Neo Classical Approaches to Local High Tech Economic Development

The Classical economic theorists focused much of their attention on the problems of growth. After the "marginalization revolution" in 1870 (? ref)the interest shifted to an obsession with prices prom the point of view of the Marginal factor on various facets of the economy. These "neo-classical" economists have developed explanatory theories about many market phenomena from that point of view, many of which are used to explain and guide the people carrying out High Tech economic development.

It must be noted here that the "local" aspect of most of this type of economic development activity is reserved to a very few locations in the world, as the requirements for this type of work are so stringent.

There are six major theories, which arise out of the neo-classical writers' work:

  1. Regional growth theory: All things being equal, capital and labor flow to the regions with the best technology in the short tun but these equalizes out over the long run. ("boys and their toys like good paychecks")
  2. Theory of Comparative advantage and Trade:Places with some structural advantage will win the competitive game in the long run (If you have a bid government lab or University, you're going to be able to attract good talent, if you have two or three it's hard to lose)
  3. Disequilibrium Models: Cumulative causation sets in once some programs get operational (get the snowball effect working for you not against you).
  4. Growth Pole theory There is a multiplier effect that sets in as backward Dan forward linkages form with related companies. ("Birds of a feather flock together")
  5. Classsical Location Theory : Firms tend t locate near the sources of lowest cost of transportation and production as outlined elsewhere.("Rodents make their nests near the grain bins").
  6. Creation and diffusion of inventions and innovations: Profit maximization in the knowledge industries. ( "buy cheap, sell dear")

navigation