High-tech activities cluster and clustering spurs competitiveness. That is the message of a rapidly growing
body of research showing that the geographic co-location of businesses,
universities, colleges and labs often yields powerful clusters of
technology-related activity that continue to expand through initial market
leadership and economies of scale.
Well-known examples are information technology and biotechnology
California's Silicon Valley and Boston's Route 128, software and aircraft in
Seattle, and electronics and pharmaceuticals in North Carolina's Research
Triangle. Such clusters have
contributed to substantial increases in their regions' prosperity while also
supplying the innovations that drive national economic growth.
This study constitutes a systematic location analysis
of the technology assets of Appalachia.
Specifically, the report identifies and documents sub-regional
concentrations of technology-related employment, R&D, and applied
innovation within and immediately adjacent to the 406-county service area of
the Appalachian Regional Commission. By
assembling and analyzing an extensive set of data at high levels of functional
and spatial detail, the study reveals localized technology strengths that might
be nurtured through focused economic development policy.
The
study found 100 technology clusters–joint spatial concentrations of high-tech
employment and innovative activity–within and adjacent to the ARC region. The clusters vary significantly in size,
depth, and overall competitive strength.
They span eight general technology areas: chemicals and plastics; motor
vehicles and related; industrial machinery; information technology and
instruments; aerospace; communications services and software; and
pharmaceuticals and medical technologies.
Chemicals and plastics, industrial machinery, and motor vehicles and
related account for a majority of the technology clusters. Some of the detailed findings in the report
include:
- Overall, Appalachia's
technology sector is comparatively small but expanding. There were roughly 1.07 million workers
employed in the region's high-tech industries in 1998, up from 959,000 in 1989,
an increase of 11.2 percent. The rate
of net technology employment growth between 1989 and 1998 was about two-thirds
of the overall private sector growth rate.
Most of the high tech gains occurred in sectors classified as
"moderately technology-intensive," such as chemicals, electronic components,
transportation equipment, instruments, and hospitals and health-related labs.
- In terms of a diversity of
high-tech industry employment, there are five leading metropolitan areas in
Appalachia: Binghamton, Greenville-Spartanburg, Huntsville, Johnson City, and
Pittsburgh. We found evidence of high-tech
concentrations in four or more high-tech sectors in at least parts of each of
those cities (seven and six in the cases of Huntsville and
Greenville-Spartanburg, respectively).
A second group of cities that are also home to multiple sectoral concentrations
include Asheville, Decatur, Erie, Knoxville, and State College, PA.
- Spatial employment
concentrations in industrial machinery, chemicals/plastics, and motor vehicles
tend to be larger in geographic extent (comprised of larger multi-county areas)
than the other technology areas. That
is, their presence (or sometimes extension into) rural counties is more
extensive than sectors such as information technology, communication services,
and software.
- Within the ARC region
proper, there is clearly an orientation of high-tech activity to the northern
and southern thirds of the region, with activity in the central region very
sparse in several key technology areas.
Chemicals and plastics industries exhibit the strongest presence in the
central third of the ARC area, whether measured by value chain employment or
occupational employment.
- Appalachian metro areas
have a significantly lower complement of scientists, engineers, and related
technicians than the U.S. as a whole.
Scientists and engineers are somewhat better represented in the MSA's
that line the region's borders.
Washington, DC accounts for a significant share of the total scientists
and engineers employed in the 62 metro areas included in the study. Excluding the Washington, DC MSA finds the
southern third of the extended region the most "science and
engineering-intensive" based on occupational employment indicators.
- Based on national ratings
of faculty quality, there are six major nodes of highest competitive research
strength in the universities in Appalachia (either within or adjacent to the
ARC region): Cornell (Ithaca, NY),
Carnegie-Mellon (Pittsburgh, PA), Georgia Tech and Emory University (Atlanta,
GA), Penn State (State College, PA), and Virginia Tech (Blacksburg, VA).
- While faculty quality
rankings indicate that the greatest competitive strengths among Appalachian
research universities as a group are oriented toward the physical sciences and
engineering rather than the biological and medical sciences, national R&D
funding rankings suggests some Appalachian universities are actually very
strong in the life sciences disciplines.
- A number of Appalachian universities
boast research programs that are rising steadily in the national rankings
(based on R&D funding and graduate student enrollments). The majority of such "emergent programs" are
at Carnegie-Mellon, Georgia Tech, Ohio, Penn State, the University of Kentucky,
Virginia Tech, West Virginia University, and Mississippi State.
