The New Technopolis
Over the past two decades, Silicon Valley has been the exemplar of information-age success. Yet, as stories of the valley’s social and economic inequalities have tarnished its image, a new kind of technopolis is emerging that may provide a more sustainable model for ascendant high-tech regions.
This new high-tech development model differs substantially from the one that evolved in Santa Clara Valley and its environs. The new technopolises--best exemplified by the Dallas-Fort Worth metroplex, greater Washington, D.C., and Southern California--are more multipolar, more dispersed and more diverse than Silicon Valley. All three regions rank among the top five in high-tech employment and production, yet have achieved these benchmarks in ways vastly different from Silicon Valley.
One difference is geographic. Extreme density and compactness characterize Silicon Valley and, to a lesser extent, its traditional rival, the Route 128 area around Boston. In the valley, venture capitalists, investment bankers, industrialists, innovators and entrepreneurs have flourished in an atmosphere of close collaboration. This is a product, in part, of the valley’s recent history, which turned on the dynamics of the semiconductor industry. The region’s early dominance, beginning in the late 1960s, in the production of this critical piece of circuitry catapulted it into the forefront of chip-dependent applications, from early personal computers and disk drives to PC software and, most recently, networking technology.
Equally important, the Bay Area technopolis developed with one city, San Francisco, at its center. The region’s elite financial and media institutions are similarly concentrated in two places, San Francisco and Palo Alto. The role Stanford University played was critical.
In contrast, the new technopolises are more geographically dispersed, with their multiple technopoles often separated by as many as 75 miles. They demonstrate how a sprawling network of diverse communities can operate successfully in the Internet era. In the new technopolis, daily, even weekly, personal contacts are generally unimportant; occasional in-person meetings, often in a mutually convenient location halfway between the parties, are enough to cement business ties.
The two most successful examples of this development model are greater Washington and Dallas. High-tech jobs in Washington, for example, make up 7.7% of regional employment, up from 2.5% in the 1970s. According to a recent survey by Milken Institute economist Ross A. DeVol, Washington ranks among the top five or six high-tech regions in the country.
Yet, its growth is not concentrated in one location. The greater Washington technopolis encompasses a vast array of subregions, extending from the Potomac across from the Capitol to suburbs and smaller hamlets deep in the Virginia countryside. At its core is a rapidly expanding telecommunications complex, led by America Online, that supplies, according to some estimates, nearly half the nation’s Internet infrastructure and employs more than 330,000 people.
Another technopole is a cluster of biotechnology firms near the National Institutes for Health in suburban Maryland. More recently, there has been a ramp-up of Internet companies in Baltimore’s “digital harbor,” as well as some biotechnology growth closely associated with Johns Hopkins University.
Larger and less appreciated is the technopolis located in greater Dallas-Fort Worth, which has been growing faster than Silicon Valley and is roughly three times the size of the more-ballyhooed Austin, Texas, region. Dallas-Fort Worth boasts no single “Silicon Valley.” Its technopoles are located in the center city (software, Internet) as well as on the prairie north (telecommunications). The Dallas airport and the privately developed Fort Worth air terminal are ideal, low-cost commercial-air transport and warehousing hubs, an increasingly critical factor for Internet-commerce firms.
Although its recent growth has not been as heady as that of greater Washington and Dallas, Southern California is the largest of these technopolises, surpassing Silicon Valley if Orange County is included. As its history would predict, the region’s technopolis didn’t develop out of a single “technological heartland.” Instead, an archipelago of smaller high-tech hubs mushroomed over time. These include the hardware-oriented “nerdistans,” hotbeds of telecommunications and biomedical technology, led by the the Irvine area, home to roughly 2,000 high-tech firms, including communication-chip makers Conexant Systems and Broadcom, and whose supply of office space almost equals that of San Francisco. Smaller nerdistans are located in Pasadena, the South Bay, the Burbank-Glendale area and the Thousand Oaks-101 corridor, headquarters for NetZero and Amgen.
