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June 18, 2007

« Diversity and Social Capital | Main | Children of the Market »

Check out this Wall Street Journal story on Pennsylvania's efforts to stem its brain drain:

The common refrain in Pennsylvania is that the state is a "net importer" of college students, but a "net exporter" of college graduates. ... But many students take their diplomas and run, leaving Pennsylvania with the third-oldest population in the nation as measured by the number of people 65 and older. The result: The state is struggling to attract the type of cutting-edge companies that would make it a major participant in the "knowledge-based" economy -- one driven by highly skilled workers and industries like technology, science and health care. The state is on a mission to change that.

Now read this from the Post-Gazette:

A local startup that last year got off the ground with help from a venture capital firm that received money from the state is moving to Boston.Logical Therapeutics Inc. officials said they are making the move to tap into a deeper pool of talent that they hope will help their firm get their promising painkiller out of the lab and into the commercial marketplace....Logical's co-founders and sole employees, former University of Pittsburgh official Carolyn E. Green and Dr. Mitchell Fink, Pitt's chief of critical care medicine, in recent months visited roughly 30 investment firms around the country that, "almost without exception, asked if we'd be willing to relocate,'' said Ms. Green, the company's chief operating officer.

The Wall Street Journal article goes on and on about how the key is to create tech jobs. But then the jobs also move away. So much for those chickens and eggs. Hmmmmm....
Your thoughts?


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This evidence seems to support the role of clusters in the economic development of cities.

It also suggests that it is difficult for governments to try to invent clusters through targeted tax breaks or other programs.

In the end, investors want to work with companies located in the right city for their niche or industry -- that is, the city with the right talent. Other things like taxes and corporate real estate costs, for example, don't really matter that much in the knowledge economy.

So, if this is correct, then the question is how does an economically struggling region obtain useful clusters...

Craig Blitz

I don't see this as overwhelming evidence that Pennsylvania's efforts are not working. The Post-Gazzette article points out that "What's missing is the expertise in designing and carrying out early tests for new drugs, managing the federal regulatory process and manufacturing material used in clinical trials." Logical moved for a very specific talent. Boston has a deep talent pool in many creative industries and Pennsylvania should not be dismayed by this one move.

One thing does dismay me as a career New Jerseyan (I live in New York City, but work in the suburbs): where was New Jersey in this equation? New Jersey is a pharmaceutical hub and, as a neighbor to Pennsylvania, is a natural partner for Pennsylvania in creating a regional cluster.

Over the course of my career, I have watched New Jersey fail to create an entrepeneurial culture following the breakup of AT&T. I wish I saw a compelling vision for enlivening its local economy instead of just being content with back-office work for New York companies.


Craig- Your questions get to the root of the answer. And they deal with two of my long term "homes" - New Jersey where I grew up and went to college and Pennsylvania. Rise tries to provide the outlines of that answer.

Pennsylvania and New Jersey had a level of technological sophistication which for the time was literally unmatched. Pittsburgh was not just a steel town, but excelled in electronics (Westinghouse), materials (Alcoa) and many other fields. New Jersey if anything was more advanced - Bell Labs, RCA, pharma, the list goes on. So one has to ask why were these leads lost? Why did Shockley take his group from Bell Labs and head west to Silicon Valley? Why couldn't these places respond to and incubate a creative and entrepreneurial culture. The reason is that they were both overwhelmed by a stodgy, fordist, organization man culture, Pittsburgh, btw, far more so than New Jersey.

The biotech startup is the same story as Lycos which goes much deeper than a specific talent pool. Places that attract talent, real top talent, attract that talent across the board. Our research shows that pretty clearly. Talent needs to be around talent. Young talent needs an exciting and vibrant mating market as well as a great labor market. So to succeed a place needs to be above all else not just a technological leader and not just a great university town, it needs to be open to people, all sorts of people and their needs, wants and desires, across the board.

Michael Wells

The point about general talent pools is key. When Oregon was trying to attract Genentech people were very worried about the lack of biotech workers. Genentech said that's not a problem, you have lots of electronic chip workers whose skill sets are similar and can be easily retrained. Then the state and community colleges set up the retraining program.


Yes, yes, yes. Smart people attract smart people. Talent attracts talent. Some places can develop specialized niches but this is very unlikely. Our analysis of software and biotech locations show they are in general talent pools, with high percentages of human capital (highly educated people) and creative class occupations.

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