Tuesday, November 08, 2011

Keep Albany Weird

Albany is the new Austin. That's remarkable insofar as we are talking about a tech boom in the Rust Belt. I spent the bulk of my childhood in southern Saratoga County. I'm familiar with the blight and economic struggles of Schenectady and Troy, to name a few of the depressed cities in the New York's Capital District. Reading about the rise of Albany's globally renown nanotech cluster is a strong challenge to my memories of the region:

“There aren't going to be, out of the blue, five factories going up in the next five years,” said an Intel spokesman, Chuck Malloy.

To glimpse Albany's future, look south—to Texas. “Albany is the new Austin,” Mr. Malloy said.

Two decades ago, that city transformed itself into a poster child of the semiconductor industry, luring Sematech there in 1987. Since then, Texas' investments in manufacturing decreased as other high-tech sectors, like software, took off. Sematech traded Texas' capital for New York's.

“Albany is at a tipping point,” Sematech's Mr. Armbrust said. “The desire to work across company boundaries created Silicon Valley. And that's what's happening here.”

Industry is moving where the talent is produced. That's great news for the Rust Belt, which is rich in legacy institutions such as SUNY Albany. Native talent, too, is moving back to reap the rewards:

Layoffs in the early 1990s changed all that. IBM's vulnerability startled employees and signaled a crisis in the state's high-tech economy. Mr. Montgomery jumped ship, embarking on a nearly two-decade odyssey that has mirrored the volatile growth of global computing and New York's struggle to reclaim its perch in the nation's high-tech economy.

As jobs and skilled workers left the state, so did Mr. Montgomery—for Europe, then for Silicon Valley and, as chip manufacturing moved north, to Oregon's Silicon Forest.

Now, after more than $2 billion in state commitments, New York's tech sector is back—as is Mr. Montgomery. Improbably, the epicenter is Albany, known more for bureaucracy than innovation.

I expect such return migration to pick up as the national economy improves. Albany is poised for a boom. This part of Upstate New York is uniquely positioned for strong growth because the cluster is so esoteric on the global scale:

Two economists, Ricardo Hausmann of Harvard and Cesar Hidalgo of MIT, have just released their 364-page “Atlas of Economic Complexity,” which claims to be the best model yet for predicting how much nations will grow in the future. So what’s the secret?

As it turns out, the authors argue, the best way to tell how rich a country will get isn’t by looking at things like political institutions, or the rule of law, or even education levels. Nope, it’s far better to look at what they call a country’s “collective knowledge.” That means looking, primarily, at how many different products a country creates — and particularly how many unique products a country makes, things that no other countries are making (say, medical-imaging devices). For example, the authors note that Pakistan and Singapore both export a similar number of types of products. But Singapore’s exports tend to be relatively rarer on the world stage than Pakistan’s, and the country’s much richer as a result.

Emphasis added. Albany is not just a nanotech cluster. It is the nanotech cluster. Try as other metros might, there is no Next Albany.

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