The Smartest Places on Earth summary

Have you heard the term rustbelts? It refers to formerly industrial areas in the United States and Europe, places that have largely declined in affluence because of the offshoring of manufacturing to cheaper production sites in countries such as China, Bangladesh, Mexico and Turkey.

But that’s all starting to change. Some of these rustbelt regions are transforming into brainbelts; regions that have been revitalized through the formation of hubs that unite knowledgeable workers with smart manufacturing. Just take the new production facility created by General Electric, an iconic company that produces aircraft engines and household appliances, among other products.

Rather than offshoring their production to Asia, GE set up shop in Batesville, Mississippi because of its close proximity to Mississippi State University. In this new location, researchers work with cutting-edge materials to revolutionize the production of aircraft engines.

GE had already been working with the university and, because of the great results the collaboration was producing, decided to become its neighbor. The choice has proven to be a boon to GE, as the work between the two institutions brings together innovation and smart manufacturing.

However, just because some companies succeed with this model doesn’t mean that emerging markets in the East are no longer a threat; rather, these markets are just facing stiffer competition. For instance, many Western industrial powerhouses have had to close their doors, overwhelmed by the low-cost production model – built largely on cheap labor – employed in East Asian countries.

That being said, the rise of brainbelts is causing concern for some Asian companies. Just consider the Taiwan-based Mediatek; for years, they’ve been a powerful force in the global marketplace, designing chipsets for smartphones and other such electronics.

Despite this success, the company’s CFO, David Ku, has expressed grave concerns about the increasingly competitive nature of US firms. He pointed to the San Diego-based company Qualcomm as an example, saying that they’re way ahead of the game in terms of research and development.

So, you now know why brainbelts are important. Next, you’ll learn how exactly they come about.