Technology Life Cycles and Economic Development: Implications for New

England and Ireland

Patricia M. Flynn, Dean (PFlynn@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

A. Technology Life Cycles (TLCs) and Economic Development

B. Implications for New England

C. 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– R&D 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– R&D– 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!

B. Implications for New England

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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

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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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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

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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 R&D sites, not low-cost production

– Business revitalization

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)