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1 INNOVATION ECONOMY By D OUGLAS BLAISDELL M C DUFFIE A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR TH E DEGREE OF M ASTER OF ARTS IN URBAN AND REGIONAL PLANNING UNIVERSITY OF FLORIDA 2012
2 2012 Douglas Blaisdell McDuffie
3 To my Parents
4 ACKNOWLEDGMENTS First, I would like to thank my Chair, Dr. Ruth Steiner for assistance in learning research methodology and planning professionalism over the past two years. I would also like to thank my professor Andres Blanco, who instilled in me a love for economics thanks to Gerry Dedenbach, who initiated the formative development of this thesis, and David Ramsey who introduc ed me to many fasci nating and intelligent members of the Gainesville business community Also, I would l ike to thank all of those whom I interviewed. Without their help, I would not have been able to complete this body of work. Their vision has made this thesis possible. To make sure I did not leave anyone out, thank you to all of my supportive classmates and engaging professors
5 TABLE OF CONTENTS page ACKNOWLEDGMENTS ................................ ................................ ................................ .. 4 LIST OF TABLES ................................ ................................ ................................ ............ 8 LIST OF FIGURES ................................ ................................ ................................ .......... 9 LIST OF ABBREVIATIONS ................................ ................................ ........................... 10 ABSTRACT ................................ ................................ ................................ ................... 11 CHAPTER 1 INTRODUCTION ................................ ................................ ................................ .... 13 Shifting Economic Geography ................................ ................................ ................ 13 Justification for Research ................................ ................................ ........................ 16 2 LITERATURE REVIEW ................................ ................................ .......................... 18 Structure of the Literature Review ................................ ................................ .......... 18 Globalization, Regionalization, and Localization ................................ ..................... 18 The Death of Distance ................................ ................................ ...................... 18 An Urbanizing World ................................ ................................ ........................ 20 Opposing Forces ................................ ................................ .............................. 21 Combining Theories ................................ ................................ ......................... 23 Land, Labor and Capital ................................ ................................ .......................... 23 Land ................................ ................................ ................................ ................. 23 A sense of place ................................ ................................ ........................ 23 Factors of location ................................ ................................ ...................... 25 Cluster development: strength in numbers ................................ ................ 27 Hubs, incubators, research parks and others ................................ ............. 28 The knowledge center community ................................ ............................. 30 The importance of being different ................................ .............................. 33 Networks and connectivity ................................ ................................ ......... 35 A summary of land economics ................................ ................................ ... 37 Capital ................................ ................................ ................................ .............. 38 Explaining capital ................................ ................................ ....................... 38 Capital i nvestments ................................ ................................ .................... 3 9 Comparative advantage ................................ ................................ ............. 41 Characteristics of successful industries ................................ ..................... 43 Labor ................................ ................................ ................................ ................ 45 Work smarter, not harder ................................ ................................ ........... 45 Social classes ................................ ................................ ............................ 47 Creative class focus ................................ ................................ ................... 50
6 The innovative environment ................................ ................................ ....... 53 Increasing returns on investment ................................ ............................... 54 The value of ideas ................................ ................................ ...................... 56 Criticisms of the Literature Review ................................ ................................ ......... 59 Creative Class Criticism ................................ ................................ ................... 59 Equity and Social Imbalance ................................ ................................ ............ 59 Diversity in Education ................................ ................................ ....................... 60 Innovation Economy: Adaptability and Academia ................................ ............. 61 Business Concerns ................................ ................................ .......................... 62 Patent Trolls ................................ ................................ ................................ ..... 63 Literature Review Conclusion ................................ ................................ ................. 63 3 METHODOLOGY ................................ ................................ ................................ ... 66 4 FINDINGS ................................ ................................ ................................ ............... 68 Profile of Gainesville, Florida ................................ ................................ .................. 68 ................................ ................................ ............................ 70 Vested Interests ................................ ................................ ............................... 70 Contextual Structure ................................ ................................ ......................... 73 Capital Investments ................................ ................................ .......................... 76 Culturally Creative ................................ ................................ ............................ 76 Cluster Developments ................................ ................................ ...................... 80 A Knowledge Center Community ................................ ................................ ..... 85 ce the Innovation Economy .......................... 87 Broad Implications ................................ ................................ ............................ 88 Labor Force Characteristics ................................ ................................ ............. 91 Business Opportunity ................................ ................................ ....................... 96 Opportunities and Constraints of the Physical Environment ........................... 103 Innovation Square and Ot her Cluster Developments ................................ ..... 106 What about the Creative Class? ................................ ................................ ..... 110 Transportation ................................ ................................ ................................ 112 The Role of Government ................................ ................................ ................ 116 Hurdles to Overcome ................................ ................................ ..................... 120 Criticism and Warnings ................................ ................................ ................... 123 Innovation economy concerns ................................ ................................ 123 STEM industry deficits ................................ ................................ ............. 124 Innovation should not rely on extern al inputs ................................ ........... 125 Infrastructure ................................ ................................ ............................ 126 Community and equity ................................ ................................ ............. 127 Critic ism summation ................................ ................................ ................. 129 Summary of Findings ................................ ................................ ............................ 130 5 DISCUSSION ................................ ................................ ................................ ....... 132 Globa l Trends ................................ ................................ ................................ ....... 132 Transnational Corporations ................................ ................................ ................... 133
7 Perception Is Reality ................................ ................................ ............................. 134 The Role of Government and the University ................................ ......................... 135 Economic Feasibility ................................ ................................ ............................. 139 Restrictions and Limitations of the Research ................................ ........................ 140 Topics for Further Research ................................ ................................ ................. 140 Discussion Conclusion ................................ ................................ .......................... 141 6 CONCLU SION ................................ ................................ ................................ ...... 143 Conclusion ................................ ................................ ................................ ............ 143 Final Thoughts ................................ ................................ ................................ ...... 145 APPENDIX A BIOGRAPHY OF INTERVIEWEES ................................ ................................ ...... 146 B INTERVIEWS ................................ ................................ ................................ ....... 150 C INTERVIEW QUESTIONS TEMPLATE ................................ ................................ 151 LIST OF REFERENCES ................................ ................................ ............................. 155 BIOGRAPHICAL SKETCH ................................ ................................ .......................... 164
8 LIST OF TABLES Table page 4 1 Performance. e valuat ion of e xisting t ransit s ervice ................................ ............. 79 4 2 Effectiveness m easures. e valuation of e xisting t ransit s ervice ........................... 79 4 3 Efficiency m easures. e valuation of e xisting t ransit s ervice ................................ 80 4 4 Level of Service. e valuation of e xisting t ransit s ervice ................................ ........ 80
9 LIST OF FIGURES Figure pag e 2 1 Location of world population ................................ ................................ .............. 19 2 2 Location of American population ................................ ................................ ........ 19 2 3 Cen trifugal and c entripetal forces ................................ ................................ ....... 22 2 4 Shifting o ccupation c lasses in the U.S. ................................ ............................... 50 2 5 U.S. m anufacturing output vs. jobs ................................ ................................ ..... 51 4 1 ................................ ................................ .. 69 4 2 Gainesville has many young people ................................ ................................ ... 69 4 3 Overview of Gainesville, FL ................................ ................................ ............... 71 4 4 Gainesville, Florida characterisitcs ................................ ................................ ..... 72 4 5 Activity c enters in g ainesvill e, FL ................................ ................................ ....... 74 4 6 Innovation square context ................................ ................................ .................. 75 4 7 Projected c reative c lass g rowth between 2008 and 2018 ................................ ... 77 4 8 U.S. b iotech s tatistics from 1995 2005 ................................ ............................... 82 4 9 Innovation s quare c ontext ................................ ................................ .................. 83 4 1 0 Innovation s quare as related to other c luster d evelopments .............................. 85 4 11 Association between job growth and the c reative c lass ................................ ...... 86 4 1 2 c reative c lass j obs ................................ ........................... 87 4 1 3 A look at population growth in Gainesville compared to Florida and the U.S ..... 93 4 1 4 Gainesvill e ridership on RTS is improving ................................ ........................ 114
10 LIST OF ABBREVIATION S CEO The Council for Economic Outreach GTEC Gainesville Technology Enterprise Center KC Knowledge Center I G Innovation Gainesville IT Information Technology NIH National Institute of Heal th NSF National Science Foundation RTS Gainesville Regional Transit Service STEM Science, Technology, Engineering and Mathematics UF the University of Florida VC Venture Capitalist
11 Abstract of Thesis Presented to the Graduate School of the University o f Florida in Partial Fulfillment of the Requirements for the Degree of Master of Arts in Urban and Regional Planning INNOVATION ECONOMY By Douglas Blaisdell McDuffie December 2012 Chair : Ruth Steiner Cochair: Kristin Larsen Major: Urban and Regional Planning Gainesville, FL, is in the midst of determining the future course o f its economy. Global economic shifts in market conditions necessitate a reevaluation of the local economy model. For Gainesville to compete and grow in an increasingly specialized marketplace, alternative solutions that utilize the unique strengths of the area should be considered. This research examines the factors needed to establish and develop the Innovation E conomy and ultimately how or if it can be applicable in the context of Gainesville, FL. Gainesville can be classified as a small to medium sized, knowledge based a nd social sciences, this paper explores the nuances of, and conditions for, high tech industry agglomerations in creative communities. The availability of labor, proximate location of land and timeliness of capital are shown to have great effect. The sym biotic relationship between knowledge based centers and their supporting industries has the potential for great achievement but the capricious nature of this economic model must not be understated. Generating positive feedback loops between industry, inst itution
12 and environment are the key findings of this research. Significant positive externalities may be generated to enable high tech businesses to locate in high numbers with spatial concentration in Gainesville. By comparing and then applying the gene ral guidance found in the literature review with the opinions and insights of local community leaders, it was determined that Gainesville, FL, does in fact possess the necessary qualifications for the ado ption of the innovation economy.
13 CHAPTER 1 INTRODUCT ION Shifting Economic Geography The landscape of economic geography is taking a powerful new d irection as a number of forces, new and old, act upon it. The 'new economy' shaping our urban development is largely a response to the phenomenon called globaliz ation. Learning to compete in this new marketplace requires an adept understanding of the forces behind the worlds shifting economic geography. One implication is that the old models of business location in standard economies may not be enough to stay co mpetitive in an increasingly globalized economy. More and more, the locations and regions that produce the highest levels of innovation and subsequent wealth are marked by advanced learning institutions enveloped by support industries. These knowledge ce nters (KC ) take their physical form by way of universities, research facilities, and hospitals 1 One purpose of this m aster hesis is to explain the relationship between proximity, availability of labor and time as key components to the economic succ ess of innovation economies and knowledge center communities. When analyzing proximity, the character of physical space and dynamic relationships formed between business, academics and other parties is of chief concern. The component of availability exam ines the quantity and quality of capital and labor, and more often, land. The element of time is discussed because often, in this dimension, ideas, inventions or 1 Centers aggregating government, universities, and medical complexes provide the ingredients for incubating entrepreneurial activity and generating tech and biotech startups fed by research grants and academic talent. For communities to thrive, education and a cluster of talented firms, workers, government leaders, and local amenities are required. Not surprisingly, places with a high percentage of w ell educated residents have grown the fastest and experienced less pain during the current recession. Unemployment in the highly educated metropolitan areas has averaged 2 3% lower than the national average and significantly lower than those communities wi th a less well educated workforce. (ULI)
14 relationships either flourish or perish. The complex relationships and dynamic interplay bet ween these variables in the context of the urban environment is critical to understanding the innovation economy. One city that displays the characteristics of the innovation economy is Gainesville, Florida: a medium sized university town. Although not pa rticularly dense greater innovative economic activity has been directly cited by leading economists, urbanists ( e.g., Richard Florida, Pa ul Krugman, and Edward Glaeser ) and others. The research universities in the southeast U.S., specializing in biomedical research and engineering ( Zuckerman 2012) Currently, Gainesville exhibits positive indicators of land, labor and capital necessary for innovative growth. In the innovation economy, the fields of science, technology, engineering and mathematics (STEM) are critical for initiating and maintaining consistent levels of innovation. Combined, STEM industry and knowledge centers often form symbiotic relationships, feeding and growing off the achievements of one another (Weldon, 2011) Identifying and analyzing the environmental factors that contribute to the growth of high tech indu stry clusters in knowledge center communities like Gainesville, Florida is the basis of this research. The idea is to understand how the principles of the innovation economy succeed or flounder in different locations, with the hope that Gainesville, Flori da can act as a model for other cities also wishing to make this transition. The economic competitiveness of cit i es, regions and even countries may be determined by the places that pioneer new technologies and ide as (Schwab, 2011)
15 Humanity itself has all but become reliant on a myriad of technologies to support consumption based economies and maintain a high quality of life. Our value systems reflect this dependence. The evidence manifests itself, at least monetarily, via global stock markets. Trailbla zers of innovation and discovery advance civilization and those places actively involved, reap substantial economic rewards while attracting t he next wave of innovators. P that is a consistent theme throughout the research. Capital and the brightest minds are gradually coalescing into fewer places, and increasingly, these places are marked by high levels of innovation (R ichard Florida, 2010). Existing urban centers wishing to remain competitive should cultivate a learning and living environment that responds to the needs of innovative businesses and the desires of their creative class employees. Helping high tech business flourish and facilitating the interaction b etween people, pro ducts and ideas is critical for long term success. Future economic winners and losers will be determined by those cities and regions that develop aggressive and clever means to achieve this end. Applying innovation economy concepts to the regional context of Gainesville requires an examination of the factors that promote the development of STEM industries. Knowledge centers are of particular interest. This inquiry is challenging because the ideas of the new innovation economy model are relatively new and in some cases hard to quantify. Nevertheless, the resulting work attempts to encompass the question: What are the basics of the innovation economy and what economic policy guidelines might be implemented to achieve that end in Gainesville, Florida?
16 Justi fication for Research Advances in technological applications and an emerging emphasis on regional economies allow s for the exploration of new local economy models High tech and, particularly, STEM industries are at the forefront of many economic discuss ions as more technologies lend themselves to practical commercial applications. Simultaneously international competition in the manufacturing sector adds strain to traditional economic models, applying pressure to reform local economies (Harrison, 2011) These concerns and others should prompt communities to reevaluate their assets and form economic strategies using resources that are plentiful, proximate and renewable. Presently Gainesville experiences difficult y when rely ing on traditional econ omic models like manufacturing. This difficulty may be exacerbated if larger economic trends such as outsourcing in the manufacturing sector, continue. The ability to re invent or invigorate the local economy of Gainesville should be explored for the greater benefit of the community. Expanding the local economic base by using an economy model that benefits the community, the University of Florida, its student and faculty, and that rel ies heavily on intelligence and ideas both in large supply in Gainesville makes good economic sense. The anticipated positive feedback loops should benefit the university, students and faculty and community at large, both directly and indirectly. Fina lly, the selection of Gainesville, Florida as a case study for research was made for various reasons. The strength of the argument for the innovation economy was chief among them. Gainesville has received attention from proponents and detractors of the i nnovation economy theory, allowing for some direct references and
17 examples in the literature review. Also, the willingness of many public and private leaders to meet with the researcher provided credible and authoritative information on the subject. Fina lly, the practical limitations of choosing another case study location ( i.e. distance, monetary resources, time) played a significant factor. For all these reasons, Gainesville, Florida was selected for research
18 CHAPTER 2 LITERATURE REV IEW Structure of the Literature Review Each of the three components land, labor and capital is important to the innovation economy. The organizational theme of this research tracks the se three components, applying their principles to the context of Ga inesville as needed. Beginning with a broad view of economic and social trends, the three components become more complex as their relationship to the innovation economy emerges. These concepts build upon themselves, establishing linkages with the others. The research then focuses on the relevance of each principle to the innovation economy. The result is an overview of each basic component with a detailed understanding of the particular applications in an innovative economy. The enabling factors that allow the formation of the innovation economy began with larger changes in the global marketplace. Before understanding land, labor and capital, exploring what catalyzes innovative economies is warranted. Globalization, Regionalization, and Localization T he D eath of D istance Frances Cairncross as cited by Harrison, described the phenomenon of saw a drop in physical transportation costs, the twenty first century wil l be marked by reductions in trans (Harrison, 2009. pg 5) G lobalization economic geography. First, it allows for a general expansion of industries and economies of all types by opening up additional areas for manufacturing, trade, resource extraction, and
19 other economic activity. At the same time, it encourages industries and people to concentrate in greater numbers to reap the benefits of efficien cy and urbanization. This mas Friedman famously concluded. . the most salient spatial concentration [Figure 2 1 and Figure 2 2] in a relatively small number of particular places pg 14) Figu re 2 1 Location of world population Reprinted by permission from Florida, R. (2005). Population The Atlantic Retrieved from http://www.theatlantic.com Figure 2 2 Location of American population Reprinted by permission from Florida, R. (2005). This is where we live The Atlantic Retrieved from http://www.theatlantic.com
20 An U rbanizing W orld Exemplified by the rise of mega cities and regions all over the world the sp ikiness of human habitation coincides with the more general emergence of urbanization. In fact, as of 2012, over 5 0% of all people are estimated to live in urban areas. That trend only shows signs of increasing. ("The World Factbook," 2012) An illustrative example of the transformation from rural homesteads to urban life over the past hundred years is found in the U S census. In 1900, 38% of all Americans lived on farms but as of the 2010 census, less than 1% of American s did so; enough to remove the occupation al f evolution in the marketplace has polarized existing urban centers, increasing the demand for more highly metropolitan a reas in America concentrated 74% of the 75% of workers with graduate degr ees, 82% of NIH a nd NSF research funding, and 96% pg 14). Bringing people, industry and institutions together like no other industrial revolution before is one of the hallmarks the information age (Harri son, 2009) but a national economy pg 14) T he importance of creating a competitive regional economy relies he avily on macroeconomic trends. T his thesis examines the potential application of a specialized, local urban economy model, with reference to global and regional trends to understand how economies, industrie s and physical proximity and locally bounded exchanges matter so much to their workings,
21 [regional] clusters highlight the importance of geography, space, and regions in the st r ucture of the national economy. Clusters, in that sense, make unavoidable the fact that locations matter. And the recognition of this fact is critical; a s Michael Porter writes, but a series of regional economies tha t trade with each other and the rest of the world 98; Muro & Katz, 2010. pg 28) The application of these regional economies as situated in the physical similar development. These clusters can be as large as cities or as small as research parks. For many innovative and KC communities, clustering industries can be powerful strategy. Opposing F orces Noble Prize winning economist Robert Lucas comments on ci ty and cluster formation and 'centripetal force' stating that, given the tenets of traditional economi cs, "[c]ities should fly apart. . He adds that the, "multiplier effects that stem from such talent clustering [are] the primary determinant of econo mic growth," and while acknowledging the principals of land, labor, capital Lucas concedes they would matter little if peo ple had nowhere to combine them (Florida, 2008. pg 67) Understanding the variables that produce a centripetal or centrifugal forc e in an environment is a cornerstone on which th e validity of this thesis is built. Implementations in KC communities that are dismissive or ignorant of these forces are shown to have undesirable and potentially disastrous effects. Figure 2 3 shows the d ifference between centrifugal and centripetal forces in transportation networks. Basically, focusing the direction of activity inwards a centripetal force allows for greater efficiencies; promoting density and other related urban initiatives.
22 Figure 2 3 Centrifugal and c entripetal forces Reprinted by permission from Rodrigue, J (20 12 ). Centripetal and c entrifugal n etworks The Geography of Transport Systems Retrieved from http://people.hofstra.edu/geotrans/eng/ch1en/conc1en/centripetfug.html The general theories of location economics from the past combine with current ideas concerning the innovation economy. Broad topics like globalization and market locati on merge with particulars like social dy namics and new economic models. While the topics covered vary in both scope and scale, the literature review finds the incorporation of these principles essential to understanding and proving the validity of the Kno wledge Center, Creative Class and Innovation Economy theories. The baseline fo r the land component is now set; given the general effects of globalization on industry location, along with the basics of market formation and competition. On this foundation the role of clusters in high tech industries is furthered.
