Chapter 1
The Rust Belt Renaissance: How Brainpower Is Reshaping Global Competition
In a world obsessed with Silicon Valley's tech dominance, a quiet revolution is unfolding in unexpected places. Former industrial centers across America and Europe-once written off as economic casualties of globalization-are experiencing remarkable revivals. This transformation isn't happening through government bailouts or nostalgic attempts to resurrect old industries. Instead, it's occurring through the power of collaborative innovation, where universities, businesses, and government agencies are joining forces to create what authors Antoine van Agtmael and Fred Bakker call "brainbelts." Their 2016 book, which became required reading in economic development circles and influenced regional planning across continents, challenges conventional wisdom about global competitiveness. Even Barack Obama cited its insights during his presidency, while cities from Ontario to Newcastle have adopted its blueprint for post-industrial revival. The book's thesis-that the future belongs not to those who make things cheaply but to those who make things smartly-offers a compelling vision for how former manufacturing powerhouses can reclaim their economic vitality in the 21st century.
Chapter 2
From Rustbelts to Brainbelts: The Great Economic Reversal
For decades, the narrative seemed clear: manufacturing was leaving America and Europe for cheaper shores, and nothing could stop this inexorable tide. Conventional wisdom held that countries like China would continue their ascendance while Western industrial regions would continue their decline. But something unexpected happened around 2012 that challenged this assumption.
During a business trip to Asia, Antoine van Agtmael was startled when David Ku, CFO of Taiwan's Mediatek, expressed concern about American competition. "We're being squeezed," Ku admitted, worried that Qualcomm's R&D capabilities were "so far ahead." This confession from an Asian executive-after decades where Western businesses were the ones feeling threatened-suggested a profound shift in global competitive dynamics.
Meanwhile, Fred Bakker was noticing similar patterns while traveling through emerging economies. The low-cost labor advantage that countries like Mexico, Indonesia, South Korea, and Turkey had leveraged was losing its power. Something fundamental was changing in global manufacturing economics.
What both authors discovered was that after decades of obsession with making things cheap, the future would focus on making things smart. Their two-year journey through the United States and Europe revealed former industrial regions-"rustbelts"-transforming into "brainbelts" through collaborative innovation.
Take Pittsburgh, for example. Once a manufacturing powerhouse with over 1,000 factories producing steel, iron, brass, and glass, the city suffered devastating decline from 1945-1985 when steel plants closed and half its population fled. Today, Pittsburgh's revival has been driven by healthcare and education, with University of Pittsburgh Medical Center becoming the region's largest employer with 110,000 staff. Carnegie Mellon and University of Pittsburgh provide world-class education and research capabilities that have attracted tech giants like Google and Uber, which established its Advanced Technologies Center for self-driving cars next to Carnegie Mellon's Robotics Center.
This pattern repeats across numerous regions. In Akron, Ohio, where tire giants once dominated, 1,000 startups now employ more people than the four big tire companies did during manufacturing's heyday. In Eindhoven, Netherlands, Philips transformed its research lab into an open-innovation campus where researchers from different organizations collaborate. In Lund, Sweden, a technology park rose from the ashes of a bankrupt shipyard.
These emerging brainbelts share key characteristics: they tackle complex, multidisciplinary challenges no single player could handle alone; are driven by a connector with vision and relationships; operate in collaborative ecosystems with research universities at their center; focus on specific disciplines; openly share knowledge across de-siloed organizations; contain physical centers that encourage collaboration; foster environments that attract talent; have capital available for investment; and acknowledge external threats, creating a strong sense of regional identity and continuous improvement.
Chapter 3
Sharing Brainpower: The New Competitive Advantage
The collaborative innovation model driving brainbelt success represents a fundamental departure from traditional industrial development. Unlike the solo genius model, these emerging ecosystems feature universities, corporations, start-ups, and government agencies sharing brainpower to create complex, multidisciplinary products.
This collaboration transcends traditional joint ventures, bringing together academia, businesses, government agencies, and supporters like venture capitalists and design studios. This deep academia-business collaboration is relatively recent-traditionally, these worlds rarely mixed. The shift began in the 1970s when European professor Charles Weissmann founded Biogen and American biochemist Herbert Boyer co-founded Genentech with venture capitalist Robert Swanson.
Effective brainpower sharing requires the right balance of focus and openness. Focus means concentrating on a specific discipline, while openness involves knowledge-sharing with partners. This sharing happens primarily out of necessity-complex brainbelt initiatives demand collaboration-and because sharply focused companies can collaborate without competitive overlap.
