, and international competition (Kim & Kim, 2002).

Each region has its own strengths and weaknesses that can be used as a foundation for developing stronger economic hubs. Customizable economics means that we can adjust local development to the actual needs of local citizens to enhance their particular strengths while still working within a national economic framework. Hubs offer local adaptability with national influence that leads to better management.  

Hubs are small enough to measure, understand and develop while still being large enough to impact the livelihoods of residents. Successful models will become emulated in other places as their utility is validated. A generic but customizable model allows for maximum utility based upon the uniqueness of each area. The very nature of science and experimentation allows for the development of a model, implementation of ideas, and then readjusting that model to greater performance. Building off of existing successful models allows for customization with a basic adaptable methodology.

Before developing a working model it is necessary to understand related existing frameworks. It is possible view this complex system through the kite model which postulates that the internal clusters and workings of a country lead to their competitive position within the marketplace. The Kite model is based on a combination of the Flying Geese Theory and The Diamond Model. 

The Flying Geese Theory shows that countries compete with each other for market position (Kaname, 1962) while the Diamond Model helps to show how internal clusters and the elements of Factor Conditions, Demand Conditions, Related/Supporting Industries, Firm Development, Government and Chance come together to help economies grow (Porter, 1990). 

Globally focused hubs are based upon the internal abilities of companies and their connections to the outside world. Selling products internationally is difficult if companies are not developing properly for international competition or if they don't have sufficient network clusters to create innovative outputs. The Kite Model helps to explain how each of the international and environmental aspects operates together to create the right mix for national development (Yu-Jen & Hsiao-Fong, 2012).

Hubs should be built on local human capital and physical resources that ensure competitive production. Ricardo’s theory of comparative advantage shows how companies that manufacturer products cheaper in one country can trade with other countries that have different competencies to create higher value (Ricardo, 1817).  In the international world these hubs may draw resources and information from across the globe and sell those products internationally.

Hubs are magnets for investment and experimentation. They have internal working clusters and parts that function together to continuously realize new ideas and productions. The hub needs investment dollars and the proper internal resources to put those dollars to more productive use. The catalyst within the hub model is the entrepreneur who uses the financial capital to better connect resources to create new forms of innovation.  Governments that foster hubs will find increased market efficiency and alignment of resources, labor, intellectual knowledge, and investment interest.

Placing Countries within the International Supply Chain:

The world economy consists of millions of large and small networks that span from one country to the next. Ports-of entry and exit are key determinants of product flow and economic strength. The same process works in reverse for ports-of-exit. The strength of a nation's supply networks, and its position within the global supply chain, helps determine its ability to growth economically through the movement of products and goods.

Ports, railroads, airports, and highways influence economic growth potential as products find their way in and out of the country through the most efficient and cost effective pathways they can. Connectivity in the world-system increases spatial polarization toward global cities in a way their favors economic activities (Friedmann, 1986). Better connections attract more traffic that in turn increases business opportunities.

Cities that have placed themselves strategically, or by good fortune were geographically located in an advantageous locations such as rivers and trade routes, have historically found themselves more wealthy and more cosmopolitan centers of innovation and development. The principles that have applied in the past continue to apply today in a way that influences the wealth and viability of nations.

Globally oriented cities think of their ports, airports, highways and railroads as an important pieces of the puzzle of becoming a global shipping center. Investment in these areas leads to greater economic growth when significant internal industrial and business networks have been fully developed. Networks reach to other major shipping networks and centers that connect international economies together.

Supplies and products come in, are converted to higher value goods, and shipped throughout the country. In reverse, raw goods and parts come from the region, are converted into a higher value products and shipped to overseas markets. The business ability of each city will determine what type and how much value they can create.

China found that after they invested in the development of their ports they also realized significant economic growth throughout the region (Song & Geenhuizen, 2014). These infrastructure investments had spill-had effects that reached into various areas of the country. Increased import and export activity opened new opportunities for regional businesses that further justified increased investments.

Think of the world as a round sphere of railroads, highways, shipping lanes, and air traffic routes.

Connecting a city to global networks does take some analysis. Such cities should have a solid manufacturing and technology base to improve and convert incoming and outgoing products. Investments in shipping infrastructure should be based on the needs of the international market and the capacity of the cities current position within existing global supply networks. Likewise, constant development of internal networks is necessary for value building for distribution to markets.

Trade Agreements and  Government Strategy: 

Growth is not possible if government doesn't foster the right trade agreements to draw new resources and capital. To enhance economic hubs it is sometimes necessary to strategically align free trade agreements to ensure that lower value resources are being brought to the hub for higher level conversions. Growth requires cheap imports of raw materials, technology, and knowledge. 

Not all agreements are the same. Those that favor the necessary resource attainment needed by the business community and allow for product redistribution overseas are more important than simply important cheaper products that could competitively be produced in the U.S.

Trade agreements fit within the hub and spoke model. When properly aligned each spoke has access to the hub but the hub has beneficial market access to all of the spokes (Chong and Hur, 2008). The more the hub is connected to the market channels of other nations the greater wealth it can generate.

The central hub has many more advantages than being in a secondary market. As a centralized hub most products and services are filtered through its system thereby offering higher advantages of resource attainment and sales. Market reach is longer and spreads like economic vines back through the resource chain.

Fostering growth will require economic hubs to integrate into global markets whereby they can both draw the most resources as well as sell the most products. This integration can come through Free Trade Agreements, Customs Unions, Common Markets, and Economic Unions (Holden, 2003). They are not permanent agreements but can be used at varying times to ensure the hub is integrated into the market at the right places to foster growth.

Treaties and trade agreements improve on the development of a nation's growth opportunities. Even though political instability increases the long-term growth of the nation continues upward (Chaudhry, 2011).  The political structure should encourage growth, flexibility, and accurate information to change and adjust to ensure maximum potential. 

As a world Super Power the U.S. has the ability to leverage its economic might to create economic hubs based around industrial skills to respark manufacuturing and innovation in the country. Treaties are general leveraged in the favor of the more economically powerful member as emerging economies seek to obtain new investements (Chikere Azubuike, 2013). Using our reemergence to create a stronger system is beneficial for future generations. 

As treaties are made and developed they naturally come with additional benefits of promoting American values like free markets and human rights (Choudhury, 2009). These values being congruent with the American economic system that encourages other nations to engage in the development proces. The hub being the central position where all participating spokes connect thereby allowing for economic and moral transferrence. 

Open markets are more likely to develop than closed markets. We see this occur throughout history closed off societies that become poorer over time. When tariffs are enacted it often lowers knowledge and increases the skirting of national laws (Rotunno & Vezina, 2012). Laws must help encourage and foster business and opportunities. Nations should want to invest in local clusters and the policy should be as easy as possible. 

Lower tariffs means products and services move more quickly. Products may be physical or virtual by nature but are often restricted and hampered by improperly designed tariffs.

An analysis byDrzeniek-Hanouz & Doherty (2013) found that if countries moved half-way to best practice there would be a 4.7% GDP increase, a moderate reduction of restrictions would improve GDP 2.6%, and a removal of tariffs would result in a .7% increase in GDP. Improper tariffs are hampering national growth.  

When hubs produce the right type of FTA agreements that foster growth they are able to recognize economic benefits while reducing global risks of economic loss (Chong & Hur, 2006). Developing a stronger hub will ensure that an area (or nation) is at the center of economic activity and product/service exportation. Those at the center of the hubs create greater opportunities and investment due to duty-free access of all participating members (Wonnacott, 1996). Super hubs are able to hedge their trading interest with other hubs and associated supply nations by creating greater access for sales/exportation while finding sources for cheaper input materials.

The plan should be draw in those resources and capabilities that can enhance the system. According to a study by Kanter (2003) it is beneficial for hubs to use thinkers, makers, and traders to be successful in innovating the market. Thinkers are your researchers, creators, and developers that bring forward new ways to compete. Makers are the skilled labor, businesses, and other entities that ensure the products are generated. The traders are those who distribute and sell products to the local, national, and international market.

 Before an area can be successful the following  factors should come into play:

• 1 -Visionary leaders who have a clear economic strategy and recruit international companies.

• 2-A hospitable business climate and positive work ethic that attracts innovative companies to make long-term investments.

• 3-Strong training and upgrading of worker skills.

• 4-Collaborations between businesses as well as business and government. 

Free Trade Agreements can make a big different in expanding economies. San Diego Asian-Pacific trading partners include Mexico, Japan, Canada, Australia, Chile, New Zealand, Singapore and more which represents over 500 million consumers with a GDP of 12 trillion (Sanders, 2015). Exporters are often smaller but do have the ability to produce more and sell more with the right international game plan that leads to stronger free trade agreements that help ensure the region and nation stay international innovation leaders. 

According to EL Namiki (2013), organizations (i.e. entity) should consider the concentration, competencies, focus and end game within its market approaches. The same process applies to economic hubs and national development. Regions should understand where they want to go and how  they fit within the national development context. You can visual this in the California San Diego hub:

Concentration: Worldwide markets mixed with large and small industries. Growing international demand for seafood products, new technologies and micro manufacturing. Room for market entry.

Competencies: Local history and human capital knowledge in fishing, tourism, education, environmentalism, military, ship building, pharmaceuticals, technology, and micro manufacturing. 

Focus: The development of an economic hub around the Blue Economy. Implementation of industry knowledge transfer, technology infusion, product development, and national/international marketing. 

End Game: Blue Economy maximization that connects to other hubs with their own unique contributions to national development.

Encouraging International Trade While Still Fighting Intellectual Theft:

Intellectual property theft, hacking and lack of regard for other ideas is becoming a concern. Even more alarming is the amount of theft that occurs across international borders as some nations have developed cultures of stealing where the rights of the producers are not respected. Precisely why some countries, and the companies within, engage in intentional acts of intellectual theft is discussed in Trade Liberalization, Corruption and Software Piracy published in the Journal of Business Ethics.

Culture of Corruption:

Cultures that have more corrupt governments also engage in more theft. They have little oversight and lack a healthy respect for the rights of their citizens as well as the rights of those from other countries. Within develops a culture of corruption where theft is part of everyday business and there are few ethical qualms about it.

Economic Freedom:

Countries that have more restrictions on economic activities also have more corruption. Free trade countries seem to have less corruption while those that have more governmental barriers to movement of goods and money have more. Part of the reason could be associated with a lack of competitiveness within isolated nations.

Countries can be highly innovative by seeking new solutions and products to compete within the global economy. Some countries may suffer from a lack of competitiveness and therefore seek to copy others work as a cheaper alternative to making money. When new products hit the market, they are willing to steal their information in an effort to create profits.

This makes trade more difficult when international intellectual rights and laws are not appreciated. Most international companies engage in a level of risk management that determines approximately how much of their products will be stolen. Ensuring copy write and intellectual protection guarantees and potential damage compensation when passing treaties is helpful in combating these activities. Another option is to shun and isolate high theft countries leaving their economies weaker until their government enforces international standards.

