International Studies in Entrepreneurship Volume 42 Series Editors Zoltan J. Acs, George Mason University, Fairfax, VA, USA David B. Audretsch, Indiana University, Bloomington, IN, USA More information about this series at http://www.springer.com/series/6149 Charles W. Wessner • Thomas R. Howell Regional Renaissance How New York’s Capital Region Became a Nanotechnology Powerhouse Charles W. Wessner Thomas R. Howell Georgetown University Dentons, LLP Washington, DC, USA Washington, DC, USA ISSN 1572-1922 ISSN 2197-5884 (electronic) International Studies in Entrepreneurship ISBN 978-3-030-21193-6 ISBN 978-3-030-21194-3 (eBook) https://doi.org/10.1007/978-3-030-21194-3 © Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Endorsements How can an ailing, declining region be transformed into a vibrant economic suc- cess? The answer has eluded thought leaders in policy and business for decades. With the publication of this path-breaking new book, Wessner and Howell provide a resolute and compelling answer. Based on their penetrating analysis of the resur- gence of the New York state Capital Region, the authors provide a startling clear roadmap of how policy can trigger a breathtaking economic turnaround. Thanks to this book, there are no more reasons or excuses why any particular region cannot dramatically enhance its economic performance. David B. Audretsch, Distinguished Professor and Ameritech Chair of Economic Development, Indiana University This is a thoroughly researched and well-rendered account of one of the most dra- matic regional economic turnarounds in modern US history. New York’s large and sustained public investments in universities and research infrastructure in partner- ship with industry led to the creation of thousands of new, well-paying high-tech manufacturing jobs its Capital Region. Significantly, this effort enjoyed the support of a long line of Republican and Democratic leaders, from governors to the local level, as well as business and academic leaders who worked together to achieve a shared vision—the creation of New York’s ‘Tech Valley.’ This study suggests best practices that can guide manufacturing and technology development efforts by fed- eral and state policymakers across the nation. Philip Singerman, the Associate Director for Innovation and Industry Services at the NIST (National Institute of Standards and Technology) in the Department of Commerce v Executive Summary This book describes how the State of New York has revitalized the economy of its Capital Region, creating a center of nanotechnology research and manufacturing that has come to be known as “Tech Valley,” a corridor running along the Middle Hudson Valley from East Fishkill through Albany, Schenectady, and Troy to Saratoga Springs. This effort, which spanned several governorships, required sub- stantial investment on the part of the state and included the creation of new institu- tions, which in turn attracted advanced manufacturing facilities. The initiative has been successful beyond expectations, creating nearly 10,000 manufacturing jobs in the region and tens of thousands of indirect and induced jobs, helping to reverse the area’s long economic decline. This positive outcome and the policies that enabled it are especially relevant in an era in which Americans are seeking ways to revive US onshore manufacturing and to create viable long-term, well-paid career pathways for young people. In the mid-twentieth and late twentieth century, Upstate New York was in a steep economic decline, reflecting a seemingly intractable combination of demographic, geographic, and structural disadvantages. Beginning with Governor Nelson Rockefeller and continuing down through Governor Andrew Cuomo, successive Republican and Democratic governors have worked to reverse this trend, emphasiz- ing the practical application of scientific knowledge to promote innovation and restore job growth. Importantly, the governors enjoyed sustained bipartisan support from the state’s principal legislative leaders in this effort. Despite its rough-and-­ tumble politics, New York leaders have been able to maintain the policy continuity necessary for the successful pursuit of a long-term strategic goal. Building on the Universities The foundation of New York’s developmental effort has been its educational sys- tem, which every governor from Nelson Rockefeller onward has worked to improve and expand. Governor Rockefeller drove the buildout of the State University of vii viii Executive Summary New York (SUNY), transforming it from a loose aggregation of struggling under- graduate institutions into an educational and research powerhouse. In the early 1980s, Governor Hugh Carey and state legislative leaders supported the establish- ment of a Center for Industrial Innovation at Rensselaer Polytechnic Institute (RPI) in Troy, New York, with a then-unprecedented outlay of $30 million in state funds. Governor Mario Cuomo established Centers for Advanced Technology (CATs) at New York research universities, strengthening graduate-level research, upgrading research equipment and infrastructure, and fostering research collaborations between universities and local companies. Governor George Pataki (R) took New York’s technology-driven economic development effort to a new level, supported by a bipartisan duo of legislative lead- ers, Senate Majority Leader Joseph L. Bruno (R) and House Speaker Sheldon Silver (D). At the beginning of his tenure in 1995, Governor Pataki made an all-out, suc- cessful effort to dissuade IBM from relocating its headquarters outside the state, with the eventual result that IBM invested in a new, state-of-the-art semiconductor manufacturing facility in East Fishkill. He secured legislation creating the New York State Office of Science, Technology, and Academic Research (NYSTAR) with a then-unprecedented first-year budget of $156 million and created Centers of Excellence at state universities, thematic applied research teams focusing on tech- nological issues of particular interest to industry. Perhaps most importantly, together with his allies in the legislature, he oversaw successive major investments in nano- technology research and research infrastructure at SUNY Albany, enabling that institution to emerge as the foremost academic center of applied nanotechnology research in the world. Betting on Nanotechnology Nanotechnology is the manipulation of matter with at least one dimension sized at 1–100 nm, a nanometer being one billionth of a meter, the equivalent of eight hydro- gen atoms lined up side by side. Nanotechnology is applicable across a wide range of human activity and is leading to revolutionary new technologies in electronics, materials science, medicine, biotechnology, and renewable energy. New York State has been a leader in nanotechnology since its inception, with IBM and New York universities pioneering in the investigation of nanotech themes. At the end of the 1990s, the state began investing in nanotechnology for purposes of economic devel- opment in the Capital Region. Because the semiconductor industry was the first major industry to cross the nanotechnology threshold in manufacturing, the state’s initial developmental effort focused on that industry. Executive Summary ix IBM’s Contribution IBM, headquartered in Armonk, New York, played a key role in the evolution of Tech Valley. Although the US semiconductor industry is most commonly associated with the West Coast and the southwestern United States, New York State, where IBM is headquartered, has been the site of semiconductor research and some manu- facturing since the 1960s, an industrial legacy that enabled future success. IBM has conducted semiconductor-related R&D virtually from the inception of the industry, and it operated semiconductor manufacturing facilities producing devices for its own internal consumption at a site at East Fishkill, New York, which became opera- tional in 1963. In the 1980s, IBM worked through US semiconductor associations and consortia to steer industry-supported research projects to New York universi- ties, collaborated with university-industry research projects, and acted as an advo- cate for New