The Portland partnership between Oregon Health & Science University and Intel exemplifies this: OHSU needed Intel's computing expertise to analyze cancer data, while Intel benefited from applying its technology in new ways. Their collaboration began before contracts were finalized, demonstrating mutual trust. This shift toward openness has transformed traditionally siloed academic and business organizations, breaking down walls between disciplines as interdisciplinary research becomes essential for innovation.
Brainbelts create distinctive environments that magnetize talent and businesses while supporting collaboration. These feature science parks, incubators, shared workspaces, and renovated factories-often grouped in innovation districts-that attract diverse talent pools of students, entrepreneurs, researchers, and investors. Beyond work facilities, affordable housing and lifestyle amenities draw people to these areas.
As brainbelts develop, they experience virtuous cycles: startups multiply, large companies create spin-offs, global players invest, downtown areas revitalize, and wealth generated is often reinvested locally. Local heroes and mentors emerge, providing management expertise to complement entrepreneurial enthusiasm.
The authors view successful brainbelts as "awakening beauties"-regions that lay dormant like Sleeping Beauty but retained their underlying qualities of skill, knowledge, and potential. The awakening typically occurs when frustration reaches a tipping point or a new player arrives. A connector emerges to bring together stakeholders who identify strengths, find common ground, and set ambitious goals.
Chapter 4
Smart Manufacturing: The Revolution in Production
The brainbelt model revolutionizes both idea generation and product realization through smart manufacturing technologies like robotics, 3D printing, and the Internet of Things. Unlike traditional manufacturing's focus on low-cost mass production, smart manufacturing emphasizes customization, localization, complexity, and quality.
The "smartfactory" differs dramatically from traditional factories: it's highly automated, often small, and operates 24/7 with system operators, designers, and researchers working side by side. The entire supply chain integrates into a single information system. Advanced materials replace waste and scrap, while close monitoring virtually eliminates defects. Production occurs in custom-designed batches rather than huge volumes, as customers prioritize custom fit, quality, speed, and innovation over low cost.
Humanoid robots like Baxter, created by Rethink Robotics, represent a revolution in factory automation. At 5'10" and 165 pounds, Baxter uses cameras, sonar, and multiple sensors to "see" and "feel" his environment, enabling him to find, grab, and manipulate objects with remarkable versatility. At just $22,000 with a 6,500-hour work capacity, Baxter costs merely $3 per hour to operate, making advanced robotics accessible to smaller companies previously priced out of automation.
As robot prices fall and developing world wages rise, producing goods locally becomes increasingly viable. Nike's founder Phil Knight confirmed that Olympic shoes are already largely robot-made, envisioning a future where customers' feet are 3D-scanned for perfectly customized footwear.
3D printing, or additive manufacturing, has evolved from prototype creation to actual production. Unlike traditional manufacturing methods like injection molding or machining, 3D printers build objects layer by layer following digital design templates, creating solid pieces without joints or weak points.
At America Makes in Youngstown, Ohio, manager Kevin Collier described the technology's rapid advancement, with improvements in speed, material versatility, and problem-solving for issues like warping. The automotive and aircraft industries now use 3D printing not just for prototyping but for shaping composite materials, while medical applications include custom-made knees, hips, and battlefield injury replacements.
The Internet of Things represents the third pillar of smart manufacturing, with 25 billion "things" already using the internet in 2015 compared to 5 billion people. This machine-to-machine communication network embeds sensors in equipment to analyze performance data, reducing downtime and enabling predictive maintenance. GE's chief economist Marco Annunziata calls this Industrial Internet "a marriage between minds and machines" as powerful as the Industrial Revolution itself.
Together, robotics, 3D printing, and the Industrial Internet enable the collaborative "brainsharing" that powers innovation in chips, new materials, and life sciences across unexpected places like Akron, Eindhoven, Lund, Dresden, and even the former rustbelt towns of upstate New York.
Chapter 5
Connectors: The Catalysts of Brainbelt Formation
In examining brainbelts across the United States and Europe, the authors discovered that successful transformations typically depend on visionary individuals or organizations who serve as "connectors." These connectors possess the vision to persuade reluctant parties to collaborate beyond their comfort zones, building lasting innovation communities.
Albany's transformation into a brainbelt hinged on Alain Kaloyeros, who led SUNY Poly's $20 billion NanoTech Complex. Recruited in 1988 by Governor Mario Cuomo to confront New York's declining rustbelt industries, Kaloyeros created a modernistic research campus that challenged Asia's chip-making dominance. He established the Global 450 Consortium (G450C), convincing fierce competitors like Intel, IBM, Samsung, and TSMC to collaborate on next-generation 450-millimeter silicon wafers.
