The New Era of Localnomics

The current issue of Time magazine has an important article (Go Glocal) by Rana Foroohar on the changing face of globalization and the power localnomics.  Globalization used to be a one-way street that led away from America.  We may be entering the era of localnomics - - a world where high energy prizes, political risk, and technological shifts are bringing opportunity back home to local markets.

The article highlighted the new rules for localnomics economic model:

1. Hometown Bankers Know Best - - Slowly but surely the world of finance and banking is changing.  Approximately 30% of US corporate profitability comes from banks - - a number likely to fall ((in 1975 the number was 11%).  Look for a world of safer, smaller, and local banks.  Moving toward localnomics will require more It's a Wonderful Life banking - - bankers that understand and are part of the local/regional economic matrix.
2. Manufacturing Matters - - The world is on the verge of a new industrial revolution in manufacturing as a global growth driver.  Manufacturing's share of global output is 17.4%, the highest it's been in over a decade.  Look for more of this growth to come back home to the US because of three reasons.  Goods cost more to transport because of higher energy costs.  Foreign wages are going up.  Doing business abroad can be risky.
3. Blue Collar Jobs Go High-Tech - - The good news for some workers.  By 2020, the world will have a shortage of 85 million high-and medium-skilled workers.  The bad news - - the world will have a surplus of 93 million low-skilled workers.  Localnomics will have a key challenge.  Producing the high-skilled while supporting the low-skilled will increasingly matter.  Education will be a key, which is a local responsibility and opportunity (and historically a constraint and problem).
4. Closer is Faster, and Faster is Good - - I read recently that the online global retailer Amazon wants to offer same day delivery of items that you order.  This flips the world of complex, global supply chains on its head.  If the model become faster (much, much faster) - - faster will need the support of closer.
5. Local Leader Must Step Up - - Count on cities to become more aggressive about protecting their economic future.  Political gridlock is out.  Local-centric approaches that combine the best of government and capitalism have to be in.