Christopher Bradford

Bradford

February 7, 2013

Urban Economics

Prof. Becker

Literature Survey

It is my hope to explore in subsequent work the Research Triangle Park (RTP) as a factor for economic and urban growth in and around Durham. Accordingly, the sources chosen here are ones that pertain to some facet of this topic. The Jenkins et al paper explores causes of growth in the proportion of employment in high-technology industry, and proposes that state and local government policies can be effective in achieving high-technology employment growth.Kodrzyckiet al investigate the factors associated with resurgent post-industrial cities, finding chief among them competent leadership and long-term collaboration between the private and public sectors. Seeking to understand the institutional contexts that underlie high-tech clusters, Sternberg et al compare federal, state, and non-state cluster policies in the dual cases of the RTP and the Greater Munich area in Bavaria, Germany.

Jenkins, Craig J, Kevin T Leicht and Arthur Jaynes. “Creating High-Technology Growth: High-Tech Employment in U.S. Metropolitan Areas, 1988-1998”. Social Science Quarterly. Vol. 89, No. 2, Pp. 456-481. 2008.

This 2008 study is concerned with the issue of whether state and local policies can induce growth in the proportion of high-technology employment. The authors argue that sustainable economic growth necessitates a transition from older to newer, high-technology industries, especially as traditional high-paying manufacturing jobs continue to be outsourced. Accordingly, the proportion of total employment in high-technology industries is vital for future economic growth, more so than is the pure numerical increase ofhigh-technology jobs, which the authors believe has received far more scholarly interest. Another point of difference between this and other studies is that this workemphasizes the role of agglomeration effects in the proportional growth of high-technology employment, whereas, according to the authors, others have focused primarily on location effects. Jenkins et al find that location effects may explain numerical growth in high-technology employment, but that location effects fail to account for the proportional increase of high-technology jobs.

In their analysis, the authors use data from 291 Metropolitan Statistical Areas (MSAs) from 1988-1998 to construct a generalized linear model that predicts the probability of percentage change of high-technology employment in this time period. Data include population density, 1988 mean high-technology wage, various amenities associated with location effects, and numerous determinants of agglomeration effects (469). The generalized linear model finds many factors to be positively correlated with increasing shares of high-technology employment, among them research parks, public venture capital programs, technology incubators, small business innovation research, and technology grants and loans.

The conclusion that research parks are correlated with an increasing proportion of high-technology employment is significant to my interest in the RTP. Moreover, the authors propose that research parks magnify the effects of private venture capital firms in increasing the share of high-technology employment. Perhaps this amplification in high-technology employment that arises from such a partnership will emerge as a matter of importance in the context of the RTP. The study’s conclusion that “state and local government can play a strategic role in high-technology development” (456) is certainly relevant to the past, present, and future relationship between North Carolina, Durham, and the RTP.

The authors indicate that their study does not address the distribution of benefits from increasing shares of high-technology employment in the labor pool. This has relevance for Durham, where it is unclear to me at present whether unskilled workers that are largely excluded from positions in high-technology employment benefit from growth in this industry. The study also points to other works that address “counterproductive ‘bidding wars’” for investment in high-technology industry (477). Though only mentioned in passing, this appears to be a question of significance for an evaluation of how RTP has and will continue to affect economic and urban growth in Durham.

Kodrzycki, Yolanda K and Ana Patricia Muñoz. “Reinvigorating Springfield’s Economy: Lessons from Resurgent Cities”. Federal Reserve Bank of Boston. Community Affairs Discussion Paper No. 09-7. 2009.

This study is concerned with identifying factors that are associated with economic growth and revitalization in post-industrial cities. The authors investigate 25 municipalities that were similar to Springfield, Massachusetts in 1960. Ten of these cities experienced significant economic growth after restructuring their economy on a post-industrial model. The authors brand these as “resurgent” cities and consider them in detail. In doing so, the authors hope to elucidate potential policy options for catalyzing growth in Springfield. The study is largely qualitative in scope, examining factors responsible for success in various resurgent cities. Among the data used to evaluate urban success are income levels, poverty rates, population figures, educational attainment, and employment in various industries (e.g. manufacturing versus healthcare).

The authors stress leadership and long-term collaboration between the public and private sectors as factors chiefly responsible for the success of the studied resurgent cities. This applies to the case of the RTP; for example, Link and Scott (2003) emphasize the importance of the vision of certain individuals and coalitions to RTP’s success. Kodrzycki et al find that the initial preponderance of manufacturing in a metropolitan area is the factor most correlated with post-industrial growth. Namely, studied cities that were more reliant on manufacturing in 1960 are less likely to experience dynamic post-industrial economic growth. The study notes that each of the 10 resurgent cities studied had more employment in healthcare and in social assistance than in manufacturing by the mid-2000s. This transition from manufacturing to healthcare is a prominent feature of Durham, and will likely come up as a subject of investigation in my future work.

