When A. T. Burgum came to the Dakota Territory in 1880, the way to riches lay in the deep, rich soil of the Red River Valley. A generation later, his son J. A. Burgum founded an elevator company in a small town called Arthur (current population 400). The company remained in family hands, and after A. T.'s great grandson Doug Burgum graduated from Arthur's high school, he left town to attend North Dakota State University and then Stanford. In 1983, after working in Chicago, he returned to North Dakota, lured back by another kind of natural resource: its people.

"My business strategy is to be close to the source of my critical inputs," states Burgum, dressed casually in jeans and down vest. "And for me it's not fertile land or a raw material that's most important, but educated people."

Burgum found his opportunity by joining, and then buying, a fledgling local firm called Great Plains Software. Over the next 15 years, Great Plains became a force in the information business, and was acquired by Microsoft in 2001. Today, the company employs 1,000 people in its sprawling, wooded complex on the outskirts of Fargo, and plays a critical role in the overall strategy of the world's dominant software company.

Burgum believes his insight about the high quality of Fargo's people is more relevant today than a decade ago. Once considered an oddity in tech circles, the greater Fargo region of some 180,000 people is becoming a force not only in software, but in electronics manufacturing, research and development, and biotechnology.

Burgum sees North Dakota's edge not just in its abundance of cooperative and educated workers (North Dakota has among the highest high school test scores in the country) but also in other qualitative factors. Today's Midwesterners from farms and small towns, he believes, approach life and work in a manner perfectly suited to the challenges of the information age.

"You have to start with the character of the people," Burgum suggests. "These people come with a strong work ethic. They also have a sense and aptitude for risk -- all farmers have that." There is a stability and responsibility about his neighbors that makes them highly competent and reliable brain workers.

A Heartland Strategy?

In some senses, the movement of technology industries into the vast interior of America reflects one of the nation's fundamental strengths. America has always relied on its continental girth for economic advantages. It did so in the agricultural era, when farmers settled the plains and transformed the nation into the food basket of the world. It did so again during the industrial era, when manufacturers headed to the resource-rich Midwest to build the most powerful goods-producing infrastructure the world had ever seen.

The Japanese have a word for this uniquely American strength -- sokojikara. This is their term for our resiliency and ability to recover in new and often unexpected ways. They view it as resting on three pillars -- our vast natural resources, our deep human resources thanks to our large population and continuing stream of immigrants, and our wide-open economy which is constantly reinventing itself. With these assets and its pioneering spirit, America is often alone among the great advanced industrial powers in possessing an ability to constantly remake itself afresh.

In the latest example of this, America has experienced a form of geography-based renewal over the last several decades. Population and entrepreneurial energy has shifted away from the old centers of the Northeast and upper Midwest to burgeoning new centers in the South, West, and Southwest. This has changed the map of American innovation, and it has transformed the world.

The remarkable success of places like Silicon Valley, Seattle, and Austin in generating new jobs and opportunities over the last generation is well known. But today the ability of these places to keep expanding is severely limited by rising housing costs, growing congestion, and often strong anti-business political environments. The resulting seismic re-ordering became noticeable after the collapse of the dotcom bubble. Since 2001, San Jose (Silicon Valley) has experienced a 23 percent drop in information jobs -- the loss of some 200,000 positions. Boston's information sector has shrunk by 22 percent, San Francisco's by 17 percent, Austin's by 13 percent.

For sure, India and other developing countries (where lower costs for technical talent have become indispensable to firms struggling to recover their bottom line) have been major beneficiaries of the setbacks in America's first-generation tech centers. Last year global IT outsourcing grew by 37 percent to over $163 billion. In the process, as many as half a million white collar jobs, many in the information sector, have been offshored in this decade. By 2010, the number could swell to more than one and a half million.

Offshoring is not necessarily a bad trend, but it has changed the nature of technology hubs drastically. Boston, San Francisco, and Silicon Valley may still be prime places to launch new concepts or companies, but they are increasingly not the places to build them. They may still serve as headquarter locations, but they are not likely to replace the jobs lost over the past few years, much less gain any new ones.