23 Combining T heories The more ephemeral studies of social theory conclude that relationships between people and their urban environment are a key component in creating the supportive context that f urthers innovative processes. This demonstrates the increasingly important role people have in shaping the inputs and outputs of capital. Changes in lifestyles, preferences and abilities are the most important factors discussed as the ography is increasingly linked to the habits and nuances of labor. The exploration of the components of Land/Location, Labor and Capital and how they can influence the development of a local innovation economy is the primary purpose of the literature rev iew. Interactions between land, labor and capital produce unique qualities that, when combined, demonstrate how innovation economies can form. Finally, new economic models and theories are built upon the combination of traditiona l economics and social th eory. Achieving the necessary conditions for an between theories, and second, by focusing on their specific applications in the urban environment. Land, Labor and Capital La nd A s ense of p lace Land has character. The opportunities and constraints nature affords mankind shaped habitation patterns even before humans settle d into cities. Productive forests and valleys were prized because they allowed early man to hunt and gath er effectively. More challenging environments, with their lower carrying capacity, limited the ability of people to congregate for extended periods, much less found cities. Later on, t he
24 development of agriculture promoted a baseline for density a s vill ages and towns formed in these advantageous places. Just as agriculture birthed and sustained imilar developments occur today. M odern technologies and innovations increasi ngly rely on urban locations for the continuous creation and implementation of ideas products and services Simply put, good locations attract large r quantities of people, increasing the likelihood of labor and capital opportunities, both in quantity and variety. Location matters, because side the context of environment (Zeitgeist: MF, 2011, 9:50 10:00) For any economy, the idea of location con cerns three principles: supply, the market, and the distance between them Today, the factor of particular places because of rich endowments of minerals, fertile la nd, and, nowadays, well educated workers pg 5) Additionally and of particular locations an unprecedented role in economic and/or social development. For example, ever wonder why Boston, Massachusetts is so . Irish? Although New York City received the bulk of the Ir ish emigration wave in the 1840 s following the great potato famine, "Boston's Irish character is essentially a gift of its strength dur ing the era of sail (Glaeser, 2011. pg 77) The overseas trip to Boston was cheaper and faster than the main port of New York City and, upon arrival, many poor and starving Irish families settled down rather than travel further. Thirty years later, the age of sailing ships was replaced by steamliners The greater size and quality
25 of ports in N ew Y ork C ity meant that the later waves of European immigration bypassed Boston altogether. This accident of history relies on the timing of both a great tragedy and great invention as it solidified the character of Boston, MA to this day. In all, it can be said that the impact of location on industrial settlement is largely contingent on the presence of natural (and later created, artificial) advantages compara tive to other localities. Again, h ow companies or industries locate the factors of location largely contends with ho w local variables interact to provide advantage s over other locations. Factors of l ocation While some locations are preferable to other s, not all factors of location are readily apparent. Because the aim of this thesis seeks the factors that enable or catalyze the development of (STEM) industry at a local level, the basic economic principles behind industry location must be examined. Al l economic models are built upon the premise of maximizing profits and uti lity while minimizing the costs and time required (Blanco, personal communication, 3/26/11) Generally, the f actors of i ndustrial l ocation break into three strategies orienting arou nd the efficiency of: 1) the acquisition or transport of resources and/or products, 2) the location/distanc e to the market or end user and 3) labor or workforce inputs. The factors of industrial location rely on balancing the combination of these efficien cies to achieve maximum profit equilibrium. The first t wo strategies are really halves s upply o which is concerned with two models that a ll firm s must consider: the need to lo and/or the need to minimize the distance or transfer costs from production to market the so The former factor of production resource orientation, is best understood when thinking
26 about a firm that has a relatively hi gh cost of transporti ng inputs as opposed to outputs (Blanco, personal communication, 3/26/11) Examples of this model are found in industries whose inputs are : 1) perishable, 2) fragile, bulky or hazardous or 3) weight losing. For example, p erishable in puts include the fruits or vegetables used in canning, fragile inputs include computer components for automobiles, and weight losing inputs include a large piece of wood from which a baseball bat is made. In any case, the object of a firm that is resource oriented is the shortening of the physical distance between input material and output products. Therefore, production facilities are built near resource oriented inputs. m arket business is typical of this type of firm. One example is to consider a beverage bottling firm. Assuming a standard transportation cost based on weight, and that the output ( i.e., the bever age) is more valuable than its input s, ( e.g., sugar, water) the firm would have a much greater incentive to locate near its final marketplace (Blanco, personal communication, 3/26/11) Most often, a firm will employ a combination of these locational facto rs to select a median location that maximizes the benefit while reducing the cost, of each input. Certain types of production, like those often found in the innovation economy, see t he traditional importance of locating proximal to physical resources or markets largely being replaced by the need to locate near highly skilled, innovative workers. For some industries, this may be because input costs and market access are both very low. Given the basics of location strategies, the logical next step is eval uation how these firms locate in spatial terms.
27 Cluster d evelopment: s trength in n umbers Often, high tech firms will cluster close together to enjoy certain benefits of their concentration. Clusters of firms can form local or regional economies allowing f or powerful concentrations of codependent industries. The mutual advantages to both industry and their host communities are magnified as a symbiotic relationship is formed. The primary reason why industries locate close to one another is due to the princ iple of facilitates cost reductions. E conomies of scale can either reduce costs internally, like a company benefitting from the efficiencies of increased production related to something it has direct control over, or externally, for factors over which it does not control. External economies, also known as agglomeration economies, on the other hand, depend on the concentration or industries (Blanco, personal communication, 3/26/11) In general external economi es can be advantage from the over all size of the local economy (Blanco, personal communication 3/26/11) Urbanized economies rely on the sheer size of the proximal economy and the subsequent large number of transactions taking place. Localized economies, which generate their advantage from a large number of similar or co dependent industries, ar e of greater interest to th is research and are explored in greater detail below. trade tended to locate near each other in the industrial districts of England, and suggested this was because they could derive mutual advantage from such dynamics as labor market pooling, supplier specializ ation, and knowledge spillovers Katz, 2010. pg 18) Mutual advantage derives from
28 of inpu ts, l abor pools, and knowledge (Blanco, personal communication, 3/26/11) The physical form of scale economies must mimic their function in the local marketplace Often, this process manifests itself via several industrial clustering methods. Hubs, i ncubators r esearch p arks and o thers The commercial settlement of an innovative economy relies largely on the clustering of economic activity. The clustering of activity in special places in our case knowledge centers leads to the development of relationships with the community and dialogue between companies. The form and function of these cluster developments reflect their purpose in the local economy and are often referred to incubators, hubs, collectives, research parks and others. Incubators are often as sociated with housing small original or spinoff companies needing further capital investment and time while their ideas develop and commercialize. Once mature enough to enter the market, a company may seek to locate in a collective, research park, hub or other cluster The nature of the business will likely determine the appropriate destination. For example, a company focused on research and devel opment might prefer a research park or collective. Such clusters tend to specialize in related products or services. By locating there, a company might benefit from the other companies in a supplementary fashion, using what is best described as horizontal integration. By amassing similar knowledge or skills, collectives and research park clusters offer like m inded companies a competitive advantage. Alternatively, a company which creates a unique or tangible product may want to locate in a hub where complementary services are offered; what is also known as horizontal integration. Hubs typically house a variet y of companies with different skillsets. There, a young firm may be able to obtain legal, managerial or logistical services, allowing it to connect its product or service to larger networks while
29 also developing a well rounded business model. The needs o f a particular innovation economy will likely require a mix of cluster strategies but their roles are worth mentioning. Scientists, professors and/or students will have formula ted an idea that has commercial value. In an effort to protect intellectual property, a scientist may start a company to further develop his/her idea with the hopes of eventually bringing it to the marketplace. Involvement by that institution in facilita ting this process makes the said institution experienced ma nagers who could guide the firm Sa, 2008; Block & Keller, 2009: 472) An incubator which is orga nized by local economic development partners, is the prime sort of cluster development in that it facilitates the development companies harboring innovations by promoting access to legal, business and educational services and providers. Over time, a spin off company may decide to enter the market and may l ocate in a hub or research park, surrounding itself with like businesses that benefit from shared knowledge and the advantages of mutual cooperation. Espousing the merits of local innovation and the netw that U.S. inventors increasingly use domestic knowledge more than foreign knowledge and knowledge from the same metropolitan a rea than knowledge from outside Katz, 2010. pg 26) By focusing on the creation of a dynamic core of inter related businesses, the inclusion of additional local parties can participate and benefit from local ideas. Communities that take advantage of a local, specialized knowledge network and build economies around the m are called Knowledge Center communities.
30 The k nowledge c enter c ommunity Sometimes, special situations arise that tweak t he traditional concepts of capital, land and labor into form ing specialized cluster developments resulting in a KC community. T hroug hout the course of history many cities functioned as knowledge c enters Such cities and regions served as important hubs for trade and commerce, often straddling the boundaries of major civilizations. The blending of other cultures, ethnicities and reli gions in a dense setting sparked the formation of new ideas while also providing a re ason and means to transmit them trade. F amous cities including the likes of Rome Baghdad, Jerusalem, Istanbul Alexandria and Teotihuacan are prime examples of knowle dge cities from the past. They operated as crucibles for the ideas and innovations that formed the civilized world. Today, large urban centers function similarly as innovations in science and technology increasingly emerge from highly specialized, local economies. K C communities have been defined in many ways but SGS, an Australian firm, describes a knowledge center as a local or regional economy that exports high value products created through research and development. Knowledge centers also typically e njoy a high standard of living in t olerant and inclusive societies (Ovalle, Marquez & Salomon, 2004). The only element missing from this definition is the pre eminence of a that acts as the backbone of the community. O f ten times a robust, specialty industry forms alongside an educational institution serving a s the point of industry focus. 1 2 1 effect' in which a growing number of agents want to congregate to benefit from a larger diversity of activities and higher specialization." (Fujita, and Thisse, 2002. pg. 8)
31 These conditions almost perfectly describe the American university system and by extension, the composition of Gainesville, FL w hich hosts the University of Florida and Santa Fe College KC communities often crop up around long established centric model of an innovation system hing[es] on research universities that are simultaneously centers of learning, the foci of basic and applied research, and the source of entrepreneurship. . Nabeshima & Yusuf, 2007. pg 933) Because institutions like universities are well funded, committed to academic excellence and generate the ir own population base, they are ripe for further expansion if the private sector can capitalize on the products created there. 2 3 I n the current economic climate, universities and other institutions might be intrigued by the idea of reinventing themselves One reason why concerns itself with a key difference between traditional economic models and those of the innovation economy. Conventional economies often experience decreasing returns, the decreased efficiency of resources the more they are used (e.g. the additional effort required to extract fossil fuels in a given location, over time). T he innovation economy model witnesses just the opposite partly because its inputs are not based on exhaustible resources, but rather on the mind Innovation econom ies often produce positive feedback loops that increase the utility of its source material educated people. Our brains, much like our muscles, become stronger the more they are used. An 2 oriented universities public or private can assist geographically proximate firms directly through the provision of educated workers and indirectly by way of my riad externalities is now reasonably well established. More controversial is the research which attempts to show that in a number of notable instances, research oriented entrepreneurial universities have supplied the underpinnings of dynamic industrial clu (Leiponen, 2005; (Hershberg, Nabeshima & Yusuf, 2007. pg 932)
32 economy based on inputs that appreciate, instead of depreciating t hrough use is one hallmark of the innovation economy. The knowledge based opportunity has, in many cases, been accompanied by a concomitant decline in neoclassic industrial activity (Burton Jones, 1999; Drucker, 1998). The replacement of ph ysical commodity production by more abstract forms of production (e.g. information, ideas, and knowledge) has however, paradoxically, reinforced the importance of central places (cities) and led to th e formation of knowledge cities pg 2) Broadly, community leaders and planners that wish to develop KC co mmun ities financial, intellectual, social and human capital systems. . developing a high tech society, improving infrastructure, and increasing the quality and variety of (Yigitcanlar, 2009. pg 231) Knowledge city deve lopment has become a recent interest for urban planners as the requisite adaptations in urban a high culture as the providers of dynamic socio with the objectives of increased density, variety and e xperiences in o ur urban places nnor & Westerman, 2008. pg 4). Today, many cities fac urban economies are being radically altered by dynamic processes of economic and spatial restructuring. The result pg 2) Some values necessary for advanced development have remained constant over millennia such as diversity, inclusiveness and higher learning while other variables like
33 geographic distribution corporate structures, and economic models have changed dramatically. 3 4 The pre existence of the se e draw heavily upon the existing cultural and industrial foundations within a city as these act as a ttra ctors for knowledge workers 2008. pg 2) The underlining theme is that the byproducts of scholastic achievement, technological sophistication and urban living rely on the active participation and endorsement of the p eople. The constituents of a place must value those ideals or the communal bonds that facilitate the processes and inter actions of the KC cannot be realized. The i mportance of b eing d ifferent When considering the physical composition of the innovation eco nomy, planners and officials should not go too far in attempting to recreate the character of other, successful innovation economies. A nother prosperous innovation economy might offer some lessons learned at prevents imitations, cities should make the most out of their uniqueness of interconnected amenities, atmosphere, cityscape, and clusters of specific cul tural industries Trip, 2008. pg 14) The argument here is that differences of character and the context of original places allows for the occurrence of truly innovative processes. 3 economies but also stressed that vi brant socio cultural activities associated with conserved rich natural environments, quality built environments, the presence of tolerance and acceptance of multiculturalism, democratic, transparent and visionary governance, and enriched human capital play key roles (Florida, pg 1)
34 A nalogous to industrial innovation is the biological process of speciation in which (along with isolation and other variables such as time) the spe cies in quest ion arises out of responses to the unique conditions found within its proximal environs. What this mea ns is that the economy is not so much a Newtonian system with a predetermined equilibrium but more like an evolving biological system characterized by punctuated equilibrium and multiple possible outc omes, subject in part to chance pg 6) Finishing this link between economic development and biolog ical processes, Cortright adds that v ariations in local taste s and preferences may be an important source of innovation economy wide. If we adopt, for a moment, the evolutionary view of economic change (Nelson & Winter, 1982), unusual or fringe environments (in our case, communities with different tastes) become th e source of mutations changes in business practices that may give some busi nesses a competitive advantage. Species businesses that develop or thrive on the fringes may ultimately dominate the economy if the larger environment cha nges 2002. pg 8) The astounding prevalence of market behavior mimicking biological processes gives credence to the discoveries in the physical sciences which clearly have 4 5 By encouraging originality, some cities have m et huge success when implementing innovation economy principles. Consider Austin, TX, with its famous mantra: Keep Austin Weird. By focusing on 4 speed driving in Germany, gardening in England, or fashion in Italy produce local demand conditions that push producers to im prove and innovate in ways that translate into advantages in international competit pg 6) L ocal passions forge outstanding (quality, efficiency, etc.) local industries that can then better compete in larger markets.
35 in business, a dest ination for the brightest college graduates and a symbol of American creativity. The lesson here is that places ought to celebrate and revel in their distinctiveness. To flourish in an economy that values knowledge creation, diversity should be at the fo refront of the innovative process. Although special parts of cities and knowledge center communities can be exciting places on their own, when these places and the people in them connect to form larger networks the real power of KC s are understood. Netw orks and c onnectivity Unlike previous eras where products, technology or even information could be and information from flowing t it is extremely difficult, if not impossible, to maintain monopol ies of information indefinitely 2000. pg 5) Critical for the survival of innovation economies is the production, transfer and incorporation of new knowledge into their product a nd services. Standard economic theory might suggest that willingly sharing resources, labor and intelligence with similar or competing firms is bad for business. However, in the innovation economy, this sharing of information and eventual co dependence a mong businesses is often necessary for long term success. revolution has greatly increased the available knowledge from which new products and services can be developed. Th e huge array of technologies and applications has outpaced the ability of single firms to retain proficiency in the technology fields relevant
36 to their bu s iness 5 6 (Itzkin, 2000. pg 9) Innovative companies are specialists, not generalists. They often r equire outside products and services to keep their businesses running and so the needs of professional, administrative and other services are likely to cluster nearby. Path dependence and a flair for entrepreneurship can encourage the chances for fortuito Relationships between companies need to be more than just the sharing of intermediate inputs, labor forces and knowledge it needs to be about dialogue and collaboration. Whether this trust comes from mutual necessity or mark etpla ce advantages is up for debate. In a sust information or knowledge embedded in commodities, not the physical material from which they are made, b ecomes the main source of value pg 5) No one firm can indepen dently produce the technologies and information needed. Partnerships between industries and the commu nity must be formed along with nimble and open minded business model s the importance of having strong links and creating synergy and trust between all social (Ergazakis, Metax iotis & Psarras, 2004. pg 13) The unifying principle behind innovative economi s piral tacit and tangible applications as the process of conversation (Dvir & Pasher, 2004. pg 5 The collabora tion needed for innovation depends on social and cultural factors, not just on information technology. This applies not only to information sharing inside an organization but also to networks linking different organizations. It is above all trust and the n orm of reciprocity to promote mutual gain that makes collaboration feasible. As Fountain and Atkinson (1998:3) argue, these shared values, or 'social capital', become a (Itzkin, 2000. pg 10)
37 20) T his physical, and often face to face, dialog ue furthers the collective enterprise of innovation economies. Often, industries cluster around local institutions to provide them with cutting drivers of growth are skill and, in many instances, research (Hershberg, Nabeshima & Yusuf, 2007. pg 931) Firms and industries ought to be positioned carefully in the context of economic geography. Understanding the nuances that bind cluster developments concludes the component of land in land, labor and capital. A s ummary of l and e conomics In summation, the prevalence of high tech cluster developments in culturally rich, knowledge based communities is of chief importance. Often, clusters of industries locate near one another to take advantage of their mutual connectivity and capital reductions. Also, the appeal of agglomeration economies may make them attractive to host cities due to their relative permanence. Exporting these jobs is difficult because cluster develop ments are anchored into the economic landscape by their interconnectedness with each other and their suppliers. Clusters arise and grow because the firms within them profit materially from the presence of powerful economic externalities knowledge spi advantages. These advantages range between a highly skilled labor force and a matured supply chain to the basic frameworks of sharing cutting edge knowledge (Muro & Katz, 2010) Cluster economies are made p drama of shared experience and synergy a kind of symbiotic empathy . rewards those industries by improving externalities like comparative advantage,
38 economies of scale, and others (Minchin, 2008) In dustries that share, cooperate and gen erally act in a unified manner, esp ecially when bound by location, strengthen the legitimacy of th e innovation economic model. Such clusters represent paradigm than a program, [as they] are neither a shiny ne w fad, a silver bullet, nor ethereal, but instead represent a grounded source of practical value to busine sses, workers, and policymakers (Muro & Katz, 2010. pg 46). T he coordination required to orchestrate local cluster development s acts as a model for overall economic policy coordination Because sustaining an innovation economy requires cooperation, t he efficiencies gleaned from cluster interactions could help make increased returns on other capital investments a reality (Muro & Katz, 2010) While lo cation is vital to the creation of an innovation economy the next step to understanding the whole process examines how investments are made in these places. Capital, or the investment of money and material into a place, is what turns a good location into a thriving hub of activity. Capital Explaining c apital Capital is referred to as the amount of cash, machinery or other assets that comprise the input portion of a basic inpu t output model. The capital, for example, of a timber company would be money, ti mber trucks and warehouses, and the output would be lumber. For our purposes, the examination of capital in the context of the factors of industrial location is minimized because capital is often so diverse in its composition, application and quantity. C apital is ever changing and highly variable. Quantifying or comparing the worth of capital between industries or economies is difficult as many forms of capital are constrained by intangible characteristics like mobility, adapt ability,
39 suitability and so on. Capital should be treated as an evolving entity that constantly refreshes, updates and modifies itself according to the context of i ts environment (Itzkin, 2000) We can consider capital to be a foundation of economic development but one that is larg ely maintained by private interests and as such, largely uncontrollable. One fo rm of capital that serves the public interest are the investment s made in transportation networks Capital i nvestments While the, "centripetal forces tend to promote spatial co ncentration of economic activity, centrifugal forces oppose such concentrations," by presenting incentives ( e.g. lo wer transportation costs, rents ) and other factors of production for businesses to locate elsewhere (Fujita, et al. 1999. pg 9). T he applic ation of transportation investments when considering agglomeration economies must account for positive feedback loops in supply, production as well as the placement of industry alon g major transportation networks Creating more centripetal, or inward fo rce, is the goal. Linking the aforementioned economics of agglomeration with the changing nature of global commerce, specific information concerning the role of transportation costs and infrastructure can be addressed. The applied ideas are localization a nd the reduction of transport costs and increasing transport options or modalities. It can be assumed that industria l areas geographically positioned along or near existing trade routes are given a significant comparative advantage. Fujita says the, pre sence of a good harbo r or access to a major waterway. . explains in a formal way why ports and transportation hubs tend to become urban centers (Fujita, et al. 1999. pg 129) Although historically it has been cheaper to transport by water than by land, today
40 water based ports are not the only im portant means of transportation, and the principle of connectivity remains. While municipalities may not have control of their geographical features most often the transportation based solution to increasing t he range of locally created goods is to expand transportation connections such as railways, highways, seaports and airports which serve an export function 6 7 (Fujita, and Thisse, 2002) 'External economies' a subset of which is agglomeration economies, choose to locate inside bustling locations "first, [because] a geographically concentrated industry could support speci alized local providers of input. . and second, a concentration of firms employing workers of the same type w ould offer labor market po oling. . and finally, [because] geographic proximity would facil itate the spread of information (Fujita, et al. 1999. pg 18) However, in the case of STEM industries many products are intangible and knowledge based; of the exported goods, many are sm all, expensive and time sensitive. 7 8 The export of products should then skew heavily in favor of the fastest means of transportation air and overland trucking. While the agglomeration of certain industries has been explored, just where they locate th e localization of a firm is heavily dependent on transportation costs of intermediate and final goods. Reducing the costs 6 ur unless the costs of transporting intermediates are particularly low compared to those of transporting final goods. And a general reduction in transport costs, of both intermediate and final, will ordinarily tend to encourage localization rather than di scourage it." (Krugman, 1991. pg 56) 7 specific analysis shows to have unexpected analytical importance is a product's perishability or storability its 'temporal mobility' over the day or week o r year." (Winston, 1982. pg. 6)
41 of transportation and export has two effects, localizing production where it is cheapest and concentrating that development in one place (Krugman, 1991) Given that the market will ultimately be the deciding factor in localization, transportation policies recognize these market forces and plan accordingly to best capitalize on industry clustering. Also, transport costs not only value the movement of goods but the land actively facilitating i t. Transportation is valued, both an economic good and as the sub stratum for economic activities (Fujita, and Thisse, 2002. pg 11) That is to say, the market value of transportation investmen ts should be considered for the benefit of trade and transit and as capital for further economic development. The complex relationships, "between the decrease in transport costs and the degree of agglomeration o f economic activities. . happens provided that transport costs ar e below some critical threshold (F ujita, and Thisse, 2002. pg 4) That nd maintaining it is critical. Economic advantages that stem from cluster developments or other capital improvements ar e many. Of them, the idea of comparative advantage has been singled out for review due to its importance in localized innovation economies. The main reason firms cluster in the first place rather than give into the centrifugal forces of dispersion is due to the special benefits or advantages gained from co locating. Comparative a dvantage The existence of shared inputs, labor and knowledge are needed for cluster formation. These and other inputs allow a localized agglomeration economy to maintain a compar ative advantage or in other words, a special benefit that enables an industry to remain competitive in the larger marketplace. Comparative advantage can be created by shorter production times, cheaper inputs, or other supply/production advantages.
