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BROOKINGS
| June 2009
1
METRO ECONOMY SERiES fOR ThE METROpOliTaN pOliCY pROgRaM aT BROOkiNgS
Bootstrapping High-Tech:
Evidence rom Three Emerging HighTechnology Metropolitan Areas
hee Myer
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“ As our metropoli-tan economiesbecome moreknowledge-basedand innovation-driven, it isimportant tounderstand how high-technology industries de- veloped beyondSilicon Valley and Boston. ”
This report shows how three metropolitan areas—Portland (OR), Kansas City, and Boise—becamecenters of high technology industry without the presence of a major university. For each metro- politan area it describes the history of high-tech development, current status of high-tech indus-try clusters, and the roles that public policy and higher education played in spurring the growth of high-tech industry. In the three metropolitan areas high-tech industry is very specialized, anchor
rms and new business startups helped it develop, high-tech industry predated supportive public
policies, and local universities that were not major research institutions helped support high-techgrowth after high-tech industry was already established. The evidence on high-tech developmentin the three metropolitan areas offers important information for policymakers and practitionersinterested in technology-based economic development outside of large, well-established hightech centers.
Introduction
T
ecnooy-bsed economc deveoment s sred beyond Scon Vey nd Boston’sRoute 128 corrdor. Tese two oneern -tecnooy centers ve on ctured tettenton o ocymers nd nysts wt mny wondern wt t woud te to become“te next Scon Vey.”
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So r, eorts to mtte Scon Vey ve d dsm trcrecord.
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in recent yers, owever, oter metrootn res ve ned momentum nd re emer-n s -tecnooy octons. Understndn te dynmcs o rowt n emern -tecnooycenters s mortnt becuse emern centers my oer more restc scenros or deveon-tec economes n metrootn res tn Scon Vey or Boston woud. as our metrootneconomes become more nowede-bsed, nnovton-drven, nd servce-orented, t s mortnt tounderstnd ow -tecnooy ndustres deveoed beyond Scon Vey nd Boston.Ts reort sows ow tree metrootn res—portnd (Oreon), knss Cty, nd Bose—emered s second-ter -tec centers even tou tey dd not ost mjor reserc unversty,
which is often thought necessary for high-tech development. These metropolitan areas host signicant
concentrtons o -tecnooy ndustry ctvty.
4
Retve to ter sze nd octon, tey re ynnovtve nd entrereneur. Tecnooy comnes n tese emern -tecnooy metroo-tn res ve rown by budn on exstn cororte ssets. Stte nd oc ocymers n tesemetrootn res re deveon unque oces to n unverstes wt ndustry, ctte entrere-neurs, nd suort te deveoment nd commerczton o nnovton.
BROOKINGS
| June 2009
2
portnd, knss Cty nd Bose re derent rom suc re, we-nown -tecnooy centerss Sn frncsco-Sn Jose (Scon Vey) nd Boston. Tey re smer nd somewt ess seczedn tecnooy ndustres. Tey do not ttrct re mounts o venture ct. Ter busnessessend ess on reserc nd deveoment tn do tose n Sn frncsco-Sn Jose nd Boston. Teydo not ve word css reserc unverstes. however, portnd nd Bose re bout s nventve sBoston, s mesured by rtes o tentn ctvty (Tbe 1).
Table 1. Portland, Kansas City, and Boise Metropolitan Areas Compared With San Francisco-San Jose andBoston Metropolitan Areas on Selected Indicators of High Technology Activity
San FranciscoKansas and San Jose Portland City Boise (combined) Boston
High-Tech Industry
h-Tec Emoyment, 2005
58,646 49,918 18,969 375,413 218,392
Number o h-Tec frms, 2005
5,614 4,850 1,335 23,003 14,357
h-tec locton Quotent, 2005*
1.35 1.14 1.76 3.27 1.96
Entrepreneurship
Tot Number o h-Tec frm Brts, 1998–2000
24 71 23 622 297
Venture Ct Des er 1,000 peoe, 2000–2005
6.2 2.2 1.0 58.1 35.5
Innovation and Research
Tot industry R&D fundn, 2000–2005 (mons o dors)
$2,087 $662 $506 $44,862 $26,422
Tot Unversty R&D fundn, 2000–2005 (mons o dors)
$123 $163 $42 $10,480 $7,930
ptents er 1,000 peoe, 1990–1999
260 40 241 2,126 223
*Te -tec octon quotent, mesure o te extent to wc metrootn re s seczed n -tec ndustres, s te rto o te ercente o metrootn re’s emoyment tt s n -tec ndustres to te ercente o ntonwde emoyment tt s n tose ndustres. a octon quotent bove 1.00
indicates some degree of high-tech specialization, and the higher the location quotient the greater the metropolitan area’s high-tech specialization. I dene high-techindustries as those that Daniel Hecker of the Bureau of Labor Statistics classied as “Level I” high-tech industries; these are the industries that have the highest per
-centes o ter ntonwde emoyment n suc tecnooy-orented occutons s enneers, tecncns, e nd ysc scentsts, nd enneern nd nturscence mners. in ener tese ndustres rou brody nto botecnooy, normton tecnooy, -tec mnucturn, nd -tec servces nd R&D.See Dne hecer, “h-Tecnooy Emoyment: a NaiCS-Bsed Udte,”
Monthly Labor Review
128 (Juy 2005): 57-70.
