Planning in the Knowledge Economy

MSU Center for Community & Economic Development

Globalization

« Data & Indicators

The global economy refers to the phenomenon of information, money, capital markets, production systems, and management systems working as an integrated unit on a global scale in real time (Castells, 2001). Globalization, then, refers to more than traditional trade. Interconnectedness and interdependence across national borders creates demand for services and information as well as goods. Globalization implies opening local or nationalistic perspectives to embrace a broader outlook on this vital interconnectedness and inter-dependence.

In his seminal book, The World is Flat, Thomas Friedman (2005) portrays the world as having become a level playing field as a result of instantaneous communication via the Internet, the pervasiveness of computers, and Moore's Law where computer technology is outmoded every 18 months. Anyone, anywhere on the planet can compete as long as they have a computer and Web access. Where vertical organization served the traditional economy, successful companies now operate and collaborate horizontally. Collaboration with other companies can add value and leverage innovations. Increased communication capacity and better access to global markets can bring a wider range of goods and services to greater numbers of consumers.

A global orientation provides one avenue to expand markets for a region's products. Local leaders may want to consider advancing the economic interests of their regions by working with companies to extend their market reach and compete in global markets. This includes companies and entrepreneurs that are creating and competing in niche markets.

Indicators of Globalization include Air Travel Passengers, H-1B Visas, Exports, Foreign Trade Zones, and Imports.

Globalization: Air Travel Passengers

In the knowledge economy, the ability to travel quickly and economically remains important. Most businesses prefer their facilities to be located at sites where air travel is convenient and inexpensive.

Airport Enplanements (Domestic and International, 2007)

The Federal Aviation Administration (FAA) publishes annual enplanement data (the number of passengers boarding airplanes) for all U.S. airports.

Northeast MI1 Northwest MI2 Eastern UP3 Michigan
Enplanements 7,657 251,408 13,879 20,084,509
Per 1,000 population 55.28 845.89 246.92 2,007.76
Source: Passenger Boarding and All-Cargo Data, Federal Aviation Administration (2009).

The number of enplanements in Northwest Michigan is significantly higher than the other two regions. In 2007, Traverse City's Cherry Capital airport ranked fifth in the number of enplanements, behind only Detroit, Grand Rapids, Flint, and Lansing, and ahead of Kalamazoo.

In 2007, 17.5 million passengers boarded planes at Detroit Metropolitan Airport, accounting for over 87% of enplanements in the state. Many of these passengers, however, do not originate from the state. As a major Delta (formerly Northwest) Airlines hub, large numbers of Metro Detroit passengers are simply transferring planes.

If the number of enplanements of passengers originating in Michigan were used, then the number of state enplanements per 1,000 would be considerably less than 2,007.76 per 1,000. Northwest Michigan's 845.89 per 1,000, then, may lag behind state-originated enplanements per 1,000 less than it appears.

Figure. Airports in Michigan
Map of Michigan with airport locations marked and project regions highlighted.
Primary Airports
  1. Houghton County Memorial Airport, Hancock*
  2. Sawyer International Airport, Gwinn*
  3. Chippewa County International Airport, Sault Ste. Marie*
  4. Pellston Regional Airport of Emmet County, Pellston
  5. Charlevoix Municipal Airport
  6. Cherry Capital Airport, Traverse City
  7. MBS International Airport, Saginaw
  8. Muskegon County Airport, Muskegon
  9. Gerald R. Ford International Airport, Grand Rapids
  10. Capital Region International Airport, Lansing
  11. Bishop International Airport, Flint
  12. Kalamazoo/Battle Creek International Airport, Kalamazoo
  13. Detroit Metropolitan Wayne County Airport
Commercial Service Airports
  1. Gogebic-Iron County Airport, Ironwood*
  2. Ford Airport, Iron Mountain*
  3. Delta County Airport, Escanaba*
  4. Alpena County Regional Airport, Alpena
  5. Manistee County-Blacker Airport, Manistee
General Aviation Airports
  1. Tulip City Airport, Holland
  2. Oakland County International Airport, Pontiac
  3. Willow Run Airport, Detroit

Note: Asterisks (*) indicate sites in regions.

Source: Passenger Boarding and All-Cargo Data, Federal Aviation Administration (2009).

Globalization: H-1B Visas

The ability to employ legal foreign workers (those who are not immigrating to the U.S. to establish permanent residence) in specialized job positions has become increasingly important, albeit controversial, in the knowledge economy. These workers are directly linked to knowledge economy activity as H-1B work visas are typically granted to workers in the health, technology, and science sectors and universities.

