Information technology clusters and regional growth in America, 1970–1980

Abstract

We use county business patterns data for the 1970s to study the role of information technology (IT) clusters in fostering regional growth in America. We interpret the IT industry as made up of four components: computer hardware, computer software, semiconductors, and key computer customers. We pose two fundamental questions. First, did counties where the IT industry clustered in 1974 grow at a faster rate between 1974 and 1980? Second, did each individual component of the IT industry grow faster between 1974 and 1980 in counties where the other components clustered in 1974? We find that counties in which the IT industry clustered early on grew faster than those in which it did not, after controlling for a variety of county-specific characteristics and after addressing the potentially endogenous nature of the IT industry’s location. We also find that each individual component of the IT industry grew faster in regions in which the other components clustered. We interpret these findings as consistent with the tenets of the spillover theory of entrepreneurship.