His persuasive case centered on increased effectiveness through brainsharing, structural advantages of university-based collaboration that avoided antitrust concerns, and the ability to tackle larger challenges with greater rewards. Despite his 2016 resignation over legal issues, Kaloyeros had successfully transformed Albany into a semiconductor innovation hub where 3,500 industry scientists work alongside faculty in a $30-40 billion research effort.
Dresden, the picturesque capital of Saxony in eastern Germany, has transformed from a former scientific and industrial hub of the 1930s into a modern brainbelt rivaling the Hudson Tech Valley. After the Berlin Wall fell in 1990, Christian Democrat Kurt Biedenkopf, serving as prime minister for twelve years, played the crucial connector role in helping the region reclaim its scientific-industrial heritage.
Under Biedenkopf's vision, prestigious research institutes established presence in Dresden-the Max Planck Institute, Fraunhofer Institute, Helmholtz Association, and Leibniz Institute-creating substantial brainpower. The region's semiconductor legacy through Zentrum Mikroelektronik Dresden (ZMD), though bankrupted after Communist rule ended, provided the foundation for future growth.
Eindhoven transformed from rustbelt to brainbelt with remarkable speed after Philips Electronics and DAF Truck drastically reduced operations in the 1990s, cutting 35,000 jobs in a city of just 200,000. The turnaround began when Philips kept its research facility NatLab open while shutting down manufacturing. In 2002, Philips renamed it the High Tech Campus Eindhoven and radically transformed it from a proprietary, siloed lab to an open innovation center.
This transformation was driven by visionaries like Gerard Kleisterlee, who became Philips CEO in 2001 and redirected the company toward addressing global challenges through open innovation, investing half a billion euros in the project. University and city leaders embraced this collaborative approach, creating a powerful ecosystem that attracted global talent and companies like ASML, now the world leader in photolithography equipment for chip manufacturing.
Chapter 6
From Legacy Industries to Innovation Hubs
Akron exemplifies the rustbelt-to-brainbelt transformation. Once an industrial powerhouse strategically located between New York and Chicago, Akron housed global tire giants Firestone, Goodyear, and Bridgestone and served as a major railroad hub. By the late 20th century, however, these companies had grown insular and failed to respond to overseas competition. As manufacturing moved to Mexico and China, Akron's economy collapsed, leaving abandoned tire plants and unused Quaker Oats silos.
The region's revival began when skilled workers, driven by necessity, started companies based on their technical expertise from the rubber and steel industries. Luis Proenza catalyzed this transformation through his "Akron Model," positioning the university as "an Engine for Economic Growth" rather than an ivory tower. The University of Akron's College of Engineering and College of Polymer Science and Engineering grew into the nation's largest academic program for polymer study, with 120 faculty members and over 700 graduate students.
To bridge academia and business, Proenza created an independent research foundation allowing professors to benefit financially from their inventions. The state government supported these efforts through Governor Bob Taft's "Ohio's Third Frontier," a $2.1 billion initiative launched in 2002 to connect technology companies with universities and research institutions.
Established companies also embraced the Akron Model. Timken invested $5 million in joint research with the University of Akron to develop polymer-based coatings for bearings with 40% greater resistance to wear and corrosion. A. Schulman built a new plastic-fabrication facility in Akron specifically to benefit from the university's expertise. Today, Ohio is the acknowledged polymer capital of the United States, with about 1,300 companies employing over 88,000 people-more workers than the big tire companies employed at their peak.
North Carolina's piedmont region tells a similar story, but with distinct differences. In the 1950s, North Carolina was America's third-poorest state, dependent on declining industries like textiles, tobacco, and furniture manufacturing-the rural equivalent of the Midwest's rustbelt. Facing economic crisis, visionaries like University of North Carolina chemistry professor William Little conceived the first full-fledged American science park.
The Research Triangle Park (RTP) was designed to leverage the strengths of three major local universities-Duke's healthcare expertise, UNC's educational focus, and NC State's materials and agriculture research-to create a unified research community within a science-based economic zone. A breakthrough came in 1965 when IBM chose the RTP for production of its System/360 mainframe computer, attracted by the strong universities, high quality of life, good government-academia-business relations, industrious workforce, and nonunionized labor.