Government and International Investments: 

Governments can influence the rate of domestic and foreign direct investment (FDI) to improve their local economies. FDI that seeks lasting interest and resources from international entities creates opportunities through transference of resource allocation from another economy to a local one (UNCTAD 2007, 245). Governments become deal makers and marketers that keep investment interest alive.

New revenue and investment helps to rejuvenate businesses and keep interest and focus on a regional hub. Lucrative environments attract foreign investment through the potential for higher profit returns. Investors seek to invest in those areas that have the right kind of businesses that fit within changing market trends and are likely to offer the highest rates of return over the longest period possible. 

Governments seek to spur this investment but are often unable to do so adequately. A concept called principle-agent can help explain how the government seeks an area of development and the agent is willing to engage in such activities (Eisenhardt, 1996). Governments are the agents of the needs of the people and should encourage greater international investment to ensure they are fulfilling their responsibilities.

 Through proper management hubs should have access to more investment money than the spokes or smaller regional hubs (Wonnacott, 1996). Maintaining the investment activities for an area means government is the producer of information. That information comes in the form of understanding their hubs and knowing how to manage the areas in ways that produce the greatest opportunities. 

Once such information is available it becomes imperative for the government entity to share it with the public and potential investors that would be receptive to new opportunities. Governments are agents for their people through the creation of knowledge and opportunities through drawing in stakeholder opportunities to their markets. Government is an influencer in the investment process.

Government market mapping should maintain and track projects, their investment draw, and areas where further investment is likely to be beneficial for the investment community, government, and the local population. The information must be based on accurate and transparent data that help others connect to those very same conclusions.

International organizations seek out locations that have assets, proper organizational/institutional structures, and information to create growth markets (Paniccia, 2002). Information is used as a catalyst to improve upon the development of the region through spill over effects of organizational growth and profits. Information between companies, societal sectors, and government guidance can encourage the development of marketable products which further encourages investments.

We can see an example where San Diego has partnered with five other locations through a new program by the Brookings Institution to draw in foreign investment (Horn, 2014). The goal is to pilot San Diego, Seattle, Columbus, Minneapolis, Portland and San Antonio to encourage collaborative efforts with foreign investors to encourage growth and employment development. According to San Diego Mayor Kevin Faulconer “San Diego’s strong ties to international markets, high-growth industries and culture of innovation mean we have the necessary ingredients to attract foreign direct investment to the region.”

When foreign direct investment, as well as personal and business savings, are used to invest in local businesses the economy continues to expand  (Todaro & Smith, 2011). The encouragement of an investment environment through multiple business ventures that hedge investment risk through adequate information can be beneficial. Investors should feel that through multiple opportunities as presented in greater regional platforms that money is better spent in direct investment opportunities for growth. The business communities money provides a major engine and catalyst to expansion but the knowledge of where to put that money is of tantamount importance.


How Applying the Right Tax and Investment Incentives Leads to Economic Growth


Governments are always looking for new ways of enhancing the economy and putting it on a competitive stance. Throughout the years there have plenty of ideas that came and went. Ideas are often as plentiful as the politicians that bring them forward and the business investor class that seeks to make profit off of change. The opportunities to grow the economy why creating a strong return on investment from investment opportunities makes the fundamental difference between those cities that can grow and change and those that will die.

The entire cluster acts as a organism with lots of working parts. It is always adjusting, moving, creating, destroying, and working to fulfill its ultimate purpose. For the businesses in the area the purpose is return on income while for residents that may lay with quality of life and opportunity. Because collective organisms grow and change they have different needs to fulfill their existence. As they decline and change new money and ideas is needed to grow them again. If investment opportunities meet growth cycles the entire system can grow quickly.

Cluster stages of development have different needs at different times to help them grow healthy. Similar to company stages such as introduction, growth, maturity and decline a cluster will also grow and decline through different stages. In the beginning it will need entrepreneurs and angel capital. When it is in the growth stage it will need an influx of capital and supplier businesses. Eventually, when the companies within the cluster no longer produce meaningful products they will decline without reinvestment and rejuvenation of purpose.

Each stage needs its own type of investment at a particular time. As these stages grow and change investment in the infrastructure of the system, as well as investment in the companies within the cluster, will be needed to create the biggest impact. Investment in companies that exist within a growing sector will help the entire network of companies grow while investment in the infrastructure will allow the entire system to grow.

Infrastructure investment improves the overall growth prospects of all companies within the system. For example, providing investment in entrepreneurial creative spaces may help launch ideas but investment in education leads to long-term growth once these business have developed to a point where news skills are needed. The same can be said for high speed Internet, roadways, social places like bars and restaurants, housing, parking and just about everything else the clusters need to grow. Different times, have different, needs as the company moves through the different stages. While a random market hand may work government can apply the right pressures at the right time to speed up this growth.

Providing tax incentives and other incentives relevant to the stage of growth based on the needs of industry clusters encourages a coordinated boost to economic growth. Government should seek to maximize on existing trends and do so in a way that the return on investment is greater than any cost to public resources. Through strategic and scientific approaches government can continuously grow their coffers to catalyze additional growth into the future. As the investment pays off in terms of new money, employment taxes, and generated commerce it can reinvest this money through additional incentives and infrastructure improvement.

Coordinated institutional investors can create a big impact on the potential success of the companies. Their profits are derived from the ability to return greater value. In clusters, that value is created when multiple interrelated businesses attract new profitable business.  Pack investing can put the needed capital at important places within the cluster network that have the greatest return. They can "light up" the cluster network with injections of cash and liquidity to ensure that the growth stages are well lubricated and have what they need when they need it. Investing in groups of clustered businesses enhances all of their performance because they work in the market in collaboration as much as they do in competition.


Industry and government can work together to create something new that profits business, people and government. Yet they need to think about proper coordination of their efforts. When clusters move through different stages government can catalyze growth by providing the right incentives to attract growth and investment that later leads to "profit" through economic growth and tax revenues for government and greater returns on investment for investors. Research and awareness into how economic systems work opens the door to new possibilities of economic rejuvenation.


How Reducing Taxes Leads to Head Quarter Movement and Investment

Being the intellectual center of the world has advantages for economic growth. As headquarters move to the U.S., or any other nation, they bring with them their intellectual capital and significant investment in facilities within their location. To encourage companies to move their headquarters and their manufacturing centers to the U.S. it is necessary to create an investment rich environment by lowering corporate taxes.

High tax rates adversely impacts foreign and domestic investment (Abbas & Klemm, 2013). As the tax rate increases, companies seek to put their money into other markets as each % of tax increase has a direct impact on the bottom line. We have experienced the effects of this phenomenon when U.S. companies invest heavily overseas by moving their administrative offices and manufacturing centers overseas to avoid tax liabilities.

We have to think of this issue from a corporate investment standpoint. When the cost of taxes is significantly lower in countries and the amount of dollars being taxed is in the billions it would be wise to move headquarters overseas if there is no major impact on management or company health. While one could make moral and patriotic arguments, the end result is simply the same...the dollar return on investments makes the difference.

As the tax rate increases it has also has a significant impact on the value of the parent firm and its affiliates in foreign markets. Multinational firms are interconnected to the point where a 10% increase in the tax rate at a company's home country reduces capital stock value at foreign locations by 6.5% (Becker & Reidel, 2012). Firms therefore have big incentives to avoid corporate taxes at their head quarters and all of their subsidiaries.

It can be difficult to calculate such a impact throughout the entire corporate network. Yet it determines whether or not a company should invest or move their head quarters to another country. If the U.S. wants to encourage companies to move their intellectual centers to the U.S. then they will need to offer lower tax incentives. Once these centers are attracted and moved to the U.S. there are often other investments opportunities throughout these companies' supply networks as they also move to be near the parent company.

Can Innovative Clusters Protect the Economy from Recession?

Recessions can be brutal and countries often suffer from the magnitude of global changes and shifts that can impact their economic well-being. While they search for solutions to strengthen their economic position among lower cost emerging nations they should consider the benefits of developing clusters. According to a study entitled Coping with Economic Crisis-The Role of Clusters published in European Planning Studies, clusters offer a ray of hope in fortifying an economy from recession.

When the global economy adjusts there will be winners and losers. Some nations will pick up additional manufacturing while others will lose manufacturing. When times are good more people will be employed, while when times are bad people will be unemployed.  Europe and the U.S. has lost jobs over the past few decades due to the cheaper cost of manufacturing in places like China, Asia and India.

The only true competitive position that Western countries can make is to be more innovative and development oriented than emerging nations. They must lead the market with new products and services in order to ensure their offers gain the most market attention and interest. Clusters offer an opportunity to capitalize on Western ingenuity in a way that keeps manufacturing and jobs at home; even when the global economy shifts.

The study looked at Norwegian clusters and used surveys and data from four cluster organizations to determine how they acted under economic pressure (Skalholt & Thune, 2014). The economic time-frame use for the study was a recession from 2009 to 2010. They looked for innovative strategies, roles and activities of the clusters during the crisis, and the differences in behaviors of mature clusters.

The study found that mature clusters adapted to economic recessions by putting forward new innovative strategies, increasing collaboration with other businesses, and engaging in developing their workforce. A big concern was that lenders slowed down available investment capital and this choked off innovation. The study highlights that when monies were available, clusters were able to overcome challenges by developing new innovative products/services even while the global market was slowing. 

Adam Smith and Limited Government:

Adam Smith, the father of economics taught us in his book The Wealth of Nations, that laissez-faire approaches to the market encourage the highest levels of growth. Government is limited in its role and provide the greatest freedom to business without unnecessary restriction. As we experienced during the advent of globalization, companies regularly choose nations with lower input costs and fewer restrictions. Newly formed clusters will need to offer something more than simply "cheap" costs and instead push for maximum growth opportunities through cultivating environments that supersede advantages of low cost manufacturing localities.

The market system will determine where companies will invest in operations, where they will hire employees, and how they will contribute to the global economy. Low cost copycats will be drawn to cheaper locations, while innovators will be attracted to places that spark the greatest opportunities for the development of new services and products.

One seeks to to focus on a low cost strategy that uses available technology. The other seeks to dominate the market by leading it through transitions with new products and services. Companies that seek innovative strategies will inherently look for locations that have the right elements that foster knowledge accumulation and intellectual capital.

A cluster exists within a local economy with inherent benefits that allowed these clusters to form in a one location over another. Governments create market conditions by attracting or deterring business investments through government policy making. Business-minded global companies do not invest locally out of patronage or loyalty but because they believe they can achieve the greatest advantages by doing so.

Adam Smith states, "Its not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from the regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages (Smith, 1776)."

