1. Introduction

The term “Rust Belt” has its origin in the 1984 presidential campaign of Walter Mondale. It is an imprecise expression and is sometimes used to embrace the coal-producing regions of Appalachia and former iron ore mining areas, the industrial regions in the upper South, as well as the old industrial Northeast and Midwest. “Midnight in the Rust Belt,” Beltmag.com (September 21, 2013).

Martin Neil Baily and Barry P. Bosworth, “US Manufacturing: Understanding its Past and Potential Future,” Journal of Economic Perspectives 28(1) (2014). In 2013, New York State had the most disproportionate top-to-bottom ratio of income disparity of any state in the United States. The top 1% of earners averaged income of $2,006,652 compared with the average of $44,163 for the bottom 99%, or a top-to-bottom ratio of 45.4. The smallest ratio was observable in Alaska, 13.2. “Income Inequality in the US by State, Metropolitan Area, and Country,” Economic Policy Institute (June 16, 2016).

See generally Kansar Hamdami, Richard Deitz, Ramon Garcia, and Margaret Cowell, “Population Out-Migration from Upstate New York,” in Federal Reserve Bank of New York (Buffalo Branch), The Regional Economy of Upstate New York (Winter 2005). Binghamton, New York, has lost roughly three out of four manufacturing jobs in the past three decades. Rochester’s manufacturing employment has plummeted by 53% since 1990. Reflecting the fact that manufacturing jobs pay $15,000–20,000 more per year than the average wage in the private sector, the wholesale loss of such jobs means that “upstate residents, as a whole have less disposable income to spend on cars, homes and vacations.” “Made in NY? Forget It, as State Loses to Others,” Rochester, Democrat & Chronicle (March 10, 2017).

“The Upstate Economy is One of the Worst in the Country,” Politifact.com (September 16, 2016).

“Upstate New Yorkers to Trump: ‘Hello, it’s not the 1940s and 1950s,’” Schenectady, The Daily Gazette (July 27, 2017).

“Upstate New York’s persistently slow economic growth is often viewed as the result of local disadvantages, such as the region’s heavy reliance on a declining manufacturing sector, elevated business costs, or lack of high-tech business services.” Kansar Hamdami, Richard Deitz, Ramon Garcia, and Margaret Cowell, “Population Out-Migration from Upstate New York,” in Federal Reserve Bank of New York (Buffalo Branch), The Regional Economy of Upstate New York (Winter 2005). In 2001, an academic expert on technology-driven economic development, Stuart W. Leslie, published what amounted to a postmortem verdict on an effort in the 1980s by the then-president of Rensselaer Polytechnic Institute, George Low, to replicate Silicon Valley in New York’s economically struggling Capital Region. Noting that Low’s effort fell short of its objectives, he concluded that his initiatives “could not overcome the regional disadvantage that kept them from competing effectively with emerging high technology centers in other parts of the country. [They] illustrate the limits of local actions in the face of large corporate restructuring and regional economic decline.” Stuart W. Leslie, “Regional Disadvantage: Replicating Silicon Valley in the Capital Region,” Technology and Culture (2001), p. 238.

“Feds: Upstate New York Job Growth ‘Flat,’” Syracuse.com (August 18, 2016).

See generally David Kaiser (ed.), Becoming MIT: Moments of Decision (Cambridge, MA, and London: The MIT Press, 2010); C. Stewart Gillmore, Fred Terman at Stanford: Building a Discipline, a University, and Silicon Valley (Stanford CA: Stanford University Press, 2004); N. Rosenberg and R. R. Nelson, “American Universities and Technical Advance in Industry,” Research Policy (1994) 23:326.

George Wise, Willis R. Whitney: General Electric and the Origins of US Industrial Research (New York: Columbia University Press, 1985).

Thomas P. Carroll, “Designing Modern America in the Silicon Valley of the Nineteenth Century,” RPI Magazine (Spring 1999).

Stuart W. Leslie and Robert H. Karagon, “Selling Silicon Valley: Fredrick Terman’s Model for Regional Advantage,” Business History Review (Winter 1996).

The phenomenon of the industry cluster, in which enterprises in a given sector group themselves together in a particular location, thus enhancing their collective competitiveness, was first examined by the great nineteenth century British economist Alfred Marshall, who examined the Sheffield industrial district in Great Britain. (See Fiorenza Belussi and Katia Caldon, “At the Origin of the Industrial District: Alfred Marshall and the Cambridge School,” Cambridge Journal of Economics (2009)). Marshall identified the elements of a successful cluster, which have come to be known as “Marshall’s trinity”—supply chain linkages, a pool of skilled labor, and “knowledge spillovers” reflecting the availability in the cluster of market intelligence, new designs and applications, and improvements in manufacturing technique. Paul Krugman, a winner of the Nobel Prize in economics, stressed the abiding importance of Marshall’s trinity in Geography and Trade (Cambridge, MA: The MIT Press, 1991). Marshall’s ideas were carried forward, refined, and popularized by Michael Porter, who argued in his influential 1990 book, The Competitive Advantage of Nations, that in advanced economies, regional clusters of related firms and industries, rather than individual firms or sectors, were the principal source of economic competitiveness as well as rising regional employment and per-capita income levels. (See Michael Porter, “Clusters and the New Economics of Competition,” Harvard Business Review (December 1998)). The role played by research universities and supportive government organizations in the development of regional technology-intensive industry clusters has been articulated in academia and refined by Henry Etzkowitz, Loet Leydesdorff, and others, into a model known as the “Triple Helix.” Henry Etzkowitz, The Triple Helix: University-Industry-Government Innovation in Action (New York and London: Routledge, 2008).

Andrew M. Cuomo, “Rebuilding the Upstate Economy,” Huffington Post (September 1, 2016). In the European Union, economic development strategies which seek to identify and build upon a region’s strengths, including the industrial legacy described by Governor Cuomo, have come to be known as “smart specialization.” See generally Slavo Radosevic, et al. (eds), Advances in the Theory and Practice of Smart Specialization (London, San Diego, Cambridge, MA, and Oxford: Elsevier, 2017).

Stuart W. Leslie and Robert H. Karagon, “Selling Silicon Valley: Fredrick Terman’s Model for Regional Advantage,” Business History Review (Winter 1996). See also Vivek Wadwha, “Silicon Valley Can’t Be Copied,” MIT Technology Review (July 3, 2013). Hsinchu Science Park was founded by Kuo-Ting Li, a Taiwanese policymaker known retrospectively as the “architect of Taiwan’s economic miracle.” He consulted with Terman as to how Taiwan could create its own version of Silicon Valley and applied the Terman model with spectacular results. “Fred Terman, the Father of Silicon Valley,” Net Valley (October 21, 2010).

“What We Can Learn from £100 m and 10 Years Wasted on the Technique Programme,” WalesOnline (June 1, 2013). The Economist observed in 2013 that “the world is littered with high-tech enclaves that fail to flourish. Malaysia’s biotech valley has been nicknamed ‘Valley of the Bioghosts.’” “Crazy Diamonds,” The Economist (July 20, 2013). For case studies of failure of the Triple Helix model, see Denis Gray, Eric Sundstrom, Louis G. Tomasky, and Lindsey McGowen, “When Triple Helix Unravels: A Multi-Case Analysis of Failures in Industry-University Cooperative Research Centers,” SAGE Journals (October 1, 2011).

“Reshoring: A Boost in American Manufacturing,” Machine Design (August 30, 2017); “Manufacturers Bring Back Jobs to Central Mass,” WBJournal (September 4, 2017); “Manufacturing Bringing the Most Jobs Back to America,” USA Today (April 23, 2016); Lindsay Oldenski, Reshoring By US Firms: What Do the Data Say? (Peterson Institute for International Economics, September 2015); David Simchi-Levi, “US Re-Shoring: A Turning Point,” MIT Forum for Supply Chain Innovation 2012 Annual Re-Shoring Report (Cambridge, MA: The MIT Press, 2012); TD Economics, “Onshoring, and the Rebirth of American Manufacturing,” (October 15, 2012); “US Manufacturers ‘Relocating’ from China,” Financial times (September 23, 2013); “Overseas Jobs are Coming Home—S.C. Business,” Columbia, SC, The State (September 8, 2013).

