STATE TECHNOLOGY DEVELOPMENT STRATEGIES: THE ROLE OF HIGH TECH CLUSTERS

CRS Report for Congress
State Technology Development Strategies: The
Role of High Tech Clusters
October 21, 1998
Wendy H. Schacht
Specialist in Science and Technology
Science, Technology, and Medicine Division

Congressional Research Service ˜ The Library of Congress

A^B^S^T^RACT
This report provides a framework for exploring the feasibility of generating high tech
clusters in states where they currently do not exist or are not easily identifiable. The
information may be used to provide a common frame of reference for key decisionmakers
as they examine the possibility of creating clusters. The reasons for such actions are
presented here, as are the characteristics typically associated with high growth
entrepreneurial regions. A summary of the lessons learned by the successes and failures of
other jurisdictions may provide a guide for additional discussion. Also offered are selected
options for further consideration in designing next steps for the community. The report will
be updated if events warrant such action.

State Technology Development Strategies:
The Role of High Tech Clusters
Summary
There has been increasing congressional interest in efforts across the country to
generate expanded regional economic growth through technological development and
the creation of new firms. Concurrently, and often in conjunction with on-going
federal programs, state activities to promote an environment conducive to
technological innovation have expanded, typically focusing on the development of
concentrations of high tech firms in specific localities. These clusters are groups of
interrelated firms and institutions (including suppliers, service providers, universities,
and trade associations) located in a specific area that cooperate as well as compete.
As such, clusters provide the opportunity for on-going innovation to meet new
demands for products and processes generated by the dynamic relationships among
the players.
Technological advancement is a key element of economic growth. Experts
widely accept that technical progress is responsible for up to one-half the growth of
the U.S. economy and is one principal driving force for increases in our standard of
living. Entrepreneurial firms often play an important role in technological progress.
It usually is through these companies that the results of research and development
(R&D) are commercialized and brought to the marketplace. They are also
instrumental in allowing economic benefits to remain within a region. Such firms
create wealth through value added jobs that are long-term and require highly skilled
employees that subsequently generate additional income, spending, and growth, as
well as more jobs.
States are attempting to fashion an entrepreneurial climate by undertaking a
variety of programs to assist existing technology-related businesses, to promote the
development of new companies, and to facilitate the application of technologies and
techniques in all industries. While it often takes long periods of time to establish
regional clusters, with the attendant risks and uncertainties, several characteristics are
common to entrepreneurial areas. These regions typically have a knowledge source,
generally a university that can provide a supply of ideas and employees, and on-going
R&D. Venture capital is available as is skilled labor. Clusters (or agglomerations)
of similar entrepreneurial firms exist as do opportunities for generating new
businesses through science parks or incubators. Good transportation and a high
standard of living are also complementary. In addition, successful state and local
efforts to develop an entrepreneurial environment generally exhibit sustained
leadership in such endeavors, support for education and training, use of R&D
resources, and public-private cooperation.

Contents
In troduction ......................................................1
Economic Growth.................................................1
Lessons From the Past..............................................3
Ideas for Consideration in Employing the High Tech Cluster Concept.........9
Cluster Development...........................................9
The Workforce................................................9
Education ...................................................10
Research and Development.....................................10
Business Environment.........................................10

