Appalachia Rife with Tech Clusters But Exploiting Them Presents Challenges

More than 100 technology clusters may exist in the Appalachian Regional Commission (ARC) area, but challenges to exploit and nurture the clusters still exist. A new report analyzes the ARC region’s concentration of technology resources at a sub-regional level and uncovers localized technology strengths that might be promoted through concentrated economic development policy.

Regional Technology Assets and Opportunities: The Geographic Clustering of High-Tech Industry, Science and Innovation in Appalachia, written by Edward Feser, Harvey Goldstein, Henry Renski and Catherine Renault, shows the technology sector of the Appalachian region is small, yet expanding. In 1998, more than one million technology workers belonged to the 406-county ARC area. This represents an 11.2 percent increase since 1989 when 959,000 technology workers were present in the area.

The ARC region’s technology clusters are organized in eight technology areas – chemicals and plastics, motor vehicles and related, industrial machinery, information technology and instruments, aerospace, communications services and software, and pharmaceuticals and medical technologies – but their spatial distribution is highly uneven. Forty-five clusters are located in the northern third of the region, 29 are in the southern third, and only 19 of the clusters are in the middle third.

In addition, more than half of the clusters are located on the periphery of the region and are anchored to metropolitan areas outside of the ARC region — a statistic the report suggests may present a problem for a region where high-tech prospects are heavily reliant on spillover effects from nearby cities and metropolitan areas. These spillover effects are not necessarily positive, however. High-tech concentrations in these neighboring cities can draw away talented graduates and skilled labor and deplete the human capital, which is necessary to fuel tech-based economic growth. This sort of negative spillover is one that policy makers must address to assure that a skilled workforce remains in the region.

Other findings suggest that areas with the greatest advantage in exploiting the knowledge economy are those near large population centers or academic research facilities. SBIR, STTR, and ATP award winners are concentrated in Huntsville, Blacksburg, Pittsburgh, State College and Ithaca. The diversity leaders in high-tech industry are Binghamton, Greenville-Spartanburg, Huntsville, Johnson City and Pittsburgh.

The report provides three major recommendations:

* The technology clusters are possible targets for entrepreneurship and recruitment strategies. Cities and regions can use the information in Regional Technology Assets and Opportunities to further analyze the clusters identified. After this analysis, promising sectors can be evaluated as feasible targets for further development efforts. The idea is to build upon the region’s demonstrated strengths.

* The findings can be used to direct state investment in “centers of excellence” at research universities, training and education at teaching universities and community colleges and in technology transfer and industrial extension programs. This type of investment helps to develop the knowledge infrastructure within the region. Technology clusters are not only characterized by high-tech industries but also important supporting institutions. Cities and states can use this report to identify investments in the knowledge infrastructure that will ensure an adequately skilled labor force and capitalize on complementarities between innovation and industrial capabilities.

* Establish an industry association committed to championing specific clusters’ interest in policy matters. These organizations typically can help promote the region as a location for business and hold networking events and conferences. These associations can also help promote industry collaboration and information exchange. Firms often are not aware of the benefits of this collaboration or that they are even part of a cluster. Also, these associations provide a vehicle with which to raise issues concerning policy, workforce development, taxation and other concerns to public agencies and other entities.

Regional Technology Assets and Opportunities is available at: http://www.kenaninstitute.unc.edu/Centers/OED/OED_Publications/assets.pdf

Copyright State Science & Technology Institute 2002. Information in this issue of SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.