How Dubai, South Carolina and Maine Governments Are Building Technology Sector JobsShare: Posted on
As technology research analysts we can locate our company's headquarters anywhere in the world as long as that location provides access to telephone services, to the Internet and to a decent airport. Our jobs involve conducting product and market research and performing competitive analysis on advanced technologies. We need the phone to conduct interviews and run our business; we need the Internet to research market trends and to conduct competitive analysis – and we also need the Internet to distribute our reports. We need an airport in order to fly to various locations to conduct face-to-face research, to attend briefings, as well as to deliver technology speeches and provide technical education.
As we travel the world speaking about data center and information systems trends and technologies we talk to dozens upon dozens of information technology (IT) executives, managers and administrators. When addressing these IT professionals we explain how various technologies work and the benefits that these technologies can deliver – and we provide competitive perspectives aimed at helping these executives make good technology selections. And sometimes on these road trips we find government officials who are interested in building technology sector jobs in their respective countries, states and cities. The reasons these officials want to grow technology job opportunities vary – from trying to increase their tax revenues by building a large base of high-paying white collar technology jobs, to providing job opportunities that will keep next generation workers at home in their local geographies (thus offering young workers an opportunity for upward economic mobility within their home region). We are not the only analysts to make these tax revenue/local job opportunity observations. The motivators that drive governments to expand their technology sectors are explored in greater depth in a report by Lawrence H. Summers in his National Bureau of Economic Research Reporter article entitled "Economic Possibilities for Our Children" found here.
But now to the meat of this story. Over the past 14 years we have lived in Dubai, South Carolina and Maine. As residents of these states, we have had the opportunity to observe the role that governments have played in driving the creation of information technology (IT) jobs in each region. What we found is that:
- The city-state of Dubai (in the United Arab Emirates) has embarked on an aggressive plan to bring IT jobs – and has been wildly successful in doing so;
- The state of South Carolina offers tax incentives to IT employers who create jobs – and one city in South Carolina (Charleston) has created a "technology corridor" to help overcome obstacles for start-up technology companies and thus accelerate technology job creation. Further, private grass-roots IT education programs have been created by resident IT professionals who want to help stimulate IT job skills. Further, state and private institutions have also expanded technology educational offerings at the university level; and,
- The state of Maine has built its "three ring binder" program that links fiber optic cables in three large loops across the state in order to bring Internet connectivity (and hopefully IT jobs) to its citizens. Maine also offers tax incentives to IT employers who bring jobs to Maine.
We characterize the Dubai IT job building effort as a "big government" effort because the government is heavily involved in attracting IT companies to this city-state. We view South Carolina's effort as a moderate government effort because the state offers some tax incentives and small innovation grants but much of the effort to attract IT jobs to the region is driven by grass-roots citizen efforts or by city governments (example: Charleston's "digital corridor"). We characterize Maine's effort to attract IT jobs as a "wishful" government effort. Maine's approach appears to be an "if you build it, they will come" approach because the state has laid the infrastructure groundwork needed to attract IT jobs – and hopes that this infrastructure will attract employers to the state.
When it comes to driving technology jobs creation, the big differentiator between the state of South Carolina, the state of Maine, and the city/state of Dubai is the grass roots commitment of the information technology community to drive technology training and to create a technology-friendly business environment. South Carolina's approach is distinctly different than the government-driven approach found in Dubai; and it is hugely different from the infrastructure-centric if-you-build-it-they-well-come approach found in Maine. Further, Maine lacks the grass roots IT base found in both Dubai and in South Carolina.
Each of these approaches to building more IT jobs in each respective state deserves closer scrutiny.
The Dubai Situation
As consultants and educators, we have been serving Gulf Cooperative Council cities and states (including Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and others) since 1996 (primarily by attending the region's largest technology trade show and eGovernment conference on a semi-annual basis where we have regularly conducted technology training). These events are held in Dubai, UAE. Twenty years ago, when we first travelled to Dubai, the city/state was a small Arab oasis with a grand plan to grow to one of the world's most desirable tourist destinations – and to develop an advanced infrastructure that included world-class hospitals, educational institutions, and technology center. Dubai's government formulated an aggressive growth plan and sunk billions of dollars into building this infrastructure.