State Technology Development Strategies: The
Role of High Tech Clusters
Introduction
There has been increasing congressional interest in efforts across the country to
generate expanded regional economic growth through technological development and
the creation of new firms.¹ Concurrently, and often in conjunction with on-going²
federal programs, state activities to promote an environment conducive to
technological innovation have expanded, typically focusing on the development of
concentrations of high tech firms in specific localities. This report provides a
framework for exploring the feasibility of generating such high tech clusters in states
where they currently do not exist or are not easily identifiable. The information
contained in these pages may be used to provide a common frame of reference for
key decisionmakers as they examine the possibility of creating clusters. The reasons
for such actions are presented here, as are the characteristics typically associated with
high growth entrepreneurial regions. A summary of the lessons learned by the
successes and failures of other jurisdictions may provide a guide for additional
discussion. Also offered are selected options for further consideration in designing
next steps for the community.
Economic Growth
Technological advancement is a key element of economic growth. Experts
widely accept that technical progress is responsible for up to one-half the growth of
the U.S. economy and is one principal driving force for increases in our standard of
living. Historically, industrial expansion was based on the use of technology to
exploit natural resources. Today, such growth tends to be founded on scientific
discoveries and engineering knowledge (e.g. electronics, biomedical applications)
and is even more dependent than before on the development and use of technology.
Technological advance can drive the economy because it contributes to the creation
of new goods and services, new industries, new jobs, and new capital. It can expand
the range of services offered and extend the geographic distribution of those services.
The application of technology also can contribute to the resolution of those national
problems that are amenable to technological solutions.

¹For a detailed discussion see: Congressional Research Service, Technology Development:
Federal-State Issues, by Wendy H. Schacht, CRS Report 96-958, 22 November, 1996.
²For additional information see: Congressional Research Service, Industrial Competitiveness
and Technological Advancement: Debate Over Government Policy, CRS Issue Brief 91132,
updated regularly.

Technological progress is achieved through innovation, the process that
provides new and improved products, manufacturing processes, and services. It is
an activity that may involve, among other things, idea origination, research,
development, engineering, commercialization, and diffusion throughout the
marketplace. A concept can become an innovation without evolving through those
separate steps. An invention becomes an innovation when it has been integrated into
the economy such that the knowledge created is applied in production to increase
productivity and quality, or results in a new or improved product or service that can
be sold in the marketplace. It is only then that a significant stimulus to economic
growth occurs.
Entrepreneurial firms often play an important role in technological advancement
and economic growth. It usually is through these companies that the results of
research and development are commercialized and brought to the marketplace. Thus,
the current interest in creating an environment to facilitate the development of
indigenous talent and to attract outside players. While the manufacturing facilities
of high technology companies can bring an infusion of new jobs to a region, studies
have shown that branch plants do not provide much additional high technology
development.³ Such businesses tend to move when it is cheaper to manufacture
elsewhere even though they utilize a skilled workforce. In contrast, the R&D
facilities of high tech companies generate higher value added jobs. It might be
possible to devise mechanisms to use the location of a production plant to stimulate
involvement of the R&D sectors of the relevant corporation. However, concentrating
on branch plants poses problems in that “[t]he stifling effects of a branch plant
economy on entrepreneurship are great and cannot easily be overcome by policies to
locate government research facilities in backward regions in the hope of generating
spin-offs.”⁴
Economic benefits remain within a region through the creation of new firms.⁵
These companies create wealth through value added jobs that are long term and
require highly skilled employees that generate additional income, spending, and
growth, as well as more jobs. The regions that display an active entrepreneurial
environment embody distinctive, and similar, characteristics. These areas typically
have a knowledge source, generally a university that can provide a supply of ideas
and employees, and on-going R&D. Venture capital is available as is skilled labor.
There are clusters (or agglomerations) of similar entrepreneurial firms and
opportunities for generating new businesses through science parks or incubators.
Good transportation and a high standard of living are also complementary to
entrepreneurial activity.

³Amy Glasmeier, “High-tech Policy, High-tech Realities: The Spatial Distribution of High-
tech Industry in America,” in Growth Policy in the Age of High Technology, The Role of
Regions and States, ed. Jurgen Schmandt and Robert Wilson. (Boston: Unwin Hyman,

1990), 92.

⁴Edward J. Malecki, “Entrepreneurs, Networks, and Economic Development: A Review of
Recent Reserch,” Advances in Entrepreneurship, Firm Emergence and Growth 3 (1997):

60.

⁵Edward J. Malecki, “Technological Innovation and Paths to Regional Economic Growth,”
in Growth Policy, 99.

