Technology Life Cycles and Economic Development: Implications for New England and Ireland Patricia M. Flynn, Dean McCallum Graduate School of Business Bentley College, Waltham, MA, USA Smurfit Graduate School/UCD, Dublin May 23, 2002

2 Overview A.Technology Life Cycles (TLCs) and Economic Development B.Implications for New England C.Implications for Ireland

3 A. TLCs and Economic Development Strategies I. Recruitment of Firms II. “Create Your Own,” High-Tech Job Creation III. Business Revitalization

4 I. Recruitment of Firms Strategies: –Tax & Financial Incentives –Custom-designed Workforces –Elaborate & Expensive Recruitment Packages Scope: Regional, National, International

5 “Successful” Recruitment Proposals 1980s & 1990s (U.S.) –Nissan/TN –GM-Saturn/TN –Toyota/KY –Mazda/MI –Mitsubishi-Chrysler/IL –BMW/SC –Mercedes-Benz/AL

6 Recruitment Strategies Results Differ by Stage of Development –Branch plants –Assembly plants –R&D sites –Headquarters

7 Recruitment Strategies: Conclusions A relatively small number of regions are likely to succeed in “recruiting” a significant number of good jobs into the area. The bulk of jobs that respond to cost-based incentives have been relatively standardized, requiring relatively low- skilled workers.

8 II. High-Tech Job Development “High-tech” – Is a stage of development within industries, not a list of industries Success Factors –R&D –Scientific & Technical Workforce –Venture Capital –Entrepreneurial Network –Established Base of High-Tech Employment

9 High-Tech Development: Conclusion Relatively few regions will be successful with high-tech job creation strategies, and even those will find that high-tech jobs will represent a relatively small share of employment.

10 III. Business Revitalization Niches/Specialization Integration of New Technologies Reorganization

11 Business Revitalization: Conclusions The FAILURE to remain technologically competitive contributes more to worker displacement and job loss than does the adoption of new technologies. Revitalization strategies for established businesses hold significant potential for long- term economic development for most regions. Revitalization policies do not win elections!

B. Implications for New England

13 Historical Competitive Advantage of New England Innovation & “high-tech” development Key factors –University R&D –Federal research funding –Venture capital –Well-education, highly skilled workforce –Established base of high-tech employment

14 The “New Economy” Transformation of business practice in every sector of the economy Globalization of industries and firms Innovation and speed are the key sources of competitive advantage Greater demand for “brainpower” and knowledge workers in all industries

15 NE’s Traditional Strengths Should Prove Beneficial in the New Economy Established “high-tech” employment base University infrastructure contributing to –Highly skilled workforce –R & D Venture Capital

16 Potential Constraints in New England Relatively slow population and labor force growth Labor and skill shortages Dependence on in-migration Declining market share of college degrees awarded (including engineering and CS) Lack of affordable housing, especially in eastern Massachusetts Infrastructure (airports, roads, broadband)

17 Conclusions for New England Focus on good jobs, requiring a highly skilled and well-educated workforce Focus on making the best use of its scarce human resources Strategies to pursue: –High-Tech job development –Recruitment – focus on headquarters and R&D sites, not low-cost production –Business revitalization

C. Implications for Ireland Class Discussion

19 Historical Competitive Advantage of Ireland

20 Irish Economy Strengths

21 Potential Constraints for Long-Term Economic Growth in Ireland

22 Conclusions (for Ireland)