Michael Polanyi, a scientist who closely studied this phenomenon, observed in 1958 that much knowledge cannot be transmitted by prescription, only by example, and that “this restricts the range of diffusion to that of personal contacts… Craftsmanship tends to survive in closely circumscribed local traditions.” Michael Polanyi, Personal Knowledge: Toward a Post-Critical Philosophy (Chicago: University of Chicago Press, 1958), p. 52. Eugene S. Ferguson, an engineer by training, observed in 1992 that “an engineer’s intelligent first response to a problem that a worker brings in from the field is ‘Let’s go see.’ It is not enough to sit at one’s desk and listen to an explanation of a difficulty. Nor should the engineer refer immediately to drawings or specifications to see what the authorities say. The engineer and the worker must go together to the site of the difficulty if they expect to see the problem in the same light. There and only there can the complexities of the real world, the stuff that drawings and formulas ignore, be appreciated.” Eugene S. Ferguson, Engineering and the Mind’s Eye (Cambridge MA: The MIT Press, 1992), p. 56.

National Research Council, A Matter of Size: Triennial Review of the National Nanotechnology Initiative (Washington, DC: The National Academies Press, 2006).

“If You Build It They Will Come,” The Chronicle of Higher Education (February 7, 2013); “IBM Team Makes Atomic-Scale Circuitry Breakthrough,” Watertown Daily Times (February 3, 2000); “RPI Creates Center for Nanotechnology Studies,” Albany, The Times Union (March 30, 2001).

GlobalFoundries’ wafer fabrication facility in Malta/Stillwater, New York, is currently manufacturing semiconductor wafers with technology nodes as small as 7 nanometers (GlobalFoundries, May 2017). See generally Jan G. Korvink and Andreas Greiner, Semiconductor for Micro- and Nanotechnology: An Introduction for Engineers (Wileys, 2002).

Recent academic work supports the proposition that semiconductor manufacturing results in much higher local employment multipliers than other manufacturing and services activities. Enrico Moretti of the University of California at Berkeley concludes, based on an analysis of 11 million American workers in 320 metropolitan areas, that high-tech manufacturing, of which semiconductor fabrication is arguably the most advanced expression, supports dense clusters of supply chain and services firms which themselves pay above-average salaries and require specialized services. High-tech manufacturers and supply chain firms require additional local services, including sophisticated information technology, graphic design, business consultancy and legal and security services, and restaurants, hotels, healthcare, and other services. Moretti concludes that for each new high-tech job in a metropolitan area, five additional local areas are created outside of high tech over the long run. Enrico Moretti, The New Geography of Jobs (Boston and New York: Mariner Books, 2013). This is consistent with the Semiconductor Industry Association’s estimate—that every job in the semiconductor manufacturing sector fosters nearly five indirect jobs nearby. Other estimates are even higher. Semiconductor Industry Association, US Semiconductor Industry Employment (January 2015).

“Tales of Silicon Valley Past: Legendary Founders Talk About Early Days at Fairchild,” San Jose Mercury News (May 13, 1995); “Growth of Silicon Empire: Bay Area’s Intellectual Ground Helped Sprout High Technology Industry,” The San Francisco Chronicle (December 27, 1999).

See generally “Moore’s Law: Past, Present and Future,” IEEE Spectrum (June 1997).

Nathan Rosenberg, “America’s Entrepreneurial Universities,” in David M. Hurt (ed.), The Emergence of Entrepreneurship Policy; Governance and Growth in the US Knowledge Economy (Cambridge: Cambridge University Press, 2003); Stuart W. Leslie, “The Biggest Angel of All: The Military and the Making of Silicon Valley,” in Martin Kenney (Ed.), Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region (Stanford: Stanford University Press, 2000).

In Europe, national governments initially sought to promote “national champions”—large, vertically integrated electronics firms producing chips primarily for internal consumption—but over time this approach was largely abandoned in favor of strategies building on Europe’s superb research institutions and its tradition of research collaborations. European firms emerged as leaders in niche areas of design, toolmaking, and specialized materials.

Semiconductor Industry Association, Maintaining America’s Competitive Edge: Government Policies Affecting Semiconductor Industry R&D and Manufacturing Activity (March 2009).