42 Reachi ng and then maintaining a comparative advantage, as far as the innovation economy is concerned, is the centripetal force and overall principle binding the land, labor and capital inputs in the first place. Without an advantage in the marketplace, clusters would not form. How do old firms maintain their advantage against upstart companies? Similarly, how do new firms entering the market hope to accrue an advantage if there is existing competition for land, labor and capital? These questions are a nalogous to the timeless riddle, n interesting quandary exists when analyzing spatial locations of industry. Assuming textbook economics, producer s wish to locate in areas with : 1) large markets and, 2) nearby supplie s, where they can gain a comparative advantage. However these places have large markets specifically because they already have producers. Fujita claims these, "two advantages correspond precisely to the backward linkages and forward linkages of developme ntal theory", and are the basis fo r persistent economic activity (Fujita, et al. 1999. pg 5) Although one might consider the presence of established competitors a deterrent for market entry, the overall benefit of locating near a large market with a spe cialized supply chain outweighs the negative effects of high competition. In fact, for some industries STEM in particular locating densely among the competition decreases supply costs (in terms of labor and capital) and increases the attractiveness of the market. If an agglomeration economy is to survive and thrive it must be ready, willing and able to adapt to changes in the market. The importance of sharing and cooperation is tage and innovation are inextricably linked to the ability to learn. Learning and change are two
43 sides of the same coin pg 2) Adaptation is fundamental to this economic model as the innovation process simultaneously creates new knowledg e while outdating established technologies, attitudes and processes. The foundation of sustained innovation is maintained through a myriad network of partnerships called (Itzkin, 2000. pg 4) advantage of clusters is the specialized knowledge there. Craftsmanship is rightly appreciated, and knowledge is in the air. But what triggers the information but another deals with the demand f or the products created both locally and for export (Cortright, 2002. pg 2) If a product has demand in a variety of markets, it buffers itself from domestic or foreign economic turmoil better than a product dependent on a particular market. Companies that are keen to these developments will not only position themselves advantageously in the landscape and with the right tools, they will also seek out the critical component of labor to put these other elements to work. Characteristics of s uccessful i ndus tries In the innovation economy, numerous small to medium sized companies appear preferential. As the products of the innovation economy are often smaller, highly customized, and time sensitive, the normal advantages of larger corporations (such as mass p roduction and a large resource base) are less of a priority in the innovation economy. However, the lack of speed and efficiency are not the only hindrances. Common in large companies is the reluctance to experiment with new business models and other int ernal, structural elements. The larger a company becomes the more it invests in its organizational hierarchy. Smaller and perhaps newer companies might
44 hierarchy, and perhaps even a loosely defined structure [that] increase[s] the chances that the organization will enhance, rather than inhibit, the generat ion, flow and leverage of ideas pg 17) Creative people and companies are driven to succeed and les employees, the propensity to export, and the company size (measured by the number of employees) h ave a significant and positive effect on a compan innovation ta & Fernandez, 2008. pg 1009). able to adapt to environmental changes rather than just reacting to them. In the innovation economy the inability to alternate between or adopt new models indicates a kind of silo thinking that can handicap and eventually suffocate a business. The, sector innovation are re al time, unforgiving, and essentially Darwinia n survival of the smartest (Bain bridge & Roco, 2006. pg 35) Further, the company structures that promote and can thrive on small batches of highly customizable products while also remaining efficient are primed for su ccess in the innovation economy (Harrison, 2009. pg 7). Further consideration of the organization of innovation industry finds that market pressures and industry relationships may be the cause. The need for companies to be ng edge of innovation is often [found] at the in terfaces between organizations. The focus of innovation in industry is moving away from the centralized, prestigious laboratories of large multinational corporations to large numbers of smaller and medium si z ed firms in their supply chains (Fountain & Atkinson, 1998:1; Itzkin,
45 2000. pg 9) This shift in focus to smaller, localized agglomeration economies is caused by the greater emphasis the larger markets place on quarterly earni ngs and other financial re ports (Block & Keller, 2009. pg 470) As research and development becomes increasingly expensive, many industries now focus on product development to come long a fter the pg 470). The need for firms to mobilize assets, alter business models and collaborate with one another appears paramount; effective communication inside of and between other companies is cru cial. Focusing on the land and capital needed for innovation is not enough to spark the innovation economy. More is needed and can be found in the element of labor. A s mentioned previously c ompanies and industry types are anyth ing but immune from larg er changes in the global economy. For a company or local industry to survive and thrive in the innovation economy it must be adaptable, conn ected, open minded and zealous; all of which are preferable tra its found in the last component labor. Labor Work s marter, n ot h arder Last but certainly not least is the component of l abor, often synonymous with [h] uman labour has the peculiar ability to create more valu e than is used up in production pg 3) In a world of dwindling resources and mechanized production, labor appears to be the one inexhaustible factor of development. While some older industries have all but seen the elimination of physical huma [t] he lack of a negative impact of technology on overall employment, especially in the longer
46 term, is probably due to the way in which markets and economies adjust to new technology. As well as reducing the need for direct labour in the product ion process, technology increases output and reduces the cost of production pg 7) The reduction of importance of direct or manual labor in the developed world is just another example of turn over in modern economies; t hey recycle and r ecreate themselves. In fact, the quality of life for those who would otherwise perform backbreaking physical labor has increased. Often these people leave the fields and factories for service sector jobs. As the component of labor in our modern economi c system changes one important observation is this: our minds are clearly more valuable than our physical ability. This change marks an exciting developmental adjustment in the human species. Never before have we been so free to explore the potential of our ideas, passions and interests. Today, as part of a global, connected society, we have for the first time the critical mass of people, technology and ideas to truly revolutionize our function in the world. By utilizing our brains to greater extents, we have the ability to solve many s equipment and technology) and human capital (intellect, character, education and training) in driving innovation and growth. The stock of social capital is increased when a network of organizations develops the ability to work in collaboration to promote mutual productive gain pg 10) Today, it appears increasingly important to combine the physical assets (capital) of indus try with the more intangible assets of the mind (labor) for the future growth of economies in certain advantageous places (land). Capital and location are surely important but without the input of labor the
47 op erating component of industry, little to noth ing would be accomplished. According to Richard Florida (2010) labor separate s into three social classes or groups, based on their application o f knowledge in workplace tasks. Social c lasses The access to increasingly important and scarce human capital i s a vital component for firms wishing to c luster in a particular locale Westerman, 2008) Intelligent and creative people are becoming the focal point for many industries and, unlike the elements of capital and location, which are largely static, industry must actively attract and pursue talented people to remain competitive. One of the consequences of globalization is the increasing necessity of talented and intelligent people to invent and produce the technologies that make to possible. The old model of industrialization that required tycoons of industry is less important today as their greatest contribution the infrastructure and industrial base they created facilitated the conditions necessary for the next st ep in industrial hundred years have been the entrepreneur, the businessman, and the industrial and the engineers of the new intellectual technology pg 344). 8 9 The needs of these people, both inside and outside of their working environment, reflect the interests, passions and lifestyle of a forward thinking community and the 8 the new economy will be based on innovation. . The new economic building blocks ar e bits, genes, atoms, and neurons. . these are the ingredients of the Innovation Economy: knowledge products. Those that achieve primacy via intelligence, adaptation, and connectivity will define the Innovation Economy of 2006. pg 37)
48 overall humans are more likely to settle in habitats that nurture them. Describing the basic necessities for comfortable living is easy, but if we wish to capture the best and brightes t minds, the development of an environment that mimics the ideals of these people should be investigated Richard Florida, the famous urban economist theorist has much to say on the issue of city structure and social relations. He claims that the cultiv the like, is essential for persistent competiveness in a variety of marketplaces and economy types. The creative class can be contrasted with three other classes : the agri culture, working, and service classes a gricultural c hundred years ago. As of the 1900 census, nearly 38% of all Ameri cans lived and worked on farms ( USDA, 2012) To day, less than 1% of all Americans are classified as farmers, emblematic of a huge shift in national settlement patterns. A griculture allowed the founding of cities and it is the offspring of cities technology that has relegated the agricultural clas s to obscurity. T w orking cenes of hardworking men and women in factories, plants and office environments and conjure up the very image of the and as of the 2010 Cen sus, 24.6% of Americans are considered working class. Today, technology like mechanized labor and economy of scale externalities favor massive factories that require less of the human element. Thus, like the jobs in the agricultural class, working class jobs are disappearing.
49 Over the years, t he majority of labor from the agriculture and working classes reformed s ervice c which comprise nearly 39% of US employment (Florida, 2010) The service class includes o ccupations in retail, tourism and other personal services such as dry cleaning, gas station, drive through restaurant and customer support operators needed to maintain a high quality of life today. While not the creators of innovation, the service class o ften applies and operates the technologies that run our modern economies. Richard Florida and others tout as a major, potential source of growth for industry. He claims that the both directly and indirectly. Th e rising number and infl uence of creative class workers through the last one hundred years is illustrated in Figure 2 4 The products directly created from the creative class spur growth in the working class due to inventions that require new manufacturing and operation skill sets as well as by creating demand for new service class employees. Consisting of 35.6% of total US employment in 2010, the creative class ranks just behind the service c lass in occupational strength (Florida, 2010). 12% of the workforce and consists of scientists, engineers, art ists, design ers and others. The remaining 24% of the working in fields like management, legal and financial operations, healthcare, technical and educational practitioners. While only still a small percentage of the total economy
50 Figure 2 4 Shifting o ccupation c lasses in the U.S Reprinted by permission from Florida, R. (200 8 ). Patents Retrieved from http://www.creativecla ss.com/_v3/whos_your_city/maps/FIG_7.1_Rise_of_the _Creative_Economy.gif the direct and indirect growth to the economy is substantially disproportionate to its size. Creative c lass f ocus In all, historical trends point to big changes in labor and class structure. The economy of the future favors labor that utilizes the mind rather than the application of physical ability or skill. The importance of skilled tradesm e n to the last century are not being replaced by a new k ind of worker, only now those trades in demand require le ss muscle and more brainpower. One of the aims of this research is to demonstrate the necessity of this brainpower made evident in the creative class. For instance, in the
51 manufacturing industry, l abor is the often the largest expenditure (DeRocco, 2009) Today, technological advances allow for almost fully automated assembly lines dominated by mechanized labor. In the U.S., m anufacturing is thriving just not manufacturing jobs as seen in Fi gure 2 5 M echanization chan ged farming a hundred years ago and so too are technological innovations changing the working class today. But why focus on the c reative c but increasing t heir numbers directly and indirectly grows jobs, increases the tax base, lowers unemployment, produces a higher average standard of living and acts as a Figure 2 5 U.S. m anufacturing output vs. jobs Reprinted by permission from Intellectual Takeout ( 2005). U.S. Manufacturing Output vs. Jobs, January 1972 to January 2009 Intellectual Takeout Retrieved from http://www.inte llectualtakeout.org/library/chart graph/us manufacturing output vs jobs january 1972 january 2009
52 catalyst of innovation (Florida, 2010). Also, the creative class appears more resistant to economic change. While none of the occupational cla sses are im mune to unemployment, i n general the creative class is better able to weather ma rket volatility. Nationwide unemployment in 2010 was near 10% but working class jobs saw an average of 15% total unemployment while the rates for the creative class were only about 5% Also, the wages for the creative class are significantly higher. As of 2010, although the creative class was nearly a third of total US employment, it represented over half the total income reported in the United States (Florid a, 2010) The creative class is dependent on the service class for basic goods and services and this trans fer of wealth into the economy, especially the local economy, is important for sustained growth (Florida, 2010). Not all places can succeed in creati ng an innovation economy. In describing these innovation economy models, it is implied that all the factors of production land, labor and capital are aligned to produce the right context for an innovation economy. For places without the right environ mental context or capital investments, the presence of the creative class is not enough. For some places, the economic, social and intellectual capital is already established and what remains is the full utilization and commitment from that community to f oster creative class growth. Adopting the innovation economy model by no means guarantees a successful outcome but for many communities, the upside is far more appealing than the long term risks of maintaining their current model. The creative class cont ribution to a unique economic model, the innovation economy, is of great interest to those places that are positioned to benefit from the abundance of this human capital; places like Gainesville Florida
53 The i nnovative e nvironment The interaction between people and their environment has never played a bigger role in overall economic success like it does within the innovation economy. production but at the same time produce workers congregate in urban centers of the creative class have already been noted above. However, further inquiry into what makes the creative class willing to set tle an area and what results occur when they do are a pertinent topic for discussi on. Rise of the Creative Class from existing technical productivity and innovation to the number of gay couples and t echnology (capital), t alent (labo r) and t olerance (labor/population), Florida has shown that the higher the cumulative score of a location, the gen eral higher level of industrial innovation and creative class employment. Societies that are open to different lifestyle choices with an educ ated populace and technologically sophisticated infrastructure have the greatest chance of capturing the imag ination of the creative class (Florida, 2008) While the needs and wants of the creative class appear demanding, the scale and structure of their d esired urban environment is actually a return to a previous era of urban design. The departure from traditional urban design practices stemmed from the invention of zoning a re just a few factors blamed for the segregation of land uses and
54 general dispersion of economic activity. While home and car ownership boomed, the lack of concentration in urban areas and the dwindling variety of networks and interactions between them ma de for a homogenous and rigid (sub) urban environment. What the creative class and other urbanites clamor for today is a rich, dense and vibrant edge worksites into the urban fabric can reinvigorate urban neighborhoods and downtowns. Creative economy oriented planning can contribute to the local economy by drawing tourists and attracting and retaining employers and a workforce who rank community q uality of life high on their li st of desirable characteristics pg 1) Encouraging and enabling the exchange in the context of urbanism is th e goal when attempting to attract the creative class. Increasing r et urns on i nvestment For many cities, the need to switch from a standard economic model to that of different kind of growth model that depends less on bubbles and consumption and more on the production of last (Muro & Katz, 2010. pg 4) The increased emphasis on sustainable production of wealth in economies by using a resource that did not become scarce or inefficient through continual use has eluded economists until now. O economy consisted of the need to manage an intangible asset that, in contrast to m aterial resources, does not depreciate through use but rather becomes mo re valuable the more it is used Laszlo and Laszlo, 2006. pg 2) Traditional input output models of
55 resource consumption for product creation are no t staples of this new economy and n ovelties like increasing returns found in the innovation economy threaten to undermine classical economic theories. 9 Krugman follows up, noting the importance of 'technological spillovers' of information (which are easily transmitted over short distanc es) and comparative cost decreases that further entice the clustering of industry. These benefits then extend beyond industry itself, radiating into the community and improving the strength of the labor pool by encouraging skillset diversity. Additional ly, when these industries cluster, they amplify their overall utility and in a process called 'Super linear Scaling', a form of increasing returns economics are rewriting the rules of economic geography 10 11 (Krugman, 1991. pg 36) Similar to the requiremen ts of land and location to the innovation economy, the principles of density, diversity and connectivity are the three hallmarks of creative class environments and knowledge center communities. Effective policy investments in infrastructure, development a nd education ought to reflect this paradig m. As Cortwright explains the, 9 bulk material manufacturing to design and use of technology from processing of resources to processing of information, from application of raw energy to application of ideas. As this shift has taken place, the underlying mechanisms that determine economic behavior have shifted from ones of diminishing to ones of increasing returns. Increasing returns are the tendency for that which is ahead to get farther ahead, for that which loses advantage to lose further advantage. They are mechanisms of positive feedback that operate within markets, businesses, and industries to reinforce that which gains success or aggravate that which suffers loss. Increasing returns generate not equilibrium but instability: If a product or a company or a technology one of many competing in a market gets ahead by chance or clever strategy, increasing returns can magnify this adva ntage, and the product or company or technology can go on to lock in the market. More than causing products to become standards, increasing returns cause businesses to work differently, and they stand many of our notions of how busine ss op 1996. pg 2) 10 how and when these returns may change, and then explore how the economy's behavior changes with them. (Fujita, et al. 1999. pg. 4)
56 of economists, led by Brian Arthur (1989) and Paul David (1985). Variously labeled increasing ret suggest that in many industries, particularly the high tech, the combination of high up front costs and low marginal costs, network externalities, and complementary investments produce a dramatical ly different marketplace from that found in convention al decreasing pg 6). Such a new marketplace does not require a revolution in market structure but rather a reexamination of location investment opportunities. This new economy does externalities of the US economy and the local availability of labor and capital. Clustering high tech and other innovative industries together for ms a feedback loop of US competitiveness in recent years has been its ab IMD 2001) By swiftly taking the innovations of today to t he marketplace or incorporating them into the creation of new technologies, the US has become the premier developer of bio technology and information te chnology, just to name a few ( IMD 2001) Ideas and inventions propel human progress forward and the mo st valuable product made in t he innovation economy is those thoughts. The v alue of i deas The most valuable commodity in the innovation economy is the ideas and innovations developed within them. This network of ideas is one of the crucial components of th e innovation economy because the majority of marketable innovations stem from a collaborative process. The formation of great ideas usually requires the
57 idea or innovatio n may mature on its own, but when those ideas collide in the rich context of a supportive and energized community, their development becomes catalyzed. I deas and the formative processes that create them should not be quickly discarded just because no cur exploration before their value can be demonstrated to others. Innovative organizations give people the freedom to use some of their time to explore ideas . the compounding of multi ple ideas will yield a viable application for them 11 (Dvir & Pasher, 2004. pg 18) T he usefulness of previously outmoded or discarded innovations is another staple of the creative process. One more important benefit of discovery and innovation is the in can provide powerful incentives for additional firms to co locate as they can quickly adapt to additional changes and otherwise benefit by proxy o f the original innovation. lock in Once a particular standard becomes established, consumers and suppliers of complementary products, such as films in Blu Ray format, become locked into this format 12 13 (Harrison, 2009. pg 12) Similar examples include the QWERTY keyboard, 11 by others over a period of time as new discoveries are made and new applications found. This is frequently the case wi pg 10) 12 in effects which favour continued use of the system even when the tech nology is becoming outdated unless relatively low cost upgrades are available. Markets for technological products and services are often characterized by high fixed (sunk) costs in the form of set up and switching costs, which help to reinforce the advan tages of standardization, whereas the variable costs of producing multiple copies of pg 12)
