"What we typically see is that new products are made in regions of the country or the world where there are a lot of highly educated, skilled folks. They usually are highly paid," says Walden, an economist with the North Carolina Cooperative Extension Service and professor with the Department of Agricultural and Resource Economics. "That's the kind of labor base you need to innovate.

"So you have the new products begun there. They are often manufactured there, too, initially in order to kind of work out the kinks," he adds. "Then, however, when the manufacturing of the products becomes standardized and very simple -- that's when you often see the production migrate, and migrate to lower-wage regions where the companies can take advantage of lower wages and lower costs.

"And we've seen this kind of pattern in such diverse industries as textiles, which moved from New England
to the southern states, now moving offshore; the auto industry; and computer components.

"And what this really says is for those regions that are innovative -- high skilled and high cost -- they have to continue to innovate."