A critical mass of high technology companies is necessary to sustain indigenous
economic growth. “An existing agglomeration [cluster] of firms in similar or related
sectors is a principal determinant of both birth rates and the distribution of small
technology-based firms.”⁶ Clusters are groups of interrelated companies and
institutions (including suppliers, service providers, universities, and trade
associations, etc.) located in a specific area that cooperate as well as compete.⁷ As
such, clusters provide the opportunity for on-going innovation to meet new demands
for products and processes generated by the dynamic relationships among the players.
Diversity within the types and sizes of businesses contributes to a good
entrepreneurial environment.⁸ A varied, educated, and skilled workforce also
contributes to the technological advancement in and around the cluster.
Clusters are important not primarily because of production but because of the
opportunities for knowledge spillovers.⁹ “[I]nnovative activity is more likely to
occur within close geographic proximity to the source of . . . knowledge, be it a
university research laboratory, the research and development department of a
corporation, or exposure to the knowledge embodied in a skilled worker.”¹⁰
Innovation tends to cluster around industries where knowledge plays an important
role¹¹ as evidenced by the biotechnology, computer, advanced materials, and
telecommunications sectors, among others.
Lessons From the Past
In the quest for regional growth, state economic development strategies are
based upon expansion of indigenous innovation and adaptation of technology in the
private sector. Efforts are focused on the creation of high technology firms and the
use of advanced technologies in the traditional manufacturing and service sectors.
States are attempting to fashion an entrepreneurial climate by undertaking a variety
of programs to assist existing technology-related businesses, to promote the
development of new companies, and to facilitate the application of technologies and
techniques in all industries. These endeavors vary by state and often several
approaches are supported simultaneously. What they all have in common, however,
is the potential to generate a large number of new, high value added jobs.

⁶Patricia M. Flynn, “Technology Life Cycles and State Economic Development Strategies,”
Federal Reserve Bank of Boston, New England Economic Review, May/June 1994, 24.
⁷Michael E. Porter, “Clusters and Competition: New Agendas for Companies, Governments,
and Institutions,” Harvard Business School, Division of Research Working Paper, Sept.

1997 (revised 25 March, 1998), 1.

⁸Malecki, Entrepreneurs, 68.
⁹David B. Audretsch and Maryann P. Feldman, “R&D Spillovers and the Geography of
Innovation and Production,” American Economic Review, June 1996, 631.
¹⁰Ibid., 638.
¹¹Ibid., 635, 637.

The economic distress brought about by the decline of traditional industries in
the 1970s and 1980s and the subsequent loss of thousands of jobs helped spur the
formulation of many of today’s state programs.¹² The conditions precipitated a shift
away from state policies to promote “smokestack chasing” — attracting large
manufacturing firms away from other areas — toward assistance to high technology
companies in the areas of research, development, commercialization, technology
transfer, and capital formation, among others. Many of these efforts have crystalized
into state “industrial policies” under which particular businesses or industrial sectors
are selected as the nexus of state investment endeavors.
The activist nature of these state ventures has a foundation in their
responsibilities to promote the economic viability within their jurisdictions. State
involvement initially developed based on the idea that these non-national
governments must take action in areas where the private sector was unwilling to play
a role. Thus, the government was not seen as replacing the business community in
the decisionmaking process, but as filling a void left by inaction.¹³ In filling this
void, the states saw an opportunity to attract or develop high technology firms which
contribute to the area’s economic growth through high-wage employment; low
environmental costs; high rates of expansion; long-term growth potential; clustering
of other similar firms and suppliers; export orientation; and prestige.¹⁴
Over the years, planned, coordinated efforts have been undertaken by states and
localities to facilitate technological advancement and generate economic growth.
Several have been highly successful; others have failed. In order to provide a
framework for decisions in a particular area, it might be helpful to analyze efforts by
several other regions and identify activities which might parallel the current situation
under discussion. The study of Austin, Texas; Cape Canaveral, Florida; Research
Triangle Park, North Carolina; Phoenix, Arizona; and Lowell, Massachusetts may
offer insights into what activities might be appropriate to areas of the country with
few existing or identified clusters. The focus of this section is on early efforts by
several communities because of perceived parallels with the current situation in many
regions.
Critical to local technology development is a strong technological infrastructure
and an entrepreneurial network.¹⁵ This presents opportunities for state and local
governments in pursuit of their responsibilities to promote economic development.
However, it is important to keep in mind that some argue government policies are
limited in what they can do to create entrepreneurs. Policy does not create
entrepreneurs but can encourage them to stay in a location. There is a general finding
that “...due to the complexity of the firm formulation process, it is hard for policies