58 standards in railway gauges, computer operating systems, and many others. Innovative and innovation because they are usually the originators of said technology. 13 14 Finally, a distinction exists between the form and function of knowledge. Just because an idea is applied in the workforce does not make it revolutiona ry. A distinction exists between tacit and explicit knowledge and its application in the between regions even in advanced economies. A key reason for these knowledge or tec hnology gaps stems from the distinction between explicit and tacit knowledge. Although explicit knowledge can be written down and transmitted . tacit knowledge, or know how, derives from experience and relies on innate judgment and common sense an d can not easily be communicated pg 5) goal of the innovation economy whereas simply following a recipe for the replication of existing technologies or products is akin to a standard manufacturing economy. The value of ideas in society should be apparent to all. Aiding the advancement of technology and innovation are vital for the continual relev ance of an innovation economy. 13 In a world governed by instant communication, exploding knowledge and speed to market it beco mes (Berry, 2005. pg 387)
59 Criticisms of the Literature Review Creative Class Criticism The largest target for criticism, made evident by the number of articles discovered, concerns itself with the creative class. A rather nebulous definition of a social group, the creative class is sometimes difficult to quantify. According to Richard Florida, the creative class is not designated by the blue or white of a workers collar or of the products of their trade, but rather by how that worker uses knowledge in their occupation. The degre e to which knowledge is applied in an endeavor can often be more than a rhet orical device which can placate the hearts and minds of local councilors and politicians that they are actually doing something whilst doing hardly anything at al l (Chatterton, 2000. pg 392) Defining the creative class is hard enough, but what should b e apparent to all are the obvious risks of disproport ionately allocating real value investments towards one group over others. The issue of equity among people and places in the innovation economy is poised to be a recurrent theme in the years to come. B y embracing the creative class too tightly, we risk alienating the other members of society; hardly a democratic ideal supposedly valued by the creative class. Equity and Social Imbalance focusing on the attraction of creative class workers may negatively affect the crucial working and service best described as the effects created when relatively wealthy people acquire property in otherwise low income or working class neighborhoods. Gentrification effects,
60 nurses, transport workers, police officers, teachers may not be able to access housing they can afford, even though they have permanent full time jobs that are vital props to called, may effectively be priced out of the housing market, undermining th e functional efficiency of the urban economy and reducing its attractiveness to the creativ e class pg 389) The effect raises housing costs and eventually other costs follow suit. Displacing less affluent people away from their communitie s is especially hard on those affected because now they must spend more time and a greater percentage of their already earnings on transportation (Blumenberg, 2003 ) Finding the right balance of eedback loops necessary to the innovation economy can function properly in a community. Implementing thoughtful urban development through good planning and vetting ideas through public think tanks l ike Community Action Committees is a g ood start. Unless significant changes to property rights arise, the free market will ebb and flow in the housing sector Wherever value is perceived, investment is likely to follow. Ultimately, the role of planning may rtificial means, the inhabitants of an area are given extended time to adapt to local conditions or relocate: s ink or swim. Diversity in Education Another worry about the innovation economy is the over reliance upon the traditional staples of reading, writi ng and arithmetic in education. STEM industry/education, which is the mainstay of innovation economies, demands priority in the classroom. While certainly important for any student, the pressure to skew less activity in other educational
61 areas, notab ly in recreation and the arts. If diversity is a staple of the creative class and STEM industry, then what we need is more variety in education. As Albert Einstein children, need a range of experiences in their education, especially ones that do not involve looking at a book. They need regular and diverse opportunities to exercise their mental development. The arts and s ports excite children; keeping them interested in school and providing an outlet for creative energy. Anyone can remember feeling the heart of what it is to be hu development, we risk losing or at least degrading our cultural richness and the very es sence of what it is to be human ( McLaugh l in 2012) Innovation Economy: Adaptability and Academia T he innovation econom y model is the next object of debate. Innovation and th e innovative process are different things : j ust because a scientist, engineer or businessman has an innovative idea does not automatically mean the successful translation from concept to market. Also what evidence is there that any one university is or can be successful in the private market? The processes that operate in academia vs. private industry may prove un reconcilable (ex: tenure, for profit systems, worker expectations: research vs. earnin gs, shareholder opinions, etc.). Universities and other special institutions usually form the backbone of the innovation economy as they are the sources of raw knowledge and a skilled workforce. ough to nourish the academic n in the innovative environment (Dvir & Pasher, 2004. pg 24) All universities are unique and serve
62 different roles in their communities. The question to b (Dvir & Pasher, 2004. pg 24) And most importantly, how well do they turn these innovations into realities? Business Concerns I n the innovation econom y, we should be careful not to force the issue of cluster development. A cluster development like Progress Park in Alachua can be created because of the local supply of workers and technology and the local demand for created products G try to create clusters. out of nothing, and cluster initiatives should only be attempted where clusters already exist. The preexistence of a cluster means that an industry hot spot has passed th e market test pg 9) Clusters cannot be manufactured without the support of the market and the special externalities previously discussed. T here is much to be said about the dangers of being too successful with respect to business pr actice Becoming locked into a successful business model or method of operation has the danger of making oneself complacent or dismissive of the eventual necessity of change. Initially, success can easily result in a kind of tunnel vision which is focus ed on, and reproduces, existing activities and knowledge within an organization, with little cognitive openness to new knowledge in the envi ronment pg 2) By first refusing and next becoming unable to adapt, companies eventually consign t hemselves to obscurity T tend to lead t o the ossification of tomorrow. Economic development policies s hould encourage inno vation and adaptation to change 2002. pg 15) Larger
63 companies that have invested much into and often fail to notice the larger changes going on around them, preferring ins tead to car clinging to obsolete technologies or business practices (Itzkin, 2000. pg 2) Patent Trolls Finally, the dark side of the innovation process must be addressed. Globally, between countries, many inconsistencies exist and no clear consensus exists on topics like intellectual property rights, piracy, generic subst itutes and ethical business practices U.S. courts Sometimes, patents are filed but then purpose fully hidden and not disclosed. Sometime later, usually after another entity has investigated significant amounts of time and money into a parallel effort, the patent holder will suddenly emerge, demanding royalties or damages. In conclusion, the criticis ms of the creative class, business practices and worries over the long term effects of STEM prioritization in education do provide poignant topics of discussion. Clearly, large forces are at work. What it all means for class relationships and economic mo deling remains to be seen. By addressing these issues seriously we can help either avoid or at least minimize the negative effects. Literature Review Conclusion Today's leading economists and urbanist authors (such as Fujita, Krug man, Venables, Glaeser, W inston and Florida) postulate that people and the industries they operate comprise the most valuable input in today's economy. As the structure of the corporate world shifts along with the demands of an increasingly influential class the creative class cities and regions scramble to attract the talent and capital necessary.
64 Emblematic of this shift is the location strategies used by STEM industry as they often take positions around these knowledge centers. Meanwhile the reinvestment of power, influen ce and wealth become more concentrated in these knowledge centers and the innovative industries that fuel them. Drennan and Saltzman (1998) argue against the magnitude of this change, and others like Susan Christopherson (2004) claim that other factors, l ike the restructurin g and redistribution of assets, are more indicative of the larger shift in location economics. As time passes the debate will resolve itself as to the specifics of attraction and retention techniques exhibited by cities and by firms on their employees. The composition and intricacies surrounding the spatial location tendencies of resident firms as initiated by cities is complex and evolving Ultimately, the cause of this shift in economics is mute because the end result remains the sa me: innovative firms locate where they can best compete; and they compete best when staffed with highly intelligent people. Such people can o ften be found where they learn; near universities and other educational institutions. Knowledge centers, especiall y those related to STEM industries, often exhibit a few consistent physical traits. They are small, and they are dense. They form economies of scale in agglomerate patterns, and they are typically localized instead of urbanized economies (Blanco, persona l communication, 3/26/11) Policies to attract the workers and companies of this new economy should reflect the needs, desires and opportunities present in these communities. From the bazaars of the Middle East that bridged civilizations and the Parisian salons that nurtured the enlightenment, to the coffee houses of the Netherlands that dreamed up lucrative trade routes right down to the ale houses in New England that
65 fomente d revolution; e ach of these places typify the vibrant and exciting atmosphere whe re people, products and ideas can collide. Fortunes were won discoveries made revolutions staged and fascinating technologies shared. The world would not be the same without these places. Now, as the w orld economy restructures, new opportunities emerg e which u the mind. In all, the literature review explains the economic foundation and social changes driving the location strategies of high tech, innovative industries. Given the information above the concepts of KC and the creative class will be applied to Gainesville, Florida using interviews with actors in innovative professions to understand the effectiveness of their efforts.
66 CHAPTER 3 METHODOLOGY This thesis is a qualitative case study of Gainesville, Florida performed to an innovation economy. The primary data collection method was accomplished by conducting a series of in person, semi structured interviews with open ended questions and answers. This cross sect ional study included interviews of roughly a dozen prominent members of the Gainesville community who were chosen based on their knowledge of the innovative economy The goal was to incorporating the innovation economy model. Using a snowball sample, participants were selected that were knowledgeable of the subject and who hold or held prominent positions in public office and/or private practice. In particular, the research contact ed public and private economic/development professionals, community leaders and elected public officials. Additionally, professionals such as economists and academics were interviewed. A full list and short biography of each interviewee is listed in A pp endix B Participants were given, via email, a list of open ended questions one week before the interview. It was made known to each participant that additional questions may be asked as the interview progressed. Interviews took place during regular bus iness hours and lasted no longer than 1.5 hours. The primary data collection method was made by recording the interviews and taking additional notes during interviews. Interviews were conducted during the month of August, 2012 and were recorded via audiot ape. The information obtained was then personally transcribed and the tapes deleted as per the IRB protocol
67 Results generated from the interview process were assembled into categories and further into opinions of specific topics. The findings are orde red according to their topic and referenced in a similar manner to the literature review. That is to say that the findings are displayed in a general to specific nature, with potential Gainesville specific applications being voiced at the end of each chap ter. This non experimental study is retrospective in nature. The retrospective portion regards past lessons and trends that are examined and then applied when making This research design was selected due to the availability and willingness of expert witnesses to speak with me. Time constraints and lack of monetary funds were also a factor. The strength of this research design is in the abundance of qualitative data a nd literature on the economics and sociology of the creative class, knowledge center community and innovation economy. The number of participants, the overall quality of their testimony and their relevance to the topic at hand are also a benefit. Also, s ome quantitative data, mainly in the form of labor and population statistics are included. Comparisons are then made between Gainesville and other communities with similar innovative economy models, real or proposed. The limitations of the research desig n mainly concern the data collection method which is mostly qualitative. The potential bias of those questioned is also a factor. Also, recent trends and events, local or abroad, may shape the opinions of those interviewed.
68 CHAPTER 4 FINDINGS Profile o f Gainesville, Florida The profile of Gainesville, FL is that of a typical university town. Gainesville is situated in Alachua County, in north central Florida. According to the 2010 Census, the population inside the city limits is 124,3 54 covering 61 sq uare miles (U.S. Census Bureau 2010) Although initially a hub for railroad activity, the university has since redefined itself as a premier research city. Landlocked, the city relies on Interstate I 75, which connects the Southern most region of Florid a all the way to the industrial centers of Chicago, IL. This is the major transportation network through the community. Gainesville also has a small regional airport that is served by four airlines Delta, US Airways American, and Silver Airlines with direct service to Atlanta, Charlotte, Miami, Orlando, and Fort Lauderdale In socio political terms, Gainesville can be considered relatively progressive community; consistently voting for libera l candidates, (Supervisor of Elections, 2008) developing it s mass transit system (RTS) and actively promoting a variety of cultural events throughout the year, the bulk of w hich are offered free of charge (Schlenker, 2006) As of the 2000 Census, 5.25% of Gainesville residents biked to work, one of the highest ra tes in the country (Bureau of Labor Statistics, 2000). Active living is Ame rica (Welln ess Council 2003) A s seen in Figure 4 1, a high percentage of its residents hold or are pursuing a college degree. Gainesville is also a relatively young city, as seen in Figure 4 2. Currently, the major industries are based on education,
69 healthcare an d real estate, (C EO 2010) and the University of Florida itself contributes more than $8.7 billion to the state of Florida (Mulkey & Hodges, 2011) Figure 4 1 . Source: Bureau of Labor Statistics, 2010 Figure 4 2 Gainesville has many young people Source: Bureau of Labor Statistics, 2010
70 Economy Vested I nterests Many of the vested interests, both public and private, want to see the development of the local economy that focuses on creating high tech jobs that offer comparatively high wages. Gainesville could capitalize on the abundant opportunities created between the University of Florida and Santa Fe College, local community and businesses. Today, the cooperation between these parties has, as many say, never been better. Several large and ambitious development projects in the area are also underway. These projects could have the ability to permanently and significantly alter the social and economic dynamics of the city. The leadership in Gainesv ille is motivated to accomplish these and other projects and the desire of the community appears concurrent with the innovation economy. First, on the subject of land, labor and capital as the foundation of any economy, Gainesville appears well positioned. Gainesville, as shown in F igure 4 3 is seen to have large amounts of land available for development, especially outside the city limits. Also, with a population of approximately 32,000 undergraduate students and 16,000 graduate students Gainesville coul d supply the innovation economy with an abundance of skilled labor ( University of Florida 2012) Also important is the ability of Gainesville to staff service positions with semi skilled labor. The availability of capital, the supportive element funding the early stages of innovation, is of the greatest concern. Because Gainesville is a relatively small city, its venture capitalist enterprises and other related lending institutions are currently undersized to meet the demands of a developed innovation e conomy. As this economy type grows, increasing capital investment in the area is expected.
71 Figure 4 3. Overview of Gainesville, FL Source: Google Maps 2012 W hat potential industries might become established in Gainesville? Fortunately, the specia lized industries and supportive institutional framework of the city are already established and well known. Figure 4 4 highlights the basic characteristics of the community. Of particular note is the high rate of patent citations and the high number of a vailable medicine related employment opportunities.
72 Figure 4 4. Gainesville, Florida characterisitcs Reprinted by permission from Plum Creek (20 12 ). Envision Alachua: Brain Hub Cities Envision Alachua Retrieved from http://www.envisionalachua.com/files/managed/Document/206/EA_Vision_Ma y%20_2012_web AppenA.pdf
73 The University of Florida is a top tier research un iversity specializing in bio medical research and related applications. Aside from the College of Medicine, many other departments are well regarded such as E ngineering, Business, and Law ( Zuckerman, M., 2012) H igh tech and STEM industry companies wishi ng to locate in Gainesville have comparatively high chances to attract highly skilled labor into their workforce. The potential for high tech startups or established companies to profit from skilled labor and cutting edge technologies derived from the Uni versity of Florida is enticing. Gainesville can be considered supply oriented in terms of its labor inputs. Also, it could be described as market oriented because its products and services generally have local and export demand. Furthering this advantag location directly adjacent to the major transportation conduit of I 75. Companies in Gainesville, Florida have direct acce ss to markets in Tampa, Orlando and Jacksonville and flights to Atlanta and Charlotte among others. Although the industries and markets in these other cities vastly overshadow that of Gainesville, complimentary products and services could be of great interest and value to them. Contextual Structure centric city in a core Figure 4 5 demonstrates the existence of many activity clusters. While Progress Park is seen to be isolated, the new and expanding GTEC and Innovation Sq uare projects offer more suitable locations for innovative industry. This decentralized structure, at the moment, disallows the self allows for a variety of cluster locations. Of primary int erest is the Innovation Square development, seen in Figure 4 6, which will be examined later.
74 Figure 4 5. Activity c enters in Gainesville, FL Source: Google Maps 2012 r context of economic geography sees it at the center of a core periphery region. Simply put, Gainesville is like an island there are no nearby cities of equal or greater size. The nearest major cities are, clockwise: Atlanta, GA to the North, Jacksonville, FL to the East, Orlando and Tampa, FL to the South, and Tallahassee, FL to the west. Each of these destinations is, with the exception of Atlanta, two hours driving time away while Atlanta and Miami are approximately five hours away, in opposite directions. is largely unchallenged in the region (hence a mono centric region), somewhat reducing
75 Figure 4 6. Innovation square context Reprinted by permission from Perkins+Wills (20 12 ). Innovation Square University of Florida Perkins+Wills Retrieved from http://worldlandscapearchitect.com/innovation square university of florida gainesville florida perkinswill/
76 competition from outside loc alities and generally focusing energy and activity inwards D ifferent development opportunities in the city and the benefits of relative regional isolation ensures the focus of attention remains firmly on Gainesville. Capital Investments Effective and ef ficient modes of transportation around Gainesville are taken seriously by advocates and researchers at the University of Florida, ( TRC 2012) city planners, councilmen and city residents. Although efforts to expand the scope and scale, like the $9M BRT ma intenance facility expansion, (Smith, 2011) of transportation networks have met considerable opposition ( Ruane, 2012; Cunningham, 2012; Cunningham, 2012; Bottcher, 2012) the plans are forward thinking and likely inevitable. Long term plans f or the city of Gainesville include considerable densification of land uses between the university and downtown. Parking restrictions are likely to become more stringent in the future. The city hopes that alternative transportation methods and good city pl anning will make car ownership unnecessary in some parts of use an automobile, Gainesville can remove cars from some of the densest parts of the city and enable more spac e for people and exciting places. This vision and the current efforts to reach it are on track with many of the aspects of the innovative economy and creative class ideals. Culturally Creative Gainesville has just the type of cultural diversity and progre ssive attitude that authors like Richard Florida say are critical to developing the creative class. According The Rise of the Creative Class Gainesville is listed as the second best metropolitan area in the country for creative cla ss growth. Later, in a 2010
77 Florida listed Gainesville as the number one metro area for having the largest creative class job growth between 2008 to 2018, standing at 17.7% (Florida, 2010) [Figure 4 7] Figure 4 7. Projected c reative c lass g rowth between 2008 and 2018 Reprinted by permission from Florida, R. (2010). Where the Creative Class Jobs Will Be The Atlantic Retrieved from http://theatlantic.com/ Gai are leveraging the unique quality of life in our community to gain a competitive edge in the 21st century. Already we are moving forward forward with renewable energy, forward with mass transit and forward with an innovation economy." Mayor Lowe said Gainesville is in competition with other cities and regions around the country for, "high tech, high paying jobs" and that Gainesville can harness, "what sets us apart", as a
78 majo r advantage: The University of Florida, a, "thriving arts community," a diverse populace and as the, "home to unique ecosystems and species." Mayor Craig Lowe with the de mands of the (Smith, 2012) portion of the state. The city is socially progressive, tolerant of alternate lifestyle choices, forward thinking in terms of policy and open minded to new ideas regarding its future economy. The level of density and transit connectivity may not be optimal at the moment, but is steadily improving. As seen from 2000 to 2005 Passenger trips are up 5.2M to 8.2M; Service area pop ulation rose from 137k to 149k and the number of RTS Employees grew from 133 to 254 (RTS, 2008) [Table 4 1 Table 4 2 ,Table 4 3, Table 4 4 ] However, there is little doubt that, in the context of social issues, Gainesville meets the demands and expectat ions of the creative class the workers necessary for and the cultural base of the city is well developed. The uniqueness of the area is complimented by a range of natural ecosystems, a diversity of academic, recreation and sports related activities, and a number of locations and lifestyle choices that improve the overall quality of life.
