Regional Competition Reigns

States and localities are vital to U.S. competitiveness in the global economy. They are major investors in work force training through funding of public schools, community, and technical colleges and universities. They are also responsible for the infrastructure that makes global commerce possible, including roads, bridges, highways, ports, local transit and communications.

Moreover, states and localities play a critical role in cultivating regional economies, which is where global competition plays out. This trend was highlighted in the Council on Competitiveness' 2006 flagship publication, Competitiveness Index: Where America Stands. After evaluating two decades worth of economic data, the publication noted that today, more states and regions are participating in the global economy as a result of technology, and that the linkages among locations have increased dramatically.

Position of Strength
From a national competitiveness perspective, we are clearly in a position of strength. Phenomenal productivity growth over the last 20 years has rapidly increased the U.S. standard of living. Average household wealth is up 61 percent since 1989. Diffusion and deployment of technology continue to drive U.S. productivity.

On the flip side, however, it is clear the United States can no longer compete on low-wage, low-skilled jobs. American workers and middle-class families are rightly anxious about the current economic transition. The last 20 years witnessed a doubling of the global labor force and opening of completely new markets for commerce. In response, U.S. firms have transformed themselves. Many Americans have seen their jobs shipped to other countries. Meanwhile, the U.S. education system has not worked as aggressively as industry has to retool the work force for 21st-century competition.

This transformation begs for a comprehensive national competitiveness plan. It's essential that the public and private sectors at the national, state and local levels collaborate closely. Together, they must focus on our uniquely American traits of innovation and entrepreneurship -- the qualities that have made the United States the world's economic leader.

Now more than ever, this requires regional innovation.

Regional Innovation
The Council on Competitiveness has long championed regional strategies for economic development. The close working relationship with Harvard Business School Professor Michael Porter has been critical to the council's work on the topic and to advancing a new paradigm for tackling economic development challenges.

During the last decade, we identified several challenges that regions face in trying to support innovation-based growth: