Do High Technology Policies Work? An Analysis of High Technology Industry Employment Growth in U.S. Metropolitan Areas, 1988-1998

Abstract

In the past three decades, federal, state and local governments have launched an array of new high technology development programs. Researchers and policy-makers disagree about the relative merits of these policies as economic development tools. We address two questions: (1) Do these policies affect high technology industry employment net of location and agglomeration factors? (2) Do these policies interact with existing agglomeration advantages to boost high technology industry employment? Using a conditional change score design to examine the effects of seven major high technology policies on the change in high technology industry employment in metropolitan statistical areas (MSAs) between 1988 and 1998, we find that two programs--technology grant and loan programs, and technology research parks--have direct effects net of controls for location and agglomeration factors. All of these programs, except for SBIRs and technology development programs, positively interact with existing agglomeration advantages to create high technology industry employment growth. Technology development programs compensate for deficits in agglomeration resources. High technology growth is an organic, path-dependent process that depends primarily on location and agglomeration advantages but also can be planned by adapting high technology programs to magnify these local growth advantages.Urban Affairs Program (Project #739365) and the John Glenn Institute for Public Service and Public Policy, The Ohio State Universit