In the old industrial economy, the major source of productivity gains came from the scale and efficient use of natural resources and materials. In the new economy, productivity improvements result from the efficient use of information to innovate and create knowledge. Knowledge and skills tend to concentrate geographically. For example, most of the world's high performance race cars are manufactured within a circle with just a 150-kilometer radius in England. More than 90 percent of the world's heart pacemakers are made in my county - Hennepin County in Minnesota.
Globalization is the second major factor affecting local governments and changing the economy.
Globalization is a complex process resulting from the international flow of goods, money, people, ideas, images, and knowledge. The cost efficiencies of communications technology, freer international trade, and a worldwide shift toward market economies have created a smaller world with new and wider markets. There will be few places to hide from the rest of the world in the future. In turn, globalization has spurred technological changes and intensified competition. Admittedly, many local governments in the United States and elsewhere have not implemented much of the newly available technology.