The Smartest Places on Earth

The Smartest Places on Earth Plot Summary

Introduction

The global economy has experienced a profound shift in recent decades. For years, manufacturing jobs flowed from developed nations to emerging economies, leaving once-thriving industrial centers in America and Europe as hollowed-out "rustbelts." Cities like Akron, Dresden, and Eindhoven watched helplessly as factories closed and jobs disappeared. The conventional wisdom held that Western economies would inevitably decline as manufacturing prowess moved to countries with cheaper labor. Yet something remarkable has begun to happen in these former rustbelts. Rather than fading into economic obscurity, many are transforming into vibrant centers of innovation—what the authors call "brainbelts." These regions are leveraging their industrial heritage, academic institutions, and collaborative ecosystems to pioneer smart manufacturing and breakthrough technologies. By fostering environments where universities, businesses, and local governments work together to share brainpower, these areas are reversing their decline and creating high-value products that low-cost labor alone cannot replicate. This transformation not only challenges our assumptions about globalization but also offers a hopeful model for revitalizing struggling economies around the world.

Chapter 1: The Decline of Traditional Manufacturing and Rustbelt Formation

The rustbelt story begins in the latter half of the 20th century, as manufacturing regions across the United States and Northern Europe entered a period of painful decline. Cities that had once been industrial powerhouses—Akron with its tire factories, Eindhoven with electronics manufacturing, Dresden with its precision instruments—saw their economic foundations crumble as companies moved production to countries with significantly lower labor costs. The exodus accelerated in the 1980s and 1990s. In Akron, tire giants like Firestone and Goodyear relocated their manufacturing operations overseas. Eindhoven lost 35,000 jobs when Philips Electronics drastically reduced its local manufacturing presence. Dresden, which had been a leading scientific and industrial hub before World War II, suffered further decline under Communist rule and the subsequent economic turmoil after German reunification. Abandoned factories, unemployed workers, and decaying infrastructure became common sights across these once-thriving regions. This industrial decline stemmed from several converging factors. Globalization opened borders to international trade, creating unprecedented competitive pressure. Advances in shipping and communication made it easier to coordinate global supply chains. Most significantly, the enormous wage differentials between developed nations and emerging economies—with labor costs often 80-90% lower in countries like China and Mexico—made outsourcing manufacturing irresistible to companies focused on cutting costs. The conventional wisdom held that these rustbelts were doomed to permanent economic decline. Economists and business leaders predicted that manufacturing would never return to high-wage countries, and that Europe might eventually become a "museum of the world." The sense of despair in these communities was palpable, with widespread unemployment, crumbling infrastructure, and young people fleeing for better opportunities elsewhere. The impact extended beyond economics into the social fabric of these communities. Industrial cities had built their identities around manufacturing prowess, and that identity was now shattered. The loss of well-paying jobs led to increasing inequality, declining public services, and in many cases, social unrest. It seemed these regions had been permanently left behind by the forces of globalization. Yet even as these rustbelts reached their lowest point, the seeds of their remarkable transformation were already being planted. The crisis itself created an urgency that would drive innovation, collaboration, and ultimately, reinvention.

