Technology, Innovation, and Regional Economic Development

1 technology , innovation , and RegionalEconomic DevelopmentJuly 1984 NTIS order #PB85-150894 Recommended Citation: technology , innovation , and Regional Economic Development : Encouraging High-TechnologyDevelopment Background Paper #2 (Washington, D. C.: Congress, Office of Technol-ogy Assessment, OTA-BP-STI-25, February 1984).Library of Congress Catalog Card Number 84-601013 For sale by the Superintendent of Documents, Government Printing Office, Washington, 20402 PrefaceThis background paperof technology , Innovation, contains information gathered by OTA during its assessmentand Regional Economic Development . The information is be-ing made available at the request of Committees of Congress, State and local officials, andothers with an interest in high- technology Development programs that are being mountedat the State and local levels.

2 OTA hopes that its timely publication will prove helpful toreaders who have an immediate need for more detailed information than will be availablein the formal report of this ..IllTechnology, innovation , and RegionalEconomic Development Advisory PanelWilliam C. Norris, ChairmanChairman and CEO, Control Data J. Abernathy*Graduate School of BusinessHarvard UniversityWilliam F. AikmanPresidentMassachusetts technology Development Henry CisnerosMayorSan Antonio, FrancisPresidentParkside Association of PhiladelphiaAaron GellmanPresidentGellman Research Associates, Lee GevirtzChairmanThe Foothill Group,George W. HaighPresident and Toledo Trust LindseyScience and Public Policy AdvisorOffice of the GovernorState of North CarolinaNeal R. PeirceContributing EditorNational JournalDavid V. RagonePresidentCase Western Reserve UniversityJ.

3 David RoessnerTechnology and Science Policy ProgramSchool of Social SciencesGeorgia Institute of TechnologyJohn StewartAssistant General ManagerTennessee Valley AuthorityEllen Sulzberger StrausPresident, WMCA RadioMember, New York City PartnershipAlexander B. TrowbridgePresidentNational Association of ManufacturersThomas L. Yount, of Employment SecurityState of TennesseeThe Advisory Panel has provided advice and suggestions, but it does not necessarily approve, disapprove,or endorse the contents of this background paper, for which OTA assumes full responsibility.* technology , innovation , and RegionalEconomic Development ProjectJohn Andelin,Science, Information,StaffAssistant Director, OTAand Natural Resources DivisionWilliam F. Mills,* and Nancy Naismith,** Program ManagerScience, Transportation, and innovation ProgramPaul B. Phelps, Project DirectorBarry J.

4 Holt, AnalystCaroline S. Wagner, Research Assistant*Jeffrey E. Seifert, Research Assistant**Brian R. Land, Research Assistant**Student Intern (fall 1983)Jay M. Berman, Student Intern (fall 1982)Mary Ann Wall, Student Intern (spring 1983)D. Douglas Caulkins, Faculty Intern (fall 1983)Marsha Fenn, Administrative AssistantR. Bryan Harrison, Office Systems CoordinatorContractorsRenee A. BergerThe Fantus Co., Charles Ford Harding,Principal InvestigatorJohn Rees, Syracuse UniversityResearch Triangle Institute, Alvin M. Cruze, Principal InvestigatorRhett D. SpeerCarol SteinbachOTA Publishing StaffJohn C. Holmes, Publishing OfficerJohn BerglingKathie S. BossReed BundyDebra M. DatcherJoe HensonGlenda LawingLinda A. LeahyCheryl J. Manning*~rough September 1983.** Afier September 1983.** Afier January ..Overview ..00..The Allure of High- technology Development .

5 Common High- technology Initiatives ..Factors That Contribute to Success ..State Government Initiatives ..Summary ..0..Introduction ..Program Design and Operation ..Program Effectiveness and Impacts ..University Initiatives ..Summary ..Introduction ..University-Based Programs ..State Government Involvement ..Conditions That FosterLocal Initiatives ..Summary ..Introduction ..Community Typology .Common Initiatives ..Success .. $ .. l *..** l **.* l **.. $$..Program Design and Effectiveness ..Factors Affecting Success ..Private Sector Initiatives ..Summary..Introduction .., .. , ..:.Private Sector Roles and Initiatives ..Factors Affecting Success ..Appendix A Descriptions of Local High- technology Initiatives..Appendix B Index of Initiatives Cited in This Background State High- technology Programs by Type .. 132. Distribution of Survey Respondents by State.

