Monday, February 20, 2006

Innovative Metropolitan Areas in the South: How Competitive are South Carolina’s Cities?

Below is are excerpts from the report, Innovative Metropolitan Areas in the South: How Competitive are South Carolina’s Cities?
Eight South Carolina metropolitan areas...(Aiken-Augusta, Charlotte-Gastonia-Rock Hill, Charleston, Columbia, Florence, Greenville-Spartanburg-Anderson, Myrtle Beach, Sumter)... were placed in the “Medium” grouping... among the South’s larger metropolitan areas (indicating a diversity of economic activity) and had large public or private universities. Thus, these Southern metro areas have good foundations upon which to generate and support innovative activity. However, the Median group, on average, markedly lagged the Outliers, High, and College Town group in terms of innovative activity (as reflected in patents and employment in technical professions) and a supportive environment for entrepreneurs (as measured by availability of venture capital and business services).

The Florence, Sumter, and Myrtle Beach metropolitan areas were placed in the “Below Average” grouping... consisted primarily of relatively small metro areas with little research activity, few college graduates in the work force, and an unfavorable environment for entrepreneurs based on the availability of venture capital, business services, and managerial and business professions. On average, cities in the Below Average grouping need significant improvements in virtually all indicators of innovation to be considered emerging centers of innovation...

None of South Carolina’s eight metropolitan areas were classified as a Regional Innovation System by the classification methodology used in this study... The absence of a cluster of innovative activity in South Carolina should not be interpreted too negatively. Regional innovation systems were relatively uncommon and only 21 of the 117 Southern MSAs were categorized as RIS. Moreover, the five South Carolina MSAs in the “Medium” cluster grouping could be considered “emerging” clusters of innovation that could become RIS with increases in innovation and entrepreneurial activity.

The groupings provided by the cluster analysis hide some of the relative strengths and weaknesses of South Carolina’s metro areas with respect to the principal attributes associated with regional innovation systems (innovative activity, well-educated labor force, supportive entrepreneurial environment, and high local quality of life). For example, among Southern metropolitan areas, the Greenville-Spartanburg-Anderson MSA ranks high in innovative activity but medium in human capital and entrepreneurial support services (figure 1). The Columbia and Charleston MSAs, on the other hand, have less innovative activity (as reflected by patents) than G-S-A, but these metro areas rank higher in terms of human capital and entrepreneurial support. The use of innovative activity as a strategy for local economic development requires a local labor market and business services network that facilitate the growth of businesses that evolve from the innovations. Efforts to expand local innovative activity should be accompanied by programs to insure a quality labor force and adequate support services. A focus on innovation alone may result in new patents and products that must move elsewhere to develop into successful businesses.

Finally, many metropolitan areas lack the research university upon which to base an innovation focused economic development strategy. For these areas, Rosenfeld (2002) recommends creating “smart systems” based on an industry clustering approach. Suggested strategies for stimulating innovation and entrepreneurship in these developing clusters include providing investment capital for innovations and business startups, establishing incubators, facilitating entrepreneurial support and networks, and developing cluster–specific technology centers (Rosenfeld, p. 27, 28). Thus South Carolina likely will need to pursue two strategies of development: one focused on promoting emerging RIS centered on a major research university and the other addressing the development of an innovative and entrepreneurial environment around traditional industry clusters (see, for example, Shapira, 2004). A state development strategy targeted only at innovative systems will leave much of the state unserved.

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