¹²Matthew I. Slavin and Sy Adler, “ Legislative Constraints on Gubernatorial Capacity for
State Industrial Policy: Evidence from Oregon’s Regional Strategies Program,” Economic
Development Quarterly, August 1996, 226.
¹³Jonathan Rauch, “Stateside Strategizing,” National Journal, 27 May, 1989, 1296.
¹⁴Larry Dildine referenced in Keith Ihlanfeldt, “Ten Principles for State Tax Incentives,”
Economic Development Quarterly, November 1995, 344.
¹⁵Malecki in Growth Policy, 99.

to transform an environment adverse to entrepreneurial activities into a favourable
[sic] one.”¹⁶ By identifying what worked in other areas, decisionmakers can identify
what resources their individual state or locality has to offer the entrepreneur and what
might be done to augment this foundation.
The history of the Austin area provides an interesting study for decisionmakers
in regions with federal facilities. Several of the factors necessary for a strong
technological infrastructure were already in place; others needed to be developed.
Federal facilities played a role in generating the critical mass required for the effort
in Austin to succeed. Bergstrom Air Force base employed a large number of trained
individuals and placed government funds into the local economy. Balcones Research
Park was created in the early 1940s when the federal government provided land to
the University of Texas and funded research tied to World War II.¹⁷ The federal
government has continued to facilitate development in the area by on-going funding
for R&D.
The contribution of a strong academic institution in generating entrepreneurship
and technological development is underscored by the role of the University of Texas
(UT) in the Austin area. The University has been the source for the development of
numerous indigenous firms. Over half of the small and medium sized companies
existing in the locality during 1986 were spun-off from UT. The potential for on-
going interaction with the university was part of the decision for entrepreneurs to
remain in Austin.¹⁸ Tracor Corporation, a Fortune 500 company in the mid-1980s,
exemplified the generation of new, entrepreneurial growth through a research
university. Created by a UT graduate, over 16 companies had spun-out of the
original firm, employing almost 5,500 people in 1985. These spin-offs also spawned
additional new companies. This growth would not have occurred without the
existence of the University of Texas.¹⁹
The depth of higher education within Texas also played an important role in the
1983 decision by the Microelectronics and Computer Technology Corporation (a
joint R&D venture supported by various companies) to locate in Austin. Between
1970 and the early 1980s, Texas undertook a planned program to improve the state
university system and 800 new chairs were endowed at UT.²⁰ This was accompanied
by local level promotion of technology development that resulted in various public-
private initiatives. A study of the reasons for the location decision by the
Microelectronics and Computer Technology Corporation identified as significant the
coordinated and cooperative effort by academic, business and government (state and

¹⁶E.J. Malecki and F. Todtling, “The New Flexible Economy: Shaping Regional and Local
Institutions for Global Competition,” in Technological Change, Economic Development
and Space, ed. C.S. Bertuglia et al. (Berlin, Springer, 1995), 281.
¹⁷David V. Gibson and Raymond W. Smilor, “Creating and Sustaining the U.S.
Technopolis,” in Growth Policy, 392.
¹⁸Ibid., 388.
¹⁹Ibid., 404.
²⁰Jurgen Schmandt and Robert Wilson, eds., Promoting High-Technology Industry,
Initiatives and Policies for State Governments (Boulder, Westview Press, 1987), 242.