In the late 1990s Dubai embarked on its modernization campaign, organizing the city into regions (miniature "cities") with concentrated specialties. For instance, Dubai created its Internet City area to attract technology companies to the region (Internet City now hosts the regional offices of companies such as Microsoft, IBM, Oracle and dozens of other high-tech companies). Dubai also created its "Academic City" to spur intellectual activity (as well as to perform technology education); its "Healthcare City" to bring world-class medical services to the area. Dubai hosts several other specialty cities – each creating a corridor for companies with like interests to grow and expand in Dubai.
As for doing business in the UAE, technology companies are highly attracted to the Dubai tax structure. In the city-state of Dubai, the government taxes banks, oil companies and hotels – and makes money from other fees – but does not tax technology companies, hospitals, educational institutions and other businesses. With low or non-existent taxes, with funding for technology education, and with a low cost labor pool – combined with distinct and aggressive government interest and involvement in growing its technology sector – Dubai has become a shining beacon for technology companies in the Middle East and a model for the rest of the world.
The South Carolina Situation
One of our first actions after having moved to Charleston was to get in touch with the local technology community. Much to our surprise (and delight) what we quickly found were many public and private individuals and organizations that devote their time and energies to technology job growth and IT education in South Carolina. Some of these organizations include the South Carolina Budget and Control Board (that sponsors IT information exchange and curriculum support); IT-oLogy (a Columbia-based IT professionals organization that focuses on advancing South Carolina's IT talent pool); and Charleston's own Charleston Digital Corridor.
The reason for our delight with the IT situation in South Carolina in general – and with Charleston in particular – has to do with the grass roots commitment of South Carolinians to technology growth in the region. South Carolinians want better jobs in the region; they want an environment where their children do not have to leave the state to find work – and they want only a little government support in helping to drive this agenda. The South Carolina state government offers performance-based tax incentives that reward companies for job creation and investment. And Charleston has its own "Charleston's Digital Corridor" that provides meeting venues, incubator space for early-stage start up companies, technical education, a job portal, relocation assistance and an avenue for access to small business funding in order to help entrepreneurs in South Carolina build their businesses and source talent.
In many respects, the technology growth situation in South Carolina reminds us a lot of how Dubai grew its technology industry. In Charleston, the city government interest in growing Charleston's Digital Corridor can be viewed as "accommodating". Ernest Andrade, the Executive Director of Charleston's Digital Corridor, describes his organization as "largely a grassroots organization that promotes IT education as well as helps technology companies locate their offices in the greater Charleston area. My job is to help technology companies that wish to locate in Charleston do so effortlessly". And Andrade has been highly successful at his job –attracting over a hundred technology companies to the Charleston Digital Corridor as members and sponsors over a 12 year period.
According to Andrade, Charleston has several extremely desirable ingredients for attracting technology companies to the area: "we have a lower cost labor pool; a great climate; a beautiful and vibrant city – and a city government that is willing to work with us to help overcome obstacles to doing business. On the other hand" Andrade went on to say "our colleges and universities don't produce a lot of IT talent – and if they do, those graduates frequently go elsewhere because they perceived there were not a lot of technological career opportunities in the area". Keeping information technology talent local is personally important to Andrade "when my daughter gets older, I don't want her leaving Charleston because she can't find a technology job here".
To address this "technical opportunities" issue, another South Carolina organization – Columbia-based IT-oLogy – has taken an aggressive approach toward IT education. IT-oLogy's mission is to "advance IT talent" by growing the IT talent pool, by promoting IT (starting in grades K-12), and by teaching IT. The organization encourages IT professionals in the region to get involved in IT training and in growing the region's IT skills. According to Lonnie Emard, IT-oLogy's president, IT-oLogy "is the only organization presenting a complete model to address the skills shortage, deliver business value to companies and create economic development advantage because of this talent
Stephen K. Wiggins, executive vice president and CIO of Blue Cross Blue Shield of South Carolina (BCBSSC) – and members of his staff – are actively involved in IT-oLogy activities. BCBSSC has a vested interest in the growth of the state's technology skills. As one of South Carolina's largest employers, Wiggins needs a steady stream of IT-knowledgeable individuals to program his systems and to run his IT operation – which is why he devotes his time and encourages his staff to devote their time to providing IT skills education to others through IT-oLogy.
The Maine Situation
When contrasted to Dubai, the government of the state of Maine does not have an explicit technology jobs growth agenda – and few funds to support such an endeavor (Maine is a largely rural "welfare-heavy" state with other crucial matters such as education and healthcare on its agenda). This state has some of the highest income taxes in the nation; employers are over-regulated; and young people are leaving the state in droves due to the lack of well-paying jobs (thus, the Maine population is becoming increasingly older). And with a small base of technology companies, Maine lacks the critical mass needed to start a grassroots movement supporting the growth of IT jobs in the state.