The Southern California technopolis is distinguished by its cultural-industrial complex, which evolved out of the entertainment industry and now includes new media, digital imaging and the Internet. The epicenter of this technopole is Santa Monica/West Los Angeles, with satellites in the San Fernando Valley, notably Burbank and Glendale.
Finally, the region’s technopolis boasts the vast transportation and warehousing resources of the Inland Empire. These unglamorous and unappreciated assets, according to John D. Kasarda of the Kenan Institute at the University of North Carolina, are enabling the region to emerge as the leading Internet trade region in the country.
Many academics and economic and political policymakers disparage multipolar development as wasteful of space and resources. Yet, the evidence suggests that the Silicon Valley model has run its course and may be counterproductive. For one thing, although the valley’s extreme concentration of technology-related businesses, about three times that of its nearest rival, has produced a hothouse of economic growth and wealth creation, it has also produced an enormous bumper crop of political, economic and social problems.
Consider the region’s cost of living. The premium awarded a San Francisco or Silicon Valley address has driven housing and commercial real-estate prices to among the highest in the nation. A one-bedroom cottage in Palo Alto goes for as much as $750,000, a price tag that excludes all but a small elite from the local housing market. One-third of the valley’s more than 30,000 homeless have a full-time job.
Silicon Valley’s overconcentration has also afflicted its transportation system. For decades, Bay Area residents skewered Southern California, in particular, for its freeway horrors. But today, commutes in and out of Santa Clara Valley easily match those in the Southland; the percentage of regional freeways suffering from the highest levels of congestion rose from 11% in 1995 to 31% three years later.
In a sense, the valley has become a victim of its own success and mythology. The new technopolises can always recycle older industrial locations, as is occurring in the San Fernando Valley, the Baltimore harbor and central Dallas. But Silicon Valley is increasingly hemmed in by geography--the San Francisco Bay--and a powerful, well-entrenched anti-growth movement. The combination of these factors has created an extremely difficult and expensive development environment.
These social problems are slowing the valley’s growth and tainting its attractiveness in the eyes of younger people and companies. A recent poll of graduating Iowa college students--the Midwest has long been a critical talent pool for the valley--found only 5% of them rating San Jose as a desirable place to live, well behind Minneapolis, Denver, Portland, Seattle and even Los Angeles.
But perhaps the greatest challenges facing Silicon Valley are internal. The concentration of professionals in the valley and San Francisco has fostered conditions hostile to less-well-heeled parts of the middle class, not to mention working class. Besides sky-high real-estate prices, the region’s overdependence on information industries has created a bifurcated economy of highly successful information elites and “worker bees” who provide services, often at very low wages. As manufacturing has shifted to subcontractors, “silicon sweat shops” have become a critical component of the valley economy.
Since the late 1980s, wages of middle- and lower-income valley residents have stagnated; only the top 20% have registered significant gains. This has produced a widening gap between the original valley elite--the venture capitalists, investment bankers, professional managers and sales people--and the general work force. The ratio of top corporate salaries to worker wages skyrocketed from 42:1 in 1991 to 220:1 in 1996. Top executives’ salaries rose 391%; those of rank-and-file workers dropped by 6%. Largely because of the valley’s increasingly homogeneous economy, there is a dearth of upwardly mobile jobs in manufacturing or services. In greater Washington, government often plays this role for working-class people, while warehousing and manufacturing still flourish in greater Dallas and throughout Southern California.
In the long run, Silicon Valley’s blend of industrial homogeneity may prove economically counterproductive. As technology spreads to such activities as retail, warehousing, industrial machinery and apparel and textiles, new kinds of companies that apply innovative methods to traditional production are likely to spring up where older firms can afford to locate. This is true of entertainment firms, which find Southern California not only cheaper, but a far better place to marry content with technology.
In the emerging digital era, regions will need to learn the advantages of what Robert Fishman calls “regional pluralism”: urban neighborhoods, elite high-tech nerdistans, affordable working-class suburbs and an accessible outback of rural communities. This kind of diversification, not the intense monoculture of Silicon Valley, is likely to become the model for future high-tech development as the digital revolution reshapes the U.S. landscape. *