As a profit oriented enterprises, governments should move beyond traditional approaches to economics by thinking from the perspective of would be corporate interlopers. What are they looking for, what type of environment are we providing and how do we provide it are essential questions to strong cluster management.

Of course we have choices, and one of them is to not change or adjust our governance to a global marketplace. We can use the same methods, continue to lose corporations, and watch our national debt rise and incomes decline. The role of government is to create polices that are in the best interest of their citizen stakeholders and thus have a responsibility to adjust their thinking when necessary.

Proper cluster management offers opportunities for government to be an environment creator but not seek to fight against the forces that allow are swirling through the global economy. Fighting these forces leads to greater decline. However, they can create local advantages by rethinking some policies that are hurting the ability of business to flourish while at the same time still protecting the needs of citizens.

Nationalism and loyalty are powerful motivators for local businesses but international companies have options where countries are often seen more as tax and cost incentives than believing in a particular national causes. While it is difficult to calculate the amount gained or lost due to corporations moving operations overseas, the amount is likely in the trillions of dollars in tax revenue. Creating strong market driven clusters helps to draw these businesses back to the U.S. because it is their best interest to do so to maintain their profit margins.

Individual Rights and Government Influence Help to Start Economic Clusters:

Government administrators often wonder how to foster business within their cities and improve overall economic development. The debate between more or less government influence has been raging since the beginning of the country. A study of socio-economic clusters in the Applied Economics Letters helps us understand the government influence in the beginning of cluster development is helpful while it may not be as helpful later on (Huskinson & Lawson, 2014).

Capitalistic societies desire to have a "hands off" approach to government while socialist societies want more government influence. Using K-means clustering helps us identify that the free market capitalistic system along with social policies can help get clusters going. At least in the short run, social-democratic systems outperform liberal systems. The reasons might be based in the need to set the "right" conditions for economic growth.

They used a K-means cluster analysis to determine their results. The method is to take observations (data points) and then associate them to the nearest cluster mean. Each new piece of data is added to the closest cluster and helps recalculate the mean. The method can be done by hand but often uses statistical software.

They used an EFW index, with data for five areas:

(1) size of government,

(2) legal system and property rights,

(3) sound money,

(4) freedom to trade internationally and

(5) regulation.

What they found was that the most free nations earned higher incomes, had larger GDP, and life expectencies. However, social based nations had higher civil rights and civil liberties. The essential mix seemed to focus on how those nations where government protects individual rights and the freedoms of individuals had higher cluster development.

This would make sense if we consider a cluster a mini-economy. One doesn't need to adapt a socialist system but simply protect individual rights within the cluster and ensure the right elements are available when a cluster begins. As clusters are innovative by nature it is beneficial to protect and allow for maximum freedoms for individuals to be entrepreneurial within the system.

Thus the study found that the free market system along with protections of individual rights have a significant impact on cluster growth. It doesn't elaborate on why. However, one could put forward the idea that setting the right elements in place based on taxes, development zones, recruiting businesses, etc.. require a collaborative effort to get clusters going in the beginning but may not be as important later on as the cluster businesses find "footing" and their own efficiency. Still, protecting individual rights continues to allow for the maximum freedom of individuals to maintain their entrepreneurial activities.

Keynesian Model:

 The Keynesian model is one method of measuring economic development. Each of the sections theoretically work together to create the economic system. Investments can improve exports which in turn impacts consumer spending and government revenues. Some levels of government spending can encourage growth when they have the widest impact on the business environment. 

The key is to create something of greater value than investment dollars such as greater economic information, more efficient infrastructure, a stronger labor force, or collaborative projects. Direct investments into programs without a significant impact on society does not use resources wisely. Government has a responsibility to ensure that all money is used in a manner consistent with the highest levels of growth. 

In the Keynesian Model  consumer spending, investments, government spending, and exports/imports make up the growth of a nation. When times are tough government typically tries to spur growth through government spending. However, this also raises the debt ration making it more difficult for the nation to borrow and service that money in the future. Eventually government, and those benefiting from government spending, consistently borrow to feed their own needs versus that of the populace. 

Instead of relying heavily on debt it is better for government to get into the numbers and data game by seeking places where the investment by the business community will raise the standards of both business and the populace. Government provides a stronger catalyst by growth by helping companies find places where the greatest advantages may occur for multiple stakeholders. 

The Keynesian Model is written into the following formula: 

AD=C+I+G+(X-M)

C=Consumer Spending

I=Investment

G=Government Spending

X-M=Exports minus Imports. 

X-M Improvement: Economic hubs can increase the Export-Import values as lower priced import resources produce higher value product exports. Factors of Improvement: Innovation, Synergy, Business Collaboration, labor skill, science, information infrastructure, etc.

I Investment:  Economic hubs can increase investment in the area as investors seek to be centralized in the highest value markets (i.e. a global hub). Factors of Improvement: Industry Information, FTAs that Enhance the Hub, Lower Taxes/Costs, Govt. & Business Collaboration, Synergy Opportunities, Business and Personal Investment Opportunities, R&D, science, etc.

C Consumer Spending: As the investment environment improves, products develop, and income rises so does the income and opportunities of residents. These opportunities create higher levels of personal income and consumer spending that support the development of the economic hub. Factors of Improvement: Higher income, Higher Education, Positive Psychological Outlook, Marketing, Housing, Technology Purchases, Social Development, etc.

G Government Spending: Government spending that attempts to encourage economic growth in the  most cost effective manner. Factors of Improvement: Industry Information/Collaboration, Business Districts, Education, Infrastructure, Open Data/Transparency, Government Efficiency, Education, Economic Metrics (GNP, GDP, Income Equity, Competitive Stance, etc.), etc.

Instead of pushing (G) government debt with additional debt, government should spur international investment into American economic hubs thereby raising (I) investment.  Proper investment should lead to profits with international appeal that eventually improves (X-M) the export import ratio. This in turn leads to higher levels of employment which raises (C) consumer spending. If done well the end result will be greater sustainable development of (G) government spending that fosters better data governance, improved infrastructure, and more responsive government. The cycle should continue over and over generating higher levels of improvement for each generation.

Unfortunately, we know that people do not always look long-term to solve problems. It is much easier to borrow and spend today than it is to fix the mechanics that help a nation grow and develop for the future. Deciding where short-term investments will have the biggest bang for the buck can be highly political and create all types of in-fighting based upon which group/special interest is likely to reap the highest rewards from such spending/decisions. The pressure to feed one's appetite now at the expense of others has been studied in varying situations that include children and cookies all the way to political decision making. 

 To help in this problem government should use long-term strategic directionality with short-term financial returns. In projection there is divergence between short term Keneysian models and longer-term neoclassical models that have not been matched well in the literature (Kwok, 2007). This is representative of the fundamental difference between short and long-term thinking in the economic fields. Short-term stimulus is beneficial for immediate crisis stability but it is the long-term savings and reinvestment that helps to create more sustainable systems. It is possible to balance short and long-term needs when decisions are made that create the greatest economic return to the hub and nation. 


Combining Keynesian and Schumpeterian Models

The two models of Keynesian and Schumpeterian models have been at the forefront of modern economic debate often split along party lines. While each of these models have some advantages they are not the whole story in and of themselves. Research by Giovannie, et. al. (2017) helps us understand that these models can work together to encourage proper government policy and economic adaptation and integration. When discussing economic growth models that can help the U.S. it is more intuitive to see innovation as fostered not only by the ability of companies to create and adapt technology but also how government can better ensure that happens.

The K+S model combines Keynesian (demand-driven) mechanisms with Schumpeterian (innovation-driven mechanisms. Using this combined model we find a) search capabilities of firms, b) the pool of technological opportunities available for innovation, c) the degree and breadth of patent protection, d) the strength of market selection and competition.

The Schumpeterian growth model is used to understand innovation and growth within the economy. It rests on growth as a result of innovation and imitation and the diffusion and new products/ideas that lead to more efficient production processes. Innovation is motivated by financial returns and new technologies often replace older ones in a chaotic manner.

Keynesian economics is more based on demand economics which basically says that if people are working then the economy will be good. In this model, government has an important role in ensuring that jobs are growing and government influences the ability of the economy to grow. Sometimes, this is going to require significant investment.

What the researchers found was that an increase in technological opportunities and entrant-carried search have a positive effect on the long-run performance of the economy. Likewise, too much patent protection can damage sharing of information and thus deters growth. There is likely a happy medium of protection and adaptation by other firms but the study doesn't say where this was. There is some positive indication that stronger market competition impacts long-run economic growth. They also found that fiscal policies have an positive impact on unemployment, output stabilization and long run growth.

Neither of these models is true or not true but only useful based on gradation. Combining the models does mean that we can foster creative destruction and innovation by the proper use of government administration. The study helps us understand that government does have a role in encourage stronger policies that raise internal competition and foster greater economic growth. Patents and innovation are important but have their widest use when other firms within a cluster can eventually immitate those advantages raising the economy in the long run. Thus, by creating stronger government policies, pin pointing investment in key areas that improve the business environment, and helping companies to invent and imitate can raise the overall advantages of local economies.

Conclusions

Factors the Influence Hub Strength:

1.     Lowering Transaction Costs: Improving economic development requires the lowering of transactional costs of commerce. Any reduction in repetitive costs such as taxes, banking, or expenditures that impact all commerce in a hub helps to improve profits and encourage investments.  

2.     Clustering Businesses: Business should work in tandem with each other by sharing resources and knowledge to compete on international markets. Areas should develop core competencies that draw international investment and opportunities. 

3.     Attracting Investments: Investments should be focused on either improving hub infrastructure, which increases transaction speed and lowers transaction costs, and/or push development into improving the functioning of clusters within the hub for the creation of employment opportunities.

4.     Government Effectiveness and Efficiency: Government uses resources and a large percentage of those resources are wasted on stakeholders who receive material benefit from taxpayer money. Government should always seek to improve efficiency and effectiveness by reducing waste and improving operations to create a lower drag on society.

5.     Government as an Information Generator: Government has the capacity to generate large amounts of information and data to create policies. Modern technology affords a stronger ability to connect and share information with citizens, suppliers, community groups, and business entitities. 

6.     Government and Project Collaboration: Government is only as effective as those who believe and participate in the process. When government, business, philanthropic, and community groups work together the process of development is enhanced.

7.     International Market as a Guide: Understanding the market and aligning the economic hub through education, economic policies, training, and organizational practices helps in ensuring maximum resource allocation. The hub should continually adjust to meet market challenges and align its internal elements for better competitive positions.

8.     Human Capital Development: Improving access to training and education increases human capital development that employers used to further their business.   Universities, trade schools, community colleges, Internet, public education and corporate training improves opportunities to maximize business investment.

9.     Research,Science and Innovation: Research and science are important institutional building blocks to a stronger economy. Improving technology in an area increases the wealth of an area by creating more efficiency, productivity, and opportunities.