H-1B Visas Granted (2007)

To qualify for an H-1B visa, a foreign worker must have a bachelor's degree, or equivalent, and be needed to perform high-skill tasks in a technology-heavy industry. The Foreign Labor Certification Data Center maintains a database of all electronically-filed H-1B visa applications (e-applications accounted for over 90% of applications in 2004). A maximum of 65,000 H-1B visas are annually granted.

Visa locations are based on the primary location of the job opening, not the worker's place of residence. Only those visas with a primary work site that could be located are included.

Northeast MI1 Northwest MI2 Eastern UP3 Michigan
H-1B Visas Granted 98 10 8 7,420
Per 1,000 population 0.71 0.03 0.14 0.74
Source: H-1B Program Data, Online Wage Library, Foreign Labor Certification Data Center (2009).

The number of Northeast Michigan's H-1B visas granted is close to the statewide level per 1,000 population. Northwest Michigan and the Eastern Upper Peninsula numbers of H-1B visas are negligible, both in absolute terms and compared to the statewide level.

Globalization: Exports

In the highly-interconnected global marketplace that characterizes the knowledge economy, import and export trade activity (measured by value) represents a key market opportunity. Bi-lateral Michigan-Canada trade amounted to $58.9 billion in 2008. Michigan's exports to Canada were valued at $19.1 billion and Michigan imported $39.8 billion worth of goods from Canada. This is a significant drop-off from 2007 when bi-lateral trade was over $77 billion. In 2007, Michigan's exports to Canada were valued at $24.9 billion, and Michigan imported $53 billion worth of goods from Canada. Canada remains Michigan's and the U.S.' leading trading partner.

Northern Michigan regions can take steps to trade in the global market place by exporting and/or importing goods to and from Canada. Michigan's high-volume land traffic connections to Canada include the International Bridge connecting Sault Ste. Marie to its sister city in Ontario. This land connection along with those at Detroit and Port Huron made the state's transport network the major entry route for Canadian goods entering any U.S. market in 2008. This transport network access provides excellent opportunities for exporting and importing firms, and logistics facility and transport firms.

Exports to Canada (in millions of dollars, 2008)

No data was available for any port of entry in Northwest Michigan. Limited data for Northeast Michigan and the Eastern Upper Peninsula was obtained.

Northeast MI1 Northwest MI2 Eastern UP3 Michigan
Exports to Canada $0.04 N/A $225.34 $18,340.17
Source: North American Transborder Freight Data, Research and Innovative Technology Administration, Bureau of Transportation Statistics, U.S. Department of Transportation (2009).

The Eastern Upper Peninsula exported about $225 million in goods to Canada, compared to Northeast Michigan's export value of $40,000 in 2008. Export opportunities could be substantial.

Globalization: Foreign Trade Zones

Foreign Trade Zones (FTZs) are federally-designated areas in the U.S. where merchandise is treated as being outside the country. This merchandise may be assembled, tested, relabeled, processed, mixed, or repackaged. Important economic advantages include 1) cash flow savings from deferring customs duties and excise taxes until the merchandise is shipped from the zone to a U.S. market; and 2) allowing the manufacture, manipulation, or assembly of articles using imported components and paying a lower duty rate for the finished articles than a firm would have paid on the individual components. Firms can warehouse their goods at U.S. locations near their markets or distribution centers, while keeping inventory costs down. If goods are exported from the zone, no duties or taxes are owed. These zones provide a clear advantage to a region in developing its global markets.

Foreign Trade Zones (2009)

Foreign Trade Zones are licensed by the Foreign Trade Zones Board, (composed of the U.S. Secretaries of Commerce and Treasury, respectively), housed in the Import Administration of the International Trade Administration, U.S. Department of Commerce. There are approximately 250 Foreign Trade Zones in the United States.

Northeast MI1 Northwest MI2 Eastern UP3 Michigan
Foreign Trade Zones 0 0 1 6
Source: List of Foreign-Trade Zones by State, Import Administration, International Trade Administration (2009).

Michigan's six Foreign Trade Zones are located in Sault Ste. Marie, Detroit, Port Huron, Flint, Grand Rapids, and Battle Creek. Foreign Trade Zones can act as magnets to attract businesses that seek global markets. The Eastern Upper Peninsula is the only region taking advantage of this economic development tool that provides Northern Imports, LLC with FTZ advantages. The recent economic downturn forced Northern Imports into bankruptcy; however, Northern Imports plans on reopening and continuing business. The other regions may want to consider the benefits afforded by Foreign Trade Zones.

