Brookings states that San Francisco (the Silicon Valley) is the leader so far, and that 8 other cities--Seattle, New York, Boston, Los Angeles, Washington, D.C., San Diego, Austin, Texas, and Raleigh, North Carolina--have the conditions/preconditions to be leading cities in the development of the industry It lists SF as the leader, and S as other key centers.
The article mentions 87 other places that have the potential, including Detroit, because of the auto industry, and Charlotte, NC and its place in finance and finance related AI.
Talton is skeptical of cities like Detroit and Charlotte becoming leaders in AI, even though they are industry leaders in their respective fields, and I guess I am too. He writes:
But few of these have the world-class talent, top universities, tech transfer, entrepreneurship, financing and innovation clusters that would allow them to leap into AI’s headwaters. Expanding federal support for AI research might give some a boost. But it’s a long curve.
No wonder the report finds AI activity highly concentrated “in a short list of ‘superstar’ metro areas and ‘early adopter’ hubs, often arrayed along the coasts.” Another 261 metro areas aren’t in the game at all.
As Paul Krugman wrote recently ("What Vaccine Supply Tells Us About International Trade
," New York Times
), referencing a supply chain study of the development of the vaccines, and how even big countries donn't have the scale to do all the pieces, that the supply chain has to be global.
AI is bigger than cars or finance and likely that AI clusters will go beyond industry-specific sectors. Even if back in the day, partly because of the auto industry, Detroit had its own big iron computer company, Burroughs (and before that, Parke-Davis, a drug company, and in Kalamazoo a major drug company, Upjohn). Eventually, those companies were taken over by bigger companies, located in places that were more central to those respective industries.
Over time, the scale in secondary cities isn't big enough for the company to thrive, they need to operate on a national or international scale. E.g., were I in charge of Barnes & Noble, I would have figured the company was large enough to become the industry leader with an e-reader, because it was a bookstore chain with a national footprint and many hundreds of stores.
That's what Roger Smith said about GM when he bought Electronic Data Systems and Hughes Aircraft in the 1980s. While they ended up making a lot of money off the acquisitions, at the end, the company wasn't changed. It remained an automobile company, not a software company ("With Hughes Sale, G.M. Buries a Discarded Strategy
," New York Times
It's unlikely GM will be able to change its DNA from manufacturing to software.
Some universities are good at startups
. Talton suggests that San Diego has a shot, because of the success of UCSD at spinning off potentially successful businesses. This is mentioned in the Pfizer article, that some universities are really good at sparking startups but most aren't, but UCSD is one of the outliers
Cities need to focus their economic development strategies. Talton writes:
Too many cities throw incentives at low-end tech facilities such as data centers, which produce few jobs — and not good ones. They refuse to do the heavy lifting to expand funding for higher education and invest in the quality amenities that draw talent.
I have mentioned this a lot in terms of DC:
Cities need to work to strengthen the sector, especially in information technology, engineering, and biotechnology.
By contrast, DC is far more comfortable with office buildings, retail, and housing development than it is with substantive economic development, especially stoking higher education as a vehicle for economic development. This comes out in interviews with DC officials recounted in this Wall Street Journal
article, " The Pandemic Hit Cities Hard, but Especially Washington, D.C.
It's fortunate though that the federal government, especially the military, is such a large customer that it is big enough to have seeded the IT sector, which is why Amazon opened a second HQ in Arlington County, Virginia.
Labels: agglomeration economies, change-innovation-transformation, economic development, innovation districts/technology sector, knowledge management, universities and economic development, urban economics