10. Natural Resources to Informational Resources: Moving from heavy reliance on natural resources to intellectual resources based in information raises the long-term sustainability of a hub. Hubs slow their own natural resource usage and important cheaper resources when necessary. 

11. Social Systems and Norm Development: Developing strong social networks among various races, religions, ethnic origins and backgrounds encourages a more stable society that develops shared norms and values. 

12. Functional Police and Fire Service: Investment should be adequately protected against unnecessary loss through functional and effective police and fire service.

13. Balanced Budgets: Systems should maintain balanced budgets to lower costs, minimize unnecessary borrowing, and encourage investments in infrastructure projects.

14.  Reinvestment: Government should be reinvesting revenue in government operations and infrastructure to reduce the cost of government and improve economic platforms. Business should be reinvesting innovation, operations and marketing to stay ahead of competition and keep their businesses growing.

15.  Export Economy:  The economy should be broadly focused on advanced industries and exportable products creating income, investments, and jobs.

16. Egalitarian Society: Society should recognize the inherent value of each person to the nation and seek to maximize human capital through effective policies that do not hinder growth.

17. Systematic Justice: A system that respects the rights of all individuals. Stability cannot be found in aggressive, short-sighted, discriminatory, or ineffective policies. Each member should trust the capacity of justice. 

18. Harnessing the Internet:  The Internet offers opportunities for collecting information, analyzing that information, polling opinions, and sharing information. Information can influence resources and opinions to better ends.

19. Ecological Environment: Environments that retain people should be clean, aesthetically pleasing, connected to nature, and provide an inviting environment where people live and raise healthy families.

20. Corporate Collaboration: Companies will need to use existing business networks to collaborate on projects both vertically and horizontally. The better these organizations share their competencies the faster they develop. 

Five Economic Elements:

Linkages (People, Finance, Resources, and Information): The speed and ability of various sectors of society to connect determines the speed and potential of economic growth. Whether scientists are creating a new theory, businesses building new products, or a the financing for a new facility it is the ability to connect and transfer resources is important. Infrastructure such as Internet, roads, and payment systems makes economic activity possible. The more dense these connections, such as that found in a cluster, the higher the economic activity.

Intellectual and Human Capital: The intelligence and skills need to connect information and resources for financial gain. Technology is an enhancement to human capacity and increases in technology often produce noticeable gains in productivity and profits. Ensuring the population has the knowledge, skills and abilities to overcome challenges is fundamental.

National Structure: The governmental system that encourages profit seeking behavior, protections of assets, trade & commerce, efficient use of taxes, and social stability. Trustworthy governments that use resources wisely and in the best interest of all its people are going to create better environments for full economic engagement.

Culture: How people interpret environmental information and act on that information in culturally accepted ways. The cultural underpinnings will influence economic behavior of the people which leads to national strength. Cultures that are open-minded and progressive will encourage greater adaptation and use of resources while ensuring social bonds are maintained.

Leadership:  Leadership is the capacity to make decisions and lead social networks to overcome immediate market challenges and concerns. Leadership in business, government, education and other institutions helps to ensure the nation maximizes its opportunities by using all the other elements.

The Human Element in All Societies

If we combine a few theories together we can start to see the motivations behind how and why each of us engages in the economy. Literature supports the idea that people make economic decisions each day and nearly all of these decisions rely on their psychological, social, and biological needs. As they navigate both their inner experiences and their outer perceptions they will weigh and balance how to make money, which activities to engage in and where to spend their money. Many of these decisions are in the neuroeconomic choices people make on a very subconscious level.

Nations and economies are built through the the millions, billions, and trillions of economic choices people make that are added up to create a country. Social construction and the way in which cultures define these actions will determine where most people spend their energies in time to strengthen the larger social networks they live within. As economies develop and feed people's core needs and motivations they are able to grow and promote their way of life to others.

The idea of economics starts with the individual in a group setting. These group settings could revolve around ones family but also can be evaluated through cities, states and nations. As a country we are a collective of smaller economic decisions that lead to the success and failure of a nation. The entire field of economics is at its center a study of human behavior and how that relates to profit and loss.

Therefore the success of a nation can be evaluated based on the entrepreneurial activities of its people. When people are making positive decisions that are helpful to their fellow countrymen and contribute to profitable actions the entire nation can grow. When these actions detract from their fellow countryman then the trust and glue that holds a nation together begins to decline and the nation declines with it.

Ensuring the best environment to ensure that entrepreneurial activity is rewarded at all levels of society is beneficial for positively reinforcing growth oriented behavior. Those rewards should be even more lucrative when they help society as a whole. As a person develop and grow their perspective will change leading to wider knowledge schema. Those who can foster growth among people through collaborative efforts and personal entrepreneurship are leaders that can encourage a country's economic and political system to expand through the actions of pro-social goal-directed behavior.

The Possibilities 

America was founded on basic principles of equality and the opportunity to succeed financially, socially and psychologically. Over the past few decades we have experienced a rise in debt, stagnating wages, a number of wars, and the Great Recession that has led to economic difficulties impacting at least two generations. In addition Americas dominance as a land of opportunity and the strongest economy has been challenged by China and emerging nations. America can still capitalize on its innovative spirit and strong labor skills to develop a more sustainable and stable system that continues to grow through reinvestment and redevelopment. 

Development of a stronger nation is more feasible once all hands on deck to fully engage the economic system for mutual growth.  International investment must meet developing labor skills to ensure new products are built that have international market appeal. The side effects of this development is a stronger nation that has better practices and a more responsive government to the needs of its people through earned income obtainment and access to better opportunities. 

Successful redevelopment should revisit the fundamentals of economic and social life to understand how people act and interact with each other to create growth in multiple spheres of economic life. Financial growth is a by-product of growth in our personal development and social connections that allows people to share and encourage ideas that solve market problems. Each person is hitched wittingly, or unwittingly, to society in some way, shape or form and has important contributions to make through their instinctual need to grow. 

Theorists have argued that the very core of society is based in the instincts of man to better himself and the people around him (/her). According to Veblen (1914) Man instinctively pushes himself to learn, innovate and create more efficient methods of ensuring survival. It is necessary for society to give man the proper pathways to find opportunities for development. Those methods may be improved or impeded through lack of education, training, employment, social engagement, and governance. Governments ultimate responsibility is to enhance their system grow for the benefit of its members.

To ensure that many can succeed and develop government must also renew itself to ensure it is meeting the needs of society while not hindering the natural instinctual growth needs of people. Democracy is at present the highest form of governance but still needs further evolution to create economic opportunities/incentives, access to influencing governmental decisions, and ensuring laws enhance human nature and performance (versus restriction/punishment). Democracy in its current form is not the end path of development.

Proper economic theories must include governance and human psychology within its ranks to be encompassing enough  to handle the human affairs that make up core foundation of all economic systems. Therefore, economic solutions must take into consideration human life beyond accounting matrices and financial data. The human and its spirit is the generative source of all economic life that produces innovative developments in society and must be given adequate pathways to flourish.

Innovation and technology are the natural outcomes of an innovative people that are free to develop themselves and others around them (Ayres 1958). As people are better able to fully function within the context of society they will become more innovative resulting in new artifacts of progress. Lower innovative countries are focused more on rules and control while higher innovative countries are focused more on human enhancement and development that lessens the need for control.

The difference between control oriented and growth oriented societies is essential. Growth oriented societies seek to develop laws, cultural norms, and governmental methods that push to free the human spirit to achieve its psychological and biological destinies in ways that have the most positive benefit to society. Control oriented societies are less stable and seek to maintain laws,  norms, and governmental methods that restrict the pathways for psychological and biological goal achievement. Growth comes from effort and restricting that effort for control based purposed reduces psychological motivation.

Because these two societies are fundamentally pushing for different tracks you will find that they are marked by different outcomes. Free societies generally have higher growth rates based upon the innovative and commercial activities of people who can find rewards through hard work and the entrepreneurial spirit. Restrictive societies are marked by lower growth rates and higher levels of corruption because official pathways are limited for only a few thereby stifling the human spirit.

Sustainability societies exist by ensuring the social structures create growth on an economic level. For example, learning new skills not only improves the human mind but also the skill by which people can obtain their daily sustenance. Allowing for skill development across the widest possible sector of society creates impact full changes. The social structure of society will determine who and when people obtain these resources based upon past traditions and present necessities. Developing a stronger and more practical social structure based upon actual skill, knowledge, and abilities will help ensure a brighter and more sustainable system for future generations.

Sustainable Growth Systems: 

Sustainable systems are based in synergy whereby the sum of the parts are greater than the whole. As investors put their savings into the system they are able to generate return on investment. The realization of profit and effective use of data draws additional investors who also want to capitalize on available resources. To spark growth requires the engagement of the multiple sectors of the system such as labor development, technology enhancement, governmental effectiveness/efficiency and access to resources to work together to generate new economic activity. The elements are put to advantageous use through creativity and innovation to develop higher value products/services that are uniquely tied to the characteristics of the hub and not easily copied in other places. As profits are realized they are further invested into the system to develop a higher form of economic existence.The creative process of destruction and re-investment maintains a growing system with better adaptation to present market realities.

Properly run systems focus beyond short-term labor gains and into developing the entire system. A 2014 World Economic Forum Report states that policy makers should focus on infrastructure development that encourages long term growth and lowers carbon emissions (WEF, 2014). The report highlights the idea that sustainable systems continually reinvest in those infrastructure improvements that create stronger platforms for businesses that reduce overall waste (i.e. pollution, fraud, etc.) within the system.Lower waste means lower transaction costs and higher returns on investment.

Business and cities exist together and follow similar stages of growth and decline. Each invests back into itself to foster higher levels of economic interaction and revenue development. When this doesn't happen governments begin to decline and develop unsustainable structures that eventually collapse. Governments seek to create a net return on tax investments while businesses seek revenue returns on new product/service lines. They are not mutually exclusive.  Without constant reinvestment and growth, the system eventually declines and resources are used in other localities.

Sustainability can be seen as a positive return on investment money that allows for reinvestment back into the system for future growth. It is a perpetual cycle of growth. Governments may reinvest resources in schools, roads, police, WI-FI, fiber optic cables, etc. to realize greater levels of income generating interactivity. Well run systems will realize a net positive outcome for all involved parties that leads to higher tax revenue and better use of resources.

Economic hubs must expend resources to fuel future growth. Resources may come in the form of new business start-ups or existing corporate reinvestment. Private investment increase local revenue streams that raise tax revenue (not tax rate) and create more tax paying employment opportunities (not tax rate). Growth can be seen as the total increase in economic activity and revenue development throughout the hub that further contributes to tax collection and efficient resource allocation.

The developmental level of a nation and its people will determine what resources it will rely on. Lower developed nations will rely heavily on natural resource production and sell that production to other nations. Medium developed nations will use their labor forces to manufacture basic products for consumer consumption or supplies. Highly developed countries move further from natural resources and more into technological developments that conserve natural resources and develop leading edge products that change the market in their favor.