"We've lost the hunger," admits John Butler, director of the Austin-based Ic2 Institute. "We don't really create jobs, we create companies. Route 128 [Boston], Austin, and Silicon Valley are not where jobs are being created in America."

Fortunately, though, the reshuffling of our technology economy has engendered a second, and far less recognized, development -- the creation of thriving new tech-centered economies in such seemingly unlikely places as Fargo, Reno, and Boise. "Silicon Valley used to be the center of the galaxy in technology," explains John Sien, a former high-level executive at Hewlett-Packard who now lives near Reno. "We controlled most of everything. Now that galaxy is distributed."

This can be observed, he says, in the growing number of technology and new-economy firms choosing locations that were once far off the high-tech track. Many of these firms are concentrated in fields like software support, which puts them in direct competition with Indian companies. American entrepreneurs have discovered it is far more feasible to compete with offshore firms from a low cost, low regulation environment than from the traditional tech centers.

"The Internet changed everything," suggests Aki Korhonen, founder and president of PC-Doctor. "You have so much better connectivity today. The Bay Area will have to face great challenges in the years ahead due to its cost structure. You can't make the argument for many operations in the Bay Area versus India."

High-Tech's Cultural Revolution

But you can build a competitive company in many interior locales of the U.S. This has produced an important shift: a quiet migration of skilled workers to lower-cost, high-amenity locales across our heartland. Korhonen, an immigrant from Finland, sees Reno as a superior location to lure skilled labor, particularly younger people interested in buying a home or raising a family. "A lot of our people are in their early thirties, and they benefited from the move," he explains. "They benefit from being able to buy a home and, if they want, have a family on a single income."

In the Bay area, where a $125,000 annual income is the minimum for buying a new home, it's hard to expect middle class families, particularly those seeking a first house or coming from another part of the country, to settle or start a business. Never mind newcomers: Nearly one in four current Golden State residents are already considering leaving due to high housing prices, reveals a recent survey by the Public Policy Institute of California.

Accelerating migration out of the Bay area since 2000 has coincided with soaring populations in less dense parts of northern California and Nevada. Many of the migrants, says Bill Frey, a demographer at the Brookings Institution, tend to be young, educated people, particularly those with families. "The knowledge migration -- the bright flight -- is going to places that are not usually the prime suspects. They are trickling down to more affordable, often smaller places," says Frey. "These places now have more to offer. After all, the Starbucks culture is now coastto-coast. They get satellite TV, read good books, and can go to good restaurants in all kinds of places."

Take Boise, Idaho, hardly a place normally seen as serious competition for high-end jobs. Since the dotcom bust, Boise's information jobs have grown by nearly 7 percent, while professional business services and finance have enjoyed double-digit increases.

And it's more than just economics that is driving the shift to places like Boise. Consider Treetop Technology, a software service launched in 1994 that supports IT operations at scores of companies. It has grown to over 100 employees, with offices in nine states, Calgary, and Singapore, with almost $10 million in revenues last year. Treetop's 34-year-old founder, Jason Crawforth, says a lower-cost environment (housing costs are one fourth those in the Bay area) makes it far easier for him to keep employees and offer them a better quality of life, while paying them 30 percent less than he would have to in Silicon Valley. But he also believes Boise provides an improved quality of employees, and a different approach to work.

"Cost of living is about 80 percent of the reason why I am here," says Crawforth. "The other 20 percent is the people and the culture. I like the consistency. I have almost no turnover. And people love the opportunity to be here." At a time when Americans say they are becoming less impressed with material success and more interested in spiritual values, smaller cities and states have much to offer.

Crawforth also suggests that, although his costs are higher than in India, customers who want help on software, particularly businesses, do not like to deal with people from so far away and such a different culture. India may work, he thinks, for someone with a credit card question or a basic technology issue. But for a business wondering how to best use a server or a network, a competent American is often infinitely preferable.

