Technology Life Cycles and Economic Development: Implications for New England and Ireland

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Technology Life Cycles and Economic Development
Implications for New England and Ireland

• Patricia M. Flynn, Dean (PFlynn_at_Bentley.edu)
• McCallum Graduate School of Business
• Bentley College, Waltham, MA, USA
• Smurfit Graduate School/UCD, Dublin
• May 23, 2002

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Overview

• Technology Life Cycles (TLCs) and Economic
  Development
• Implications for New England
• Implications for Ireland

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A. TLCs and Economic Development Strategies

• I. Recruitment of Firms
• II. Create Your Own, High-Tech Job Creation
• III. Business Revitalization

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I. Recruitment of Firms

• Strategies
• Tax Financial Incentives
• Custom-designed Workforces
• Elaborate Expensive Recruitment Packages
• Scope Regional, National, International

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Successful Recruitment Proposals

• 1980s 1990s (U.S.)
• Nissan/TN
• GM-Saturn/TN
• Toyota/KY
• Mazda/MI
• Mitsubishi-Chrysler/IL
• BMW/SC
• Mercedes-Benz/AL

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Recruitment Strategies

• Results Differ by Stage of Development
• Branch plants
• Assembly plants
• RD sites
• Headquarters

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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.

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II. High-Tech Job Development

• High-tech Is a stage of development within
  industries, not a list of industries
• Success Factors
• RD
• Scientific Technical Workforce
• Venture Capital
• Entrepreneurial Network
• Established Base of High-Tech Employment

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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.

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III. Business Revitalization

• Niches/Specialization
• Integration of New Technologies
• Reorganization

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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!

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B. Implications for New England
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Historical Competitive Advantage of New England

• Innovation high-tech development
• Key factors
• University RD
• Federal research funding
• Venture capital
• Well-education, highly skilled workforce
• Established base of high-tech employment

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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

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NEs 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

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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)

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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 RD
  sites, not low-cost production
• Business revitalization

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C. Implications for Ireland

• Class Discussion

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Historical Competitive Advantage of Ireland
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Irish Economy Strengths
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Potential Constraints for Long-Term Economic
Growth in Ireland
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Conclusions (for Ireland)