Young governments and business entities may grow quickly but will eventually move into a mature stage where they reach homeostasis with the market. During this mature stage, a consistent percentage of revenue should be reinvested back into their systems to maintain future growth. This reinvestment ensures that the system continues to develop, improve the lives of its residents, lower transactional costs, and attract new investments.With proper development a nation can move into a highly developed Information Age nation that uses the power of information to expand opportunities.

 When a system is not sustainable, or fails to reinvest back into itself, it declines to a point of no return. History is full of examples ranging from Rome to Caliphates. It becomes unattractive for investors and they abandoned the system creating economic stagnation and starvation. The system may also begin to lose residents, raise taxes, fail to attract businesses, take unnecessary debt or fall behind on needed infrastructure improvements. Eventually the system may need to painfully revamp itself, seek outside assistance, or perish into history as resources de-invest and make their way into better-managed systems that can reduce the uncertainty of risk.


Pro-Investment Tax Rates and Corporate Reinvestment: 

Its great when corporations believe America has a competitive tax rate and are interested in further investment. Even better that investors receive higher returns on their investment and create more financial capital.  To make these benefits widespread corporations and their stock owners must reinvest this capital in American businesses to ensure that new jobs are created and the economic foundation expands. The profit and reinvestment cycle creates a whole host of  other"trickle" benefits through society.

There are a few things the expanding economic based can do for the economy. First, it can increase the amount of business and transaction volumes between businesses; secondly, it can create additional demand for skilled labor which in turn improves job expansion; third, it improves tax revenue through the amount of business and people paying taxes; and, fourth it pushes universities and trade schools to teach relevant skills thereby improving the potential for greater investment and innovation later on.

-Business Volume: The improvement in the amount of business within the system generating revenue. As the density increases so do the volume of transactions that lead to added value on products and services.

-Job Market: As businesses reinvest in U.S. businesses they hire more people and put demand on wages. The labor market gets better and more people are employed through demand and supply mechanics.

-Tax Revenue: More businesses and labor force participation rates equates to a higher volume of taxes. While the rate can be important it is more important to have higher profit companies and higher wage employees paying taxes to create tax revenue surpluses that can be reinvested into infrastructure. This in turn improves the functioning of current businesses and raise the attractiveness to investors.

Universities and Skills: Universities and skilled trade schools will offer students relevant opportunities to update their skills and obtain the education they need to fill current labor market gaps. As these skills become available, more companies are willing to move into the area due to a ready labor market with labor and intellectual capital.


This process doesn't function well if companies take their high profits and reinvest them overseas. It becomes a net outflow to the economy and we are not able to reap the benefits of profits. Likely, one of the criticisms of globalization and movement out of the U.S. market. Creating an attractive business environment would help ensure that businesses find the U.S. market as one of the most attractive investment locations when compared to other options.

New Economic Platforms:

Economic platforms are the basic structure by which national development is generated. The platform will determine how efficient the system is run and whether or not the country (society) can turn a profit on the market. Those systems which are more developed will have less transaction costs and higher capabilities for growth that make investment more attractive. As society develops it generates more interaction and connections between the various economic sectors based upon profit seeking behaviors. The infrastructure will develop based upon these needs.

Consider how Romans used the roads to transport products and military equipment throughout their territories. Combined with economic growth and enlightened government their society flourished. However, over time their governmental structure began to collapse, a more efficient methods of moving products was not realized, and infrastructure began to decline. The system failed to adapt to the natural profit seeking behavior of society. Competition and internal conflict allowed the nation to be bested by Germanic Barbarians. 

All nations must continually develop and re-invest in themselves or face future risks of decline and eventual dissolution. The U.S. is not immune to the same laws of nature as other historical entities. To continue to develop means that society will need to come to new forms of understanding that generate higher levels of economic activity and growth. Failure is the failure of a nation to adapt to changing circumstances and realities that have presented themselves now and in the future. 

Developing strong infrastructure based upon the needs of societal member and the economic behavior of profit seeking individuals helps in building that infrastructure. Since developing a large national redevelopment program is very difficult local hubs can be used to study, understand the patterns of human behavior, and the creation of stronger platforms that reduce cost and improve productivity.

An example of this can be seen in the Detroit Michigan area and design. According to a February 2nd, 2015 article in the Michigan Daily entitled Detroit's layout continues to shape transportation, growth the development and roadways of the city started with Native American trails that eventually became roads and modern highways (Pfleger & Moehlman, 2015). Modern development is connected to the economic platforms of the past.

Economic platforms could be made by better usage of information networks, roads, bridges, waterways, and the incorporation of new technology. Each significant public works project should be studied to determine its economic impact on society and how such expenditures will return capital spent through new economic activity. For example, a bridge or redevelopment of a train station may generate over a short period of time a return on investment of public expenditures through new tax payers, greater investment, attracting new talent or generating new business activity. 

The Interactivity within Economic Hubs Produces Financial Value: 

The value of an economic hub is its ability to draw in new resources and convert them to higher value products for profitable exportation. The economic value of a system can be seen as the total value of exports minus the total value of imports. In other words, the cost of materials and production input should be of lower value than the export of higher end value products. Effective hubs create value by using their connections and resources in an effective manner to generate sustainable financial resources.

Markets have large, medium and small businesses that contribute to the development of strong hubs through the interaction of resources, communication (business and social), and innovation that turns lower value inputs into greater value exports. The ability of the social and business environment to create progressive environments with economic outlines will determine the developmental success of a hub.

Glazer in his book Smart vs. Dumb Service Strategies: A Framework for Ebusiness Intensity discusses the importance of information flow in developing an entity for higher levels of performance (2001). He makes three distinctions where information integration can be beneficial: 

Downward flow: The flow of information between companies and customers (i.e. the in and outflow of information). 

Upward Flow: The flow of information between suppliers and the company (i.e. efficient operations by integration of networked operations). 

Internal Flow: The flow of information held internally by a company (i.e. collaboration of internal elements).  

Information is money and it doesn't matter if we are discussing governments or business. The easy by which information flows throughout the entire economic hub will determine its effectiveness. The same can be said for the internal workings of government and the investment community that seeks to find places to investment. The government is in the business of information whether or not they realize it.  

In the diagram these transactions are noted in blue and may be larger or smaller based upon the value of the business relationships and the value of their transactions. When government runs efficiently and transparently the transaction costs of conducting business within a particular hub decreases thereby encouraging greater economic activity. Where demographic and market information is easily accessible, and transaction costs are low,businesses will naturally be inclined to invest further in these lower risk markets.

Large corporations regularly rely on medium and small business to supply their needs as well as improve upon their capacities by developing innovative products/services. For example, some small businesses may take over functions outside of the core competencies of the organization (i.e. maintenance) to help ensure strategic focus. Other businesses may provide new innovative concepts that corporations adopt, develop and export on a larger scale. Still others export in the niche market.  Each relies on the other for success.

Investment in proper infrastructure reduces costs by lowering taxes, increasing the speed of information transference, and furthering the interaction of business entities for development. Each infrastructure project should have goals and objectives to improve upon the social and business platform to spur greater economic activity. As investment increases so will the opportunities to improve upon the habitability of a place. Investment often improves services, employment opportunities, and greater options for personal advancement.

Imports of materials, information, and knowledge denoted in red should be of lower value than the export of finished products and services denoted in purple. The value creation of the hub is based upon on how businesses and individuals use these resources to develop higher value products for exportation. Individuals invest their time and energy and companies invest their financial resources to develop better products and future opportunities.  Labor, companies, and Investors have an inherent stake to produce value for their stakeholders by using market gains more wisely.

Cities are generally the center of suburbs and are part of the same hub. In the global economy it is the larger macroeconomics of an area that takes precedence over any individual entity. The business, civic, and social connections will determine how effectively they can work together to solve problems and become economic viable. Some businesses will be located within the suburbs and others within the city but each is connected together through social and business connections that help ensure mutual self-interest in development. When they do not produce value or cannot create synergy they are considered dysfunctional.  Constructive connections and financial interaction often leads to higher levels of economic activity for members. 

Network Development and Economic Growth:

Companies exist within a wider context of information, finances, resources, and sociological networks that impact their long-term health. Successful companies understand the environment in which they exist and how they contribute to their success. Companies should understand the elements of the market and encourage entrepreneurial actions that can capitalize on the elements in new ways. They should be semi-open systems that can take in information, transform it into something new, and contribute to their environment while ensuring they are retaining healthy profit margins. 

Hubs are made of clusters of competencies and abilities that make up the back bone of local human capital. They form when businesses with similarities work in tandem. We can see how clusters are formed around competencies in science, entrepreneurship, art, manufacturing, or just about any other industry. These clusters attract new interest and investment that desire to tap into unique skill sets and knowledge competencies.

Clusters have socialites who foster and push network creation. Socialites pass out cards, attend meetings, make phone calls, and connect resources and finances to create new things. They are the entrepreneurs and pro-social developers that use these networks to solve unique problems. When lower power-distance and low risk-avoidance behaviors encourage entrepreneurial interaction within a hub, according to Hofstede's Cultural Dimension Model, innovation rate rise and improves GNP growth (Overbaugh, 2013). 

Companies are inherently something called bounded rationality. This is where people band together to form an entity that produces products or services. They share similarities in knowledge, culture, and competencies bounded into a single business for financial gain. All companies have a level of bounded rationality where members think and act alike. When two companies, or bounded rationalities, share their knowledge they can create an additive process.

Hubs exist within a regional, national, and global marketplace. They are places where resources are converted into innovative products. A hub is defined by the types of clusters/competencies it has within in ranks and the abilities of these companies/bounded rationalities to work together and develop off of each other. Clusters work together to create a type of synergy that is unique to that particular hub and all the elements that come define it. 

The ease by which people act and interact with each other determines the success of hubs. This interaction can be defined by financial, knowledge, and social based goal directed behavior. Development of hubs requires a level of improvement in the ease and speed of transference. This is one reason why new technology can be a game changer. Strong hubs continually develop new knowledge, financial efficiencies, and production outputs through the activities of socialites/entrepreneurs that connect resources together in new ways.

Collaborative Investing in Local Clusters Leads to Economic Development

Group investment is not a novel idea but can be significant in developing stronger local growth models. A “hot” market is one that draws substantial investment interest that encourages growth among market relevant businesses. Pack investing offers opportunities to create multiple points of capital infusion that lead to the growth of a battery of related companies.

Companies do not work in a vacuum and rely on different local stakeholders to feed the building of their business. They need resources, human capital, science, facilities, suppliers, partners, and customers to develop momentum. If they lack the right environment, their business is doomed to failure before it gets started.