Today, the area has evolved into a full-fledged brainbelt with the Centennial Campus, cutting-edge manufacturing, educational partnerships, and repurposed facilities like the Lucky Strike factory. This transformation is prompting changes in the original Research Triangle Park itself, which now nurtures eighty startups across five incubators, with over 40% employing fewer than ten people.
Chapter 7
Life Sciences: Where White Coats Meet Blue Collars
The life sciences sector represents one of the most dynamic areas of brainsharing activity, where cross-boundary collaborations between researchers, doctors, entrepreneurs and industry are creating revolutionary medical devices and treatments. Unlike some brainbelts that emerged from rustbelts with prominent connectors, Minneapolis became a life sciences hub through the influence of Medtronic, a major medical device company, and a distributed network of doctors, researchers, and venture capitalists.
The Minneapolis story begins with maverick surgeon C. Walton Lillehei, a brilliant practitioner, academic, and entrepreneur at the University of Minnesota who pioneered open-heart surgery techniques in the 1950s. After losing a child patient during surgery when hospital power failed, Lillehei collaborated with electrical engineer Earl Bakken to create a portable, battery-powered pacemaker based on a metronome's mechanics. This innovation became Medtronic's central product and sparked the creation of a network that made Minneapolis a center for medical device development.
Medtronic, founded in 1949 by Earl Bakken who created the first pacemaker prototype, became the essential connector in Minneapolis's medical device ecosystem. Now a global leader producing 40% of the world's pacemakers, Medtronic collaborates constantly with the University of Minnesota, whose Medical Devices Center has generated over 125 patents. This ecosystem has expanded from 450 life-sciences companies in 2000 to 2,500 by 2014, with many founded by former Medtronic researchers.
Portland transformed from a rustbelt economy based on forestry and manufacturing to a thriving bioscience hub, catalyzed by Phil Knight, Nike's cofounder. Knight's $100 million gift in 2008 to what became the Knight Cancer Institute at Oregon Health & Science University (OHSU) brought together life-sciences researchers with smart manufacturing partners like Intel and FEI. When Knight pledged another $500 million in 2013 (contingent on matching funds), it accelerated Portland's growth into a $4 billion bioscience industry employing 15,000 people.
The OHSU-Intel partnership exemplifies Portland's academic-manufacturing brainsharing. Intel provides computing power to analyze DNA in hours rather than weeks for tens of dollars instead of thousands, while OHSU provides patient data Intel needs to develop next-generation health-care chips. Joe Gray explains that personalized medicine requires collecting data on millions of patients to identify similar cells and understand treatment outcomes-something only possible through collaboration.
When Nokia's mobile phone business collapsed, the Oulu region in Finland quickly transformed into a thriving life-sciences brainbelt. Seppo Kopsala's Optomed exemplifies this transformation. After starting his career at the failed touchscreen pioneer MyOrigo, Kopsala founded Optomed to develop the SmartscopeTM, a handheld retinal imaging device that replaces expensive desktop imagers.
Despite initial skepticism from Western doctors, the device gained acceptance, particularly among pediatric ophthalmologists who appreciated its portability when working with children. The Aravind Eye Care System in India adopted it to streamline cataract surgeries into an assembly-line process, reducing procedure time from forty minutes to two minutes and cutting costs by 99 percent.
Chapter 8
Building a Smarter World Through Collaboration
The future is being created in brainbelts and innovation zones worldwide, offering opportunities to address major societal challenges. Smart products developed through brainsharing are more likely to offer effective solutions than those created in traditional siloed models because they incorporate diverse perspectives throughout the development process.
Climate change mitigation represents perhaps the greatest 21st-century challenge, requiring improved energy efficiency and renewable energy adoption. Brainbelts worldwide are addressing this: ABB works with university researchers in North Carolina on smart grid development, while Dresden firms collaborate on energy-efficient chips and sensors.
In 2014, carbon emissions stabilized without economic recession for the first time, thanks to improved energy efficiency and increased renewable energy adoption. The electric grid is evolving into a hybrid system where traditional consumers become energy producers through solar roof tiles, smart windows, and battery storage technologies.
The automobile represents one of our most ubiquitous yet inefficient technologies-only 1% of fuel actually transports the driver, while cars sit idle 80% of the time even during peak hours. The reinvention of transportation has become a focus in brainbelts worldwide, from Google's autonomous vehicles to Tesla's electric cars. This transformation requires extensive brainsharing between established companies, small specialists, government entities, universities, and manufacturing facilities.