The authors also cite resurgent cities’ focus on cultivating human capital for a transition to a knowledge-based economy. The authors contend that planning for economic growth has experienced a paradigm shift in recent years. Economic policy in the 1980s and 90s emphasized attracting mega-firms to a metropolitan area. In contrast, planners today focus on the human capital necessary to sustain innovation – the quality matters more than the quantity of workers. Also important for post-industrial economic resurgence, the authors argue, is the successful social and economic integration of minority populations. Both of these necessities apply to Durham. The three major universities that anchor the RTP serve to develop and attract human capital. On the other hand, I am currently uncertain about how successfully Durham has integrated its black, Hispanic, and less-educated populations into an economic regime heavily marked by the RTP. This is likely an issue I will explore in further detail.

Sternberg, Rolf, Matthias Kiese and Dennis Stockinger. “Cluster policies in the US and Germany: varieties of capitalism perspective on two high-tech states”. Environment and Planning C: Government and Policy. Vol. 28, Pp. 1063-1082. 2010.

Believing that literature has often taken the regional cluster model of high-tech firms for granted without exploring the context from which these clusters emerge, Sternberg et al search for institutional determinants of success for cluster policies in their study. The authors compare the governmental policies that have nurtured two technological clusters: the Research Triangle Park in North Carolina, and the Greater Munich area in Bavaria, Germany. These two regions were chosen because they epitomize two very different “varieties of capitalism”: a liberal market economy in the case of the RTP, and a coordinated marked economy in the case of the Greater Munich area (1063). As described by Ketels et al (2006), clusters in liberal market economies are typically formed by the private sector and focus on exports. On the other hand, clusters in coordinated market economies are subject to greater national oversight (1067).

This study interprets qualitative data in the form of interviews with 87 cluster policy experts from both North Carolina and Bavaria. Drawing upon these interviews and a survey of literature in the field, the authors describe key features of cluster policy in the United States and North Carolina, and in Germany and Bavaria. Among the differences: the private sector is the driving force for clustering in NC, which is competition-driven, whereas it is the public sector that drives clustering in Bavaria, which is consensus-driven; the state of North Carolina is the main agent of cluster policy for the RTP, whereas the German federal government cooperates closely with the Bavarian state; the US federal government primarily plays a role in cluster policies by awarding financial grants and fostering a favorable business environment, whereas the German federal government has a history of using contests to dole out large grants while largely allowing the state to pursue its own, autonomous cluster policies.

Sternberg et alpropose comparative weaknesses of the RTP and Bavarian cluster models. In the case of the RTP, they find that local cluster policies are very dependent upon individual agencies, such as the North Carolina Department of Commerce and the seven regional nonprofit organizations that market the RTP and plan its development. With regards to Germany, the authors propose that clusters often arise through opaque public-sector processes, with resultant difficulties in mobilizing private sector cooperation (1076).This study’s examination of the federal and local policies, as well as the nonprofit actions, that have contributed to the growth of the RTP should be of use to me in later work. However, the authors clarify that an evaluation of whether the technological cluster is in fact an effective model of economic growth is beyond the scope of their study. This question of whether the cluster model, which has been successful for the past half-century for the RTP, will remain useful to Durham and North Carolina for future high-tech industry and economic growth is an issue that I will likely want to consider in later research.

References

Jenkins, Craig J., Kevin T. Leicht and Arthur Jaynes. “Creating High-Technology Growth: High-Tech Employment in U.S. Metropolitan Areas, 1988-1998”. Social Science Quarterly. Vol. 89, No. 2, Pp. 456-481. 2008.

Ketels, C. H.M., G. Lindqvist, and Ö. Sölvell. 2006. “Cluster Initiatives in Developing and Transition Economies.” Report, Ivory Tower AB, Stockholm,

Kodrzycki, Yolanda K. and Ana Patricia Muñoz. “Reinvigorating Springfield’s Economy: Lessons from Resurgent Cities”. Federal Reserve Bank of Boston. Community Affairs Discussion Paper No. 09-7. 2009.

Link, Albert N and John T Scott. “The Growth of Research Triangle Park”. Small Business Economics. Vol. 20, Pp. 167-175. 2003.