Pack investing offers the opportunity to take a local core competency with a solid industry base and infuse large amounts of capital at various points to encourage mutual growth. Multiple investors may work together to invest in complementary businesses that have market relevance but are not operating at peak performance.

The potential for quick growth and higher market returns is greater for companies that work together. Network relationships and alliance capitalism can create higher growth records among businesses (Eng, 2007). Sharing resources and knowledge during the growth stages with peer companies seems to make a difference.

Pack investing, and allied companies develop a stronger competitive stance. Industry alliances, even when money is not transferring between them, earned abnormally high local returns (Wang & Der-Jin, 2005). Getting businesses to support each other’s growth trajectories with shared services lead to stronger intra-firm alliances.

Collaborating on an investment level and working on a firm level creates two forms of potential synergy. Infusion of cash allows individual companies to expand their operations. Sharing knowledge and resources with other businesses helps them learn and adapt. Together investment and development create clusters of competitive firms that lead to jobs and economic wealth.

Investing in a pack and encouraging mutual growth is different than standard competitive strategies and requires a new way of thinking. Competitiveness is in the American blood, but collaboration can sometimes supersede this instinct to create greater value. Persuading investing institutions and company CEO’s to work together is a challenging game.

Pack investing relies on transparent city data that allows investors to find underperforming clusters and explore them. Seeing the opportunities and sharing those opportunities with like-minded investors may be against culture but can be lucrative, in the long run, when investment returns rises. Greater revenue is followed by new investment, tax income and jobs that can raise living standards of residents.

Large Institutional Investment in Cluster Life-Cycle:

There are key times when large institutional investors can swoop in a make radical change that leads to cluster growth. The key point is when companies within the cluster have moved beyond their initial inception, or entrepreneurial stage, and into their growth modes. When strategically approached large scale investment in multiple connected businesses will have their greatest impact.

Clusters are often based in market trends and budding new ideas. Whether these ideas are a new widget or a new service doesn't make much of a difference. They grow together, suppliers and producers, that lead to multiple businesses relying on each other for success. Investing in different strategic companies can ultimately lead to higher growth for entire industries.

Industries are like companies and formulate around an idea and entrepreneurship. If the business becomes sustainable it attracts investment capital that seeks to improve upon the product/service and create higher profit margins. As one business grows so does the other businesses within the cluster that connect and relate to it. They all feed off of each other in that growth process and encourage growth of each other.

Therefore, it make sense for large institutional investors to consider the different places within the cluster to invest to ensure that the entire cluster develops together. Injecting needed funds into a manufacturer and the supplier to that manufacturer makes sense in the same way as investing into the supply chain and telecommunications of the cluster leads to increased performance of multiple businesses that use those systems.

When coordinated properly large institutional investors can grow those areas and regions necessary for maximum growth of the entire local economic system. In essence, they can build the system with their investment choices and maximize profits by knowing when and where to invest within the cluster. Watching the life-cycles of multiple businesses within the region can make a big difference in striking while the iron is hot.

That requires the ability to understand the cluster from a micro and macro level. It takes considerable analysis and willing information sharing to allow this to happen. Instead of hiding information companies will need to share information so they can attract investment capital at just the right time within their life-cycle stage to maximize their growth.

Businesses within clusters often develop around new and innovative technology. Offering accurate information and institutional investing in the right places can lead to the growth of multiple businesses at one time. As these businesses grow they create synergy that leads to higher levels of investment return and stronger business outcomes that move initial business entrepreneurship into a growth stage. It is precisely this growth stage, or target return on investment, that institutional investment should seek when considering pack investment into innovative industries.

Economic Growth through Societal Motivation:

Hubs cannot develop without the proper maintenance of human motivation and the necessary rewards that are implied in any economic methodology. The economic system should encourage exploratory entrepreneurial behavior that leads to tangible rewards for societal members to ensure momentum thrusts forward. The same mechanics that apply to organizational motivation also apply to national motivation as each member determines whether it is beneficial or not to engage the market with their skills and abilities. 

We can see where a lack of motivation may not only damage the social structure but also the future financial system. The book Capital in the Twenty-First Century by Thomas Piketty outlines how wealth is being accumulated into fewer and fewer hands thereby retarding the financial growth of the middle class. Wealth distribution tied directly to performance helps to encourage greater levels of motivation and innovative ideation.  Higher performance should be encouraged throughout the layers of society to have the highest development of the economic system as members seek to move upward. 

It is important to understand that success should be reasonably incremental to have societal motivation. As an example think of a staircase and how a significant level of effort is needed to move a little upwards. That effort can be in the form of something like extra effort at work, starting a business, or obtaining more education. A person must put forward that effort and would expect to be on a new platform. 

Now imagine if the first few steps are obtainable but the next step was nearly impossible to traverse in any situation. No one can even see the top let alone step on it. At this point effort would cease and people would start looking for alternative strategies. They may also be angry and frustrated and trying to tear the staircase down as it no longer suits their needs. 

The staircase with lots of steps to the top is preferrable as it keeps everyone moving in the right direction. If the middle class and the upper class are separated by an impossible barrier motivation would stop at some point. Societal satisfaction will decline and people may seek alternative paths to obtain their needs. 

People should be able to reach the next step because it is in their best interest to do so. The system should be difficult and challenging so that most people will not be able to reach the top. Most won't be able to work that hard or smart to get there. Self-interest should always be pointed toward stepping up versus finding alternative paths. 

Economic systems require the elements to be working toward their own self-interest while still pushing for higher societal growth. Countries that can rally their people toward particular trajectories can change the culture and mindset. The system itself must be prepared to reward citizens that improve themselves through allowing the natural value and worth of workers to rise along with their compensation. 

Expectancy-Value Theory:  People will determine how much effort they are going to put forward to obtain goals. If the system doesn’t offer these rewards or if people are effectively blocked due to issues such as racism, religious bigotry, sexism, nepotism, corruption, or improper wealth allocation national motivation will decline. 

Path-Goal Theory: It is not enough to offer the rewards without offering the right rewards for the right kinds of activities. Employees that work hard, develop new products, and create better ways of conducting business have a right to increased income. The rewards must match the path to ensure societal development moves toward advantageous goals. 

Cultural Reward Systems: Each culture has their own embedded reward systems that encourage higher levels of motivation within a particular cultural context (Rosenblatt, 2010). Once the culture is set it will change the vantage points of societal members and influence what actions will lead to effective rewards that adjusts social intelligence and thinking. 

Skill Set Creation: To think, build, and produce requires the motivation to learn and develop. The system must reward employees who successfully complete training, obtain certificates, graduate with degrees, and improve their earning potential in some way. The closer learning is associated to current societal needs the higher the alignment of effort and skill. 

Ideation to Production: When good ideas are ignored only because they didn’t come from the “right” person with the “right” social connections the system suffers as less people learn to open their ideas to unjust criticism. Development of a nation requires the ability to explore various types of ideas from multiple sectors of society. 

Treaties and Agreements: Opportunities are based on the ability to sell products on the global market that obtain rewards for societal members. The types of agreements developed for trade and information sharing will determine the potential opportunities generated. 

Wealth allocation should impact all segments of society to be most effective in creating motivational effort. Developing a stronger society requires all-hands-on-deck through offering appropriate rewards, effective paths that help the greatest amount of people, the skill-set to product, open-minded enough to accept new ideas, and having the international agreements in place to develop new opportunities.

The way the system operates and develops has a natural impact on the methodologies people use to make decisions. Every person makes judgments to determine whether or not additional effort will lead to increased rewards or other valued benefits. A lifetime of rewards, punishments, successes, and failures will determine the overall way in which a people think and becomes embedded into a nation’s culture. The more people engaged in the economic system the higher the potential growth.

It is the entire system and its impact on the population that will have influence on whether or not a nation will succeed or decline and suffer the fate of history. Each member is surrounded by the factors of their environment and the way in which other people think that creates social perception as encased in culture. It is this cultural perception matched with appropriately pathways to success and tangible rewards that will determine if the system has the capacity to continue to grow in the future.

The Economic System as an Avenue of Biological, Sociological, and Psychological Needs Fulfillment:

The economic system permeates our entire existence from cradle to grave. From our socialized beginning to our elder years we are constantly making choices that impact our social and financial positions in society. Our very first experiences in life help us internalize certain cultural traits that become the foundation for our viewpoints and our ability to compete on the market. Economic hubs and nations are collective traits of our economic values that maintain patterns across society. All systems start with very personal biological, sociological, and psychological choices we may not be fully aware of and make their way throughout society to determine the success or failure of a nation in the global market.

Our economic system starts in our biological, psychological, and sociological core. Neuroeconomics is a concept that tries to explain how we make subconscious choices to purchase products, trust one another, or engage in certain activities beyond the simple mathematical equations of present day economists. It is a deep process that connects to our biology but also takes into account our psychological and social needs.We may not be aware of its influence but it still impacts nearly every decision we make.

Culture influences our viewpoint of the world and our ability to compete in it. As we internalize the values of our society and behavior we ultimately set upon an acceptable way of viewing the world and viewing ourselves within the world. This defines what behaviors are acceptable and what behaviors are not acceptable within society. We may not be aware of these cultural underpinnings but we are ultimately influenced by them.

On a conscious level we compare and contrast our limited resources to determine where we are most likely to compete. We use our limited experience and known skills to compare against the potential acceptance in our social networks to choose our occupational paths. Some will go to college and others will move into trade schools. Each offers opportunities to redefine ourselves and obtain needed skills to adequately fulfill our psychological, sociological, and biological needs.

If we were to add up all of the choices people make, and the culture vantage point  they use to make those choices, we will have the economic indicators for a state, city, or regional hub. Indicators will include the economic choices of education, occupation, expended effort, skill development, innovative ability, employment opportunities, social outlets, recreational pursuits, etc…(i.e. demographic trends) When certain economic similarities in choice, sociological behavior patterns, and psychological streams of conscious begin to define an area you have found the segmented borders of a hub and market.

Diversity of perspective that maintain shared goals can improve upon the abilities of participants within an economic hub. As all understanding is socially negotiated it is important to connect those with diverse opinions to each other to develop a more accurate understanding of the world, market, product, lifestyle, etc… When diversity, knowledge, and experience are used to enhance decision-making and find new and more accurate solutions to problems you have maximized human capital  development.  Maximization of human capital can be seen as the motivational  pressures and available pathways to achieving biological, sociological, and psychological fulfillment within a particular system.

Economics is the added sum of all of our choices and opportunities. Those nations with greater choices and opportunities have stronger economies than those that restrict human freedom. Each economic system is based upon hundreds of thousands of choices that include education, occupation, purchasing behavior, social relationships, and recreational activities. Each choice made by members of an economic system is a result of how they see themselves within their environment and their internal subconscious pressures that result from their biological, psychological, and sociological needs. No one can escape the market as much as no one can escape their own needs. To improve the market means to improve the choices and the factors that lead to those choices. The greatest freedom in society is the lawful maximization of available opportunities to achieve fulfillment based upon one's own skills and abilities.

