SERIES: Metropolitan Economy Initiative | Number 10 of 11 « Previous | Next »

Bootstrapping High-Tech: Evidence from Three Emerging High Technology Metropolitan Areas

This report shows how three metropolitan areas—Portland (OR), Kansas City, and Boise—became centers of high technology industry without the presence of a major university. For each metropolitan area it describes the history of high-tech development, current status of high-tech industry clusters, and the roles that public policy and higher education played in spurring the growth of high-tech industry. In the three metropolitan areas high-tech industry is very specialized, anchor firms and new business startups helped it develop, high-tech industry predated supportive public policies, and local universities that were not major research institutions helped support high-tech growth after high-tech industry was already established. The evidence on high-tech development in the three metropolitan areas offers important information for policymakers and practitioners interested in technology-based economic development outside of large, well-established high tech centers.

Introduction

Technology-based economic development has spread beyond Silicon Valley and Boston’s Route 128 corridor. These two pioneering high-technology centers have long captured the attention of policymakers and analysts with many wondering what it would take to become “the next Silicon Valley.” So far, efforts to imitate Silicon Valley have had a dismal track record. In recent years, however, other metropolitan areas have gained momentum and are emerging as high-technology locations. Understanding the dynamics of growth in emerging high-technology centers is important because emerging centers may offer more realistic scenarios for developing high-tech economies in metropolitan areas than Silicon Valley or Boston would. As our metropolitan economies become more knowledge-based, innovation-driven, and service-oriented, it is important to understand how high-technology industries developed beyond Silicon Valley and Boston.

This report shows how three metropolitan areas—Portland (Oregon), Kansas City, and Boise—emerged as second-tier high-tech centers even though they did not host a major research university, which is often thought necessary for high-tech development. These metropolitan areas host significant concentrations of high-technology industry activity. Relative to their size and location, they are highly innovative and entrepreneurial. Technology companies in these emerging high-technology metropolitan areas have grown by building on existing corporate assets. State and local policymakers in these metropolitan areas are developing unique policies to link universities with industry, facilitate entrepreneurship, and support the development and commercialization of innovation.

Portland, Kansas City and Boise are different from such large, well-known high-technology centers as San Francisco-San Jose (Silicon Valley) and Boston. They are smaller and somewhat less specialized in high technology industries. They do not attract large amounts of venture capital. Their businesses spend less on research and development than do those in San San Jose and Boston. They do not have world class research universities. However, Portland and Boise are about as inventive as Boston, as measured by rates of patenting activity.
 
All three of the emerging high-tech centers profiled in this report are home to innovative entrepreneurs
and sometimes branch operations of well-known firms. Intel, for example, opened its first branch manufacturing facility in Portland in 1976 and has since then expanded it into a state-of-the-art manufacturing process development facility for semiconductor production. Consequently most of Intel’s innovations are “made in Oregon.” During the 1990s, for example, the majority of patents were assigned to Oregon-based inventors. Hewlett-Packard relocated its printer division to Boise in 1973. Its trademark product, the laser printer, was developed in Idaho, not in Silicon Valley. Kansas City is an example of a highly specialized second-tier life sciences center. The City metropolitan area has a significant cluster of contract research organizations and it is home to the leading firms in the animal
health industry. Those firms, combined, capture 30 percent of the world’s animal health market.

SERIES: Metropolitan Economy Initiative | Number 10