local) leaders to offer a wide range of incentives including support for education at
the University of Texas and Texas A&M University.²¹ Similarly, the primary reason
given for the decision by SEMATECH (a consortium of semiconductor
manufacturing firms) to locate in Austin was the “support and cooperation of state
and local public and private agencies.”²² The Chamber of Commerce provided
information to and support of high tech companies while local groups brought
together key individuals and organizations in a strategic approach to meeting their
go a l s .²³
Efforts to develop viable high tech industrial expansion in Florida coalesced
around the federal facilities in Cape Canaveral.²⁴ Large aerospace and defense
contractors were able to induce high tech growth through the recruitment of skilled
workers and the training of local employees. The state also made a commitment to
the pursuit of technological advancement to ensure that the opportunities presented
were not lost. The area’s infrastructure, particularly transportation, was strengthened.
Academic resources were considered inferior and a concerted effort was made to
improve the system at all levels including pre-college through graduate school, as
well as vocational education. Educational programs were designed to meet industry
needs and state funding was provided for engineering and science programs in the
universities and for community and vocational schools. By 1987, there were over

400 specialized academic research programs of interest to industry in the state,.

Another region which focused on improvements in the educational
establishment was Research Triangle Park, North Carolina. There are three research
universities in the area including the University of North Carolina, North Carolina
State University, and Duke University. In 1959, Research Triangle Park (RTP) was
created as a university affiliated research campus. The objectives of the Park were
the diversification of the economy, the augmentation of high value added jobs, and
additional employment opportunities for university graduates.²⁵ Although the state
provided no direct funding, it built the necessary roads for the Park²⁶ and donated the
land for the Research Triangle Institute.²⁷ The Institute offers research and
development staff and facilities to companies.

²¹Raymond W. Smilor, George Kozmetsky, and David V. Gibson, eds., Creating the
Technopolis (Cambridge, Ballinger, 1988), 174-175.
²²Gibson and Smilor in Growth Policy, 385.
²³Smilor, Kozmetsky, and Gibson, in Creating, 167.
²⁴Discussion from Schmandt and Wilson, eds., in Promoting, 45-63.
²⁵Michael I. Luger and Harvey A. Goldstein, Technology in the Garden, Research Parks and
Regional Economic Development (Chapel Hill: University of North Carolina Press, 1991),

82.

²⁶Schmandt and Wilson, eds., in Promoting, 171.
²⁷Ibid., 186.

A planned attempt was made to develop high technology industry by attracting
the R&D facilities of large, established companies.²⁸ The area developed slowly until
IBM moved in and the National Institute of Environmental Health Science (National
Institutes of Health) located in the Park partly as a result of political influence by the
U.S. Secretary of Commerce Luther Hodges, the former governor of North Carolina,
and then Governor Terry Sanford. Numerous other R&D organizations have set up
facilities in the Park since that time. Among the reasons for the decision to relocate
were the “prestige” of being associated with the Park; the ability to interact with
professionals in other organizations; and access to entry level graduates for recruiting
purposes.²⁹
The ability for an area to develop a viable and prosperous research park is
dependent on several factors, although all need not be present for success. An
existing R&D infrastructure and on-going research activity is one potential element.
The availability of local research universities, engineering schools, or medical
schools also plays a role along with good air transportation as well as technical and
businesses services. Leadership is important and should include representatives from
the political, academic, and business communities.³⁰
The focus on recruiting existing firms has resulted in slower growth for the Park
as other areas across the nation have been successful in developing additional
resources. Through the early 1990s, there were few efforts within Research Triangle
Park to generate new, start-up, high-tech companies and it was often too costly for
small firms to locate within its confines.³¹ However, there were other efforts,
outside of RTP, to facilitate new firm growth. The state concentrated on improving
the educational system to mold indigenous scientific and technical talent and
developed job training programs through an extensive number of community colleges
to attract new industries.³²
Educational opportunities also played a significant role in high tech
development around Phoenix, Arizona. One 1987 study funded by the National
Science Foundation found that 70% of microelectronics firms attributed their
decision to locate in Phoenix to the proximity of Arizona State University.³³ The
state had made a coordinated effort to strengthen and expand the undergraduate and
graduate engineering programs at the University. In 1979, a 50 member council was
formed to review engineering education. Representatives from industry, academia,
state government, and faculty developed a plan to strengthen the university’s
educational programs as well as its research capabilities. As a result, the engineering
curriculum was augmented, centers of excellence were created, and facilities for

