Local Input Linkages of Rural High-Technology Manufacturers

Abstract

Recent research has shown that hightechnology manufacturers are a viable and attractive source of employment for nonmetropolitan communities. High-technology industries are decentralizing their manufacturing activities, and as a result, nonmetropolitan employment growth in this sector has increased rapidly (Markusen, Hall, and Glasmeier 1986; Glasmeier 1988; Miller 1989; Barkley 1988). For example, Barkley estimated that during the period 1975-82 over 12,000 high-technology jobs shifted from metropolitan to nonmetropolitan areas, and the nonmetropolitan employment growth rate in this sector exceeded 15 percent. Moreover, Allen, Bailey, and Robertson (1983), Clair (1986), and Smith and Barkley (1988) have shown that these industries tend to be more labor intensive and employ higher proportions of skilled labor than low-technology manufacturers. Thus, nonmetropolitan communities successful in attracting or generating hightechnology manufacturers may enhance their potential for overall employment growth as well as increase employment opportunities for the higher paid skilled and professional laborers. The nonmetropolitan economic development potential of high-tech manufacturing cannot be estimated solely on the basis of direct employment generated, however. New industries may stimulate demand for local inputs (backward linkages) and thus broaden and deepen the local economy. Local linkages also may encourage the development of entrepreneurial activity and new production activities. Thus, industries with strong backward linkages provide the impetus for a more dynamic economy and long-term economic growth. Alternatively, where local input linkages are absent, local income and employment expansion will be limited to increases in those activities that serve the workers and families in the new industry (Erickson 1975). Therefore, if highand low-technology manufacturers mai tain different input linkages, the aggregate local employment and income generated by manufacturers in these sectors may differ greatly. Conventional wisdom suggests that high-tech manufacturers have very distinct linkages, based on critical inputs required. First, many of the industries in this sector are in the early phases of their product life cycles, and as a result, their production processes require highly sophisticated material, labor, and service inputs. These input requirements tend to dictate locations in or near metropolitan areas where skilled labor and urbanization and agglomeration economies are readily available (Vernon 1966; W. R. Thompson 1968; Lever 1972; Erickson and Leinbach 1979; and Markusen 1985). The increasing geographical dispersion of high-tech manufacturing suggests, however, that proximity to these specialized inputs is not necessary. For example, Oakey (1984) found that nonlocal urchases are extensive even for high-tech firms located in metropolitan areas. Also, Hagey and Malecki (1986) noted that since relatively few regions produce many of the specialized inputs needed by high-tech manufacturers, even the small, locally owned firms in this sector must purchase