Rural Development in the United States: Connecting Theory, Practice, and Possibilities William A. Galston and Karen J. Baehler High Technology Chapter 10 Pages

Introduction The Big Picture 1.High-tech industry continues to grow 2.High-tech industry employs fewer people than traditional manufacturing and natural resources industry 3.Most high-tech industry locates in urban areas, especially in the fields of computers, communications systems, and defense-related operations

Introduction The Big Picture 4.High-tech industry with a focus on research and development offers better jobs and generates more economic growth 5.High-tech industry tends to agglomerate 6.Most rural communities will not benefit from high- tech industry growth, because of #2 and #3 (rural areas closer to cities may benefit)

Introduction The Big Picture 7.Rural areas may be able to attract more mature, less technically oriented, and slower growing high-tech industry that is undergoing decentralization 8.To encourage high-tech industry growth at the state level, governments should focus on retaining and expanding existing industry; encouraging private initiative; leveraging resources; involving businesses, labor, and universities in planning; and gaining support from the governor and other top leaders

Introduction The Big Picture 9.More research is needed to evaluate high-tech industry distribution across the U.S. 10.Rural areas may continue to lag behind urban areas in high-tech industry growth, or fall even further behind, as more money is pumped into the industry in an attempt to catch up to other industrialized nations 11.More research is needed to evaluate ways in which advances in technology might be spread within and across high-tech industry

Introduction Definitions  “High-tech” difficult to define because… oanalysts cannot agree on criteria, or distinguishing characteristics, and othey are constrained by the widely used industrial classification system (called the Standard Industrial Classification codes), which limits a company to only one classification no matter how large or diverse it is

Introduction Definitions  The most common definitions of high-tech used in recent years have focused on features of labor and/or investment input, such as… oindustries with a higher than average concentration of technical and professional workers oindustries with high proportions of overall spending dedicated to research and development

The Context: Trends Producing Technology  growth of 28% in jobs (high-tech manufacturing only) 21% growth across all sectors  employment in high-tech declined by 3% as a result of overcapacity, supply gluts, foreign competition, and automation  Hindsight: the boom didn’t last; not many jobs added during boom, because overall # employed low (small proportion of our whole economy); not all high-tech companies prospered

The Context: Trends Applying Technology  Applied technology potential solution to productivity slowdown and declining U.S. competitiveness?  Huge gains in automation in last 10 yrs in factories and offices (almost all capital investment between went towards computers and office equipment)  Computer-related improvements may still be growing (ATMs, electronic fund transfers, direct-debit, etc.)  U.S. still lags behind other countries in manufacturing automation

The Rural Picture Location, Location, Location  1982: 90% of all high-tech jobs in urban areas, particularly in cities of over one million  More recently has shifted somewhat to smaller cities of 200,000 - one million  Little growth in rural areas – slightly more in rural areas adjacent to urban areas  High-tech companies in rural areas tend to be slower growing, more mature, less technically oriented

The Rural Picture Spillover?  Larger and smaller urban areas successful at attracting high-tech clusters are likely to experience some multiplier effects  Rural area high-tech companies are the least likely to stimulate local economic development, because they tend to purchase only 1/3 of their inputs (other than labor) within the county where they are located

The Rural Picture Technology Applied  Not enough research exists to say for sure that modernization in high-tech industry tends to occur more frequently in urban areas (one study showed that not much automation had occurred in the rural South)

Economic Development Strategies Some analysts say that rural areas should not waste too much time and other resources trying to recruit high- tech industry, because of the tendency of high-tech to locate in urban areas

Economic Development Strategies Wait and See  Rural areas may still be able to capture parts of decentralizing companies, as more sectors within high- tech mature, though some analysts argue that those parts (generally routine production) should not really count as high-tech industry and some argue that many high-tech companies won’t have time to mature

Economic Development Strategies Invest Strategically  Rural areas should focus on retaining existing high- tech firms and encouraging new high-tech locally  Local and state governments need to encourage the private sector, by eliminating barriers, by providing incentives, and by supplying resources and services that the private sector cannot provide for itself  Governments should act as wholesalers, not retailers (in other words, they should help make connections)

Economic Development Strategies Invest Strategically  Focus on attracting companies with large research and development components  Involve the whole community in the effort  Active state governments help the whole process

Economic Development Strategies Build on a Base  Rural communities who already have high-tech industry should look for ways to expand that base though the creation of linkages between companies, through publicity, and through the direction of local resources to support the base

Economic Development Strategies Applied Technology  One model: economic development is a learning process – it requires a long time horizon (slow and steady growth), a willingness to experiment with new ideas and forms of organization, a strong capacity to adapt to change, and investments in institutions  In this model, the process of technology transfer becomes at least as important as the invention of new technologies (sharing info/technology benefits all)

Economic Development Strategies Applied Technology Technology diffusion occurs:  Within branches of the same corporation  Between corporations and their suppliers/vendors  Between corporations in the same geographic area – spread out from the source of innovation

Economic Development Strategies Applied Technology  U.S. lags behind other countries in automating its plants and in creating new automation equipment  The makers and the users of manufacturing equipment in the U.S. do not communicate well, so the makers don’t know what the users really need and small companies don’t hear what technology is available to them

Economic Development Strategies Applied Technology  One analyst predicts that U.S. manufacturing equipment makers may benefit when foreign companies operating in the U.S. shift to purchasing their inputs locally rather than importing them  States are spending more and more on technology diffusion, though in 1988 the amount was still only 8% of total technology-related expenditures

Economic Development Strategies Applied Technology  The most promising diffusion programs for rural communities will focus on the type of companies that reside there… oTo improve efficiency and the quality of products and oTo help those companies form networks so they can share info/technology

Quality of Development  High-tech jobs are viewed as “good” jobs – large percentage of highly-skilled workers  Women don’t necessarily benefit – employment of women may be high in high-tech, but the women were most likely doing the lower-skilled jobs or working in branch plants  Communities should make sure they know what they are getting into before developing high-tech  Automation requires workers to develop new skills

Quality of Development  High-tech workers must be more autonomous and shoulder more responsibility  Total employment generally goes up with investments in technology  Automation generally provides equal opportunities for women and minorities