Wednesday, March 7, 2012

High Tech Development

The race for high tech industry as an economic development plan has a political component. High tech industry is (ironically) most sought in towns that lack anything resembling it. Thus, high tech firms are the beneficiary of the largest public largess in places where it is least suited. High tech industry felt to be desirable, but because no similar local firm exists to contest the distribution of that largess to a competitor. Likewise, existing manufacturing do not contest the public subsidy, because the subsidy is not directed toward an industry that would compete the the existing or historic industries.

Ironically, the same mechanism which provides for this political acceptability ensures the economic failure of 'high tech' industry in that locality. Lacking competitors, any high tech firm that does move in cannot draw on the an existing 'ecosystem' of suppliers, nor hire from an existing pool of skilled workers, and so must import both. This high degree of imports ensures that the impact of 'high tech' on the local economy will be minimal, and that local high tech firms will be at a competitive disadvantage to high tech firms located in more suitable contexts.

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