Do High Technology Policies Work? High Technology Industry Employment Growth in U.S. Metropolitan Areas, 1988-1998

September 23, 2008

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"If you haven't already seen the attached article, I think you'll find it interesting. It is a fairly comprehensive study of high-tech policies over time. The challenge for Missoula is coordinating state, local and university policies to match our existing "agglomeration and location advantages."

Greg

Gregory S. Larson

Associate Professor

Department of Communication Studies

University of Montana

(406) 243-4161

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Do High Technology Policies Work? High Technology Industry Employment Growth in U.S. Metropolitan Areas, 1988-1998

Since the 1970s, federal, state and local governments have launched an array of new high technology development programs. Researchers and policy-makers disagree about the relative merits of these policies. We address the effects of seven of these policies on high tech industry employment growth in metropolitan statistical areas in the United States between 1988 and 1998. A conditional change score design shows that technology grant/loan programs and technology research parks have direct effects net of location and agglomeration factors.

Five of seven programs positively interact with existing agglomeration advantages to create growth in high technology industry employment. Technology development programs compensate for defi cits in agglomeration resources. Our results suggest that high-technology development can be planned by designing programs that magnify existing local growth advantages. Since the early 1970s, state and local governments have launched a wide array of new economic development programs to promote high tech development.

Popularly called “third wave,” “new industrial” and “entrepreneurial” policies, these initiatives entail direct state intervention in the creation of new enterprises, products, markets and technologies. By helping to identify market opportunities, fostering local innovation capacities, and making public investments in new technology and private enterprises, these governmental programs have attempted to promote “risky but potentially productive undertaking(s) that would not have gone forward without governmental support.” (Eisinger 1988:230)

These initiatives involve direct governmental intervention in the creation of new technology, products, markets and enterprises. We focus on seven major programs: public venture capital programs, Small Business Innovation Research (or SBIR) programs, grant and loan programs to finance the development of new technology, university-affiliated technology development centers, technology deployment/transfer programs, technology business incubators, and technology research parks.

Our research addresses two questions about these programs. First, how effective are they at promoting high technology industry employment growth net of existing agglomeration and location factors? Second, do these programs magnify or compensate for agglomeration and location factors, including existing high technology industry?

J. Craig Jenkins, Ohio State University Kevin T. Leicht, University of Iowa Arthur Jaynes, Ohio State University

Full Paper: http://www.matr.net/files/DoHighTech ... iesWork.pdf
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