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An Accident of Planned Growth

North Carolina’s Research Triangle Park became a model for government economic development efforts—unfortunately, however, a misleading one.

By Jay Schalin

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January 02, 2011

Editor's note: This article is part of an occasional series on the connection between investment in universities and economic growth. Jay Schalin’s paper “State Investment in Universities: Rethinking the Economic Impact” includes an appendix summarizing the history of three key high-tech areas, Silicon Valley, Massachusetts’ Route 128, and North Carolina’s Research Triangle Park. This article is adapted from the discussion of Research Triangle Park.

The development of the Route 128 corridor around Boston and California’s Silicon Valley began, for the most part, without overall leadership, and neither had much government involvement beyond military contracts. True, Fred Terman of Stanford deliberately attempted to encourage synergy between industry and the academy in the Silicon Valley dating back to the 1930s, but the seeds of the future high-tech boom were planted before then. The growth of high-tech industry in Massachusetts was even more spontaneous.

The Research Triangle of North Carolina was different. It is the only one of the three celebrated high-tech clusters that was conceived of before it existed, and the only one where government and academia were equal partners with private industry during the initial development stage. It also relied on outside firms relocating in the area—thus, unlike the other two it was neither indigenous nor spontaneous.

Numerous government and academic entities have tried to replicate the Research Triangle’s success ever since, with varying (and generally disappointing) results.

The idea to use the universities to draw industry was bandied about for a long time before it came into existence. Albert Link, a University of North Carolina-Greensboro economics professor whose definitive history of the Triangle was published in 1995, cited a 1945 speech by former governor R. Gregg Cherry as the source of the original suggestion.

The concept was a direct response to North Carolina’s historically weak economy—according to Link, in 1952 it was ranked dead last in per capita income among the 48 states. Its traditional economy was based on agriculture (particularly tobacco), textiles, and furniture manufacturing. All three of these industries would soon face severe competition from other parts of the country and world. The state had a traditional commitment to higher education, but graduates left the state. And the idea of using the universities for economic development was not new, according to Link.

The principals involved in the project were well aware of the developments in Massachusetts and the Silicon Valley, and the post-World War II era was ripe for an expansion of research. And they were also aware that their particular region of North Carolina had special qualities. While it lacked the historical economic development and technological infrastructure of the other two clusters, it had its own advantages. Few other areas in the country had large tracts of inexpensive farms and woodlands and a large airport in the middle of a triangle formed by three major research universities, all within a short distance of each other. Those universities were Duke (in Durham), the University of North Carolina (in Chapel Hill), and North Carolina State University (in Raleigh).

The Triangle was a project driven, for the most part, by civic-minded men who donated their time and money to making it work. This was why Albert Link titled his book A Generosity of Spirit.

But the profit motive played its part as well. While politicians and academics made speeches and had discussions, a private construction company owner from Greensboro named Romeo Guest led the initial charge. He was given credit for suggesting the name “Research Triangle,” although Link said that the name might not have been completely original, given the configuration of the three universities. In the early 1950s, before the idea of a research park was introduced, Guest traveled the East Coast with Brandon Hodges, the state treasurer, and Walter Harper, who headed the Commerce and Industry Division in the state’s Department of Conservation and Development, looking for companies to relocate in North Carolina.

William Newell, the director of the Textile Research Center at N.C. State, came up with the idea of the actual research park.

Link wrote that the idea really took off in 1955, after Guest and the others were able to convince then-Governor Luther Hodges to give his support. Shortly after, Governor Hodges formed the Research Triangle Development Council to oversee the process of creating a research park with university involvement. 

All three heads of the three universities climbed aboard as well. While the existence of the universities was the key selling point for the park, their actual role was rather limited. Link noted this, citing the minutes of a Council subcommittee meeting:

It is not anticipated that the three universities in the Triangle shall engage directly in the conduct of industrial research, except under carefully designed and administered policies. Rather, the principal functions of the Universities are to stimulate industrial research by the research atmosphere their existence creates, and to supplement industrial-research talents and facilities by providing a wellspring of knowledge and talents for the stimulation and guidance of research by industrial firms.

In other words, the presence of universities provided some of the agglomeration externalities that were absent due to the lack of a technological infrastructure—they put the relocating companies at the center of new ideas and provided them with a trained workforce.

In November 1955, the decision was made that the park should be developed as a private, profit-seeking endeavor (while the Council was incorporated as a “non-stock, non-profit” entity financed by private contributions). In 1957, Guest, William Saunders, who ran the Department of Conservation and Development, and Governor Hodges entered into negotiations with Karl Robbins, a former North Carolina textile mill owner who had moved to New York City. Robbins pledged $1 million to purchase land for the park.

By the end of 1957, nearly 4,000 acres had been bought or optioned for purchase by the newly-formed Pinelands Corporation. Robbins was the sole owner of stock, and Guest was appointed president of the board of directors.

Eventually Robbins soured on investing, since the Council was unable to attract other investors. In 1958, Archie Davis, the chairman of Wachovia Bank, realized that he could raise money more quickly by asking for charitable contributions than by selling Pinelands stock. By early 1959, he had raised $1.425 million, which he used primarily to retire the stock through outright purchase of the land and to fund the Research Triangle Institute’s start-up costs. Davis became president of the Research Triangle Foundation, which was created to oversee the park’s operations.

The first company to purchase land to build a research facility was Chemstrand Corporation, a joint subsidiary of Monsanto and American Viscose, in 1959. The second purchaser was the United States Forest Service in 1960. It was not until 1965, however, that the Research Triangle Park reached “the turning point,” according to Davis. In that year, IBM, which had been courted by the Council for seven years, bought land for a huge research facility. This not only brought the venture out of debt, Davis said, but IBM’s “presence also validated the mission of the park.”

Although Research Triangle Park started slowly, it is now the nation’s largest research park. It consists of approximately 7,000 acres, with roughly 40,000 employees working at over 130 facilities owned by some of the biggest names in industry. The agglomeration has spread beyond the park’s boundaries, particularly in the nearby communities of Raleigh and Cary. 

Other recent Pope Center articles about universities and economic growth:

A Conversation on Innovation with a “Master Inventor” by Jay Schalin

The Quest for Economic Growth by Jane S. Shaw

Magic Elixir for Growth or Economic Snake Oil? by Jay Schalin

True Believers by Jay Schalin

 


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