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

"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

****

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/DoHighTechnologyPoliciesWork.pdf