Tech clusters have been really rather popular of late, as policy makers from around the world attempt to boost their floundering economies by incentivising all manner of high tech wizardry in urban areas across the globe.
Earlier this month, the Economist focused its gaze upon the start-up scene in London and Berlin, in an attempt to decipher what was happening in each city and how they were each growing respectively. Indeed such has been the popularity of monitoring these tech clusters that projects such as the Startup Genome have emerged to try and chronicle them.
KPMG entered the fray this week, with a new report on the most prominent tech clusters in Britain. Interestingly, despite the hype surrounding Tech City in London, they found that the hottest tech cluster in Britain was in Wokingham, a small town to the south-west of London. The proportion of tech jobs in the town was over 5 times the national average.
The report went on to reveal that the vast majority of tech clusters were found in the prosperous south-east of the country, with only three of the top 25 located outside of the region. What’s more, only London and the South-East scored higher than the national average in terms of people employed in tech jobs.
There are also strong growth signals from the tech sector in Britain, with the report revealing that UK tech sector growth output is at its strongest since May 2010, with job creation outpacing the UK economy as a whole. Confidence is also high across the sector, with expectations at their highest since 2009.
So how important is this?
Well, obviously growth is great, but the vast majority of tech growth is focused on a relatively small area of the country, with large chunks seeming to miss out entirely. With unemployment stubbornly high in many of the areas that are bypassed by the tech sector it will inevitably have policy makers racking their brains.
Earlier this month the Economist went as far as to suggest that many of the towns in these areas should be allowed to slowly decay, thus freeing people and resources to move to areas seeing stronger growth, such as the various clusters identified by KPMG. Whilst that is unlikely to win political approval, it is difficult to overcome the power of clusters to reinforce their strength.
Earlier this year researchers from Columbia Business School explored the benefits a start-up can glean from the cluster of companies they find themselves in. They found that their physical neighbours were of less importance than the knowledge that organisations could tap into, be that via physical or virtual means.
The study found that the early employment history of the entrepreneur was more important than where they chose to locate their new business. This was because the benefits of locating in a industry cluster were offset by the high levels of competition in that area. The prior experience gained in their early employment however, together with the networks they established there, stood them in good stead with their new business.
Whilst this does offer a glimmer of hope to poorer performing regions, the challenge for them will be in attracting high flyers that have enjoyed the various benefits afforded them by their location in such well connected parts of the country previously.
