Spreading the Wealth: Building a Tech Economy in Small and Medium-Sized Regions

Deena Heg and Paul Sommers

Executive Summary

The tech boom of the 1990s created many successful companies, significant wealth, and expanded job opportunities in a new and growing sector of the nation’s economy. However, the benefits of technology development have largely accrued to a relatively small number of regions nationwide leaving many other communities both envious of this success and interested in replicating it.

Communities in Washington state, where outgoing Gov. Gary Locke made technology-based development an explicit policy focus, provide useful case studies for how to broaden the impact of technology to a wider number of places. This study examines five Washington regions—Bellingham, Tacoma, Spokane, the Tri-Cities, and Wenatchee—that have chosen a technology focus for their local economic development efforts.

These five areas are located in different parts of the state, have varied economic bases, and somewhat different goals and strategies for expanding their respective technology sectors. Their efforts to grow or attract new companies provide insights on strategies that may be useful in other regions outside the major “techpoles” that want to pursue similar opportunities.

Although they are not likely to achieve the spectacular success of Silicon Valley, Seattle, Boston, or Austin, there is a role for an IT strategy in smaller cities. Based on a review of economic data, and in-depth interviews with company executives and economic development leaders in the five Washington communities, the authors have several suggestions on how communities around the country can enhance their own economies through technology-based development:

  • Invest in broadband and other telecommunications infrastructure necessary for technology development. Adequate broadband capacity is a prerequisite for IT growth. Meeting demand can be achieved in creative ways based on an expansion of utility systems used for power system management, augmentation of public sector systems, negotiations with existing telecommunications companies, or fostering startup telecommunications operations.

  • Focus on “grow your own” strategies for technology development. Given the history of the techpole regions in this country, entrepreneurial development deserves far more attention relative to marketing and recruiting-based strategies. The establishment of robust networking, mentoring, and startup capital programs, combined with improvements to infrastructure, education, and real estate offerings are key to enhancing the competitiveness of local firms.

  • Find ways to link research institutions to the local economy. Research institutions play an important role in fostering and supporting technology-based development through the generation of commercially viable ideas, training sophisticated workers, and problem-solving for local companies. Branch campuses, cooperative extensions, and other outreach programs can play an important role in bringing the benefits of the research university to smaller communities.

  • Continually monitor and evaluate strategies and results. Regional leaders must carefully monitor and evaluate their efforts to ensure that the results achieved are commensurate with the resources invested to extend the benefits of technology into their communities. Understanding what is working, and what isn’t, is essential to ensuring that programs and policies evolve appropriately over time.

  • Work with state level research, education, and infrastructure development efforts. Local technology development strategies need to be supported by state level polices and programs that are tailored to each local community. Leadership at the state level is also necessary to provide a sense of direction and project a positive outside image that can powerfully complement local efforts.

Ultimately, the most successful communities will be those that employ a rich and varied mix of economic development strategies that capitalize upon local industries and assets. These small and medium-sized regions have a real opportunity to build a niche for themselves in the high tech economy, and to reap some of the benefits such development can generate.