"Call it homeshoring, as opposed to offshoring," says Crawforth, who grew up in the Boise area. "And this is a great place to do it. People here are competent, speak well, and tend to be patient and have a good attitude." These factors are especially relevant in areas like customer support.

A backlash against overseas "help" desks, with which many Americans have had unhappy experiences, is demonstrated by a little-known decision by Dell Computers. One of the early pioneers of offshoring, Dell recently homeshored its business-tech support center to Twin Falls, Idaho. Many other similar operations have been set up in the vast, largely uncrowded, low-cost "Mormon belt" which runs from Boise down to the Utah heartland.

Like many first-generation tech centers, Provo-Orem and Salt Lake City took hits when the dotcom boom wound down. But since then they have regained their footing far faster than the more expensive tech centers. Part of this stems from the very character of people in this religious, family-centered region, where politeness, education, a focus on marriage and children, and a search for balance between job and family are commonplace.

Josh James, CEO and co-founder of Orem-based Omniture, a firm that specializes in on-line marketing software, sees Utah very much the way Doug Burgum sees North Dakota. "This is so different from Silicon Valley, Chicago, or New York," James observes. "We have a very well-educated population, but our wages are lower and so is the turnover."

James, who helped launch the company in 1996 as a college student, says Utah's tech scene can recover -- and deal with competition from overseas -- not only because it is less expensive, but due to qualitative differences. One key advantage he sees (which again comes from the area's Mormon culture) is the fact that many of his employees have lived abroad and learned other languages in the process of serving as Mormon missionaries (as is common for most young adults in that church).

"How many American companies have a CEO who speaks Japanese because he lived there?" James asks. "You have people here who are well-balanced. They know a lot of things, but they are focused on their families. It's a happy workforce -- and that is something customers like. They want to speak to people who know their business and enjoy what they are doing."

America's Emerging Brain Belt

For much of American history, our vast hinterland -- from the Great Plains through the Mountain West -- was seen primarily as a source of raw materials and agricultural goods. It provided grain, coal, oil, beef, and lamb to the brain centers that clustered around the great coastal cities and Midwestern centers like Chicago and St. Louis.

Today that picture is shifting. What used to be known as the nation's Grain Belt is increasingly becoming our Brain Belt. New York City, San Jose, and Los Angeles still provide most of our cultural content and many of the most prized innovations. But more and more, the country's competitive edge in practical economics this century will come from previously unlikely places like Sioux Falls, Des Moines, and Fargo.

For generations, much of the educated young talent from the Great Plains and the Mountain West has bled away to more promising locales on the coasts or to large regional centers like Dallas, Chicago, Denver, or Minneapolis. For the most part, these migrants never returned.

But that's now beginning to change. Remarkable young people more often stay, or, like Doug Burgum, come home again. And other Americans, including some immigrants from abroad as well as families fleeing the crowded coastal regions, are heading into these new comfortable economic hotbeds, bringing with them fresh energies and ideas, and an appreciation for the wholesome values that people in these places hold dear.

Census figures tell us some of the story. Last year, North Dakota -- which has been losing population for decades -- gained people. Massachusetts, the original hotbed of America's technological revolution, suffered population loss.

On the education front as well, the Brain Belt is gaining ground. State universities in the hinterlands, like the University of Nevada, Brigham Young, and Utah State, are growing at a furious pace. Enrollment at North Dakota State in Fargo has jumped over 30 percent since 1999. The graduating classes in New England, meanwhile, are stagnant and in Massachusetts they are declining.

None of this suggests that MIT and Harvard are about to be outshone by Boise State, or that Silicon Valley is about to become a branch office of the Red River Valley. But something very important, and promising, is happening as economic invigoration stretches through the great American heartland.

As our nation labors to compete in an increasingly tough global economy, and struggles to keep its families vibrant as well, this bodes well for America.