Chapter 2: Brainbelts Rise: Sharing Knowledge Through Ecosystems

The transformation from rustbelts to brainbelts began to take shape in the early 2000s, driven by visionary "connectors"—individuals who could bring together diverse groups that traditionally operated in isolation. In Akron, it was University of Akron President Luis Proenza; in Albany, New York, it was SUNY Poly's Alain Kaloyeros; in Eindhoven, it was Gerard Kleisterlee, CEO of Philips. These connectors recognized that rebuilding their regions required a radical new approach: the sharing of brainpower. This collaborative approach represented a significant departure from traditional innovation models. Instead of closely guarded corporate research labs working in isolation, the brainbelt model brought together universities, businesses, entrepreneurs, and government agencies to tackle complex challenges collectively. The "lone genius" inventor was replaced by interdisciplinary teams combining diverse expertise. In Albany, companies that were fierce competitors—including Intel, IBM, Samsung, and TSMC—collaborated on next-generation semiconductor research at SUNY Poly's NanoTech Complex. The ecosystem approach proved remarkably effective because it addressed complex, multidisciplinary challenges that no single player could handle alone. Take the University of Akron's work on polymer science, which brought together chemists, materials scientists, engineers, and industry partners to develop advanced materials with applications ranging from medical devices to aerospace components. This collaboration enabled the region to leverage its deep expertise in rubber and synthetic materials—originally developed for the tire industry—for cutting-edge applications. Physical proximity proved crucial to these knowledge-sharing ecosystems. Brainbelts typically feature central hubs where researchers from different organizations work side by side. In Eindhoven, the High Tech Campus transformed from Philips' exclusive research facility into an open innovation campus housing over 100 companies and 8,000 researchers. The Holst Centre, established within this campus, became a focal point for collaboration between universities, research institutes, and companies working on wireless sensor technologies and flexible electronics. Trust emerged as the essential ingredient that made these ecosystems function. Companies that had once jealously guarded their intellectual property discovered that the benefits of open collaboration often outweighed the risks. In Portland, Oregon, Intel and Oregon Health & Science University established a partnership to analyze cancer-related patient data, with both organizations sharing their most valuable assets—proprietary health data and computing expertise—because the potential benefits were so significant. The brainbelt model flourished in regions that might seem unlikely candidates for cutting-edge innovation. What they shared wasn't glamour or massive venture capital networks like Silicon Valley, but rather a unique combination of technical heritage, research universities, affordable spaces, and motivated communities determined to reverse their economic decline. This created environments that attracted talented researchers, entrepreneurs, and students who might otherwise have headed to established tech hubs.

Chapter 3: Transforming Legacy Industries Through Smart Technology

At the heart of the brainbelt phenomenon lies a fundamental reinvention of manufacturing itself. This isn't simply the return of old-style production, but rather the emergence of "smart manufacturing"—a revolutionary approach that integrates advanced technologies, new materials, and collaborative innovation to create high-value products. Smart manufacturing bears little resemblance to the assembly lines of the past. Traditional manufacturing focused on mass production, rigid hierarchies, and worker efficiency. Smart manufacturing, by contrast, emphasizes customization, flexibility, creativity, and team-based problem-solving. The traditional factory was large, noisy, and often polluting; the smart factory is compact, clean, and highly automated, often located in urban centers where talented workers prefer to live. Three key technologies drive this transformation. First, next-generation robotics has revolutionized automation. Companies like Rethink Robotics have developed collaborative robots that work alongside humans, are easily programmable, and cost a fraction of traditional industrial robots. These "cobots" make automation accessible even to small companies and enable unprecedented flexibility in production. Second, 3D printing (additive manufacturing) has transformed how products are designed and produced. Unlike traditional manufacturing, which creates objects by cutting away material or using molds, 3D printing builds objects layer by layer from digital designs. This enables the creation of complex shapes impossible to manufacture through conventional methods, eliminates much of the waste of traditional manufacturing, and allows cost-effective customization and small-batch production. Third, the Internet of Things connects machines, components, and products in smart networks. In Siemens' Amberg factory in Germany, products communicate with the machines that make them, allowing 1.6 billion components from 250 suppliers to be assembled into 50,000 product variations with astonishingly few defects. This connectivity extends beyond the factory to create intelligent products that monitor their own performance and communicate with users. The integration of these technologies has enabled brainbelts to revitalize their manufacturing heritage in unexpected ways. In Akron, companies leverage the region's deep expertise in polymers to develop advanced materials for aerospace, medical devices, and energy storage. The University of Akron's College of Polymer Science and Engineering has become the nation's largest academic program devoted to polymers, working closely with local companies to translate research into marketable products. Perhaps most significantly, smart manufacturing has begun to erode the cheap labor advantage that drove manufacturing offshore in the first place. When production is highly automated, labor costs become a much smaller percentage of overall expenses. This, combined with the advantages of producing close to markets and research centers, has made local manufacturing economically viable again in high-wage countries. The shift from "cheap" to "smart" as the key competitive advantage represents a profound reversal of the globalization trends that devastated rustbelt regions. Areas with strong technical knowledge, research institutions, and collaborative ecosystems can now compete effectively against low-cost producers, creating products of such sophistication and value that they cannot be easily replicated elsewhere.