79 Table 4 1 Performance. evaluation of existing transit service. Indicators FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 % change 2000 2005 Service Area Population 137,665 139,950 142,273 144,164 147,036 149,173 108.4% Passenger Trips 5,180,872 6,302,952 7,185,018 8,103,12 0 8,146,496 8,152,989 157.4% Revenue Miles 1,855,587 1,960,692 2,147,281 2,408,321 2,661,644 2,668,090 143.8% Revenue Hours 152,474 161,144 188,956 212,034 233,158 235,765 154.6% Total Operating Expense $7,279,463 $8,458,929 $9,462,631 $10,917,692 $ 12,608,960 $13,823,592 189.9% Total Maintenance expense $1,244,586 $1,415,157 $1,938,381 $2,379,754 $2,600,006 $3,559,156 286.0% Total Employees 133 150 163 198 212 254 191.0% Maximum Vehicles in Service 72 82 83 105 105 105 145.8% Source: RTS Performance. evaluation of existing transit service. June, (2008) Table 4 2. Effectiveness m easures. e valuation of e xisting t ransit s ervice Indicators FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 % change 2000 2005 Rev. Miles Per Capita 13.5 14 15.1 16.7 18.1 17.9 132.6% Passenger Trips Per Capita 37.6 45 50.5 56.2 55.4 54.7 145.5% Passenger Trip s Per Rev. Mile 2.8 3.2 3.3 3.4 3.1 3.1 110.7% Average Age of Fleet (years) 11.7 9.2 9.4 10.4 11.5 10.4 88.9% Source: RTS Effectiveness m easures. e valuation of e xisting t ransit s ervice. June, (2008)
80 Table 4 3. Efficiency measures. evaluation of existing transit service. Indicators FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 % change 2000 2005 Operating Expense Per Capita $52.88 $60.44 $66.51 $75.73 $85.75 $92.67 175.2% Operating Expense Per Passenger Trip $1.41 $1.34 $1.32 $1.35 $1.55 $1.70 120.6% Operating Expense Per Revenue Mile $3.92 $4.31 $4.41 $4.53 $4.74 $5.18 132.1% Farebox Recovery Ratio 30.70 % 30.80 % 43.70 % 50.50 % 50.30 % 52.00 % 169.4% Revenue Hours Per Employee 1,146 1,074 1,159 1,071 1,099 1,086 94.8% Passenger Trips Per Employee 38,954 42,020 44,079 40,295 38,441 37,571 96.4% Average Fare $0.43 $0.41 $0.58 $0.68 $0.78 $0.88 204.7% Source: RTS Efficiency measures. evaluatio n of existing transit service. J une, (2008) Table 4 4. Level of service. evaluation of existing transit service. Fiscal Year Vehicle Miles Revenue Mil es Vehicle Hours Revenue Hours 2000 1,942,538 1,855,587 157,257 152,474 2001 2,129,984 1,960,692 170,544 161,144 2002 2,332,684 2,147,281 199,978 188,956 2003 2,710,565 2,408,321 229,444 212,034 2004 2,806,894 2,661,644 242,692 233,158 2005 2,820,508 2,668,090 245,795 235,765 % Change 2000 2005 45.20% 43.80% 56.30% 54.60% Source: RTS Level of service. evaluation of existing transit service. June, (2008) Cluster Developments The centripetal force, or outward directional energy exhibited increases the chances of localization agglomerations, a few of which already exist (Progress P ark, Knowledge spillovers are likely due to the interplay of companies in an already speciali Sid Martin Biotechnology Development Incuba tor, including the McKnight Brain Institute, and the Gainesville Technology Enterprise Center . has generated 28 biotech spin of fs since it was founded in 1995
81 (Archer, 2006. pg 7) In 2003, the U.S. biotech industry consisted of 1,473 firms tha t employed 406,000 people, generated $64 billion in output, and spent $17.9 bill ion in research and development (Archer, 2006. pg 7) It is also worth pointing out that this study underestimates the impact of Biotechnology as the study is six years old and the data is from nine years ago. Figure 4 8 shows the overall growth of the biotechnology market between 1999 and 2005. biotechnology, is poised to play a major role in regional economics. By utilizing this existin g interaction and market structure, other industries could gain a similar comparative advantage and co locate among existing firms. The advantages of increasing this economy of scale should be beneficial to all parties; helping them decrease costs, share new knowledge, and generally help create that The externalities from economies of scale should increase as more companies enter the mar ket. Likewise, the multiplier effects of talent clustering on job growth and higher wages should become stronger if the innovation economy is realized. Mentioned earlier and explained now, the ability of firms to survive in cluster developments in Gainesv ille has already been well documented. The first case to be examined is Progress Park, which was built in 1990, twenty minutes North of Gainesville in Alachua, FL. This was the first attempt by the University of Florida to coordinate the construction of a research park that clustered industry specific companies together. Since that time, Progress Park has expanded multiple
82 Figure 4 8. U.S. b iotech s tatistics from 1995 2005 Source: Kevin Archer (2006) times, going from 200 acres in 1980 to 480 acres in 2012. As of 2012, Progress Park accommodates 30 companies in 18 buildings, employing 1,200 people. Eighty percent of those employees work for companies tha t are direct spinoffs from UF (Clark, 2012) Progress Park continues to be a source of importa nt innovation and also dramatically enhanced the relationship between Gainesville and the community of Alachua. Similar, smaller cluster developments have cropped up in the following years around Depot Road, GRU Power District, and Downtown Gainesville. W hile good trial runs for the validation of the innovation economy, the most impressive cluster development opportunity is taking place now in Innovation Square. [Figure 4 9]
83 Fig ure 4 9. Innovation s quare c ontext Reprinted by permission from Plum Creek (20 12 ). Innovation Square: Development Framework Perkins+Wills Retrieved from http://www.lulu.com/shop/perkinswill/innovation s quare development framework/paperback/product 18704565.html
84 Innovation Square is the product of many collaborative efforts over the years. It seeks to physically bridge the gap between the business elements downtown with the research capabilities and br ainpower of the University of Florida. The old site of the Alachua General Hospital was cleared in 2009, providing 5 acres of contiguous land just the product of col laboration between the University of Florida, Shands Hospital, The City of Gainesville, and Tri mark Properties. Since then, one building has been constructed the Innovation Hub and several more have been planned. Completed in 2011, the Innovation Hu b is a 48,000 square foot high tech incubator housing several startup companies and related firms. This development was synchronized by a general is geared to facilit ate other, similar developments in the area. Innovation Square was awarded two state awards by the Florida Redevelopment Agency ( University of Florida 2012) and the national Donald E. Hunter Excellence in Economic Development Planning Award by the Americ an Planning Association (Gainesville Chamber, 2012) The Florida chapter of the establishment of a vision that is not only aspirational but implementable, and the collaboratio n of wide range of stakehol ders Figure 4 10 shows how the urban form of the neighborhood surrounding the Innovation Square compares to other, competitive cluster developments in Atlanta and San Francisco.
85 Figure 4 10. Innovation s quare as related to other c luster d evelopments Reprinted by permission from Perkins+Wills (20 12 ). Innovation Square: Development Framework Perkins+Wills Retrieved from http://www.lulu.com/shop/perkinswill/innovation square development framework/paperback/product 18704565.html A Knowledge Center Community Gainesville fits the description of Knowledge Center community based on a number of criteria. A strong institutional backbone anchors the city while clear specializations have arisen in medicine, engineering and other STEM industries. Shands Hospital, and The Colleges of Medicine and Engineering act as the specialt y driver for biotech research Some cluster developments exist while others, like Innovation Square, are expanding. Specialized suppliers and spinoff companies have arisen to support and contribute to the overall level of innovativeness, creating agglomeration clusters in multiple plac es and generally meeting success. Also, the aforementioned projected growth of creative class jobs bodes well for the community aspirations as a Knowledge Center In Figure 4 11, a n association between job growth and the presence of the creative class exists with Gainesville circled in red. Figure 4 1 2 displays some of these local creative class jobs.
86 Figure 4 1 1 Association between job growth and the c reative c lass Reprinted by permission from Florida, R. (2005). Job Growth and the Creative Cl ass The Creative Class Retrieved from http://www.creativeclass.com/_v3/creative_class/2010/08/18/where the jobs will be/ In all, nearly every criteria or determinant for the creation of the innovation economy can be found in existence or i n progress in Gainesville, FL. The following in the words of many influenti al public and private actors in the local economy.
87 Figure 4 1 2 c reative c lass j obs Source: Bureau of Labor Statistics. (2010) The structure of these findings con siders broad trends of global activity then narrows down to specific, local applications. When possible, responses from multiple candidates are grouped together to demonstrate the consensus of a particular issue. Differences of opinion, priorities and pe rspectives are equally important and are also explored, usually in the concluding remarks of each chapter/subject heading.
8 8 Broad Implications When asked about the nature of globalization and its effect on local economies, most respondents were quick to poi nt out that speed and scale are of utmost importance. Joelle Smith, a MindTree representative in Gainesville thinks, we need to be more productive, with less people, over a shorter amount of time across the board. ftware, car s or whatever it is; our learning curve is shorter, at l east in the realm of technology Compared to other countries, our great advantage in the United States is the history and experience of developing creativ e and intelligent minds while also modernizing our civilization and infrastructure. Although other countries are, hungrier, scrappier and . know what risk versus reward i s and [ because personal communication, 8/22/12) the chance as adapting to changes in long term success. Still, l arger i mplications loom for the US economy. W hile the colle and down market history counts for something, it should be recognized that new and creative ways to capitalize on the proximal resources of our environment is necessary for global competition. For many places like
89 Gainesvi lle, Florida, that means analyzing the strengths and weaknesses of the region and reevaluating the goals and objectives of the community 1 (Florida, 2010) Renowned economist and retired UF professor David Denslow said when you, at what causes cities to exist, there has to be some kind of natural agglomeration. It started with agriculture and has matured today in the fo rm of information or technology rsonal communication, 8/22/12) For Gainesville, Florida, that natural agglomeration took the shape of a higher learning institution with a comparative advantage in biomedical research and development. The support industries that sprung up around the university over time formed the basis of the l ocal economy. Referencing the book, The Me dici Effect by Frans Johansson, Brad Pollitt, Vice President of Shands Hospital Facilities, conceptualizes the main argument. He states power and brought so many pe ople together that they [sparked] a collision of ideas. One of the concepts or metaphors gleaned from that book was that, typically when you improve a product, i t generally is a linear process ersonal communication, 8/27/12) In relation to that concept, Pollitt used the example of Microsoft going from 1 based urban development (KBUD) principally is about processes of kno wledge production, and their reflection on the urban form and functions, which provides a new perspective for the development of creative urban regions (Yigitcanlar and Velibeyoglu, 2008). KBUD is considered as a new strategic development approach in tough global economic competition. KBUD involves contemporary understanding and management of value dynamics, capital systems, urban governance, development, and planning. And the main promise of KBUD is a secure economy in a human setting, in short, sustainabl e urban and economic development pg 230)
90 collision of two or more of these linear strategies 2 (B. Pollitt, person al communic ation, 8/27/12) Today, growing the Gainesville economy must account for the larger trends in global economics which stress es regional specialization and talent/labor retention. exchange prospering and growing and the cities tha t do not have remained stagnant personal communication, 8/22/12) David Day, the Director of the Office o f Technology ourselves and future generations . innovative solutions . (D. Day, pe rsonal com munication, 8/15/12) And apparently, Gainesville need not look far when considering how to profit from this shift in global trends towards innovative thinking. Gainesville appears sufficiently supplied with two of three requisite factors needed for con tinual, innovative development. First, an exciting, diverse environ ment both natural and manmade exists that enabl es a rich variety of personal and place based intera ctions. Second, Gainesville has a wide range of intelligent people in an academic at mosphere that promotes the exchange of ideas How Gainesville meets t he need of innovative industry, in the capacity of labor, was a topic of much discussion with those interviewed. 2 See: http://www.youtube.com/watch?v=NugRZGDbPFU
91 Labor Force Characteristics Along with the City of Gainesville, the Unive rsity of Florida is also seeking creative ways to grow the economy as it struggles with state budget cuts. Not only in the business of creating talented people, the University of Florida must now consider ways to profit from some of them. Similarly, UF g raduates are also struggling with monetary concerns of their own due to potentially low job availability. By working together to harness the potential ideas from these people, the innovation economy might have accidentally provided an outlet that allows b oth students and the university just growing [the] technology business but growing undergraduate led businesses out of the university. We graduate 9,000 kids a year and send almost all of them out of this community. Of those 9,000 that graduate each year, how many startup companies is not presenting them with a startup alternative and a startup is a career alternative. We start 15 20 businesses a year out [at Progress Park] . when we could be having these students start up a hu (D. Day, personal communication, 8/15/12) Ed Poppell, Vice President for Business Affairs and have over 300 inventions every year [in Gainesville]. In fact, we had 324 inventions last had 15 spinoff communication, 8/23/12) David Ramsey, Vice President of Economic Dev elopment for
92 s to keep the talent created here, but also want s to recoup the investments made in the form of grant money and other tangible products as well Ramsey, personal communicati on, 8/12/12) T his community was founded and operates as a center for higher learning, and the products created here by its students and faculty only further its prestige. The University of Florida is, a $600 mil lion dollar research university, a third of the research in the state of Florida [happens here] and [home of] 3,000 scientists . 3 (D. Day, personal communication, 8/15/12) Fi erce competition between Gainesville and other communities for the best and brightest minds necessitates that the city use all its resources to attract and retain top talent. Eri greater obligation to the U.S. economy notes that on a larger level, Gainesville needs to be on the cutting edge for the development of this part of the [American] economy (E. Bredfeldt, personal communication, 8/24/12) ] the infrastructure to make this work and we are unlikely to become a manufacturing economy. [Also] we already have a pretty strong service base and governmental base. The basics of looking at where we are . the best we can do is to expand on somethi ng we are already making: whi ch is essentially bright people communication, 8/27/12) Referencing the economist Edward Glaeser, and the need for higher income growth, the really two tried and true ways to do so focus on the number 3
93 of adults in the community that 1) have college degrees and 2) have industrial diversification rsonal communication, 8/24/12) Previous figures and ta bles project the growing number and rate of creative class jobs in Gainesville. However, one might question Bredfeldt s formula for population growth. Gainesville already has a high rate of educated people per capita l but its growth rate and population, compared to other biotech universities, Florida and the U.S., is below average [Figure 4 1 3 ] Also, the other part of Bredfeldts equation, industrial diversity, is ight be the reason the community has a slower growth rate. Increasing this diversity is Figure 4 1 3 A look at population growth in Gainesville compared to Florida and the U.S Source: U.S. Census Bureau. (2010)
94 tech, life sciences, logistics, healthcare . [and] more creative design firms that make apps and programs. These are the companies that provide the products services tha Ramsey, personal communicati on, 8/12/12) diversity of industries, Gainesville can better balance its economy. Just because Gainesville is straying a little from its traditional biomedi cal roots does not require it to develop a whole new economic approach. The application of knowledge and innovation to the workforce does not call for the abandonment of speaking of the new opportunities in town, Ed Poppell comments about the current ignorance of these developments by the stude com panies, like MindTree, we have the jobs. This fall, you are going to see a huge communication, 8/2 3/12) Global trends necessitate adaptation in the marketplace, but those changes need not be drastic. The idea in Gainesville is not to change the character of the school [and commun ity] but to grow it By emphasizing the development of marketable innovations, this tactic seeks to e nhance the capabilities of the already outstanding research facilities by encouraging real world applications derived from raw knowledge. The degree to which implementing the innovation ionship between industry and the university. They are complimentary to one another in that the
95 successes of one are likely to transfer over and positively affect the other personal communication, 8/24/12) This feedback loop could be like a self sustaining perpetual motion is important but, in Gainesville, the point is mut e: the starting material is the university and what is needed in greater abundance is more industry. On the point of needing to draw more business, at a League of Cities meeting in early 2000, Warren Nielsen, then a Gainesville city commissioner visited th e Yale University campus and took note of developments in that city. He and his team use of located their market activity from public to private labs into what t minute (W. Nielsen, personal communication, 8/11/12) By shortening the physical distance from the centers of knowledge and the centers of business, Yale had increased the success of their public private ventures. The concept of co locating related industries is not new but often difficult to accomplish in built up commun ities due Progress Park was established but it too could be accused of a proximal disconnect; located roughly twenty minutes from campus. The idea gleaned from the L eague of Cities meeting was that finding places where business can be successful was just as important as knowing which businesses to include. Learning from this, today,
96 location and any package that [a b usi ness] might be interested in On the surface, it appears that the Gainesville community has a number of incentives some tangible and others the byproducts of the academic environment. Opportunities are avai lable for innovative companies to locate according to their needs and the city appears interested in facilitating that process. Whether importing successful business or starting local companies, Gainesville appears to have some comparative advantages in t he marketplace. Echoing this point, many respondents wished to elaborate on these advantages. Business Opportunity Typically, when businesses contemplate relocating or forming, they consider the special benefits they might enjoy when locating in a communi ty. Some are motivated by the abundance of available resources, close location of nearby markets or even the industry gets, as an advantage to [locating here]: superb tal ent, and secondarily . access to top notch facilities, collaborative efforts . and the culture of being in a southern college town The competitive advantage of locating in Gainesville can be understood, 5 years anymore like they used to. They have to get close to the minds, to th e research universities, to shorten that timeframe to stay up with technology. They have to get close to our talent. You, the communication, 8/23/12)
97 places where you can find these kind of people and these ideas that come in and can change your en tire strategy Access to fresh minds, unaltered by years of exposure to corporate conditioning can be powerful new sources of innovation. If you want to have, a successful business model, everybody needs to have new entrance into your organization. Having that influx is critical for any business . have fresh, new thoughts, injected into your business personal communication, 8/22/12). Bruce DeLaney, Assistant Vice President for Real Estate at the UF Foundation, Inc., said that right now, the University of p 4 (B. DeLaney, persona l communication, 8/16/12) While smaller and less dense than other, similar, competing cities, what draws companies like MindTree to the area are the aspiration s of the local community to be tech companies are looking for the next Austin [TX] but not the Austin cost . expensive /12/12) MindTree representative, tin and that really inspired us Still, companies like MindTree might chose Gainesville over other cities with comparably forget Raleigh 4 This claim is unsubstantiated. The researcher found that although competitive on a consistent, yearly basi s, over the last 3 10 years, UF does not produce more patents that MIT
98 petitive advantage. In order to be sustainable, we have to continually offer [businesses] talented people, excit ing places and controlled costs speaking of the relationship between Gainesville and its sout hern competitors, Smith cities under consideration] was the collaboration fr om all aspects of the community Smith, personal communication, 8/22/12) The Raleigh marke t was already cornered by economy] type would be in f irm control of the labor market communication, 8/22/12) Market domination of a single firm is clearly not what the Gainesville community has in mind. This was made evident to Joelle Smith with getting the first big fish in the door it was about proving the m odel and continuin g the (J. Smith, personal communication, 8/22/12) other area in the entire US . suited our needs better. We wanted to have a territory yet ersonal communication, 8/22/12). Inherent to the innovation economy and the resulting cluster agglomerations, the topic of networking and building connections was important to many interviewees. The interdependent relationships and the nature of those affiliations between companies, the university, and the workforce was a major topic of discussion. Key to understanding the overall concept is the encouragement of promoting social interaction between race, class, occupation, and other s ocial categories. Gainesville has grown by 20% in total
99 population from 1980 2000. Over that time, the percentage growth (and number) of the increase in both the Asian/ Pacific Islander and Hispanic populations. Of particular note was the large increase, of all minority groups, that are foreign born and living in Gainesville. As of the 1990 census, over 50% of all non white residents are foreign born, with 38% becom ing naturalized U.S. citizens ( Bureau of Labor Statistics, 2012) Although this research did not examine the real or perceived changes, if any, in the relationships between racial classes, Gainesville, Florida is experiencing continual increases in racial div ersification both in number and rates of change. Whether or not the city of Gainesville is a friendly and tolerant place for ethnic minorities is up for debate. There is a noticeable level of racial segregation between the east side and west side of th e city Representatives of the predominately African American east side ha ve voiced concerns over equitable development initiatives that often bypass that economically under privileged part of town. Because innovation economy initiatives target capital a nd resources into specific places (cluster developments and supporting industries), concerns over east Gainesville disenfranchisement may arise. Ray Oldenburg, a retired sociology professor and acclaimed author had much to say about community relations. Encouraging a mixture of ideas helps avoid a kind of that can mire a company, industry or even a city by limiting innovative ller, deeper resp ect for humanity and community (R. Oldenburg, personal communication, 8/13/12) the business community, the university even the city government . will tell you that
100 iness re (D. Day, personal communication, 8/15/12) By and large, all respondents agreed. The explanations varied from 1) decreased business application and permitting times, 2) the installation of business friendly commis sioners, 3) public private collaborations, or 4) a unified vision of community. Regardless of the reasons why, all interviewees displayed an relationships between the public, personal communication, 8/15/12) Before concluding the remarks of the needs of innovative businesses in Gaines ville, it is worth exploring a different dimension of the Gainesville economy. Stated earlier, one of the major industries and vested interests of the community is the real estate market. Many large landowning or managing companies like Tri Mark, Paradig m, Bosshardt and others have a significant impact Real e state s ales and m anagers totaled 730 local employees, a figure that does not include real estate appraisers and brokers or office support staff. These findings could not ascertain the number or siz e of for sale/lease properties, but it should be stressed that the local real estate market is heavily invested in this community. The real and tangible assets they control are significant. Until recently, these property giants were comfortable following a traditional real estate market focused on student and single family housing. Today, the market appears ready to ex pand into commercial holdings (B. DeLaney, p ersonal communication, 8/16/12) Since WWII, the amount of student and resident housing
101 steadi ly increased. Initial, post war booms in housing were following by steady increases in the student and resi dent populations Today, the reality is different. It appears that the University of Florida has effectively capped th e student population number at about 50,000 students, slowing the demand for student housing (D. Day, personal communication, 8/15/12) This has . to put their investments [toward] growing technology rying to deploy their resources A change in the variable conditions say that of land management away from residential and towards commercial does not the problem of having to create new revenue for the same stak eholders, the property giants (DeLaney, per sonal communication, 8/16/12) DeLaney continues, noting the accomplishments of major stakeholders like TriMark who diversified their business model to provide land for tech companies. Real estate companies, just like the larger economy of Gainesville, h ave altered their strategies to remain competitive and profitable. Just like the two former examples, no unimaginable shift or devastatingly large correction to their role in the economy was e to play a meaningful role in local affairs. In fact, now that the dialogue has increased between these companies, the city, and the university the real estate industry may be better evelopment plans.
