What Cleveland Can Learn From Silicon Valley

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Also see: 'The Silicon Valley of the East' Is Washington, D.C. 

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Creativity might be lightening in a bottle, but innovation clusters don't spontaneously generate. Silicon Valley has its roots in military technology and Stanford University. Washington, D.C.'s high tech corridor blazed down the Dulles Toll Road thanks to government IT consulting and military contracting. Boston's biomedical tech scene sprung from research labs and university grants.

What makes these stories rhyme? You won't confuse San Jose's high profile social media companies with D.C.'s targeted IT solutions firms, or Boston's medical device engineers. But you can trace each city's innovation lineage back to government investment in military, education, and (in the case of Washington) government, itself.

The idea of economic "clusters" is that when engineers, manufacturers, suppliers, schools and business people collaborate in proximity, it has an exponential impact on the volume and quality of good ideas and products they create. As in physics, where larger objects have a greater gravitational force, stronger clusters exert a stronger pull. Entrepreneurs who want to start a social media software company often go to the valley. Indians who want to work in IT are flocking to northern Virginia.

Today, Cleveland is trying to remake itself in the image of the country's great innovation cluster economies. How's it doing?

Besides medical devices, the Cleveland area -- a more than century-old stronghold for auto, rubber and glass making -- aims to carve out niches in clean energy and flexible electronics.

But with the loss of 8.7 million jobs in the recession, state and local officials are more active in trying to speed the growth of nascent clusters to create new jobs ... Now, the federal government is stepping in. President Obama's fiscal 2012 budget proposes a competition to identify 20 potential clusters that would receive a share of $2.5 billion in financial incentives.

Driving the effort was Ohio's Third Frontier, a $2.3 billion state program to nurture new tech-based industries. The initiative has pumped $235 million into biomedical research and start-ups in northeast Ohio since 2002. Non-profits such as BioEnterprise have recruited medical firms to the region, helped start-ups obtain venture capital and state money and matched manufacturers with suppliers.

There are challenges, including a shortage of skilled workers and entrepreneurs to lead start-ups. Astro, with 275 employees, added 45 last year and is struggling to hire a dozen engineers, managers and machinists. "It's impossible," says Vice President Rich Peterson, adding that many old-line workers lack essential math and computer skills.

Read the full story in USA Today.


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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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