Encouraging Businesses to Foster Better Legislation:

Government spends a lot of time researching and understanding which legislation is beneficial for stakeholders. They don't always get it right and sometimes they get it so wrong that doors close and jobs move overseas. While these are hotly contested issues that make Republican and Democrats burn with anger and spill-out seething rebukes it is an ongoing problem that must be faced!

We can impose regulations from the top or we can partner with industry to create regulations. The top down system is beneficial when industry cannot propose workable legislation. The hammer shall come down and it should be on the side of the people. At least in theory in societies that are "for the people". But....it doesn't need to come down when there are alternatives.

Industry are the masters of their environment and will have much more knowledge than any legislator will gain. They know their business, what will help them grow and what will screech their business to a stop! Industry leaders have something to say about how they can get things done and we are better off giving them our ear.

It makes sense to encourage them to be stakeholders and propose solutions that can meet the needs of the people and help them maintain their competitive stance. When we look at the issue of pollution it is natural and right to limit our carbon foot print. We all live in this environment and one generation does not have the right to doom the next only for profit.

Industry can put forward and invest in research and proposals that meet societies expectations. We move them from unwilling receivers of legislation to the sculptor that can develop something workable for a larger pool of stakeholders. It is they that have a lot to lose, often ranging into the multi-millions of dollars, and it is they who can propose some of the best solutions.

You might expect industry to be selfish and make propositions that are completely self-seeking in a way that ignores rights of society. This isn't often the case. They have concerns over the environment as well as their competitive position. Government has the ultimate authority to review, adjust and eventually vote on such legislation proposals.

Precisely how industry would come up with this solution is entirely up to them. One could foresee the use of not-for-profit, or research associations, that work on the behalf of the entire industry and not on the behalf of any one donor. They research ideas, investigate options, and create solutions for everyone involved. If they can't get it passed there is no reason to make a proposal.

Under this system science will be boosted. Where there is no available data, or open questions, the proposals will need to find an answer. That requires the use of scientific procedure, either research already conducted or new research, that fills the "gaps" in the proposal. An incomplete proposal is likely to result in a resounding "no" and requests for additional information.

Instead of demonizing corporations we can push them to find a better way of doing things. It would dumbfound the modern mind if they would prefer arbitrary decisions over those that can also meet their needs. More likely self-interest would push them to jump at the chance to remove what doesn't work with something that does.

The long-term impact can have a profound effect on the economy and society. Millions of jobs may be saved by ensuring legislation is practical and not an undue hindrance to industry. Pulling companies into the solution is better than have a cat-and-mouse game of big money donations that influence political votes or legal "hocus pocus" that side-steps justified legislation. As a nation, we are either finding better ways of creating alignment around societal norms through engagement or we continue to bleed organizations that could not save themselves.

Reducing Ineffective Legislation and Improving "Honest" Government:

If all politicians were narrowly focused on what is in the benefit of the nation we would not have a problem with misaligned values and inappropriate legislation. The problem is that it isn't always like this and other factors sometimes take precedence. Perhaps it never was meant to be that way. Politicians and the money that moves to them can create huge incentives to make decisions in favor of corporations in ways that can damage the needs of citizens. While these are unfortunate facts of government, it is possible to give business greater say in legislation while limiting their influence in the oversight of such legislation.

Business supporting of industry based research institutes that analyze common industry problems (i.e. pollution, mining, transportation, etc..) can improve legislative effectiveness. Industry gains increased power to propose beneficial legislation that meets government limits, restrictions, and quotas. They have a free hand in proposing legislation in an effort to curb regulations that also meet their needs.

To counter this increased legislative presence it is necessary to limit the amount of money that moves from the hands of big corporations to the political elite. The flow of money should not impact whether or not proposed legislation will pass. Campaign finance reform is a necessity for a more honest government that seeks to make decisions for the benefit of its citizenry.

In addition, concerns over increased corporate tax, and how this improves the attractiveness of the U.S. as a place of business had led to discussion on reducing corporate tax rates. Tax deductible donations to industry research centers provides opportunities to reduce corporate tax rate but improve innovation and research that has a long-term impact on national performance.

The goals of such changes are:

1.) Effective legislation that allows companies to expand and grow.

2.) Reduction of the influence of large corporate donations on legislative decisions.

3.) Improvement in innovation and research.

4.) Reduction of corporate taxes with longer term growth prospects.

Changes is a necessarily catalyst to growth. While we have experienced some low level growth over the past few decades the U.S. has not kept up with those of emerging markets. Mature economies are bleeding businesses and opportunity. Change becomes a catalyst for growth but that will require a new way of thinking about political compromise and legislation.

New ideas almost always come with resistance. Over time they can be accepted and improved upon. Of course these ideas must have practical utility. Republicans are very interest in protecting the business interest while Democrats often push the case of campaign finance reform to fight corruption. Legislation that makes sense is that which can create effective compromise. Republicans may accept tax breaks for money donated to industry research institutions that solve industry problems and promote streamlined and more effective national legislation while Democrats may accept controls on the influence of money in politics that lead to corruption. 

The Importance to the Economy of Independent Law Enforcement:

America has laws and these laws are voted on and passed by the people for the benefit of all. While we may not agree with all laws, and sometimes law enforcement may not apply these laws fairly or with the best wisdom, it nevertheless has an important duty to protecting citizens from crime, corruption, and predatory commerce. At the essential root of all economic systems is trust and law enforcement helps to ensure that people trust the system.

Independence means that law enforcement should not be at the whim of any politician or entity that could potentially skew the protections its affords its citizens. While judges have an obligation to interpret the will of the people, and often times hit a butterfly with a hammer, it is ultimately the people who have passed these laws that should have the final say.

While we may not see this at first look, law enforcement protects the value of the dollar and the economy. Each economic system is based in trust of trade and trust in the value of the dollar. When countries become corrupt it has a detrimental effect on the value of lawful commerce and causes wider devaluation of currency. The end result is the disintegration of values, economic activity, and beneficial citizen behaviors.

With skewed application of laws people lose a sense of belief in the overall American principle that if someone works hard they will receive rewards through entrepreneurial and personal initiative in the market. The system will look "rigged" and people will have less qualms about violating the law themselves in order to give themselves opportunities. The rich, poor, and popular should all be subject to the same laws.


Law enforcement has a sacred duty to protect the entire economic and political system through a balanced, independent, and thoughtful approach to the application of law. While there are many good reasons to reform law enforcement to ensure that justice is not blind to its own misapplication it should nevertheless be partially insulated from interference. Enough protections to keep it fair and unbiased while at the same time ensuring it doesn't run wild without accountability.

Enhancing Solutions through Developing Social Capital:

There is value in our social networks beyond that which serves our immediate needs. Social capital is the ability to use social networks to accomplish something that cannot be done alone. Business social networks are commonly used in areas ranging from product development to supply-chain management. On a wider scale, social capital can be matched with open innovation through appropriate Internet and physical channel expansions to develop something new for economic development. 

We must only think of how each person enters an economic system through their own particular way of viewing the world to understand the power of shared perspective. They are defined by their background, education, skill set, cultures, experiences and social networks to view topics from a particular vantage point. Problems are defined based upon how they understand them through historically perceived practical solutions. National cultures should find the rudimentary values of its societal members to better manage growth.

Having similar culture underpinnings is important for developing a nation. Within the U.S. our basic constitutions and Bill of Rights are an understanding that each member of society, regardless of religious or ethnic background, can agree with. Beyond the basic beliefs of society each person, group of people, carry with them an opinion on the nature of problems and their potential solutions. 

Social capital occurs when leaders can connect together these varying elements to focus on the solutions to specific problems that are acceptable to the widest possible stakeholders. Building social capital requires connecting people together in a way that allows them to react and develop off of each other in a manner that comes to a stronger solution. Interaction occurs through physical/virtual proximity, open dialogue, public discussion, and civility.

As these elements begin to act and interact with each other they create new definitions on how to see problems and potential solutions. The longer they interact solving a significant problem the more likely they will share mutual definitions and perspectives. It is a process of social learning and thought construction based in social construction mechanisms of elemental interaction. 

Few relevant solutions come from a single vantage point. All sustainable solutions are socially negotiated to develop new premises and conclusions. It is the changing of perspective, a focus on the solution, and the enactment of a plan that changes the reality of network members. Philosophical reality can be defined as a perspective of communicated why and why nots that enhance shared explanations.

With open-mindedness and active listening people begin to adjust their perspective and understand the factors in new and unique ways. This adjustment often leads to new solutions for complex problems and greater heights of awareness for involved members. It becomes something bigger than themselves that leads to enlightenment about the nature of life and best paths forward for a people, organization, city or nation. 

Mathews and Marzec (2012) studied social capital from varying industry perspectives and developed a model that fits well with operational management. One can see the similarities on how it applies to wider platforms and networks that improve upon social innovation and economic development. Using relational, cognitive, and structural capital it is possible to enhance HR practices to turn initial social capital into resulting social capital that produces meaningful solutions for a wider group of stakeholders. 

Streets of Gold or Pathways of Poverty: America's Next Choice:

Streets of gold look a little more like pathways of poverty. American cities have been on the decline for decades as investments diverted from urban areas to emerging countries that rolled out the red carpet. The infrastructure that was built when American cities were at the height of their economic might is still mostly intact waiting for visionary investors. Getting investment interest and better city governance can lead to mutual growth for business and job-hungry residents if the two can come to a mutual understanding.

Pick any major city in the country and follow its historic rise and fall. You may notice that as people moved to the city, built homes, and invested their resources these collections of people grew in wealth and influence. The collective action of investors created a synergy of growth that pushedprofit margins to higher levels. Money, government, and people had a mutual self-interest in growth.

As international competition rose, technology changed, and poor government policy stagnated these cities; they became ghost lands that are a pale comparison to their previous glory. Where opportunity flourished a few decades ago, some cities have grown dilapidated virtual prisons. The poorer a family was, the more likely they were stuck in a cycle of poverty.

Bleakness doesn’t need to be the norm. Cities that still retain their basic infrastructure are ripe for renewed development that not only produces higher returns on investment (ROI) but offers new opportunities for residents. When opportunity grows, hope also grows, and new economic life is born with it. Getting investors and government married into pro-growth policies can the nursing of opportunity.

Consider the mass investment draws in places like Eastern Europe, India, China, and emerging countries where investment restrictions are little but returns are high. American cities offer many of these same opportunities as the low cost of buildings, motivated workers, and reliable infrastructure found in combinations that will grow once the right capital is applied.

Stakeholders will need to look at the global market and existing local competencies to determine where the best investment growth potential can be realized. When capitalists engage in pack investments and create spawning clusters of business activities to capitalize on existing competencies and infrastructure growth is not far beyond the horizon. Economic wastelands can become investment wonderlands with a little spit shine.