102 The bottom line and common consensus with all the interviewees was that business location in Gainesville favors companies that need access to an abundance of creative, intelligent people and premier research facilities. Whether or not th e debatable, but for now, everyone seems to be pleased with the real and upcoming opportunities. Landing a big company like MindTree was the proof of concept. Also, evident to this researcher was the importance of cohesion and communication between the leaders and major stakeholders of a community. Whether it be multi year, public private collaborations like Innovation sq uare that forced cooperation or city commission innovation economy communities, the vested interests must all work together. 5 6 Sharing a similar vision of community is likely to accelerate development initiatives. By working towards a common vision and demonstrating competence and ad aptability, Gainesville appears attractive to startup and relocating companies. [business] is going through is more enticing to me than an actual cash incentive. Money make We need the solutions [to those problems] and sometimes those cost money and . is 5 "The Chamber has a vision to be a na tional hub for green and health technologies and to become a city known for innovation and entrepreneurship," he said. "Gainesville has an opportunity going forward to be part of this group of the next great American cities that will have vibrant economies ." (Clark, 2012) 6 Gainesville's policies and regulations, spurred the creation of a marketing plan for the city and played a role in the genesis of a proposed
103 sometimes more i mportan t, I think, than the incentives ersonal communication, 8/22/12) Using a variety of incentives is important to attracting the interest of firms. But once interested, Gainesville must offer equally attractive business locations. Knowin g how and where to optimally locate an innovative business is crucial. In the Gainesville community there are numerous locations good both for business and for the development goals of the city. The opportunities of this town, in regards to the innovatio n economy, is the ability to grow, the presence of large land owners and the diversity of natural and business environments. Opportunities and Constraints of the Physical Environment First, the community, as based on its geogr aphy, is certainly able to gro w laterally if it chooses to do so. New opportunities for development exist to the north by the Santa Fe campus, west by Interstate 75, out in East Gainesville, and in the outlying communities with great potential highlighted by the future Plum Creek de velopment. Development in these outlying areas would be careful to avoid sprawl and cluster their development patterns, but the pressure to build is not only at the edges but in the interior. If the needs of innovative businesses rely on the proximal adv antages of the University of Florida and the collision of ideas, urban infill and increased densification of the urban core is highly likely. While much of the land surrounding the city is physically available, nearly all the interviewees had similar tho ughts on the need to concentrate development, one piece at a time. The goals and direction of the community are, according to the experts, to . detaching the emotions that might li mit our vision of the city is quite important. If we take a scatter
104 gun approach, rather than concentrating resources to achieve a critical mass that would we would lose the initiative (B. DeLaney, personal communication, 8/16/12) Echoing the sentiments of increased density and prudent timing is the opinion large quantities of connected land in the city. I think right now we have sufficient land, 8/24/12) While the most exciting developments are taking place in clusters like Innovation Square, we should not ignore other significant plans to develop on the fringes of Gainesville. Plum Creek, a juggernaut landowner of conservation and timberland, has plans to develop a massive piece of land on the east side of town. Locat ed about 12 miles from the heart of Gainesville, the Lake development proposal spans 65,000 acres. The total of acreage of Plum Creek holdings in Alachua County spans nearly four ally diverse The implication of this development sends powerful signals to the local and regional economies. As Nielsen, Bredfeldt, Denslow and others previously explained, the opportunity to he lp shape the development of a large, contiguous body of land in or near your community represents a significant opportunity. The reason, this matters and whether that distance [from the university] is important or not is that the next big piece of land yo u have is that huge 65,000 acre tract of land owned by Plum Creek . and man, that is one heck of an
105 development projects is, assembling the land. Because of the fallout f rom the Kelo case, (Maxam, 2006) in Florida . restrictions meant to prevent takings have strengthened. The beauty of it the huge advantage [Gainesville has] is that the land has Denslow, personal communication, 8/22/12) e we start and who the (D. Ramsey, personal communication, 8/12/12) a serious the final developmen t stages of the innovation hub (D. Ramsey, personal communication, 8/12/12) on . communication, 8/12/12) growth and development in Gainesville, Ed Poppell, Vice President for Business Affairs and Economic Development for the Innovation Hub insistently reiterates his focus on our efforts here, but Plum Creek is a vision Innovation Square is a reality. We have to make sure this is
106 done. Plum Creek is good stuff, just not right now Poppell, personal communication, 8/23/12) The needs of innovative businesses appear to be met in Gainesville. Access to proximal land near the University of Florida and other locations are available today in a variety of cluster developments. Also, lar ge tracts of land to the northeast are scheduled to be developed in the future. Some physical constraints do exist like the inaccessibility of land near the university, but working around them or waiting for the right opportunity to use them seems feasib le. It appears that the opportunities for locating in Gainesville, at least from the perspective of land accommodations in the present and future, look promising. Innovation Square and Other Cluster Development s first happened in Progress Corporate is Innovation Square (D. Ramsey, personal communication, 8/12/12) The new idea is to put these innovative clusters as close to the source as possi in the old days, like Silicon valley [were] about fifteen, twenty, thirty miles outside the university [because of the abundance of cheap land] communication, 8/23/12) But the problem with that scheme was the disappointing rate of successful companies as many could not thrive; much less survive, in that environment. The difference between Innovation Square and those far away office parks in Silicon Valley even somewhat evident in Progress Cor porate Park is the proximity to the University. development of Innovation Square. When Shands and UF decided to shut down
107 Alachua General Hospital (AGH) the former occupant of Inn ovation Square initially, hands (E. Poppell, personal communication, 8/23/12). Tempers have cooled since then and now, Mr. Poppell jokes, the same people who vehemently opposed the transition of AGH to Innovation Square are quick to praise the new development. Shands, working with UF, transferred land (D. Ramsey, pe rsonal communication, 8/12/12). The loss of AGH was e specially important economic development for East Gainesville in my lifetime communication, 8/16/12) down there: the service sect or and other support industries sonal communication, 8/16/12). The creation of innovation square, other nearby cluster developments and emergence of the Lake development may help to solve the issue of equity in Gainesville Society. The location of these developments, largely due to luck, presents a substantial opportunity for east Gainesville residents. Large scale development will mean greater and more proximate job opportunities. Transportation and other infrastructure improvements are also likely to follow. While many of East Gainesville residents may not benefit directly from innovation economy jobs, the upside will be the job multiplier effect, as more service industry jobs are created to support high tech industry. Semi skilled labor, often in the form of repair techn icians, maintenance crews,
108 and other more traditional service sector jobs will provide long term, steady employment at livable wages. Although the Innovation Square is in its infancy, the people and processes that enabled its creation are the real story. The cooperation between public and private entities and the unity of vision exhibited by the leaders of the Gainesville community eally made the whole city organization . [come together and] set a new template that should ultimately not just benefit Innovation wide level (E Bredfeldt, personal communication, 8/24/12) All this talk of companies locating or forming here would mean little without the critical input of human capital. It is the scientists and engineers, the creators of our modern technologies that need the opp ortunity, tools and environment to create the these academic super stars, these p eople at the top of their field communication, 8/22/12) Creatin g the opportunities for the best and brightest only the University of Florida does have going for it is the size and comprehensive nature of the university. The ques departments work together to create the next wave of innovative products? The answer appears to be yes (D. Denslow, personal communication, 8/22/12) . . [and] if you wanted to commercialize it, then the next step would have been to protect your intellectual property. Typically [this kind of]
109 researcher is an expert at what they do but they are not experts in running a business. You need help and so you came to an incubator where somebody helped you until you got on your feet. [And then] you take it to ma rket personal communication, 8/23/12) Take the story of Banyan, a local startup in Gainesville which is a leader in developing diagnostic products and services for the detectio n of tra umatic brain injury (Hayes, 2010). . and the the medical schools, [where] you can get the samples from the people who have collided with something, say you would expect after a traumatic injury, which requires so meone to, pull out the million proteins that are in blood so [it] can [be] analyze[d]. Well, then you need a blood specialist and UF has one . and then you need someone to do the DNA blots and as it happens we have her e a center for protein analys is communication, 8/22/12) When you put all the pieces of this equation together, you have the potential for a whole new company or patent. And, roughly speaking, this is real world example of how the innovation economy can operat e in Gainesville, Florida. nt here to help me market communication, 8/23/12) Co locating next the University of Florida and downtown Gainesville is seen as the most advantageous location for innovative businesses to cluster. Proximity is everything and these companies cluster together for a mutual or
110 get these startup companies as close to the university as possible. Bei ng three blocks from (E. Poppell, pe rsonal communication, 8/23/12) her the more interact ions occur (D. Day, personal com munication, 8/15/12). The description of the innovation economy paralleling processes found in the physical sciences was one of the most consistent themes between interviewees. Wh ether this is by accident a repeated analogical theme or indicative of something greater, this researcher finds university seeking to adopt it. What about the Creative C lass? that the major technology clusters are always located around research universities, powerful institution s or otherwise brilliant people 8/15/12) Citing research from economists Fujita and Krugman, Denslow remarks that, ad vantageous and another [idea] that they think is probably most important is the exchange of ideas While Denslow networks o f interactions is one of the great hopes Gainesville has in regards t o its
111 creative class citizens. 7 All the talk about businesses, the university and the city would be mute if the people required to operate the innovation economy were absent. Thankfully none, hands down, the greatest economic benefit this tow n has is talent the workforce Ramsey, personal communication, 8/12/12) The creative class in Gainesville is alive and well and g rowing. our] . were employees today cation, 8/23/12) And that story includes a foundation of academic excellence, layered with past successes and topped by recent, energetic plans for the future development of the economy. When asked, many interviewees simply stated they were well aware of the presence of highly skilled and intelligent people in Gainesville. The need to elaborate mployees were synonymous with the term. Another commonality between those interviewed was the 7 he success of Silicon Valley in Santa Clara is due to interdependent relationships of small to medium sized companies to react quickly to market shifts better than their larger, insulated competitors. (Saxenian, 1985)
112 need for the quick transportation of people to major activity nodes that also efficiently used urban space. Transportation Another commonality between those int erviewed was the need for the quick transportation of people to major activity nodes that also efficiently used urban space. While most were pleased with the direction or vision of the local transportation initiatives, some were dissatisfied with current conditions namely parking. All were humored by scooters. Also, an unprecedented and spirited discussion about the scale with a few respondents. Despite the researcher asking for further elabor ation, most interviewees either had little knowledge of, or interest in, the component of transportation on the the researcher noted that respondents thought transportation problems were less important. Nevertheless, the following are the most notable responses of transportation issues in regards to the formation of the innovation economy in Gainesville, FL. development of an innovation economy in Gainesville. 8 A gap of about thirteen blocks 8 s that had their centers cities but we should also pa y attention to the other contextual variables at work. The period in which these cities developed and especially their cultural context like major neighboring cities should be noted when analyzing the structure and in particular the dense and vertic al nature of these places. Whereas Gainesville received its major building boom after the second World War and modeled itself after less dense southern cities, these other examples were created on the role models of major northeastern cities which were bu ilt before the major transformation that the automobile had on city development post WW2.
113 separates the University of Florida from the center of downtown Gainesville. There person can easily travel from the un iversity to downtown in a hurry t, personal communication, 8/27/12) Considering that the Innovation Square will be directly . How can we accommodate the [number] of cars if the Innovation Square is projected to have four Newberry/Oaks Mall has roughly 901,000 square feet, Nielsen explains that when it gara ges ersonal communication, 8/11/12). import ant than a regional road networ k 8/16/12) Gainesville has met success ov er the years by expanding the RTS system and improving the level of service, seen in Figure 4 14. Today, RTS Routes to the East side of Gainesville are becoming an issue. UF and Santa Fe students make up nearly 75% of all RTS ridership, an estimated 10.7 M rides annually, and pay a large share of the operating costs. Budget cuts have forced RTS managers to make tough decisions and routes to east Gainesville are expected to be reduced or eliminated altogether. Also, it should be noted that some places may end up being purposefully excluded, at least via transit, from the innovation economy
114 necessari ly link them with our plans for the innovation economy . t right for that Again, by consistently focusing attention on areas critical for the success of the innovation economy and not becom ke the most of their resources. Figure 4 1 4 Gainesville ridership on RTS is improving Reprinted by permission from Deborah Buchacz Sapper & Oliver Page (200 4 ). Analysis of Florida Transit Bus Accidents Gainesville RTS Ridership Trends Retrieved from http://www.nctr.usf.edu/pdf/527 11.pdf While many of the people interviewed did not have well formed opinions on transi t, several commented on the limitations of the Gainesville Airport. Central to this discussion is the availability of direct flights to cities with strong venture capital resources. Part of the reason why the university is so aggressive in marketing itse lf is
115 nd flights in Tampa and Orlando Denslow, personal communication, 8/22/12) ew York and Dallas [because] they are the hubs to the rest of the country. More direct flights and more carriers . [are needed] because 90% of the venture capitalists are in New York, Boston and San Francisco rsonal communication, 8/15/12). This middle of the day, and then fly home for dinner connect in Charlotte or Atlanta or Miami and be home in New York City DeLaney, personal communication, 8/16/12) Denslow says that the ridership of the Gainesville airport could increase 25% with a 10% increase in local population. He calls for, more diversification in transit, more subsidies for the airpo rt and a gr eater emphasis on urban density Denslow hopes to see Gainesville grow in size to the point where greater connections to other metro areas can be made on direct flights but acknowledges that Gaines probably never get to the point where the airport could b e a useful asset personal communication, 8/22/12) Speaking matter of We are a regional airport and nothi (E. Poppell, personal communication, 8/23/12) Although the findings from this thesis on the issue of transportation are sparse and erratic, the necessity of a good transit system for the innovation economy is apparent. While not adequately covering the subject of transportation, it is neither the focus of the research nor the object of attention for many
116 of those interviewed. The adaptation of the innovation econ omy will contain important components of transportation in the physical landscape and should be a topic for later study. The Role of Government To the respondents the function of government was definitely a topic that elucidated a wide range of opinions. The subtopics of the role of government covered issues like the facilitation of business via incentives and the degree of government intervention. Although a difference of opinion between respondents was assumed as it appears everyone has an opinion reg arding government the underlying message was consistent. Government, especially when operating in an innovation economy, needs to be just as flexible and adaptive to the needs of business as business is towards changes in the market. The willingness to adapt and the ability to quickly do so Investments by g overnment into the innovation economy can target things like infrastructure development and (especially broadband capability) early research and developm ent efforts, regulatory means that ovation such as government data (Chopra, 2012) Historically, the role of government in facilitating innovation used these three components, jump starting innovations from, ools to railroads, electricity transmission, transistors, lasers, the internet, GPS, and every aspect of ene rgy exploration and development (Bernstein, 2011) As for the university, the roles are slightly different bu t no less important. It is the goal, or duty, of higher learning institutions to push students to succeed and faculty to research and write. Many universities choose to specialize in certain fields for which they have a comparative advantage. Also, univ ersities may seek out alternative
117 programs and measures to fully utilize the resources and talent on campus. Primarily, the role of the university to use the talented student and faculty bodies (labor) along with advanced equipment (capital), to explore a nd extend the frontier of knowledge. Regardless of their role, both the university and the government should, and often do, work together to achieve this goal. First, when thinking about the operation of the innovation economy in Gainesville, have a governmental structure that would be supportive of the business hout this structural framework (B. Pollitt, pe rsonal communication, 8/27/12). historically caut ious towards growth and copious on regulations. However, the events of the latest recession and new ideas (and people) might have spurred a greater interest in cooperating with business on economic growth. Ed Poppell, would venture that the economy, unem community. And i nt to the economy (E. Poppell, personal communication, 8/23/12) Regardless of the reasons why, the attitude of government in Gainesville today exhibits far more enthusiasm for growth, especi ally in the urban core, than previous administrations. giving away the farm is anachronistic. What happens today, largely, is that companies coming into the community are ba sically looking for the best opportunity to get themselves up and running. All the factors that need to come into play to make that
118 happen, like smooth codes enforcement and approval, utility components, communications . all of that needs to be in plac e so that they can . get up and (W. Nielsen, perso nal communication, 8/11/12). The case made here was obvious to the research team: startup or relocating companies are much more interested in succeeding with their product than they are in taki ng a handout. Fitting into the environment and operating long term with other businesses moving in th e same direction appears vital (W. Nielsen, personal communication, 8/11/12) Joelle Smith of makes the world go round need are solutions a rsonal communication, 8/22/12). get the ball . a nd they need to make a profit (E. Poppell, personal communication, 8/23/12) business options to MindTree deal, there were over 8 different incentives used to bring them to town . giving [the prospective company] the ability to go after some diversity and richne incentive com binations (B. Pollitt, personal communication, 8/27/12) past] we first started giving incentives for people to build some new stuff our design standards (B. DeLaney, personal communication, 8/16/12) Addin there to get companies to come in and just ransom the[m] . for handouts is outdated
119 and not constructiv e for this or any community ersonal communication, 8/11/12). While acknowledging the necessity of incentives to stay competitive, most respondents cited the business opportunities, and the advertisement of them, as central Excel nd other co ntrollable variables (B. DeLaney, personal communication, 8/16/12) David Ramsey makes the final point on the subject of incentives. Echoing the words of the Florida deal be . I want to hear about opportunities, about people, buildings and places, and then we start talking about incentives. Incentives should only really be used in making the final sell. They should not be used ersonal communication, 8/12/12). As for the role of government, the respondents were mixed. Bruce DeLaney is, not sure about how much of a role the government is supposed to have in business formation . [beca government should and Gainesville is there to promote business expansion because the majority of busin get to first base [before] . double or triple your business DeLaney, p ersonal communication, 8/16/12). S imilar thoughts on the creation of
120 opportunities were m help you get over hurdles, . help you get along with your neighbors sometimes, manag[e] transportation and roadway networks, and mak[e] sure the city is clean and safe. It comes down to being all about environment. Government creates the nd should stay within its means (B. Pollitt, personal communication, 8/27/12) G ainesville, can be a very important partner in making sure that all the things that the city d oes well . [like] creating conducive environments. But ces to make these things happen Bredfeldt, pe rsonal communication, 8/24/12). Businesses are looking, for a community that understands how the y operate . that knows they need access to capital [and] talent . bureaucracy; they (D. Ramsey, personal communication, 8/12/12) tities how to business and not in the business of development. If GTEC (Gainesville Technology ultimately be successful. It has to be the means to an end and not the end in itsel f Bredfeldt, personal communication, 8/24/12) Hurdles to Overcome Perhaps the most important lesson gleaned from the interviewees was the expanse of false or outdated perceptions of the community. Many respondents quickly and emphatically wished to express that the relationships between local government and business have dramatically improved over the years. Gainesville has, for a long time had the reputation for being business unfriendly . but there appears to be a new
121 sea change there and that gives this [inn ovation economy] idea some hope Denslow, personal communication, 8/22/12) The refrain from all interviewed sounded In general, the business community, the university . even the city government . lationship as good as it is now 9 (D. Day, personal communication, 8/15/12) growth, business unfriendly reputation but if I stand here and look [around], I see growth and things taking place. One of the issues is the [perception of] the bureaucracy that has developed over time is this image that the c ity is unfriendly towards business and development . and reality on the ground ( B. Pollitt, personal communication, 8/27/ 12) Pollitt claims he has never seen [the city and private industry] work better together than they have like this Innovation Square project ( B. Pollitt, personal communication, 8/27/ 12) Businesses coming in recognize this and are energized because they know the being the community regulator and tax collector . ( B. Pollitt, personal communication, 8/27/ 12) Bringing in desired companies and industries has, more to do with relationship buildi Christmas D ay; the best thing you can do for that person, that visitor is to make them 9 Florida, at that point, was an open range state that is to say that the cattle could go anywhere they arg ument then was: who has to pay for the fence to keep the cows out? That began the argument or if
122 feel like family . li ke your family operates well and takes care of one another. You talk together, work together and generally act as a unit. So, when recruiting someone like that . you get your house in order . and hav[e] a unified front ( D. Ramsey, personal communication, 8/12/1 2) If perception is reality than according to David Day, Gainesville residents all live in an alligator infested swamp. In talking about the image of the city, Davi d Day states that Gainesville needs to work on its marketing on the internet and especially on search Sixty percent of the decision of some new faculty getting a job h ere depends on their might jump out and eat their dog . how out of touch our image is with reality ( D. Day, personal communication, 8/15/ 12) Coming back to the need for better search engine results, with everyone utilizing the web when making decisions on where to move, we really need to put some money into search en gine work on how we are viewed ( D. Day, personal communication, 8/15/ 12) In all, it appears that Gainesville has a little work to do on correcting the perceptions of the community both from the outside looking in and by its own residents. By ad mission, the attitudes of this research team were ill informed prior to conducting interviews on the subject of city business relationship. As proof, although residing in m led to