- Small Business Innovation
Research (SBIR), Small Business Technology Transfer (STTR), and Advanced
Technology Program (ATP) award winners tend to be concentrated in a relatively
small number of places, namely Huntsville, Blacksburg, Pittsburgh, State College,
and Ithaca, with smaller concentrations in Birmingham and Knoxville/Oak
Ridge. The nature of the SBIR/STTR/ATP
programs tends to favor locations nearby universities or labs.
- Industrial machinery is
easily the most common technology focus among the some 220 SBIR/STTR/ATP awards
in fiscal year 2000. That may simply
reflect the dominance of the region's traditional industry sectors (textiles,
apparel, furniture, and metals).
- There are a great many
state-funded technology assistance, transfer, and modernization programs and
agencies in the ARC region.
Comparatively few, however, are focused on technology areas that are
projected to drive significant growth in the next decade: information
technology and biotechnology.
- Somewhat surprisingly given
the region's industry mix, Appalachian four-year universities and colleges
grant proportionately fewer degrees in industrial engineering and related
sciences than their counterparts elsewhere in the U.S. Indeed, based on degree completions in
1997/98, Appalachian universities and colleges grant proportionately more
degrees in basic medical science, environmental engineering and controls,
mathematics, materials engineering and science, and biochemistry and biomedical
engineering than national averages would predict.
- The share of annual degrees
awarded in the computer and communications sciences by two-year colleges and
institutes in Appalachia is substantially below the national average. That may reflect the comparatively limited
job opportunities in IT-related industries in the region (a problem of labor
demand) or an inadequate training network for an emerging industry (a problem
of labor supply).
- Two- and four-year higher
education institutions with an emphasis in technology-related areas are comparatively
few in central Appalachia (namely Tennessee, Kentucky, and much of West
Virginia).
- The spatial distribution of the
100 technology clusters in Appalachia is highly uneven. Nearly half (45 in total) are located in the
northern third of the region (New York, Pennsylvania, and northern Ohio). Only nineteen clusters were identified for
central Appalachia (an area that includes southern Ohio, West Virginia,
Virginia, and Kentucky), with Cincinnati and Washington, DC accounting for nine
of those nineteen. In the southern
third of the region, Atlanta, Greenville-Spartanburg, and Huntsville account
for sixteen of 29 clusters identified.
- The uneven geography of the
clusters in the region varies substantially by technology area. The chemicals/plastics and information
technology/instruments clusters are relatively evenly distributed amongst the
northern, central, and southern thirds of the region. Industrial machinery, on the other hand, is nearly exclusively a
northern and southern strength.
- Just over half of the
technology clusters in the region are located on the periphery and are anchored
in core metropolitan centers outside the region (such as Cincinnati, Atlanta,
and Washington, DC). That means that
the ARC region's current high-tech prospects are heavily dependent on spillover
(or "spread") effects from neighboring cities and metropolitan areas. Unfortunately, those spillover effects are
neither certain nor necessarily positive.
The
analysis and findings in this report have three major implications for state
and local officials concerned with economic development in Appalachia. First, the technology clusters are potential
targets for focused entrepreneurship and recruitment strategies. Each sub-regional technology cluster
highlighted in this report can be subjected to further detailed analysis to
identify linked end-market or supplier sectors that represent attractive growth
prospects, or related industries that offer higher wages. Those prospects can then become the focus of
comprehensive development strategies designed to nurture their growth.
Second,
the report findings can be used to guide state investments in "centers of
excellence" in the research universities, expanded specialized education and
training programs in the region's teaching universities and community colleges,
and in technology transfer and industrial extension programs. Some of the 100 technology clusters are
characterized by a very strong base of science, innovation, and training; most
are not, especially within the ARC region proper. While innovation and R&D strengths are in evidence in the
case of all technology clusters by definition, the clusters vary greatly in the
depth and diversity of that strength.
Moreover, some clusters are better served than others by the region's
university and community college education and training system.
Third,
a common step in many states' efforts to develop and expand technology clusters
is the establishment of an industry association or other private sector entity
charged with documenting and championing specific clusters' interests in the
policy arena. Such organizations also
often provide a venue for collaboration and joint problem-solving among cluster
firms, thereby increasing opportunities for productivity-enhancing spillovers
that are a critical part of firms' competitiveness. States and regions should view the clusters identified in this
report as potential candidates for such "cluster organizing" efforts.
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