These are the smartest places on earth

As emerging markets cool off, Macquarie Research analysts Peter Eadon-Clarke and Nara Song are looking for the next source of global growth.

For them, an exciting source growth will be the innovation clusters, or “brainbelts,” as described in the newly-released book “The Smartest Places on Earth” by Antoine van Agtmael and Fred Bakker.

The authors argue that the days of low-cost advantage are over.

“Cheap is giving way to smart, where high value-added products are being created in collaborative environments, in ‘brainbelts’,” the Macquarie analysts wrote.

Brainbelts refer to areas where you will find research facilities with deep knowledge in particularly specialties, prestigious educational institutions, government support for basic research, appealing work and living environments, abundant capital, and an “atmosphere of trust and the freedom of thinking that stimulates unorthodox ideas and accepts failure as a necessary part of innovation.”

These hubs differ from the hierarchical and regimented thinking so prevalent in many Asian and MIST (Mexico, Indonesia, Korea and Turkey) economies, according to the authors.

“Beyond expensive, multidisciplinary, complex new product development, these innovation clusters are also undertaking manufacturing, highly automated, custom runs, using 3-D printers, produced in close proximity to the customer,” Macquarie wrote.

In addition to well-known “brainbelts” including Silicon Valley in California; Cambridge, Massachusetts; and Austin, Texas, the book focuses on important ther hubs, listed below:

The book’s authors are optimistic about the impact of these brainbelts on employment, noting that for each new urban high-tech job, there are five additional jobs created: three for professionals and two for lower-wage non-professionals.