To feed 9 billion people by 2050, brainsharing is revolutionizing agriculture in surprising places. The Netherlands, with just 0.5% of America's land area, produces 7.5% of global food exports-second only to the US. This remarkable achievement stems from collaboration between Wageningen University (ranked second globally in agriculture), farmers' organizations, and private companies. The Dutch pioneered "closed-circuit greenhouses" that store excess heat in aquifers and generate 9% of Holland's electricity.
As urbanization accelerates globally, cities face unprecedented challenges in housing, services, food distribution, and mobility. The future city requires reimagined transportation systems integrating multiple modes of travel-from autonomous cars and car-sharing to public transit and pedestrian spaces. Urban food production through local agriculture and farmers' markets is transforming city health and community connections.
Chapter 9
Creating the Infrastructure for Innovation
Innovation requires continuous funding across all stages of development-a marathon rather than a sprint. While we often associate innovation with venture-backed startups, successful innovation depends on a relay race of funders passing the baton from basic research through commercialization. National governments provide most funding for basic research, while private companies fund applied research. Even the best ideas fail without consistent financial support throughout development.
Government funding for basic research has yielded extraordinary breakthroughs-Google began with a $4.5 million NSF grant to Stanford, while other government-funded research spawned the internet, jet engines, semiconductors, and GPS. The U.S. spends $75 billion on fundamental research, nearly matching the rest of the world combined, with defense accounting for over half this funding.
The U.S. and Europe show striking differences in their innovation cultures. American strengths include entrepreneurship, military funding, university endowments, philanthropy, and abundant venture capital-U.S. startups receive over two-thirds of global venture funding compared to just 14% in Europe. Meanwhile, Europe excels through its research institutes, European Union support for long-term projects, science-park incubators, and clean-energy subsidies.
By 2020, America will face a shortage of 5 million workers with necessary technical skills, with 65% of jobs requiring postsecondary education. Despite 600,000 unfilled manufacturing jobs in 2011 (projected to reach 2 million by 2025), too many young people waste talent pursuing traditional four-year degrees that often don't match market needs. Only 54% of college students graduate within six years, while accumulating massive debt-now totaling $1.2 trillion nationwide.
Community colleges have become essential participants in brainbelt ecosystems. In Hudson Tech Valley, TEC-SMART (Training and Education Center for Semiconductor Manufacturing and Alternative and Renewable Technologies) works closely with GlobalFoundries, offering specialized training programs. All GlobalFoundries hires undergo seven weeks of training regardless of their education level, as many lack basic skills despite holding advanced degrees.
Germany's dual-track work-study education system is considered one of the secrets to manufacturing success. At Zwick Roell, a leading testing equipment manufacturer, their three-year apprenticeship program is highly competitive-585 people applied for just 20 positions in 2013. Though apprentices earn less initially, the company invests 50,000 in each trainee over three years, with students spending 30% of time in classrooms and 70% on the job.
Chapter 10
The Future of Global Competition
Our journey through rustbelts-turned-brainbelts revealed a phenomenon not yet reflected in statistics. We discovered that brainbelt success combines both brainsharing processes and smart production technologies. This shift from cheap to smart manufacturing means many outsourced activities will return to America and Europe, but in reinvented forms-highly automated, custom-specified, and physically close to customers.
The concern about job losses is misguided; the real issue isn't job scarcity but finding trained workers to fill new positions. Throughout history, innovation waves have eliminated certain jobs while creating new ones and raising living standards. Manufacturing has already shed most production-line workers, with future automation primarily affecting service jobs. Meanwhile, innovation sectors create multiplier effects-each high-tech job generates five additional positions.
The challenge ahead is developing adaptable workers with broad skill sets who view work as lifelong education, with "connectors" becoming particularly valuable for facilitating multidisciplinary collaboration. Companies will engage in a war for connectors just as they've fought for technical talent. Vocational training must be revitalized, following Germany's model of technical education that instills pride in manufacturing.
Europeans can learn from America's financial networks supporting startups, while Americans can learn from European vocational systems. What distinguished brainbelt regions was their pragmatic collaboration, with politicians becoming facilitators rather than obstacles. National initiatives are still needed for infrastructure like energy grids and Wi-Fi networks.
The brainbelt represents more than physical regions; it's a metaphor for collaborative thinking that discourages winner-take-all mentality. We don't say "beware" of the brainbelt but "welcome" to a smarter, more collaborative world where innovation happens through sharing brainpower rather than hoarding it, and where former industrial regions can once again become centers of economic vitality and technological advancement.