6 143. Targeted High- technology Industries and Business Activities in the Survey States 154. High- technology Development Programs in the Survey States, by Type .. 175. Number of Programs Providing Specific Services in Survey States .. 186. Additional High- technology Initiatives Desired .. 217. Employment in the Survey States 1980.. 238. Employment Change in Survey States, 1975-80 .. 24 CHAPTER 1 SummaryCHAPTER 1 SummaryOverviewIn the last 10 to 20 years, several regions of theUnited States have developed strong local econo-mies based on fast-growing high- technology in-dustries. Encouraged by these successes, public andprivate sector groups in other regions are launchinginitiatives to promote similar high- technology de-velopment (HID) of their own. These initiatives arethe subject of this background paper, which presentsinformation gathered by the Office of TechnologyAssessment (OTA) in its ongoing assessment ofTechnology, innovation , and Regional following chapters focus separately on theroles that are being played by State and local govern-ments, universities, and the private sector in encour-aging high- technology industrial Development .

7 Thisorganization may be somewhat misleading, however,since State government programs, for example, usu-ally involve the participation of university, localgovernment, and/or private sector groups, just asuniversity and local initiatives often seek to createcloser and more productive relationships with pri-vate industry. Forging these innovative, cooperativelinkages between sectors has in fact been one of theobjectives and major accomplishments of these , Federal Government programs haveplayed at least an indirect role in many of these ini-tiatives. As the various chapters show, some of theseefforts were encouraged by Federal pilot studies orplanning grants; in others, Federal agencies or offi-cials have provided advice and technical assistance;and in many cases, these initiatives have made in-novative use of Federal funds and other develop-ment tools.

8 In addition, recent changes in Federalpolicies and programs may have provided at leastpart of the stimulus for the increased concern andactivity at the State and local levels. However, OTAhas not yet completed its investigation of the roleand impacts of Federal policies and programs inregional governments are becoming increasingly ac-tive in promoting HTD. State officials define HTDin many different ways, but in most cases they con-sider their high- technology initiatives to be naturalextensions of their various Economic developmentstrategies. High- technology initiatives are usuallybased on an analysis of the State s existing industrialbase, and are generally undertaken in conjunctionwith more traditional Economic Development activ-ities. OTA s investigation suggests that, while gen-eral industrial Development programs may have amore direct influence on high- technology locationdecisions, the more recent targeted programs haveimportant indirect effects and can be particularlyimportant to high- technology startups and expan-sions.

9 Most of these initiatives have been launchedin the last 3 years, so it is too soon to tell what theirlong-term effects will be. Nevertheless, most respond-ents to an OTA survey public officials and high- technology executives alike would favor additionalinitiatives by both State and Federal universities are often important compo-nents in these State initiatives, but public and pri-vate universities alike have been playing a signifi-cant role in Regional Economic Development for dec-ades the Stanford Industrial Park dates from the1940 s and North Carolina s Research Triangle Parkfrom the 1950 s. Universities train technical workersand expand the base of scientific knowledge; bytransferring this talent and knowledge to the privatesector, they contribute to the diffusion of innova-tion and the creation of new firms and growing Economic importance of technologicalinnovation creates a greater need, and new oppor-tunities, for cooperation between universities andindustry.

10 Recent studies suggest that, given strongleadership and stable, long-term funding, these ini-tiatives can enhance technological innovation andregional Economic initiatives also influence the success of Stateand university initiatives, and in many communities34 l Background Paper #2 Encouraging High- technology Developmentgovernments and quasi-public groups are taking anactive role in encouraging HTD. These efforts usual-ly address perceived weaknesses in an attempt todevelop the resources and characteristics of suchmodels as California s Silicon Valley and Massachu-setts Route 128. Common initiatives include zon-ing changes and high- technology marketing pro-grams, education and training programs, and part-nerships with local universities and business highly publicized location decisions, suchas the Microelectronics & Computer TechnologyCorp.