To improve the jobs climate in Maine the current governor has embarked on a program that encourages cities to certify that they are employer friendly (nine Maine cities immediately signed up for this certification). And Maine has taken advantage of federal government funding to bring Internet access to the more rural parts of the state as part of its "three ring binder" program (completed in 2012) that has distributed 1100 miles of fiber optic cable in three large circles throughout the state, providing access to a high speed Internet backbone to much of the state. But Maine's three ring binder effort suffers from a problem known as "the last mile" issue which essentially calls for cable companies to connect to the fiber optic network and help distribute internet services hundreds of miles across the state.
To add to Maine's woes, computer courses are not taught in the vast majority of Maine schools and there is only a small base of technology companies found across Maine – so Maine can't draw from the grass-roots IT community to bolster the creation of IT jobs.
Still, several bright spots for IT development can be found in Maine. For instance, one organization located in Brunswick Landing, ME, (known as Maine's Center for Innovation) offers workforce training, a green grid renewable power plant (under construction), access to the Maine three-ring-binder fiber optic network, a low tax Pine Tree development zone, a foreign trade zone designation that eliminates duties on imported material and supplies, TechPlace business acceleration services, access to Amtrak passenger train service, and access to an airport on campus. In some respects, this resembles Dubai's Internet City environment. This development zone is also home to Maine's Technology Institute that has, as part of its charter, a goal to help stimulate IT growth in the state. There are also rumors that a large foreign business partner is considering bringing a large number of jobs to Maine (thanks to the state's high speed Internet effort).
Yet, without a large business base that requires IT services; without a base of IT skilled grass roots individuals who are willing to devote their time and efforts to help grow IT skills in the state of Maine; and with little IT education taking place in high schools and colleges across the state – Maine's effort to attract IT jobs can be viewed as somewhat handicapped.
Cities throughout the U.S. that have attracted high-tech jobs are seeing an increase in revenues due to higher real estate values (as tech companies and their employees move within their boundaries) that drive higher real estate tax revenues – and states are seeing higher income tax revenues. Further, several cities have seen their job growth rates outpace the average U.S. jobs growth rates by attracting IT sector jobs to their respective domains (data from a 2012 CareerBuilder survey [CareerBuilder is the largest on-line employment web site in the U.S.] shows remarkable jobs growth in the technology sectors in the San Francisco Bay area, in Raleigh/Durham, and in several Texas cities). These cities and states have benefitted from an influx of technology jobs – and are also able to provide job opportunities for indigenous young people such that next generation IT job seekers do not necessarily have to leave their respective states.
In Dubai, the big government approach has been wildly successful. Technology companies have moved into the region and have brought high-paying jobs along with them. "Locals" now have well paying jobs (after a little government "guidance" compelled these foreign-based high tech companies to grow and promote locals). Now, as Dubai locals grow up, they no longer have to leave the region to find high paying IT jobs. Also, Dubai has built a technology base by aggressively introducing IT training in classrooms – and has built a technology skills base upon which to draw at local universities.
In Maine, the state's pro-business governor has been able to create business-friendly cities that lower the obstacles for businesses to move and set-up shop in Maine – but with little technology education taking place in Maine, and with a small technology base of businesses situated in Maine that could potentially provide grass roots support – this state lacks the educational and grass roots IT base needed to help drive the creation of technology sector jobs. Still, on a more positive note, actions that the state is taking to create a low tax/innovation zone in Brunswick Landing, ME, somewhat mimics Dubai's Internet City approach – and could potentially hold the key for bring more technology companies to the state .
As for South Carolina, in some respects, the growth of the technology sector in the state – and in Charleston in particular – reminds us of the catch line from an old Kevin Costner movie (Field of Dreams) in which he built a baseball field out in the middle of a remote cornfield. A voice within Costner keeps telling him "if you build it, they will come" (referring to baseball ghosts of the past). And, after building a baseball venue, those ghosts did come to Costner's remote baseball field to play ball. What we are seeing is South Carolina and in Charleston is the same sort of if-you-build-it, they-will-come attitude. The infrastructure is largely in place to enable Internet connection across the state. We're seeing grass roots efforts from socially-minded IT individuals who are willing to contribute their time and efforts toward building the dream of vibrant technology community in the region in order to provide jobs and growth opportunities for their children and neighbors – and in order to make South Carolina a premier destination for leading-edge technology development.