Research finds technology, skilled workforce, energy important to economic development of U.S. cities

A highly skilled workforce, technology-using companies and energy-based resources are the most important factors supporting economic development in the United States, according to a University of Maine economist.

Workforce skills and high-tech businesses are particularly key to the performance of the nation’s largest cities, says Todd Gabe, a professor in UMaine’s School of Economics. In smaller cities, energy production is the driving factor for growth.

During research for his new book, “The Pursuit of Economic Development: Growing Good Jobs in U.S. Cities and States,” Gabe examined the economic development of United States metros based on their growth, income and employment persistence from 1990 to the near present. This period is important because it begins around the dawn of the internet and the nation’s transition to a knowledge-based economy, he says.

Gabe identifies San Jose and San Francisco in California as the highest-ranked large regions for economic development. The top two big cities were among the best for skilled workers and high-tech companies in 1990, says Gabe.

Other top 10 large metros for economic development include Houston, Denver, Seattle and Phoenix.

The top two small regions — Midland and Odessa, Texas — are rich in energy resources, like some of the other top 10 small cities, such as Laredo and Victoria in Texas, and Casper, Wyoming.

The last 25 years have seen vast differences in economic performance across U.S. cities, according to Gabe’s research. Employment change ranged from actual declines in the number of jobs to growth rates that exceed 50 percent in places like Austin, Las Vegas and Provo, Utah.

“Although a few of the places that were heavy into goods production in 1990 have done OK, many of the metros with the bleakest economic performance started with a focus on manufacturing,” Gabe says.

U.S. regional policymakers have consistently looked to manufacturing as a way to support the economy.

“We still find that a growing manufacturing sector is good for economic development in a region,” Gabe says. “It’s just that many of the traditional manufacturing strongholds have experienced job losses through greater automation and international competition.”

The economic forces at play over the last 25 years mean that the top-performing places — cities like San Jose, Boston, Denver and Houston — distanced themselves from places that were less able to participate in the new economy.

“In earlier generations, lower wage regions could more easily catch up to their higher productivity competitions,” Gabe says. “Now, the top places are pulling away from the pack.”

Contact: Margaret Nagle, 207.581.3745