²⁸Ibid.,63.
²⁹Luger and Goldstein, Garden, 85,87.
³⁰Ibid., 175.
³¹Ibid., 78.
³²Ibid., 173, 188.
³³Gibson and Smilor in Growth Policy, 388-389.

continuing engineering education were established, as was a research park to foster
industry-university cooperative activities.³⁴
Part of the success of Phoenix has been attributed to the mix and diversity of
industry in the area. Relocation of high technology firms to the region was one factor
in its economic growth. However, concerns were raised as to the reliance on branch
plants.³⁵ In the early 1980s, the state made a clear statement of commitment to the
expansion of local businesses and the encouragement of entrepreneurial start-up
firms as part of its strategic plan.³⁶ High tech growth in the region has been due to
the expansion of existing firms, relocation of national corporations, spin-offs, or new
start-ups.³⁷ Firms are attracted to Phoenix, or decide to remain, because of the
availability of a trained work force and on-going R&D.³⁸
Other lessons might be learned from the experience of Lowell, Massachusetts.
In the mid-1980s, Lowell had become a “high tech success” after having experienced
economic decline with the deterioration of traditional manufacturing in the area.³⁹
This success was based on attracting one major computer company, Wang
Laboratories, and the subsequent location of several other similar firms in the region.
The factors which contributed to the growing economy were familiar: entrepreneurial
and skilled workers; a local competitive advantage in high technology; public and
private financial resources; and effective local leadership. However, this did not last.
The economic decline in the United States and particularly in the Northeast, a
regional banking crisis caused by too many high risk loans to small and medium
sized companies, the effects of development life-cycles in the computer industry, and
an over-reliance on one industrial sector and on one firm, all combined to negate the
prior economic growth. This situation highlights the importance of diversifying the
industrial and employment base, and providing the skills necessary to support various
sectors. Sustained growth requires on-going investment in R&D and innovation and
the support of entrepreneurs in numerous types of businesses.
As discussed above, certain characteristics are found in entrepreneurial areas,
including a knowledge source, on-going R&D, a skilled workforce, clusters of high
tech firms, and good transportation. Commonalities associated with successful
programs designed to encourage entrepreneurship include on-going leadership, either
by state or local officials or representatives of the private sector. Strategic studies
that identify the strengths and weaknesses of the area, increase the visibility of the
effort, expand awareness of the process, and develop support are often important.

³⁴Ibid., 389-390.
³⁵Smilor, Kozmetsky, and Gibson, Creating, 201.
³⁶Peter K. Eisinger, The Rise of the Entrepreneurial State (Madison, University of
Wisconsin Press, 1988), 238.
³⁷Smilor, Kozmetsky, and Gibson, Creating, 190.
³⁸Ibid., 192, 194.
³⁹Discussion from Ross J. Gittell and Patricia M. Flynn, “The Lowell High-Tech Success
Story: What Went Wrong?” Federal Reserve Bank of Boston New England Economic
Review, March/April 1995, 57-68.

