Research Triangle ParkBarbara Bao

Urban Economics

What are Research Parks? Alternative names: science or technology parks Organizational entities that sell or lease spatially

contiguous land and/or buildings to businesses or other organizations whose principal activities are research or development of new products or processes. • Excludes high-tech centers or corridors such as Route 128

(MA) and Silicon Valley (CA) – concentrated businesses outside of formal organizations

• Excludes industrial parks where manufacturing is the primary focus

Notable research parks: University of Utah Research Park, Stanford Research Park

Research Triangle Park Largest and most successful

research park in the world Occupies 7,000 acres R&D branch plants of major,

technology-oriented corporations• 130 R&D facilities • More than 39,000 employees• Largest IBM operation in the

world – 11,000 employees Represents one of the most

dramatic cases of regional economic restructuring

Pre-RTP North Carolina NC had the second lowest per capita

income of any state in the 1950s Concentrated in three low wage,

declining industries: tobacco, textiles, and furniture

Combination of high-quality research universities and lack of job opportunities led to a huge brain drain

Formation of RTP 1955 – Governor Luther H.

Hodges formed a committee of state business leaders and university officials to find a way to restructure NC’s economy

Attract industrial research laboratories, in turn attract production facilities wanting to locate in the general proximity

Karl Robbins, a retired industrialist, proposed building a private research park• Failed to attract investors

Formation of RTP 1956 - a group of private citizens and

civic-minded corporations bought out the stock of the research park – forming the Research Triangle Foundation

First occupant – Research Triangle Institute, a nonprofit contract research organization

Slow to attract other organizations until 1965 – IBM, NIEHS (Environmental Health Sciences)

RTP Growth

Factors of RTP’s Success Howard W. Odum, sociologist at UNC

first to hypothesize that scientific research activity can stimulate the economic development of a region

Four factors• Park’s vintage• Geographic location• Size of the metropolitan area • Presence and type of universities

Impact on Regional Economic Development

47% of R&D organizations would probably not have located in the Raleigh-Durham area if RTP didn’t exist• Loss of 52,000 jobs

Responsible for a significant portion of relative growth the region’s per capital personal income• 93% to 107% from 1960 to

1987 compared to the US average

Impact on Regional Economic Development

Nonprofessional workforce comes from local sources – only 16.7% from outside• However 48.3% of the professional workforce come

from outside the region representing an underdevelopment of networks between the park and other businesses in the area

Substantial changes in the political environment• Improved public infrastructure • Changed socioeconomic composition

Highest concentration of PhDs and MDs, but also of residents who haven’t graduated from high school

University-Research Park Connection

Universities contribute to the creation of “localization economies” for park businesses• Presence of specialized

resources• Supply of graduates• Faculty expertise for consulting • Prestige of association

Success: positive difference in employment growth rates • Counties with medical and

engineering institutions grew faster

Impact of Universities on Research Park Success

1. Presence of university stimulates regional demand for goods and services

2. Human capital investment (passing on knowledge and training to students) enhances labor and general business productivity

3. Technology transfer results in increased productivity

4. Direct investment and technical assistance to startups

5. Directly attracting businesses seeking trained labor and expertise

Impact of Research Parks on Universities

1. Help attract and retain entrepreneurial faculty 2. Help attract good graduate students 3. Increase collaborative research with private

industry 4. Facilitate technology transfer and

commercialization of faculty inventions 5. Enhance reputation and prestige of the

university 6. Contribute to the economic development of

the region 7. Generate revenue through land sales and

leases

RTP Since 1987 Growth has slowed

• Falloff in rate of new corporate R&D facilities nationally

• Increased competition from other regions• RTF’s delay in infrastructure investment

Expansion has slowed• Targeted large corporations

Top 12 largest companies employ 30,000 people• Economically infeasible for startups

Reason why it hasn’t been as successful as Silicon Valley• Zoning issues, stringent building and site restrictions