Regional competence and economic recovery: divergent growth paths in Boston's high technology economy

Since the 1960s, the growth of high technology industries in Boston's Route 128 region has attracted the attention of academics, planners and politicians. What was especially remarkable about the region was the capability of its economic base to recover from major structural crises. Owing to this ability, the region is often looked at as being an American example of an industrial district. In contrast to Silicon Valley, however, Boston does not readily fit into the definition of an industrial district because of the dominance of large, vertically-integrated producers and the proprietary nature of high technology production. In the late 1980s, Boston was hit by an additional structural crisis when the minicomputer industry lost its competitive basis and defence expenditures were drastically reduced. As a result, almost 50000 high technology manufacturing jobs were cut between 1987 and 1997. This paper aims to identify the forces behind the region's economic recovery in the mid-1990s and relate these findings to the discussion of the importance of collective learning processes in industrial production and the development of localized competencies. In the literature, it is argued that firm-specific competencies and learning processes can lead to a regional competitive advantage if they are based on localized capabilities (e.g. specialized resources, skills, conventions and institutions). The author will demonstrate in an explorative way that the economic recovery of the Boston region is related to a number of specific forces that differ greatly between the subsectors of the high technology economy. I will also provide tentative evidence of how the willingness to co-operate and engage in interactive learning processes has encouraged economic recovery.