Chapter 4: Regional Revitalization: Key Case Studies and Success Patterns

Several compelling case studies illustrate how rustbelt regions have successfully transformed into thriving brainbelts, each following distinctive paths while sharing common elements. Their stories provide valuable insights into the revitalization process and demonstrate that economic renaissance is possible even in the most challenged industrial regions. The Albany region in upstate New York represents one of the most dramatic transformations. Once a declining manufacturing center, it has become a global leader in nanotechnology and semiconductor research. The catalyst was Alain Kaloyeros, who spearheaded the creation of SUNY Poly's NanoTech Complex—a $20 billion research facility that brought together IBM, Intel, Samsung, Global Foundries, and other industry leaders to collaborate on next-generation chip technology. This initiative created thousands of high-tech jobs and attracted suppliers and support businesses to the region. The impact extended beyond Albany itself to nearby communities like Malta, where Global Foundries built a $10 billion semiconductor manufacturing facility. Akron, Ohio presents another compelling case. Once known as the "Tire Capital of the World," Akron lost most of its manufacturing jobs when tire production moved overseas. Rather than accepting decline, the region leveraged its deep expertise in polymers and materials science to create a new economic identity. University of Akron President Luis Proenza developed what he called the "Akron Model," positioning the university as an engine for economic growth through focused research, technology transfer, and collaboration with industry. Today, Akron is recognized as the polymer capital of the United States, with its approximately 1,000 small polymer companies employing more people than the major tire manufacturers did during the region's manufacturing heyday. In Europe, Eindhoven in the Netherlands demonstrates how a former industrial center can reinvent itself through open innovation. When Philips Electronics drastically reduced its manufacturing presence in the 1990s, the region could have collapsed. Instead, Philips transformed its research facility into the High Tech Campus Eindhoven, an open innovation hub where over 100 companies now collaborate. The region focused on high-tech systems and materials, particularly in areas like semiconductors, photonics, and medical technology. The Technical University of Eindhoven works closely with companies to ensure research addresses practical challenges, while initiatives like Brainport Industries connect suppliers and manufacturers in collaborative networks. Dresden's transformation is particularly remarkable given its history. After suffering massive destruction in World War II and decades of Communist rule, the city has emerged as "Silicon Saxony," a leading center for semiconductor manufacturing and research. The catalyst was Kurt Biedenkopf, who became prime minister after German reunification and attracted research institutes like the Max Planck Institute and Fraunhofer Institute to the region. Companies including Infineon and GlobalFoundries established major semiconductor facilities, while research networks like Silicon Saxony connected small and medium enterprises. Despite their different contexts, these successful brainbelts share common elements: the presence of research universities deeply engaged with industry; physical hubs that bring diverse participants together; supportive government policies; and perhaps most importantly, a collaborative culture that breaks down traditional barriers between academia, industry, and government. They demonstrate that economic revitalization isn't about recreating the past, but rather building on legacy strengths while embracing new technologies and ways of working.

Chapter 5: Universities as Innovation Catalysts and Connectors

Research universities have emerged as the essential anchors of successful brainbelts, playing a far more expansive role than traditional academic institutions. Rather than remaining isolated in ivory towers, these universities actively drive regional innovation through multiple channels: generating research, developing talent, transferring technology, supporting entrepreneurship, and serving as neutral conveners for collaboration. The University of Akron exemplifies this new model. Under President Luis Proenza, the university articulated what he called the "Akron Model," positioning the institution as an engine for economic growth. The College of Polymer Science and Engineering became the nation's largest academic program devoted to the study of polymers, with 120 faculty members and over 700 graduate and postdoctoral students. Rather than conducting research in isolation, the university worked closely with companies like Goodyear, Timken, and A. Schulman to translate scientific discoveries into commercial applications. North Carolina State University's Centennial Campus represents another innovative approach. This unique hybrid environment combines academic departments, research labs, corporate facilities, and start-up incubators in a single campus. Companies like ABB maintain research facilities directly on campus, where their scientists work alongside university researchers and students. This arrangement facilitates knowledge transfer and provides students with real-world experience through internships and collaborative projects. The university's research on textiles, advanced materials, and energy technologies directly addresses industry needs while advancing fundamental knowledge. The relationship between the University of Minnesota and Medtronic illustrates how universities and industry can develop symbiotic relationships that benefit both parties. The university's Medical Devices Center serves as an invention "mill" that has generated more than 125 patents, while Medtronic provides funding, practical guidance, and commercialization pathways. This partnership has helped make Minneapolis a global center for medical device innovation, with over 2,500 life-sciences companies in the region. In Europe, technical universities play particularly important roles. The Technical University of Eindhoven works closely with companies at the High Tech Campus, ensuring research addresses practical challenges while maintaining academic rigor. In Dresden, the Technical University collaborates with the Max Planck Institute and companies like Infineon on semiconductor research. These institutions focus significant attention on training highly skilled workers through work-study programs that combine classroom learning with practical experience. The emergence of universities as innovation catalysts required cultural and organizational changes. Traditionally, academics viewed commercial activity with suspicion, while companies were reluctant to share information with academic partners. The Bayh-Dole Act of 1980 was a catalyst in the United States, allowing universities to benefit financially from research conducted under government grants. European universities faced similar transformations, often driven by budget pressures that forced them to seek industry partnerships. Universities also play a crucial role in attracting and developing talent. They serve as magnets for researchers, graduate students, and faculty from around the world, enriching regional innovation ecosystems with diverse perspectives and expertise. The presence of universities helps rustbelt regions overcome negative perceptions and position themselves as attractive destinations for knowledge workers. Perhaps most importantly, universities serve as trusted neutral conveners that bring together competitors, entrepreneurs, researchers, and government officials who might otherwise be reluctant to collaborate. This convening role is essential to the brainsharing model that distinguishes successful brainbelts from traditional industrial clusters.