Many proposals such as new recreation centers, additional funding, tax allocations, etc...have been tried at one time or another. They were short-lived because they were not profitable and often came with long-term commitments without measurable results. Building investment cities fixes the foundations of poverty that lead to higher housing, additional tax bases, and more community support.

The problem isn’t so much that investors are not willing to invest in these cities but that awareness is lacking, and local government is often short-sighted in their policy development that inadvertently restricts future opportunities. Revamping the way we think about investments, government, and education/training helps to ensure that struggling cities look more like diamonds in the rough. Enlightened government starts where partisan politics ends.

Major Class Conflict Likely Unless More Opportunities are Created

A report by Credit Suisse indicates that more and more of the world's wealth is concentrating in fewer hands.  This trend appears to be more dire over time with people on the bottom part becoming poorer and the people on the top becoming wealthier. The risks associated with this divergence is political instability and rapid change. Yet there are things legislators can do to change the troublesome trend.

Credit Suisse expects to see 22% rise in millionaires by 2022 increasing from 36 million people to 44 million people. While there will be some moving to the top there is less growth on the bottom leaving 70% of the worlds population with less than $10K.

While 3.6 billion poor might seem like a remote problem for people in poor countries to deal with the problems are very much at home in the U.S. It is expected that Millennials will not have the same access to wealth, homes, pensions, and other items that were so common to the Baby Boomers.

A highly educated generation mixed with few to no opportunities creates a disaster decades down the road as frustration grows. Without opportunity that generation will impact the way their children think and influence the opportunities of the generation behind them.

One must wonder what the impact of a declining impact of American financial strength mixed with declining opportunities both within the U.S. and across the globe. Such situations have fostered class struggles seen in major societal upheavals throughout history.

The very premise of the U.S. is that people have opportunity to change and grow to their maximum potential. That is becoming increasingly unlikely as large concentrations of wealth and political influence seek to ensure the "deck is stacked".


However, not all is lost. The American system is adaptable and the core principles of the nation rest on the inherent freedoms of the individual. Legislative changes that include increasing opportunities as well as supporting the development of small business can help ensure that income is distributed more evenly among those who are working hard and acting like entrepreneurs to achieve financial freedom. The economy can improve its innovative capacity through small business while creating enough variability in the system to keep it fluid and changing.

American Principles as a Catalyst for International Investment:

America was founded on a mere idea of opportunity that enticed thousands of people across the soapy seas to nail down new entrepreneurial stakes in the fragile colonies. Blacksmiths, carpenters and farmers spread out to start new businesses to feed their needy families. Even in a global economy the entrepreneurial spirit embedded within our American values has market appeal that can be converted to investment value.

Life, liberty and pursuit of happiness are based on trust. People believe that when they put a dollar in the bank it will be there a few days later, they are charged the price posted for products, hard work still results in increases in wealth, and education opens new doors. Trust glues societal fabric between people, employees-employer, investor-executive, citizen-government, and civilian-law enforcement.

When the fundamentals of trust break down so does the economy. The microeconomic transactions that occur throughout the nation are founded on simple ideas of value and confidence in the future. The dollar is the measure of that trust and is exchanged in good faith among economic elements to complete transactions.

Trust applies to foreign investment as much as it does to domestic commerce. Multinational companies spend a lot of time trying to understand the political and economic nature of nations to make investment decisions. Political instability and mistrust raise the risks of investments that ultimately result in sparser economic wealth generation.

Companies invest in places where the political, cultural, and economic spheres show enough stability to help ensure that their investments will have value in the foreseeable future. Increasing investment and heightened economic activity is one sign of increasing levels of trust. Investors believe that their opportunities are safe and growing.

Laws and values come to define the health of the system. Where laws encourage entrepreneurial activity and protect the rights of people socio-economic assumptions form. It is those assumptions that filter throughout the decision-making lenses that lead people to engage the market at higher levels.

In countries where there are political instability and inconsistent application of laws, you find that economic activity declines. Not only do companies under perform the market, but the countries find themselves in competitively weaker positions as people either disengage from the market or move into the black market.

America is changing and opportunities to build a better society abound if we ensure that trust is created in society. Founding principles applied consistently across our country prompts engagement and stability in the market that is attractive to international investors. Nation building has entered a new era of exploring the power of the human mind and funneling that through our American lens to create greater investment and economic activity. 

The Working Economic Hub System

Economic hubs have many components that make them successful. The most important aspect is they work like a system where the proper elements must be drawn into that environment to make it work properly. When one of these components is missing the entire system will lag much like we are seeing in the overall U.S. competitive environment.

Government is one component that is not included in the above diagram because they are the "brains" behind the system that ensures, in conjunction with local stakeholders, proper direction to ensure the elements are present. Such governments help ensure the proper tax structure, fair laws, and infrastructure are available.

We see that as a system we have inputs and outputs. As resources come into the system they are used, evaluated, changed, and improved into finished products. This happens through the interactions between suppliers and the supply chain. There must be adequate interchange of financial, material, network development and information to create innovation.

Of course the system won't work very well without needed capital. The intellectual and physical skills and abilities developed from universities and training are important in ensuring that the right kinds of skills are available for global competition. The system will also need access to investment capital as drawn from loans and outside investors that speed up the transactions between organizations in a way that returns investment.

You may also notice that it will be hard to draw in appropriate skills and abilities without an attractive lifestyle and social interactions that not only improve the quality of life but also the spill over information. A positive lifestyle will also contribute to political stability and retention of top talent.

The overall infrastructure of the area is vitally important to the full functioning of the system. An export oriented infrastructure with ports, railways, roads, high speed Internet, and utilities will encourage the drawing of investment but also the overall success of the business within the hub.


Finally, you will notice that it isn't enough to have a great system in place without advertising it appropriately. The government, organizations and businesses have a stake in ensuring that their product and place are well known to both customers and potential investors. To be successful they will continually need to have feedback loops that improve the functioning of their business through alignment to market needs.

The Individual within the Economic System

Individuals exist within a larger context that encourages or detracts from efforts to develop for greater economic sustainability. It is possible to adjust the governmental, regulatory, environmental, economic, and social aspects of the environment to encourage higher economic and social growth while still improving the sustainability of a system.

As humans we are responsive to our environment and very few actions are solely our own. People will see opportunities to develop based upon the benefits inherent within any one system. Those systems that provide appropriate pathways for development will reap the greatest amount of awards based upon their ability to keep large groups of people working toward similar goals and objectives. 

Leaders are the catalysts to change that often define and vocalize people's needs and find appropriate pathways to fulfilling those needs. The system should always be developing and creating to ensure that it will retain a top position in global markets. Focusing those collective efforts toward the most competitive long-term solutions should take precedence in our efforts.

The environment should continually align itself to the market needs in order to foster constant development and maximize opportunities. Organizations should seek to align their needs to that of the global environment (Bhattacharya & Gibbons, 1996). As the elements move toward global relevance they will also become healthier and more competitive.

Applying this to the example of the California Bight it is possible to see how aligning each of the parts to global needs can create higher levels of performance. To do this well requires having key strategies (goals), aligning areas (components),  putting together processes, and encouraging social development. Creating the right environment whereby following proper practices can lead to greater reward and can help in encouraging higher individual performance that results in collective gains. 

Collective gains can only come through collective knowledge sharing and ensuring the environment allows for higher levels of social intelligence and economic activity where everyone wins. It can be scary for people to find and try new ways of doing things or relinquishing the rightness of their opinions to others who may also have equally valued perspectives. The system grows by understanding, learning and adapting that results in improvement. 

All societies must learn and develop through new ideas that project the inner realities to the outer worlds. What we learn from our senses and experiences and the inner worlds can be projected to the outside world (Fullerton, 1906). We judge new theoretical propositions based on the comparison of our own internal experiences with that which is shared by others. When accepted they create a shared reality and perspective that becomes real for a greater amount of people.

Consider Plato's Allegory of the Cave. In it he describes the prison of the mind through a concept called Theory of Forms that impacts the ability of people to understand knowledge to free them to be creative contributors. In the example, prisoners are chained together in a dark cave where a fire reflects images on the wall in front of them. To the prisoners these images are their reality and is the only thing they know. The definition in their mind is complete and cannot be questioned without threatening their identity. 

On a rare occasion a prisoner may start to understand that "truth" is something beyond what is perceived in our environment. That which we see on the wall is only a form of something more true. The only value being the way in which we interpret it in our heads-our historical definitions based on perceptions. That which is gained from our perceptions and senses is not knowledge but only an opinion that reflects personal experience. 

The truth of economic development is that it provides an effective outlet for human needs. The fulfillment of human needs requires appropriate pathways to success. Those pathways are based in the way in which people judge and gauge their environment. The paths to understanding and development should match the cultural values of a nation. If there is a disconnect between the two concepts more people will be left in chains and unable to fulfill their true contributions.

When one decides to turn around they see a new truth it cannot be easily shared with others who are still locked in chains and still see reality as shadows on a wall. The example provided in the Allegory of the Cave is prisoners who see a book in shadow form on the wall and could very well be a reflection of our laws, regulations, and opinions. The concept of justice is a higher order form beyond the image of the book that is much clearer and more substantial than that which is represented in laws and regulations. 

The same can be said for the assumptions people use to describe the economic system. Each culture sees the pathways to success differently based upon how they were reared and the economic assumptions they learned from their families and communities. When people begin to understand the vantage points of others, whether of the same or different culture, they can come to conclusions about the potential success of economic systems and how they are manifestations of people's needs, dreams, and desires.

Once someone has been freed from their chains they will have a difficult time trying to explain what is on the outside of the cave, across the bridge, or on the other island because it is a far off place not seen as relevant to the prisoner's current understanding or daily needs. The prisoners have no clue of the higher order concept and will be so adamant about their opinions that they may injure, kill, or caste out the free person. Yet the  freed prisoner goes back to try and teach them anyway out of a sense of obligation despite the abuse they have and will receive.

Truth has a deeper meaning that is discovered only by those who question their environment. In the constructionist image you will find either an old woman or a young woman but a few may see a bunch of colors that don't make any sense to them. If we sit and gaze for long enough, questioning their nature, these random colors may form a picture as defined in this work on clusters, hubs, and sociological economic systems designed to enhance the inter-connectivity of societal members to greater forms of existence and living. To provide the underpinnings of one method on how to raise collective action to the benefit of the greatest amount of people. As John Donne said when he discussed how interconnected we all are to each other and the inherent value of each person.  It is fitting because a great part of our economic existence is seen through our eyes and the eyes of our social networks. 

No man is an island,
Entire of itself.
Each is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thine own
Or of thine friend's were.
Each man's death diminishes me,
For I am involved in mankind.
Therefore, send not to know
For whom the bell tolls,
It tolls for thee.

References Link

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