Antoine van Agtmael was one of the first people to understand the value of the world’s “emerging markets”. In fact, he is credited with coining the term emerging markets and promoting them as a major investment opportunity in the early eighties.
And now, he believes there is a major global economic opportunity in America’s former rust-belt cities.
Antoine will be CityAge’s guest at The New American City in Rochester, on June 6th and 7th, to talk about why America’s so-called Rust Belt Cities are key to its economic future. The first 150 CityAge delegates will receive a free copy of his book, The Smartest Places on Earth. Antoine spoke to CityAge a few days ago. Below is an edited transcript.
CityAge: Antoine, welcome to CityAge, and I know that folks will be keen to meet you and hear your message at CityAge in Rochester. At the outset, can you give us a bit of background on yourself, so folks know your background and what qualifies you for this type of a book, and this discussion?
Antoine van Agtmael: Sure. I grew up in the Netherlands, came to the US to study at Yale, became a banker, then an investment banker, then a development banker, finally a manager. And practically my entire career dealt with emerging markets, a term that I coined in 1981. After, towards the end of my career, in discussions with people in Asia I began to see that they were complaining about American competition really surprised me. And why was that? Not so much because of the increased labor costs, or even shale gas. It was because they couldn’t keep up with the American competition. And that led me to the belief that something basic has changed in the paradigm.
The paradigm used to be, try to make things as cheap as possible and compete with China. That’s a losing game. Now the paradigm has become for the next 25 years, “Let’s try to make things as smart as possible.” And there we in the United States, or Canada, we have a real chance to succeed. Because we have great universities. We have freedom of thinking, which is absolutely critical for innovative thinking. And we have a robust legal system. And so, this will give us a leg up again in global competition. And I believe actually that global competition is shifting back again to the North America and Europe.
CityAge: Excellent. So, you’re joining us in Rochester for CityAge: The New American City conference, which will look at how Rust Belt cities are repositioning themselves for exactly the type of economy you speak about. . . Did you look at Rochester as part of your book?
AvA: Yes, we mentioned Rochester because I think there is a strength based on Kodak, Xerox, etc. They . . . certainly have the old industrial base. They have some of the new technology. They have photonics. They have strong support from the state of New York.
So, with that combination with the University of Rochester and its strong history of industrial expertise, and its potential production methods, new discoveries, new materials, they have a chance to develop a new economy. . . .
CityAge: One of the major investments is happening in photonics there, which builds on their old industrial companies, and a lot their unique skill sets. . . . You mention that, I think, one of the key elements of the Brain Belt cities you look at is that they are home to a major global company, you know, like Intel in Portland, or even like Blackberry in Waterloo, and other places.
CityAge: Do you have advice for the companies and the cities when the company maybe 10 or 20 years removed from its global status?
AvA: Kodak was one of my very first clients as a markets analyst. So, I used to go to Rochester on a regular basis to talk to . . . Kodak. The best advice I can give is this, and it will always succeed: If you work very closely with the major universities like the University of Rochester and the Rochester Institute of Technology, with young, smart brains there, and try to develop trends that are new, and try to work with local startups, it is this sharing of brainpower, between universities, old-line companies, and startups that is really the key to innovation and the key to competitiveness in the future.
CityAge: How much does physical place matter? Because Kodak used to have its base a little away from downtown. We see downtown is growing again. We see university campuses also moving downtown. Is that something you looked at?
AvA: Yes. Place can be a deterrent. And for a while, I think certainly in Rochester, probably in lots of similar cities, place could have been detrimental to economic development. Now, it can also be . . . a place where people get together in a kind of natural way. But that requires simple things like cafes, bars, places where people can meet informally. Just meeting informally and this interchange of ideas between multiple disciplines is absolutely key, because that’s how you invent trends.
CityAge: So, urban design matters, and quality of design matters.
AvA: Absolutely. Absolutely. The future is all about connecting and connectedness. And by having the left side and the right side of the brain working together. Just having engineers is not enough. Just having artists are not enough. But having the two work together creatively, having scientists working with engineers, having computer scientists work with people with liberal art backgrounds, that is the future.
CityAge: One of the pieces I loved about your book . . . is when you speak about the increasing role of the connector in a community. Can you speak a little about that and, you know, who can take that role of a connector?
AvA: The connectors that we have seen can be a university president. I think in Albany, it was a former Christian militia flyer. In other places it was a local university administrator. In Portland it was Phil Knight at Nike. So, it can be all kinds of different people. What they have in common is: 1) they have a vision, 2) they have the kind of emotional intelligence to be able to connect people, to bring people together, 3) they have the respect of different groups, and 4), they have a big Rolodex. They are the kinds of people who can pick up the phone and bring people together. Because they have convening power. And then, they must have this ability to then bring people together and make them see a goal that is more important than themselves, or their company.
CityAge: In a nutshell. what’s the macro-trend here? Where are Rust Belt cities are going to be in 25 years?
AvA: Well, what I know is that this new style of innovating — where as I said, universities and startups, and old-line companies, share brainpower — we see now in about thirty places. It’s not limited to Silicon Valley and Cambridge. It’s thirty different places. And about 20 of them are former Rust Belts. So, that is significant critical mass already. And I expect that to grow. How fast is hard to say.
CityAge: Thanks, Antoine. We will see you in Rochester.