123 the perception of the city business relationship or the prevalence of large reptiles, the image of the Gainesville community needs improving. By attracting new companies or helping start its own, Gainesville will have the chance to demonstrate its true character as it seeks to adopt the innovation economy. Criticism and Warnings Innovation e conomy c oncerns Finally, it is the criticism of the innovation econo my and the general warning of its zealous application that concludes these findings. While all respondents were optimistic, a few were careful to point out the flaws or general overestimations of the innovation economy. The impact on the region might not be all that is desired or, more likely, the shakeup of entrenched ideas and powers might prove difficult to overcome. This criticism starts with the general reproach of the innovation economy, progresses towards issues of community and ends with specific local challenges. If the basis of the innovation economy centers on networks and connections, how another does not imply a correlation between dialogue and success. David Denslow argues on behalf of the economist, Paul Krugman, who, has said that the problem with this [innovation economy] concept is the exchange of ideas. While that we can easily track the flow of goods with input/outputs matrices . the flow of ideas is more ephemeral and much harder to track. People have made attempts [to track this] through patent citations [and] joint article authorship. They are beginning to look now at which industries collocate . what kind of job skills collocate . pr ogress being made on that front
124 Not enough evidence exists to date on the effectiveness of network connections and the innovation economy. STEM i ndustry d eficits Also, focusing on the i nnovation economy often implies a greater emphasis on The case in point is Larry Summers who, got fired from Harvard for trying to emphasize STEM while he was president there (among several niversity of Florida dedicate mo re resources to STEM education (D. Denslow, personal communication, 8/22/12) Critical of the existing core undergraduate requirements at the University of Florida, Denslow argues that all rounded experience will likely benefit them in the future, may lead to additional insights and discoveries and will certainly broaden the comprehension of the world. Conveying the scientifically literate, the world looks very different to you. That understanding empowers you to first, not be taken advantage of by others who do understand it, and second, there are issues that confront society that have science at their foundation. If process charlatans of the world that would exploit your ignorance (Tyson, 2011) In a f inal word
125 though, Denslow concedes that that making the curriculum tougher, at least in terms of not get too optimistic about all this because state funding for th is u niversity is not very promising Because of financial worries, it may be the case that the STEM fields necessary for the innovation economy do not receive additional funding. For now, the University of F lorida will have to make do with what it has. And, given the role it plays as a leader in biotechnology and other STEM fields, it should manage to create innovative businesses from the raw materials land, labor and capital found in Gainesville. Innova tion s hould n ot r ely on e xternal i nputs sufficient, it may not be a net positive for Gainesville. What irritates David Day about current plans to expand the innovation economy, is that we spend so much time try ing to recruit businesses from outside . when what we should be focusing on is incentives to help startups right here where we know what we have and we know how to help them grow. Our real advantage here is starting new companies from university labs and university students. That is our big advantage and it is to our disadvantage to go out and b uy companies and move them here rsonal communication, 8/15/12). The point made here speaks for itself. If the innovation economy is really going to be innovative, it should be able and encouraged to generate its own companies. Rather than compete with other cities and offer handsome incentive packages to established companies, perhaps greater emphasis should be placed on local startups. While br should probably not be the primary mechanism of innovation. As expressed by more
126 than one interviewee, local government investmen ts should target the inputs and mechanisms of the innovation economy not the importation of fully developed companies In Gainesville, that means u pg rading the internet connection speeds, further expansion of the RTS bus system, and perhaps other u pg radi ng utility services. is a desire for refined energy that does not carry in it the inconsistencies between frequencies and amplitude. Such energy is required for advanced and sensitive laboratory equipment. Infrastructure pg rades will only make it more attractive. Although there are many premier high tech laboratories in the community, the real issue lies in the level of service they can be provided. Internet s ome of our tech companies will tell . and that does impact the ability to deliver gaming and social networking competitively (D. Day, p ersonal communication, 8/15/12). Local companies like GrooveShark, Neuronet Learning, Prioria Robotics, and ADP (Automatic Data Processing) all completely rely on fast and uninterrupted internet connections. To remain competitive i n the marketplace, Gainesville needs to significantly u pg rade its internet connection speeds in the core areas. According to th best read city in the U S (Amazon, 2012) ople here but if we want to be competitive gigabyte per second speed around the core of the city is required by these firms ersonal communication,
127 8/15/12). If the community wants to attr act more technology firms, Gainesville must Community and e quity Finally, on the subject of community, Ray Oldenburg had much to say and rightly so. Oldenburg spent his career as an urban sociologist ex amining the relationships between people and their environment. For Gainesville, he expounded not the public or semipublic places where people congregate when not engaged restaurants and bars. It is in these places that dynamic interactions b etween different people and ideas often take place. The point of the, goodly number of people. It was the proximity that brought them there and then they discovered that well, not everybody agrees [with one another] . point, it was that people were engaged and [after] you get used to this the exchange selection and the problem with electronic information, as I see it, is . when you seek out people who agree with you, yo ur world gets smaller 8/13/12) f people and if we could get more connectivity, more interaction, [in a] shorter time we could achieve those hotter con ditions that make things happen To today, partly because of the myriad variables needed to measure it but also perhaps
128 because of our inability to comprehend life outside of it (R. Oldenburg, p ersonal communication, 8/13/12). Environmental awareness and participa tion in it should not wane just because technological improvements allow us to reach anyone on the planet. ur Oldenburg asks (R. Oldenburg, personal communication, 8/13/12) In terms of community, of equal importance are the neighboring towns and communities of Gainesville. Expecting those people to directly participate in the innovation economy may be unrealistic but perhaps explaining to them the indirect benefits might help gain public support. Helping to shape a positive opinion of and accrue additional econ omic benefits. Still, these residents may have no interest in competitors. One reason that residents of Alachua County outside of Gainesville may have a negative view of new de velopment has to do with taxes. Brad Pollitt explains that the county collection of transportation related taxes is often skewed against regional residents. Because they are far away, such residents may not have access or a need to use the Gainesville Re gi onal Transit bus System (RTS). How do we, engage these neighboring communities and convince them to support density and travel reform in 8/27/12)
129 To get these people engaged and excited about the innovation economy is to explain how development in Gainesville will translate into outside opportunity. One way is to narrate a story of such opportunities. People, enough to run a st ory in the newspaper. What we need is a message, a consistent d minds about this development (B. Pollitt, pe rsonal communication, 8/27/12). their strengths, some in, sure what is there to do around here? Is this a good place to live? Wha t do my employees want to (D. Rams ey, personal communication, 8/12/12) T hat example might continue to tell how the softball and archery complexes in Newberry might see increased use as outlying c activity. Gainesville can also help demonstrate the lifestyle choices offered by these distinct, satellite communities as a benefit to those looking for an alternate standard of living. Finally, all of these communities are connected to Gainesville and none of them are too distant a commute. Criticism s umma tion Overall, the challenges and criticism of the innovation economy seem pertinent inesville community and the potential requirements or side effects might be a cause for concern but are overshadowed by the numerous benefits expected. Respondents expressed their concerns in a way that explored specific topics and examples but none serio usly doubted the ability of the
130 innovation economies success. Still, their concerns were valid and could be the basis for continued study, perhaps for another thesis. Summary of Findings Weaving together the narratives of the major vested interests, thes e findings suggest that Gainesville, Florida is ready, willing, and able to initiate and expand the innovation economy. This city is ready to grow its economy, excited and energized by the possibilities and equipped with the competence and resources neces sary to do so. There will certainly be challenges along the way but that is part of the adventure in the innovation economy. It is the intrinsic nature of innovation to promote and even force And as long as the desired image of the community remains one of exciting people and places in a high tech community making the most of their intellect and ambition, Gainesville will prosper. For the innovation economy to thrive, it will take the continu ed cooperation of public and private entities and the thoughtful development and applicatio n of land, labor and capital. The physical opportunities in terms of land may not be as expansive as some communities, but where available, they are ideal for innov ative development. The prospect of huge tracts of land opening up in the future are also a welcome sign in the community. Opportunities for business are found by clustering together in close proximity. Innovation Square, GTEC, and the Power District are as accommodate those needs. The creative class is alive and well in Gainesville but accommodating them with adequate transportation will likely become a priority as the city grows. Luckily, the community appears to be heading in the right direction as a variety of transportation modalities are being introduced or expanded. The role of government is likely to remain a topic of debate but now, with a common vision of the community, local government
131 appears receptive to business growth. With the continued partnership of business, the university and government, a common vision with the city can be created. Gainesville can help shape its image both inside and outside of the community by sharing stories of success and demonstrating its commitment to a larger vision, despite the criticism or doubts of some. By paying special attention to the availability of labor and capital for development, the proximity of close land to the university, and the timeliness of government interaction and approval the research er concludes that Gainesville, Florida is ready, willing and able to establish and nurture an innovation economy model.
132 CHAPTER 5 DISCUSSION Global Trends While globalization increases overall economic activity something many refer to as the 'centrifugal force' a less apparent and opposite reaction occurs. Richard Florida remarks that many, igher level economic activities such as innovation, design, finance, and media cluster in a relat ively small number of locations" (Flo rida, 2008. pg 19). Global trends encourage regional specialization and in turn, localized economies. The natural resources, technical aptitude and cultural identity of a place (or land, labor and capital) all factor into how a locality specializes. Th e externalities generated by these components tend to push or pull industrial location. For innovation economies, This effect is widely termed the 'centripetal force' and can be witnessed in the clu stering or agglomeration of highly specialized industries in particular locations. Although Adam Smith pointed out that specialization of labor was the key to The Wealth of Nations and David Ricardo formulated the concepts of 'comparative costs', both men regarded nations as the fundamental economic unit. Noting their time and place in the context of history, it can be understood why these men put such emphasis on nations. Today that fundamental economic unit has changed, becoming ever more mobile and thu s, location dependent. The new 'creative economy' erodes traditional people anchoring institutions like the company town and the idea/promise of a job for life. Joseph Schumpeter claims these, that adaptation to a new conomic geography is essential (Florida, 2008. pg 63).
133 Transnational Corporations Major shifts in economic geography are underway as the world embraces the Information Technology (IT) revolu tion. One interesting development in world economics is the ability and prevalence of transnational corporations to shift their production to overseas markets to take advantage of cheap labor and land. In doing so, US based manufacturing and production s truggle to remain competitive and often must relocate, perish, or adapt their business models. While (arguably) good for the foreign industries in first world countries. T he late technology guru, Steve Jobs, when asked by understand why. Whether subscribing to one companies. This general trend in global economics and its impact at home does not spell doom for the U.S. economy, but it shoul d signal a wake up call that the future of domestic markets lies elsewhere. When forced to consider restructuring U.S. markets, prudent considerations of abundant, available resources and special advantages ought to factor heavily when formulating economi c strategies. Again, when looking locally at those advantages, we can, in some places, identify the people themselves as the greatest asset in the community. So it is for Gainesville, Florida a small city with big dreams of high tech innovation. Resea this university, and the university is the heart and soul of the city. In these times of recession and economic uncertainty, it makes perfect sense that the University of
134 Florida would seek to maximize its opportunities while also looking to minimize its frivolous expenditures. And so, acting in a manner of self preservation, harsh decisions have been made. They have come in the form of non essential department cuts, higher tuition costs and the prioritiza tion of proven capital generators. The STEM industries technologies to prop up our over consumptive economies. For now, we can expect a higher return on investments in inno vative industries and subsequently, we expect communities with a comparative advantage to make those investments. The importance of good planning and decision making cannot be overstated. Planning for and building an innovation economy takes years. Buil ding a fair amount of flexibility into the system while maintaining focus on the larger goals would be wise. It helps build an image or sense of place for the community while remaining agile to economic changes Doing so will keep a positive and competen t image of the city. Often, the reputation of a place is exaggerated, positively or negatively. Past events or misconceptions can greatly hinder an economy in the midst of transforming itself. Marketing is a powerful tool and cities wishing to brand them selves must take their image into account and help craft an accurate representation of their community. Perception I s Reality Perception is reality, at least in business. Developing a good reputation is often the only way a company can, at least initially compete in the larger market. Gainesville its image. And image is difficult to control. A person, a business, even a country can exhibit good taste and moral judg ment for years, only to have their reputation sullied by one negative event or a series of questionable decisions. Further, such an entity might
135 not have transgressed in the first place but the perception of fault, weakness or ineptitude can create a last ing blemish. For Gainesville, it will take years of consistent, good natured relations with the town. Physical indicators of growth and prosperity will also go a long way to ensuring the Gainesville community that change is on the way. It is not enough to talk a good game; Gainesville must prove its sincerity. By physically completing the Innovation Square, starting development of the Power District, improving the dow ntown core and its connection to the University of Florida, the innovation economy will demonstrate its worth. Luckily it appears that Gainesville has the requisite land, labor and capital to do so However, another component, which is unknown, is the re solve of local leaders to implement this change and the whims of the economy at large. The vision and the determination of plans set in motion whether for cluster development growth or greater interaction between the university and government needs t o remain consistent. Gainesville cannot afford the petty squabbles over political power with so many eyes fixed on the region. One mistake or series of miscalculations could make that difference. As much as Gainesville needs to work on its image abroad, a great benefit to the emergence of the innovation economy would be to promote these events locally. Many students and local residents are simply unaware of the larger efforts to expand the economy. Spreading the word locally might encourage students to pursue their own innovative ideas in a familiar environment. The Role of Government and the University Perhaps the message broadcasted about the evolution of the local economy flies over the heads of students or simply bounces off them. The experience of this
136 researcher in Gainesville should have clued him into some of these larger events. As a planning student and almost decade long resident sure, I have witnessed change in the community, but nothing that would make me believe that Gainesville was on th e verge of a renaissance. Yet, that is what many of those interviewed appear to claim. The common consensus was that here and right now these are the most exciting times in Gainesville anyone can remember (other than the post WWII development boo m). If only more of the enthusiasm and energy from our community leaders could be transplanted into the university. The student body should hear this news and be inspired to pursue their creative interests which might also help Gainesville blossom. Numerous th eories enter my mind when I consider why the student body is lackluster, disengaged or worst ignorant of the larger changes on the horizon. Perhaps they e the students are engaged in their own lives or otherwise disenfranchised from participation in the community? It could be that rising tuition, shrinking aid packages, and dismal job prospects leave them dejected. Whatever the cause, the resulting effec t only slows the establishment of the innovation economy, allows for unrealized profits by the university, and heightens the opportunity cost for students and citizens missing out on the benefits. The University of Florida has noticed this potential for di rected studies into innovation. The university sponsors the Innovation Academy, a subset of the University world advanced innovative thought processes. Students will attend classes in the spring and
137 summer and then pursue internships or research in the fall semester. Enrolling about 500 students per semester, the Innovation Academy will rea ch an average of 2,000 students a number that the current university infrastructure can easily accommodate. The Innovation Academy is set to relocate inside of Innovation Square, minimizing the physical distance between ideas and industry. This entrepr eneurial based, academic community will also have a residence hall (Inspiration Hall) inside of innovation square. This is the first development of its kind inside the US and the estimated completion date is Fall, 2014. Other advances by the university i nclude the creation of an entrepreneurship minor and the refocusing on co mputer and information sciences (Kushner, 2012) The Innovation Academy is a start and there needs to be more direct applications of government like it in the innovation economy. Gen to what extent, or by what means the ro le of government plays in the innovation macroeconomics, was the chief critic of the innovation economy model/definition but he also provided several insights as to how this criticism might be answered. Denslow speculated that network effects could be studied to determine the significance of relationships. These might be used to determine relationships between the government and the university. Denslow also briefly touched on a few th eories regarding the importance and
138 ignorance of variables in governance are all topics for further study. Then again, maybe because it is more of an idea than a tangible being. When considering the applicability of standard research protocols on what can best be described as a concept the best response, that I can gather, comes in the form of a riddle. The riddle, or rather the quote that comes to mind is from a personal hero of mine, Neil DeGrasse Tyson. When may not Obsessing over the need to quantify the variables of an idea, to me, is like trying to describe the pigment of a newly disc overed color: a pigment that resembles no other, or any combination of colors, to a person who has not seen it. The scientific method champions the need to prove a concept by replicating its variables, quantities, and precise arrangements. This is possib le and certainly important in the physical sciences one form or another, should we presume that the need to do so is equally important, much less viable in this dime nsion? In our urban experience, with so many interlinked variables and other intangibles, it may be irrelevant or impossible. But I digress. The important lesson taken away when undergoing this research, especially into the various
139 let connections form themselves. It appears that business and government have reached an agreement and are working together. Now there is only one piece of the tetrarchy missing. Encoura ging the business community, elected officials and other vested interests to make a serious and combined effort to energize and incorporate those very people needed to run this new economy: the students and faculty. If a united front of business, governme nt and exponentially. There is no stronger force than the collective will of a community. The people must know how they can benefit from the innovation economy whether directl y strong does not mean will alone can move mountains. A professor I admire, Andres how world events are shaped. Economic Feasibility The economic s behind the innovation economy and its compatibility to Gainesville, Florida, seem plausible to this researcher. The University of Florida is large, diverse, and academically competitive, especially in a few of the STEM industries namely medicine and engineering The community is diverse, intelligent and progressive; all traits that researchers point to as being important to creating innovative account, albeit to a lesser extent, does Gainesville not resemble such a place? I am
140 lead to believe that it does. But, if the criticism of the innovation economy prevails or other world events make it obsolete, I would not worry. I take comfort in knowing the processes that enabled Gain esville to implement the innovation economy adaptation and creativity are the same processes that would see Gainesville transition to whatever came next. Before closing, consideration should be given to the limitations of this research and further res earch that could confirm or refute the findings. Restrictions and Limitations of the Research As stated before, the restrictions of this research and the credibility of its arguments are based entirely on 1) a comparative analysis between Gainesville, Flo rida and the concepts found in the literature review regarding the innovation economy and 2) the testimony of several major actors in the local community. This research is mostly qualitative in nature, and this is a major limitation. Also, many, if not a ll, of the respondents may be affected by a bias of opinion. Many of those interviewed have a vested interest in the success of the community, and so the impartiality of respondents may be skewed in favor of the innovation economy. Lastly, the potential bias, experience and time constraints of the researcher must be addressed. I have called Gainesville home for nearly ten years and may be not be impartial to its development. I also have no formal education as an economist, rather as a s tudent of design and planning. These and other limitations, which might have eluded me, comprise the restrictions and limitations of this thesis. Topics for Further Research Some topics for further research were mentioned early but are presented now for review. The topi interdepartmentally on a university campus needs further study. Next, the role of
141 government in applying or sustaining the innovation economy model could be useful. Also, it would be wise to c onsider and compare different structures of the innovation economy as China and other Asiatic countries are likely to have a somewhat different model. Finally, a general critique of the innovation economy and the creative class would be of great bene fit t o this and future research Discussion Conclusion No doubt, the discussion portion of this thesis was a departure both in style and substance from the previous writings. Issues remain unresolved and many more are difficult even to conceptualize. Global tr ends are changing marketplace dynamics all over the world but of particular interest and relevance to me was the impact on first world countries. Many jobs, some that in the past were staples of the American thinking when planning our economies and that entails using available, abundant resources in new, creative ways. The perception of a place, especially to outsiders, can entrench an image that is neither accurate nor deserved. Dislodging misinformed opinions takes time, energy, and a consistent image or representation. Who knew Gainesville, Florida had such good job potential? Certainly not the majority of students or at least not from what I have experienced. By getting th e message out that Gainesville is a desirable place to live, work and play, greater benefits can be enjoyed by all its residents. While there is debate over economic models and the role of government, it appears communities must find that balance for them selves. Part of the danger yet also part of the adventure of the innovation economy is growing and adapting without the safety net of academic certainty. The innovation economy is a gamble but one that appears to favor the conditions and attitudes of Gai nesville. I am
142 not a betting man, but from what I can tell, this community is ready, willing, and able to adopt the innovation economy model.
