Tech Talk: Assessing Tech-Based Growth Strategies

High tech job growth

What can state governments do to best facilitate technology-based economic development? New research published in the Journal of Social Science Research suggests it’s the continuity of support more than making the “big splash.” In other words, the steady pace just might win the race.

Kevin Leicht, a University of Illinois professor and study author, says: “You don’t have to necessarily put a huge amount of money into these investments, and most states don’t. But you have to just keep doing it and plugging along and allow for a lot of failure, and in most cases, you’ll get something for it.”

The State Science & Technology Institute offers this summary of the research findings:

For “State Investments in High-Technology Job Growth”, authors Leicht and J. Craig Jenkins of Ohio State University assess two policy frameworks advanced by proponents of technology-based economic development.

A “technopole strategy” seeks to plan and support the growth of high-tech industries in specific locations. The authors suggest that elements of this centralized strategy include high-technology business incubators that provide subsidized R&D space; research parks; subsidized space for high-tech businesses (including seed accelerators); and technology development programs at universities and/or government industry research consortia.

The less centralized “entrepreneurial strategy” seeks to decrease barriers to starting a small business by supporting the development of local networks, entrepreneurs and partnerships. The authors include the following in this framework: public venture capital programs, small business innovation research programs, technology grant and loan programs, and tech transfer efforts.

The authors found Georgia, Pennsylvania, New York and Ohio exhibited the longest record of accomplishment in supporting high-tech policies. Ultimately, they concluded that entrepreneurial policies promote high-technology job growth in regional contexts where there is considerable high-tech employment already, while two policies – SBIR and technology deployment policies – had direct, additive effects on high-tech job growth regardless of agglomeration and location factors.

Although precise annual expenditure data would give a more exact measure of job creation in cost/benefit terms, the authors estimate that one additional year of commitment to technology deployment policies yields about 1,300 additional high-tech jobs and one additional year of SBIR commitment yielded 1,976 additional jobs.

The findings suggest that entrepreneurial programs tend to work best for rural (low population density) states, where those policies may help states play “catch up.” Conversely, the authors find limited evidence that technopole strategies support high-technology job growth net of other factors, though these policies can be effective when coupled with existing high-technology advantages.

The conclusions generally support this commonly heard refrain: It is oftentimes the small and incremental steps, not the massive recruitment/relocation deals, which spark transformative economic development.