Top-Down Tech Clusters Often Lack Key Ingredients

Russia’s planned ‘science city’ is a fresh example of centrally planned innovation, which historically falls short of its goals.

Moscow-SpiresRussia recently announced a government-planned “science city,” to be located outside Moscow, that it hopes will one day rival Silicon Valley’s creative engine. The country plans to spend $200 million to turn a muddy field of birch groves and warehouses into a technology hub bursting with innovation and competitive companies. The government will dole out money to companies that it selects, powerful oligarchs will develop real estate, and government-appointed administrators will run it.

Russia isn’t alone in trying to engineer new technology centers. China has invested billions of dollars to launch tech parks across the country, as have nations including Spain, Singapore, Finland, and Malaysia. The U.S. Congress is considering legislation to encourage new science parks by providing loan guarantees—never mind that U.S. office space vacancies are running at record levels in many cities.

Most of these projects are well-intentioned efforts to boost national competitiveness. But as I’ve written before, top-down clustering doesn’t tend to work nearly as well as when hubs of commerce and academia spring up from private efforts.

Many of the hundreds of cluster-development projects that have been started around the world since the 1980s have either failed or are on life support, including Tsukuba, Japan’s science city, and Egypt’s “Silicon Pyramid.” Because they typically die a slow death, you don’t read about the failures on the front pages of newspapers. Political leaders long ago held press conferences to claim credit for advancing science and technology, management consultants earned hefty fees, and real estate barons reaped fortunes. Taxpayers were left holding the bag.

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Source: Bloomberg Businessweek