Describing a future of much promise - and some peril - a group of prominent business, government and academic leaders said California's role as a global economic powerhouse should continue well into the 21st Century.

The state's strong technology and entertainment industries, its ties to the growing economies of Asia and Mexico, its location as a hub for international trade, and even its climate give California all the ingredients it needs to maintain its growth and prosperity for many years to come, these leaders said.

"It's ours to lose," said Robert Kotick, co-chairman and CEO of Activision, an interactive entertainment company.

The daylong gathering at the Milken Institute Conference Center in Santa Monica offered a generally upbeat assessment of California's future, but there were also warnings that the state will suffer if it does not solve some serious and vexing problems.

Chief among these is a looming shortage of educated workers - a problem caused by changing demographics and a struggling education system, several said.

"This problem must be attacked, and attacked quickly," said Diane Palmintera, president of Innovation Associates. "Social issues become economic issues if they are not addressed."

According to figures released at the conference, by 2001, there will be no ethnic majority in California. By 2020, Hispanics will be the plurality, and by 2040, they will be in the majority. Given that Hispanics tend to be less educated and poorer than the rest of the population, that will result in a shortage of the kinds of knowledge workers California needs if it to remain on top - unless those socio-economic factors change.

"The challenge is to get Hispanic kids hooked on education," said Ted Gibson, chief economist for the California Department of Finance.

There were also warnings of a growing gap between the haves and have-nots - not just in income, but in education, technical skills and access to technology.

"Our country is experiencing unprecedented prosperity, yet there is the vast gulf," said Henry Cisneros, president and COO of Univision Communications and former U.S. Secretary of Housing and Urban Development. He said better education and home ownership are two of the best ways to bridge this gap.

For the most part, the speakers painted a bright picture of California's future, thanks in large part to its strong technology industries. These companies, from software to the Internet to multi-media, continue to drive California's growth, and will into the foreseeable future, they said.

"California has it all to lose - and I don't think it will," said Sanford Climan, managing director of Entertainment Media Ventures.

Other themes emerged throughout the day, including:

  • There are downsides to California's high-tech economy that must be dealt with: skyrocketing housing prices, traffic congestion and high wages, among them.


  • The convergence of technology and entertainment offers enormous possibilities for California in the decades ahead, as does the Internet and the wireless industry.

The conference included keynote speeches by Institute Chairman Michael Milken and California Attorney General Bill Lockyer, as well as panel discussions on a host of key issues such as technology, global trade, the entertainment industry, demographics, real estate and public policy.