The critical role of education can not be ignored nor can the development of human
resources through training.⁴⁰ Also present are research and development activities
directed toward new products and processes. Promotion of entrepreneurship, often
through incubator programs, aims at developing the critical mass necessary for
innovative activity. Public-private cooperation is also necessary for developing a
commitment by all involved parties, particularly when such efforts tend to require
patience.⁴¹
Ideas for Consideration in Employing the High Tech
Cluster Concept
It should be recognized that “the development of regional research and
development and scientific complexes takes long periods of time, and economic
effects such as the generation of new local industries are highly unpredictable.”⁴² It
might be helpful to states interested in using high tech clusters to stimulate economic
growth to identify local resources including universities, technical and vocational
colleges, industrial facilities, small businesses, federal institutions, and federal
laboratories. Also of importance is information on research and development
expenditures in the state. What is the percent of R&D as a portion of gross domestic
product in the state? What is the role of federal funding for R&D in the area, what
does the state finance in this arena, and how much does industry spend? In addition,
questions need to be answered as to where the educational system stands, particularly
in the areas of science, technology, and engineering. What is the level of state
support for education, higher education, and academic R&D? This material, as well
as related economic, educational, scientific, and technical data particular to each state
often can be obtained from the National Science Foundation or from state agencies.
A detailed guide for any community attempting to plan for an entrepreneurial
environment is published by the Economic Development Administration of the
Department of Commerce. Titled Cluster-Based Economic Development: A Key to
Regional Competitiveness, this report furnishes a discussion of the specific steps that
may be involved in an organized effort at the state and local level. In addition, if a
pro-active approach is to be taken, certain ideas may need to be considered. Several
are identified below.
Cluster Development
!What industry clusters exist in the region, if any?
!What might be done to support/expand existing clusters?
!What clusters might be developed given resources in the area?
!What might be necessary to develop new clusters?
!Is there sufficient R&D/industry support for clusters?

⁴⁰Schmandt and Wilson, Promoting, 260-261.
⁴¹Ibid., 261.
⁴²Malecki in Growth Policy, 99.

!What are the characteristics of the state that might support clusters?
The Workforce
!What is the make-up of the existing workforce in the state?
!What are the current workforce needs of the state?
!What are the future needs of the state’s workforce?
!How should the workforce be trained/educated?
!Who should train/educate the workforce?
!Who will pay for workforce training?
Education
!What are the educational resources of area universities?
!What is the status of academic programing tied to high tech development?
!What new or expanded programs are needed to meet the demands of the
cluster(s)?
!What type of vocational education is available?
!What vocational education programs are needed?
!Who will pay for expanded university and vocational education activities?
Research and Development
!What are the R&D resources of any federal laboratories in the area?
!How can the resources of such federal laboratories be utilized?
!What existing federal R&D programs might be relevant?
!How can on-going federal programs be incorporated into state efforts?
!What is the role of any existing science parks?
!What are the R&D resources of the universities?
!What is the proper level of R&D in the universities?
!Who should pay for the proper level of R&D in universities?
!How best can knowledge spill-overs be captured in the state?
Business Environment
!What are the benefits/costs of small business incubators in cluster
development?
!How can venture capital be created or attracted to the state?
!How can a diversified industrial base be achieved?
!How can existing branch plants attract R&D facilities?
!How can indigenous entrepreneurs be encouraged?
!What are the high tech clusters?
!Is transportation sufficient to support high tech entrepreneurship?
Developing high tech clusters is one approach to creating increased economic
growth through technological development and the generation of new firms. While
this primarily may be a state function, much of what can be done depends on building
upon federal programs, utilizing federal facilities, and leveraging federal funding for
R&D and education. In addressing the issues, it should be noted that the experiences

of other regions indicate that the development of public-private partnerships are
critical to generating and taking advantage of the opportunities for economic growth.
Representation from federal, state, and local governments as well as the business and
academic communities can insure that all players are committed to the process and
that unnecessary duplication of effort does not occur. It has been shown that each
sector needs to have a stake in the planning and implementation of any coordinated
effort for it to be a success.