143 CHAPTER 6 CONCLUSION Conclusion Throughout the world, certain areas have been chosen by man for development. These settlements and later cities formed because of natural, comparative advantages over other regions. Land that accommodated the collection, connection and dissemination of people, goods and services flourished while other areas did n ot. Some of these cities still exist today, while others, having lost their comparative advantage, are lost to time. So it is today that some places experience growth and prosperity while others stagnate and slip into irrelevancy. Traditional economic d evelopment in the world favors the abundance of land, labor and capital but as the world economy globalizes, ever more emphasis is placed on dense, connected, and heterogeneous physical environments and the skills of the labor force The world has become with never before seen numbers of people congregating in cities. Often those cities have unique properties that enable them to expand their comparative advantage into one specialty or another. The physical development of such places demonstrates that by clustering related groups of people and industries together, greater efficiencies and positive economic externalities are generated. Such places are likely filled with a wide variety of people and ideas. By encouraging their interaction in dynamic exciting environments, it allows for the amalgamation of small ideas and insights into incredibly powerful technologies and revolutionary ideas. Throughout the course of history, it is in these places and with these people that world changing ideas are born. The combination of intelligent, open minded people in rich, exciting environments is even more important today. Competition has intensified between cities over these
144 people and the most sought after are the scientists, technologists, engineers and mathematicians. These people allow us to dream about the home of tomorrow, the cities of tomorrow, the transportation of tomorrow (Tyson, 2011) The benefits of STEM industry are a: force of nature like none other . If you advance frontiers, heroes are formation of scientists, engineers, mathematicians and technologists . and you reap the benefits of economic growth because you have people wanting to become the sci entists and engineers who enable tomorrow to exist today. And that, in the 21 st century, are the fou We cannot a llow ourselves to stop dreaming to stop inventing or innovating the world around us. How much would you pay, how much would you risk, to launch our economy? 10 It seems that in Gainesville, Florida, that point is well taken. After speaking with community leaders of this Gainesville, both public and private, their goals and vision all appear unified Evidence of that vision is apparent today in the form of Innovation Square, GTEC, and Progress Park. On the horizon, the developments made by Plum Creek and others will announce even more opportunity. Whether or not Gainesville can, or even wants, to can be seen today is a small city with means, drive and opportunity to grow and prosper as it transitions to the innovation economy. 10 See: http://www.youtube.com/ watch?v=CbIZU8cQWXc
145 Final Thoughts At this time, Gainesville has made great stride s in attracting creative class employers to the area. These businesses have located in or near the Innovation Square, GRU Power District and Downtown development clusters. The innovation economy appears to be well underway. This thesis seeks to address the adaptability of the innovation economy in Gainesville, Florida by analyzing the components of proximity, availability and time as key factors. As of now, proximal land with good connectivity exists. The availability of labor is in abundance while the element of capital is increasing. Finally, efforts to shorten the variable of time have commenced as the either satisfied or at least moving in a positive direction. The vision of implementing the innovation economy is being realized.
146 APPENDIX A BIOGRAPHY OF INTERVI EWEES B REDFELDT E RIK Erik A. Bredfeldt, Director of Planning and Development Servi ces Department for the City of Gainesville, has a Bachelor of Arts in Economics (1988) from Muhlenberg College in Allentown, Pennsylvania as well as a Master of Arts in Urban and Regional Planning with an economic development specialization from the Univer sity of Florida (1993). In addition to experience in economic development and redevelopment activities, Erik has extensive experience in urban planning. He is a member of the American Institute of Certified Planners and in 2001 received National Developm ent Council certification as an Economic Development Finance Professional. Erik joined the City of Gainesville, FL staff in 2003 as Economic Development Director and in 2007, was appointed the Planning and Development Services Director providing continued leadership and management expertise to a professional staff of 40 and budget of approximately $4.0 million. Erik received his PhD in Urban and Regional Planning from the University of Florida in 2009 and teaches occasionally as Adjunct Faculty in the Uni Planning. D AY D AVID David j oined the Office of Technology Licensing at the University of Florida as Director on April 2, 2001, where he oversees the commercialization efforts for UF through licensing, incubat ion and related activities. Mr. Day serves on the following Board of Directors & Executive Committees: BioFlorida, the Florida Research Consortium and Southeastern Bio Investors Forum. Mr. Day also serves as Vice Chair of the Board of Directors and Prin cipal Investigator for the Florida Institute for the Commercialization of Public Research. He is Co Chair of Innovation Gainesville, UF Center for Pharmacometrics and Systems Pharmacology Strategic Advisory Group Member, and an Enterprise Florida Innovati ons & Entrepreneurship Task Force Member. D E L ANEY B RUCE Bruce has held the position of Assistant Vice President Real Estate at the University of Florida Foundation, Inc. for the last 28 years. In that position he seeks, receives, manages and markets all gifts of real estate to the University of Florida Foundation. In addition, he ensure that the neighborhoods around campus stay healthy, safe and economically viable. He is an active propone nt for the redevelopment of commercial and rental neighborhoods near campus into more vibrant urban, creative class communities and believes such redevelopment is critical to the University achieving
147 d the creation of the College Park/University Heights Redevelopment District in 1995. He then served as the first Chair of the Redevelopment District Advisory Board and has hosted every Advisory Board meeting since inception at the University of Florida F oundation. In addition, Mr. DeLaney has served as Chair of the Alachua County Economic Development Advisory Committee and on the Chamber of Commerce Board of Directors. D ENSLOW D AVID Dr. David Denslow Jr., Research Economist for the Bureau of Economic a nd Business Research and Distinguished Service Professor in the Department of Economics, is best known at the University of Florida as the effective and popular professor of the televised course Basic Macroeconomics. A measure of the respect held for Dr. Denslow was his selection as the University Alumni Professor for 1989 1991. Given by the National Alumni Association in cooperation with the Office of the Vice President for Academic Affairs, the award recognized his influence on students and alumni as a c lassroom teacher and the national credit he has brought to the University through research and service. N IELSEN W ARREN Former Gainesville Commissioner O LDENBURG R AY Dr. Oldenburg is urban sociologist who is known for writing about the importance of infor mal gathering places for functioning civil several books on the subject. He h eld positions at Stout in Menomonie WI, U of Nevada at Re no, and U of West Florida until retirement in 200 1. He left as Emeritus. He taught a term at the University of Klagenfurt (Austria), lectured in Vancouver, Osl o, Osaka, and Pepperdine U most recently. He is Consultant to developers, YMCAs, churches, libraries and regional planning offices. P OLLITT B RADL EY Since joining Shands HealthCare at the University of Florida in 1989 Mr. Pollitt has served as Hospital Architect, Director of Major Construction Projects, Director of Facilities Planning, and Director of Facilities Development. In 2000 he was named Vi ce President of Facilities, a position he currently holds, with responsibilities for core services including strategic facility planning, construction, facilities operations, environment of care, safety, security and transportation serving the Shands Healt hCare three hospital network. During his tenure Shands has seen the development of over $750 million of construction, renovation and capital improvement to enhance the operations and quality of Shands HealthCare facilities.
148 P OPPELL E D Ed has been in High er Education Administration for over 40 years. He attended Florida State University where he obtained a B.S. degree in Business, and then a Graduate degree from the Ed serves as Vice Pre sident Emeritus and former Vice President for Business Affairs & Economic Development. The University of Florida is an enterprise of over $4.5 billion with 22 million sq. ft. of facilities. He is a former Board member for the University of Florida Founda tion, Shands Teaching Hospital, the University of Florida Research Foundation, and former Treasurer of the University Athletic Association. He serves as a member of the Proton Therapy Institute Board and various community boards, including member of the B oard of Directors and Past President of Oak Hammock Continuous Care Retirement Community at the University of Florida. Ed is now guiding the development of Innovation Square, a 40 acre live/work/play urban community adjacent to UF that will encompass 5.5 m illion sq. ft. of office/lab/retail and commercial space. In addition, Ed is responsible for the 45 historic properties managed by UF in the City of St. Augustine. R AMSEY D AVID Mr. Ramsey joined the Council for Economic Outreach (CEO) in August 2004 afte r interning for the organization while studying at the University of Florida. Since then, he has been promoted to Vice President of Economic Development. Founded in 1991, CEO is the economic development arm of the Gainesville Area Chamber of Commerce. C EO works with major local stakeholders (business community, government, workforce and educational institutions) to grow, expand and recruit new business and industry to Gainesville and Alachua County. CEO is funded by private stakeholders; the organizatio n recently raised more than $3.4 million to fund its economic development efforts through 2015. In 2012 alone, CEO announced more than 600 new jobs in the IT, manufacturing and aviation sectors. S MITH J OELLE Joelle has been working in the Information Tec hnology & Product Engineering Industry for the better part of 15 years with a heavy concentration in Banking, Financial Services, Insurance, High Tech and Information Services. She started her career with Wharton Econometrics and then moved to Thomson Reu ters where she began her sales career selling equity and fixed income software to Wall Street firms on both the buy and sell sides. She then decided to take a chance on a very small technology services start up called AppLabs. As employee number 6 she di rectly contributed to groundbreaking triple digit year over year growth taking the BSFI division from 0 to 600 people in a little over 3 years. During this time she built a team of sales, marketing, solution engineering and
149 account management professional s to spearhead their fastest growing division. In 2008 Joelle was recruited to Mindtree for her first of two joyous adventures. Joelle has managed national sales organizations at several small and midsized technology enabling companies for the last 10 ye ars where the deals range from anywhere between $2 30 Million; regularly interacting with C level executives at fortune 1000 companies across the US, Europe and Asia. In June 2012 Joelle was again recruited to Mindtree to create 400 new jobs in the Gain esville area over the next 5 years. Since arriving in Gainesville she has been a mentor for the eWITS (Empowering Women in Technology Start ups) program and was selected to be a board member for the Gainesville Chamber of Commerce for 2013.
150 APPENDIX B INTERVIEWS Blanco, A. G. (2011, March 26). Interview by D. McDuffie [Personal Interview]. Urban land economics. Land Use Patterns., Gainesville, FL. Bredfeldt, E. (2012, August 24). Interview by D McDuffie [Audio Tape Recording ]. Innovation economy interview., Gainesville, FL. Day, D. (2012, August 15). Interview by D McDuffie [Audio Tape Recording]. Innovation economy interview., Gainesville, FL. Dedenbach, G. (2012, July 23). Interview by D McDuffie [Audio Tape Recording]. Inn ovation economy interview., Gainesville, FL. Delany, B. (2012, August 16). Interview by D McDuffie [Audio Tape Recording]. Innovation economy interview., Gainesville, FL. Denslow, D. (2012, August 22). Interview by D McDuffie [Audio Tape Recording]. Innova tion economy interview., Gainesville, FL. Nielsen, W. (2012, August 11). Interview by D McDuffie [Audio Tape Recording]. Innovation economy interview., Gainesville, FL. Oldenburg, R. (2012, August 13). Interview by D McDuffie [Audio Tape Recording]. Innova tion economy interview., Gainesville, FL. Pollitt, B. (2012, August 27). Interview by D McDuffie [Audio Tape Recording]. Innovation economy interview., Gainesville, FL. Poppell, E. (2012, August 23). Interview by D McDuffie [Audio Tape Recording]. Innovati on economy interview., Gainesville, FL. Ramsey, D. (2012, August 12). Interview by D McDuffie [Audio Tape Recording]. Innovation econo my interview., Gainesville, FL. Smith, J. (2012, August 22). Interview by D McDuffie [Audio Tape Recording]. Innovation ec onomy interview., Gainesville, FL.
151 APPENDIX C INTERVIEW QUESTIONS TEMPLATE Interview Question Template The purpose of my m t hesis is to explain the relationship between proximity, availability and time as the key components to the economic succ ess of innovation economies/ knowledge center communities Opener Questions Gainesville? How can we determine what an innovative company is? Are there certain aspects of a company tha t you look for? Where do you see the greatest opportunities for development? Which areas are more difficult or would be prudent to bypass? What areas/connections are looking promising and which appear to be declining City perspectives on growing the inno vation economy What are the greatest resources of this city and region and how do they help attract business? What industries is the city targeting and how does one make those decisions? What are the primary means by which the city currently seeks, attract s and promotes STEM industries?
152 Roles and Relationships of Various Actors What role does the University and Shands play in the business attraction process and what actions might further the interests of all the interested parties? What is the interaction with the neighboring cities and how might relations be improved to foster business relationships? What factors do you consider to be the most important in business attraction with specific regard to the innovation economy? How does the city wide and/regio nal transportation network factor in to the development of the innovation economy? Do you find it easy, much less necessary, to interact with other businesses or the University? Are there any (generally) special benefits you have encountered in these rela tionships? Land Use Issues Do we have enough land and/or the right kind of land use designation for What are the land use needs of innovation economies when it comes to long range and short term plans? What does Gainesville need to be successful and when? Is has been said that the time it takes to navigate land use, citing, zoning entitlements and approval could take a year to 'get on the ground' or longer if alternations need to be made. How do you think this f decision to locate here?
153 Where do you see important production and distribution centers emerging? What industries need these resources and which ones really need the proximal advantages of the Gainesville core? Is there a way to market or more efficiently plan for these industries? Policy Issues If Gainesville is unwilling or unable to be as fast as other cities (competing for the same business) in the short run, how else might we be competitive? What would you think of a p olicy that appropriated land use and zoning designations given certain criteria say for example regular intervals or when a 'tripping point' is reached? What kinds of tripping points might you envision? How long is Innovation Hub going to last? (10 15 years?) What comes after that where do you envision the next area of economic growth to be? (The Power district, around GRU and Depot storm water park?) What lessons can be drawn, in the way of comparative analysis, of similar innovation cites and econ omies? What about how those places structure(d) their comprehensive planning and regulatory zoning initiatives? Can you cite examples that have either fostered or inhibited the development of innovative enterprises?
154 For Economic Development and Business Professionals What is your view on the role of incentives in persuading business to locate in Gainesville? What is the role of Government in supporting business formation? What incentives here in Gainesville do you believe persuade businesses to locate a nd expand or conversely, to move elsewhere? If Gainesville is going to 're tool' and wants to take advantage of its strategic assets what does it need to do to leverage them for developing an innovation economy? What can the city capitalize upon that is readily available, prevalent and a real catalyst for success? Workforce Relations and Imperatives What do Gainesville employees value most about their work environment? How difficult is it to attract and retain employees? What are their priorities as workers and citizens? What assumptions might you have about their lifestyle that makes them comfortable or uncomfortable in Gainesville? What is the role of Government in supporting business formation? What do you consider to be the most important draw/ad vances Gainesville has in attracting business
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162 Schlenker, D. (2006, March 24). Time to raise the curtains. The Gainesville Sun Retrieved from http://www.gainesville.com/article/20060324/LOCAL/203240314 Schmalensee, R. (2009). Standard setting, innovation specialists and competition policy. The Journal of Industrial Economics, 57(3), 527 552. Schneider, R and Kitchen T. Planning for Crime Prevention: A TransAtlantic Perspective. 1st ed. New York: Routledge, 2002. Print. Schwab, K. (2011). The global competitiveness report 2011 2012. World Economic Forum doi: 92 95044 74 6 S mith, C. (2011, October 19). City awarded $9 million to advance bus transit plans. The Gainesville Sun Retrieved from http://www.gainesville.com/article/20111019/ARTICLES/111019 455 Smith, C. (2012, January 24). In address, Lowe sees big things for city. The Gainesville Sun Retrieved from http://www.gainesville.com/article/20120124/ARTICLES/1 20129774?p=2&tc= pg Staff Report. (2011). UF to host public meeting about innovation square. Florida Technology Journal, Retrieved from http://www.floridatechnologyjournal.com/sections/north florida/131 news/893 uf to host public meeting about innovation square McLaughlin T. STEAM not STEM (2012, November 2). Science technology, engineering and mathematics (stem) education is necessary but not sufficient Retrieved from http://neafineartscaucus.blogspot.com/2012/06/steam not stem whitepaper.html Supervisor of Elections, County of Alachua. (2008). Official results: General elections, 1996 2012 Retrieved from website: http://elections.alachua.fl.us/index.php?id=33 Unknown, "What's Next." Urban Land Institute. ULI, 12/2011. Web. 7 Dec 2011. < http://uli75.org/whats next/ > University of Florida. Stats and facts for prospective students (2012). Unpublished raw data, Admissions : Division of Enrollment Management, University of Florida, Gainesville, FL, Retrieved from http://www.admissions.ufl.edu/ufprofile.html USDA Growing a nation: The story of American agriculture (2012, October 26). Retrieved from http://www.agclassroom.org/gan/timeline/farme rs_land.htm Weisbrod, G. (2007). Models to predict the economic development impact of transportation projects: H istorical experience and new applications. Annals of Regional Science, (1), 1 25.
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164 BIOGRAPHICAL SKETCH Doug Blaisdell McDuffie was born in 1984 in Tampa, Florida. He is the son of Doug las Evans McDuffie and Betsy Blaisdell. Doug earned his Master of Arts in Urban and Regional Pla nning, with a focus on economics, in December 2012 at the University of Florida in Gainesville, Florida. He attended the University of Florida from 2004 to 2009 as an undergraduate student pursuing his Bachelor of Science degree in Landscape Architecture. worked as a graduate research assistant to Dr. Ruth Steiner in The Center for Health and the Built Environment on a number of federal grants pertaining to the Safe Routes to School (SRTS) program. Doug is pursu ing a career in urban planning and landscape design, with an interest in economic development applications.
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