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The New Economy, High Tech Industries and the Role/Limits of State Economic Development Policy - PowerPoint PPT Presentation

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The New Economy, High Tech Industries and the Role/Limits of State Economic Development Policy. The New Economy. “ The Information Economy ” “ The Digital Economy ” “ The Risk Society ” “ The Knowledge Economy” “ The Network Economy ”. What is New about the New Economy?.

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The New Economy State Economic Development Policy

  • “The Information Economy”

  • “The Digital Economy”

  • “The Risk Society”

  • “The Knowledge Economy”

  • “The Network Economy”

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What is New about the New Economy? State Economic Development Policy

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Trade Is An Increasing Share of The New Economy State Economic Development Policy

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The Economy Is Spawning New, Fast-Growing Companies State Economic Development Policy

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The New Economy is Constantly Churning State Economic Development Policy

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Fierce State Economic Development PolicyBusinessCompetition

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“Cooperation” In The New Economy State Economic Development Policy

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Consumer Choices Are Exploding State Economic Development Policy

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Computing Costs Are Plummeting State Economic Development Policy

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E-Commerce Takes Off State Economic Development Policy

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OLD ECONOMY State Economic Development Policy




Mass Production

Capital and Labor


Lower Costs

Go-it-alone Business Culture

A Skill or Degree

Adversarial Relations





Flexible Production

Innovation and Knowledge


Innovation, Quality, Speed

Alliances and Partnerships

Lifelong Learning



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Implications of New Economy for ED State Economic Development Policy

  • Importance of Technology to all firms

  • Innovation

  • Entrepreneurship

  • Boost Firm and Worker Learning

  • Agglomeration or clusters of firms matter

  • “Entrepreneurial” Strategies, aka growth from within strategies will drive development

--Progressive Policy Institute

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Traditional measures State Economic Development Policy

Tax structure

Compensation costs

Space costs

Capital costs

Business climate

Specific to High-tech

Proximity to research institutions

Access to venture capital

Educated workforce

Network of suppliers

Technology spillovers

Quality of life

-- Milken Institute

Factors that attract and sustain high-tech industries

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High Tech Economic Development State Economic Development Policy

  • What is “high-tech” industry?

  • How important is to regional economic prosperity?

  • Is high tech a silver bullet?

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What is High-Tech? State Economic Development Policy

  • Varying definitions

    • Workers

      • Scientists, engineers, programmers

    • Processes

      • Manufacturing vs. Services?

    • Products

      • Computers vs. Shoes

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3 Organizations Measuring State Economic Development Policythe New Economy

These three, plus others, have either developed measures of local economic performance in the new economy, or include new economy data points in their measures:

  • Progressive Policy Institute

  • Milken Institute

  • Corporation for Enterprise Development

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Miliken Institute’s Definition State Economic Development Policy

  • High Technology Industries

    • Spend above average amount of revenue on R&D

    • Employ above average # of technology using occupations (scientists, engineers, etc)

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HT Manufacturing Industries State Economic Development Policy

  • Drugs

  • Computer and Office equipment

  • Communications equipment

  • Electronic components

  • Aircraft

  • Guided missiles,

  • Search equipment

  • Medical supplies, lab instruments

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HT Service Industries State Economic Development Policy

  • Telephone Communications Services

  • Computer programming, data processing

  • Motion picture production

  • Engineering,

  • Research, Development and Testing services

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283 Drugs State Economic Development Policy

357 Computer equipment

366 Communications equipment

367 Electronic components

372 Aircraft & parts

376 Guided missiles

381 Navigation equip

382 Laboratory apparatus

384 Medical instruments

481 Telephone services

737 Computer programming

781 Motion pictures

871 Engineering services

873 R & D services

-- Milken Institute

High-tech Industries(1987 SICs)

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New Economy Index State Economic Development Policy

  • More Expansive View

    • Industrial and Occupational change

    • Globalization

    • Dynamism and Competition

    • Information Technology Revolution

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Missing? State Economic Development Policy

  • Significant technology users

    • Finance (banking and securities)

    • Insurance

    • Publishing

  • Processes are changing

    • Back offices (Citibank in SD)

    • E-publishing

    • Data bases

  • Important consumers of high technology

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Producers State Economic Development Policy



Information technology hardware

Source: PPI










Knowledge Industries

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Producers State Economic Development Policy









Sales reps



-- PPI

High-tech Occupations

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Primary State Economic Development Policy

Computer & Mathematical

Architecture & Engineering

Life, Physical, Social Sciences



Business & Financial Operations


Education, training, library

Healthcare practitioners & technical

High-tech Occupations(BLS Major Groups)

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Who Collects This Stuff? State Economic Development Policy

  • Bureau of Economic Analysis

  • Bureau of Labor Statistics

  • Standard Industrial Classification (SIC), now (NAICS)

    • I.e. Drugs SIC 283

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Why States Focus on HT? State Economic Development Policy

  • Boosts long term growth of US economy

  • Determines relative economic success of regions

  • Source of Good Jobs

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HT --Source of Growth State Economic Development Policy

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New Economy Index State Economic Development Policy

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HT Predicts Metro Growth State Economic Development Policy

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HT Wages 73% Higher State Economic Development Policy

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4 Limits to High Tech Strategies State Economic Development Policy

  • Produce small numbers of jobs

  • Geographically concentrated

  • Not immune to business cycles

  • Public policy tangential to growth of industries?

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Small # of Jobs 5.3% Avg State Economic Development Policy

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High Technology Employment State Economic Development Policy

  • U.S. Average is 5.3% (Miliken Institute)

  • Only 18 states are above average

    • (Where are the states?)

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Overall State New Economy Scores (1999) State Economic Development Policy

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High-Tech Jobs are Geographically Concentrated State Economic Development Policy

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Not Immune to Business Cycles State Economic Development Policy

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Key Factors of Economic Growth State Economic Development Policy

  • Science & technology

  • World-class education and skills

  • Organizational innovation

  • Robust competition

  • Open global trade

    -- Progressive Policy Institute