Chapter 6: From Cheap Labor to Smart Innovation: The Economic Shift

The most profound economic shift underlying the brainbelt phenomenon is the transition from competing on cost to competing on intelligence and innovation. For decades, the global economy operated under the assumption that manufacturing would inevitably flow to regions with the lowest labor costs. This driving force shaped corporate strategies, regional development plans, and even national policies. The first signs that this paradigm was weakening emerged in conversations with business leaders in countries that had benefited from the low-cost advantage. David Ku, CFO of Mediatek in Taiwan, expressed concern about facing "much stronger American competition again" because U.S. companies' R&D was "so advanced, so far ahead of ours." Similar sentiments were voiced by executives in Mexico, Indonesia, South Korea, and Turkey—countries that had leveraged lower labor costs to gain economic growth but were finding this advantage diminishing. Several factors have accelerated this shift from cheap to smart. First, automation has dramatically reduced the labor component in manufacturing costs. Advanced robotics, 3D printing, and intelligent systems mean that labor often represents less than 10% of total production costs for sophisticated products. When a collaborative robot like Baxter from Rethink Robotics costs just $22,000 and operates for about $3 per hour over its lifetime, the wage differential between developed and developing nations becomes much less significant. Second, the increasing complexity of products requires sophisticated design, engineering, and manufacturing capabilities that are difficult to replicate. Creating next-generation medical devices, advanced materials, or semiconductor components demands specialized knowledge, research infrastructure, and collaboration across disciplines. These capabilities are more readily available in regions with strong research universities, experienced workers, and established innovation ecosystems. Third, the costs of distance have become more apparent. Extended supply chains are vulnerable to disruptions and often incur hidden costs in terms of quality control, intellectual property protection, and coordination. Manufacturing close to research centers allows for faster iteration and problem-solving, particularly for complex products that require close collaboration between design and production teams. The economic implications of this shift are profound. Regions that can develop and maintain innovation ecosystems now have a sustainable competitive advantage that cannot easily be replicated simply by offering lower costs. This has allowed former rustbelt regions to attract investment and create high-value jobs that had previously seemed lost forever. For companies, the imperative has shifted from minimizing costs to maximizing innovation through collaboration. This explains why firms like Intel, General Electric, and ASML are making major investments in regions like Albany, Batesville (Mississippi), and Eindhoven rather than continuing to offshore production. GE's decision to locate a new aircraft engine facility in Batesville specifically to be near Mississippi State University's materials research center exemplifies this new thinking. For workers, the shift creates both challenges and opportunities. Manufacturing jobs now require higher skills and more education, but they also offer better wages and working conditions than the repetitive assembly line jobs of the past. The growth of work-study programs in brainbelt regions helps workers develop the technical skills needed for smart manufacturing while earning wages. This transition from cheap to smart does not mean manufacturing will return to high-wage countries in its previous form. The new manufacturing requires fewer workers, different skills, and new business models. But it does suggest that the decades-long hollowing out of industrial regions in developed economies may finally be reaching its end, replaced by a more balanced global economy where innovation, not just cost, determines competitive advantage.

