High-Technology Industry

The shift from Fordist to post-Fordist modes of production has been accompanied in the contemporary world by emphasis on high-technology industries. High-technology manufacturing includes the production of computers, semiconductors, electronic circuitry, telecommunications devices, medical equipment, and similar items. Generally, the factors that underlie the location of high-technology industries differ somewhat from those described in classical industrial location theory earlier in the chapter. The markets for high-technology products are global. High-technology firms often sell their products worldwide, and plant location is seldom influenced greatly by market or raw-material location.

The establishment and maintenance of many high- technology enterprises is dependent on the investment of capital for research and development. In many countries, governments invest large sums of money into technological development in expectation that this investment will eventually be translated into profitable industrial enterprises. Funding is provided to support basic scientific research and the development of specific industrial products.

The allocation of government funds for research and development varies considerably from one country to another. In the United States, the lion's share of government funds for research and development has traditionally gone to defense-related activities. The assumption has been that military spending would eventually generate products of substantial commercial value. The proportion of research-and-development funds earmarked for military purposes may decline in the 1990s, however, as American government officials consider national economic priorities in light of the collapse of Soviet Communism and the end of the cold war. Most of the smaller European countries spend less than 10 percent of their research-and-development revenues on defense related activities.

Within countries, research-and-development funding tends to be highly clustered. Large shares of government funding are targeted to small numbers of recipients. As a result, the distribution of high-technology companies also tends to be clustered. Many of these firms have sprung up in close proximity to major research universities. Research universities provide scientists, engineers, and other highly skilled workers, and many of the sophisticated products manufactured in these firms are developed as joint ventures of the company and the nearby university.

The Silicon Valley complex in northern California is perhaps the nation's best-known high-tech region. Silicon Valley is located near the University of California at Berkeley and Stanford University. Many of the skilled professionals of the companies in the area have been trained at these universities. The Route 128 complex outside Boston is located near two other major universities—Harvard and the Massachusetts Institute of Technology (Figure 8-18). Similar high-tech landscapes are found near Austin, Denver, Seattle, Ann Arbor, and other university sites.

Figure 8-18 The High-Technology Landscape. The Massachusetts Institute of Technology provides the skilled workforce for the high-technology companies of the Route 128 complex outside of Boston

Some smaller university communities have developed as centers for particular segments of the high-technology sector oriented to their particular schools. Several firms specializing in educational technology are found in Iowa City, near the University of Iowa. Iowa City has been chosen as the location for these firms because of the presence of American College Testing (ACT). ACT is located in Iowa City because the initial research underlying the development of the tests was undertaken by professors in the school of education at the University of Iowa several decades ago.

Today, firms specializing in the production of educational testing materials are the largest employers in Iowa City, with the exception of the university itself. Likewise, Norman, Oklahoma, has become a leading center for weather-related technology. A strong meteorology department at the University of Oklahoma and the presence of the National Severe Storms Laboratory have encouraged firms specializing in the production of high-tech meteorological equipment to locate there.

Competition for high-technology industry among potential sites is often intensive. In the United States, all fifty states and thousands of cities, counties, and other local government units are active in efforts to promote the location of high-technology industry, and many regard high-technology industry as a means of promoting quick economic development.