Cities’ focus on technology ‘not always a good thing’ – New study quantifies shortcomings of New Economy high-tech clusters

A study by two business professors at the University of New Hampshire has put another nail into the coffin of "New Economy" theories that predicted that technology clusters heralded an era of perpetual growth for regional economies.

The study finds that technology hubs such as San Jose and Boston experienced steeper-than-average declines in employment compared with other U.S. cities in the economic downturn that began in 2001.

The study attributes the steeper declines to poor economic diversification, overinflated wages and irrational venture-capital investments near the end of the boom.

Andrew Mayeda
The Ottawa Citizen

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