Chapter 7: Building Sustainable Brainbelts: Lessons and Principles

Creating and sustaining successful brainbelts requires deliberate effort and alignment among multiple stakeholders. The experiences of regions that have successfully made the transition from rustbelts to brainbelts offer valuable lessons that can guide other communities seeking similar transformations. First, every brainbelt needs a connector—an individual or organization with the vision, credibility, and persistence to bring diverse participants together. These connectors come from various backgrounds: Alain Kaloyeros in Albany was a physicist; Luis Proenza in Akron was a university president; Kurt Biedenkopf in Dresden was a politician. What they share is the ability to articulate a compelling vision, build trust across institutional boundaries, and mobilize resources toward common goals. Without these connectors, even regions with strong assets often struggle to create cohesive innovation ecosystems. Second, successful brainbelts focus on specific domains where they have legacy strengths and competitive advantages. Rather than trying to replicate Silicon Valley's broad technology focus, Akron concentrated on polymers and advanced materials, building on its historical expertise in rubber. Eindhoven focused on high-tech systems and materials, particularly in semiconductors and photonics. This specialization allows regions to develop depth of expertise and attract companies and talent in targeted fields. Third, physical infrastructure and environments matter enormously. Innovation districts that combine research facilities, corporate offices, start-up spaces, housing, and amenities create the density and interaction opportunities that foster collaboration. The renovation of abandoned industrial buildings into modern workspaces—like the American Tobacco Campus in Durham, North Carolina or the Strijp district in Eindhoven—preserves industrial heritage while creating attractive environments for knowledge workers. Fourth, educational institutions must align with regional innovation strategies. This means not only research universities engaging in relevant fields but also community colleges and technical schools developing programs that prepare workers for jobs in smart manufacturing. Hudson Valley Community College's TEC-SMART program, which trains technicians for GlobalFoundries' semiconductor manufacturing facility, exemplifies this alignment. European regions benefit from well-established work-study programs that combine classroom learning with practical experience. Fifth, funding mechanisms must support the entire innovation pipeline. This includes government funding for basic research, public-private partnerships for applied research, and private capital for commercialization. Regions that successfully coordinate these funding sources can sustain innovation through economic cycles and technological transitions. The Third Frontier initiative in Ohio, which provided $2.1 billion for innovation activities, demonstrates how state governments can catalyze private investment. Perhaps most fundamentally, successful brainbelts develop cultures of openness, collaboration, and risk-taking that run counter to traditional industrial hierarchies. These cultural characteristics cannot be legislated or purchased; they must be cultivated through consistent leadership, visible success stories, and institutional structures that reward collaboration. Dresden's Silicon Saxony association and Eindhoven's Brainport Industries illustrate how formal organizations can help build collaborative cultures across regional ecosystems. For regions contemplating their own transformations, these lessons suggest a pathway forward: identify distinctive strengths, nurture connector leadership, create physical environments that foster interaction, align educational institutions with innovation needs, develop appropriate funding mechanisms, and above all, build a culture that embraces collaboration and change. The journey from rustbelt to brainbelt is challenging, but as numerous examples demonstrate, it is achievable with sustained commitment and strategic focus.

Summary

The transformation of rustbelt regions into vibrant brainbelts represents one of the most encouraging economic developments of our time. This shift challenges the conventional wisdom that manufacturing in developed nations was doomed to permanent decline, instead revealing a new model of innovation-driven growth based on collaboration, specialized knowledge, and smart manufacturing. The core insight is that competitive advantage in the 21st-century global economy increasingly comes not from cheap labor but from the ability to innovate through shared brainpower—the collaborative intelligence of diverse participants working together on complex challenges. The implications extend far beyond the revitalized regions themselves. This new model of innovation offers a pathway for addressing many of society's most pressing challenges, from climate change to healthcare to sustainable food production. The collaborative approaches pioneered in brainbelts—breaking down silos between disciplines, institutions, and sectors—provide a template for tackling complex problems that resist traditional solutions. For individuals, communities, and nations navigating an uncertain economic future, the brainbelt phenomenon offers both inspiration and practical guidance: focus on distinctive strengths, invest in education and research capabilities, create environments that foster collaboration, and embrace the technologies that are transforming how we make things. By doing so, even the most challenged industrial regions can find new paths to prosperity in the knowledge economy.

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Antoine van Agtmael

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