Figure. Foreign Trade Zones in Michigan
Map of Michigan with foreign trade zones marked and project regions highlighted.
Foreign Trade Zones
  1. Sault Ste. Marie*
  2. Grand Rapids
  3. Flint
  4. Port Huron
  5. Battle Creek
  6. Detroit

Note: Asterisks (*) indicate sites in regions.

Source: List of Foreign-Trade Zones by State, Import Administration, International Trade Administration (2009).

Globalization: Imports

The ability to import goods represents an important regional economic advantage. Businesses trading with foreign markets may increase their efficiency by locating their facilities near ports of entry where cargo may be brought into the United States.

Ports of Entry (2009)

Ports of Entry are under the jurisdiction of U.S. Customs and Border Protection in the Department of Homeland Security.

Northeast MI1 Northwest MI2 Eastern UP3 Michigan
Ports of Entry 3 1 8 40
Source: List of Facilities and Crossings in Michigan, Ports of Entry, U.S. Customs and Border Protection (2009).

The Eastern Upper Peninsula has the most ports of entry as a result of its close proximity to Ontario, Canada.

Imports from Canada (in millions of dollars, 2008)

No data was available for any port of entry in Northwest Michigan. Limited data for Northeast Michigan and the Eastern Upper Peninsula was obtained.

Northeast MI1 Northwest MI2 Eastern UP3 Michigan
Imports from Canada $0.00 N/A $288.32 $39,824.97
Source: North American Transborder Freight Data, Research and Innovative Technology Administration, Bureau of Transportation Statistics, U.S. Department of Transportation (2009).

The value of Eastern Upper Peninsula imports from Canada was $288 million. Investigating potential bi-lateral import trade opportunities could lead to the development of new markets for Northern Michigan firms.

Figure. Ports of Entry in Michigan
Map of Michigan with ports marked and project regions highlighted.
Ports of Entry in Upper Peninsula & Northern MI
  1. Houghton Seaport
  2. Marquette Seaport
  3. Munising Seaport
  4. Escanaba Seaport
  5. Port Inland Seaport*
  6. International Bridge, Sault Ste Marie*
  7. Sault Ste. Marie Airport*
  8. Chippewa County Int'l Airport*
  9. Port Dolomite Seaport*
  10. Detour Seaport*
  11. Drummond Island Airport, Chippewa*
  12. Mackinaw Island Seaport*
  13. Cheboygan Seaport*
  14. Rogers City Seaport*
  15. Alpena Seaport*
  16. Manistee Seaport*
Ports of Entry in Other Regions
  1. Ludington Seaport
  2. MBS Int'l Airport/James Clements Airport/Bishop Int'l Airport, Freeland
  3. Muskegon Seaport
  4. Grand Haven Seaport
  5. Holland Seaport
  6. Gerald R. Ford Int'l Airport, Grand Rapids
  7. Capital Region Int'l Airport, Lansing
  8. South Haven Seaport
  9. W.K. Kellogg Int'l Airport, Kalamazoo
  10. Oakland County Int'l Airport, Pontiac
  11. St. Clair County Int'l Airport, Port Huron
  12. Blue Water Bridge, Port Huron, Port Huron
  13. Marine City Ferry Dock, Marine City
  14. Algonac Ferry Dock
  15. Coleman A Young Municipal Airport, Detroit
  16. Willow Run Airport, Ypsilanti
  17. McNamara Passenger Terminal, Detroit
  18. North Passenger Terminal, Detroit
  19. Fort Street Cargo Facility, Detroit
  20. Service Port-Detroit
  21. Detroit-Windsor Truck Ferry, Detroit
  22. Ambassador Bridge Passenger Facility, Detroit
  23. Detroit-Windsor Tunnel, Detroit
  24. Monroe Seaport

Note: Asterisks (*) indicate sites in regions.

Source: List of Facilities and Crossings in Michigan, Ports of Entry, U.S. Customs and Border Protection (2009).

Definitions

  1. Northeast Michigan corresponds to the Northeast Michigan Council of Governments (NEMCOG) region of eight counties in the Lower Peninsula: Alcona, Alpena, Cheboygan, Crawford, Montmorency, Oscoda, Otsego, and Presque Isle.
  2. Northwest Michigan corresponds to the Northwest Michigan Council of Governments (NWMCOG) region of ten counties in the Lower Peninsula: Antrim, Benzie, Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau, Manistee, Missaukee, and Wexford.
  3. The Eastern Upper Peninsula corresponds to the Eastern Upper Peninsula Regional Planning and Development Commission (EUPRPDC) region of three counties: Chippewa, Luce, and Mackinac.