Sources: Author’s analysis of data from County Business Patterns, U.S. Census, Small Business Administration, National Science Foundation, and U.S. Patent and
Trademark Ofce.
All three of the emerging high-tech centers proled in this report are home to innovative entrepre
-
neurs and sometimes branch operations of well-known rms. Intel, for example, opened its rst branch
mnucturn cty n portnd n 1976 nd s snce ten exnded t nto stte-o-te-rt mnu-cturn rocess deveoment cty or semconductor roducton. Consequenty most o inte’snnovtons re “mde n Oreon.” Durn te 1990s, or exme, te mjorty o inte’s tents weressned to Oreon-bsed nventors.
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hewett-pcrd reocted ts rnter dvson to Bose n 1973.its trdemr roduct, te ser rnter, ws deveoed n ido, not n Scon Vey. knss Cty s nexme o y seczed second-ter e scences center. Te knss Cty metrootn re s
a signicant cluster of contract research organizations and it is home to the leading rms in the ani
-
mal health industry. Those rms, combined, capture 30 percent of the world’s animal health market.
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BROOKINGS
| June 2009
3
Three Emerging High Technology Metropolitan Areas
T
he three metropolitan areas proled in this report were able to grow signicant concentra
-
tions of high-tech rms without factors often considered critical in the growth of a technol
-oy reon, suc s mjor reserc unverstes. in ddton, ec o te tree metrootnres cn be consdered erery octed re tt s been oversdowed by oter
more prominent metropolitan areas. Seattle has always trumped Portland and Boise in the Pacic
Nortwest s octon or mortnt busness ctvtes. knss Cty wys stood n te sdowo St. lous even tou bot were mortnt metrootn centers n te hertnd. Te oowncse studes sow ow portnd, Bose, nd knss Cty comensted or ter c o trdton-tec rowt ctors, overcme ter octon dsdvntes, nd deveoed -tecnooyeconomes. Te cse studes re bsed on ntervews wt entrereneurs, ndustry reresenttves,nd ocymers.
Portland
Overview.
Wt just over 2 mon resdents, portnd s Oreon’s rest metrootn re. Teportnd re s nown not ony or ts nnovtve urbn nd reon nnn system but so orben ome to te so-ced Scon forest.
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In 2005, 5,614 high-tech rms employed 58,646 people.
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Te metrootn re seczes n semconductor mnucturn, comuters, nstruments, ndsotwre deveoment. Tese ndustres comrse te core o te Scon forest. Te most romnent
rms are Intel, Tektronix, and Hewlett-Packard. Portland has an industry cluster organized around itssemiconductor industry, with various rms representing the steps in the value chain of a semicon
-ductor.
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Silicon Forest rms produce silicon wafers, supply semiconductor manufacturing equipment
(SME), nd deveo eectronc desn utomton sotwre.
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Reted nd suortn ndustres
include engineering rms that specialize in clean room construction, chemical suppliers, and profes
-
sional services rms. The Portland area has become an attractive place for high-tech activities. In2000, for example, 13 well-known high-technology rms (including Intel, Hewlett-Packard and IBM) jointly set up the Open Source Development Lab (OSDL), a nonprot research and development en
-tty.
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lnus Torvds, te ounder o lnux, reocted to portnd rom Scon Vey, urter vdt-n te reon’s strent n -tec. OSDl subsequenty mered wt te free Stndrds grou toorm te lnux foundton, wc s now octed n Sn frncsco.
Important Milestones.
Te deveoment o portnd’s ndustry oes bc to te 1940s wen Te-tronx, edn mnucturer o oscoscoes, ws ounded. Tetronx strted n portnd becusetwo o ts ounders were rom tere nd d returned to te reon ter ter mtry servce durnWord Wr ii. Over te yers Tetronx set stndrds wt ts roducts nd becme te word’s ed-n mnucturer o test nd mesurement nstruments. its mret eders trnsted nto or-
nizational growth and recognition beyond the Pacic Northwest. Because the Portland area lacked a
word-css reserc unversty, Tetronx ttrcted te mjorty o ts enneers nd scentsts rom
other areas, such as California and the Midwest. The rm also developed a comprehensive in-house
educton rorm nd oered vrety o csses rnn rom very dvnced enneern coursesto recreton csses. Ts educton rorm t tmes even exceeded te oerns o re scoosnd coees. Tetronx ws vot n te reon’s deveoment o sed bor oo.
More important than the rm’s contribution to talent, however, was its impact on high-tech entre
-reneurs. Tetronx turned nto n ncubtor or tented entrereneurs. By 2003, or exme,more tn 60 comnes coud trce ter eneoc roots drecty to portnd’s oneern -
tech rm and at least an additional 35 rms can be considered “grandchildren” or “great-grandchil
-dren” o Tetronx.
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Tere re two resons wy Tetronx becme n entrereneur wesrn. frst, Tetronxdeveoed unque nnovton cuture. Te comny’s monoostc mret oston, wc owedn extensve ocus on reserc nd deveoment n vrety o res oten not reted to te core
product, fueled the rm’s innovation culture. By the early 1970s Tektronix institutionalized innova
-ton n n n-ouse R&D bortory, te so-ced Te lbs. Te lbs oered ts numerous p.D.-eve
researchers an environment similar to that of a university. The rm developed many cutting-edge
of 00
06 Metro Hightech Mayer
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