In an extraordinary demonstration of technological catch-up and eventual leadership in the mid-1990s, South Korea’s Samsung surpassed the United States and Japan in a key semiconductor memory device category—dynamic random access memories (DRAMs)—and continues to dominate this product segment today. Linsu Kim, “The Dynamics of Samsung’s Technological Learning in Semiconductors, California Management Review (Spring 1997). The government of Taiwan supported technology transfer and creation of new companies which culminated in the achievement of technological parity in semiconductor manufacturing with US, Japanese, and Korean firms. Interview with Ding-Hua Hu, “Taiwanese IT Pioneers: Ding-Hua Hu,” recorded February 10, 2011 (Computer History Museum, 2011).

See Laszlo B. Kich, “End of Moore’s Law: Thermal (Noise) Death of Integration in Micro and Nano Electronics,” Physics Letters (December 2002).

Major fabless firms include Qualcomm, Broadcom, Nvidia, Mediatek, and Xilinx.

Based on TrendForce estimate of 2017 global foundry revenue of $57.3 billion and World Semiconductor Trade Statistics (WSTS) estimates of total global semiconductor revenues for 2017 of $409 billion. “Top Ten Foundries 2017,” Electronics Weekly (December 1, 2017); http://​www.​wsts.​org/​76/​Recent-News-Release.

“U.S. Paves Roads to Trusted Fabs,” EE Times (July 11, 2017), http://​www.​trustedfundrypro​gram.​org.

“Buffalo Boondoggle,” New York Post (March 6, 2016). “Spending Billions While Killing Jobs,” New York Post (March 28, 2017). Former state Assemblyman Richard Brodsky, whose committee in the legislature oversaw state economic development projects, said with respect to Governor Cuomo’s programs in 2016 that “what I’d say is, change course. If [Cuomo] insists on maintaining these kinds of policies, more and more the evidence will show they’re not working. And he’ll be forced to defend the indefensible.” EJ McMahon, with the fiscal oversight group The Empire Center, commented that “I would hope the public would ask, ‘Hey, wait a minute. Why are you spending all this money?’” See “Cuomo Manages the Fallout from Corruption Scandal,” WBFO (September 29, 2016).

Daniel H. Calhoun, The American Civil Engineer: Origins and Conflict (Cambridge, MA: Technology Press, 1960.) The first technical and engineering college in the United States was the Military Academy at West Point. Rensselaer Polytechnic Institute (RPI), founded in 1824, is the oldest degree-conferring engineering school in the English-speaking world. Union College established an engineering program in 1845. The engineers who built America’s railroads, canals, and bridges in the nineteenth century were overwhelmingly graduates of these three institutions. Frederick Rudolph, Curriculum: A History of the American Undergraduate Course of Study Since 1636 (San Francisco: Josey Bass, 1977), p. 63.

The creation of the New York State Thruway, completed in 1955, “provided an important model for the nation’s Interstate Highway System. Its experience in executing public works projects on a grand scale was instrumental in opening the way and setting the standards for the federal interstate highways.” The Thruway Authority provided an important institutional model for the federal Highway Trust Fund. Michael R. Fein, Paving the Way: New York Road Building and the American State, 1880–1956 (Lawrence: University Press of Kansas, 2008), p. 231.

Evan Cornog, The Birth of Empire: Dewitt Clinton and the American Experience (Oxford: Oxford University Press, 1998).

The Tappan Zee Bridge, opened in 1955, bridged the Hudson at one of its widest points, between Tarrytown and Nyack, “a clear expression of engineering confidence,” and was based on a novel design utilizing eight floating caissons. During its construction, it was lampooned as a “basic error,” “costly,” and of “freak design.” The New York Times advocated an alternative site at a narrower crossing point, a suggestion that was rejected by the Dean of the Rensselaer Polytechnic Institute, a design engineer, who said that the important thing was “not the width of the body of water you want to cross but the number of people who want to cross there.” In fact, when the bridge opened it “prompted a general reordering of economic life” all along the lower Hudson. The west shore city of Kingston, previously viewed as being on the “wrong shore” of the river (e.g., the side opposite New York City), abruptly found itself to be on the “right” shore going forward. The city experienced an explosive economic boom. Among other things, IBM established a plant in Kingston, eventually bringing over 7000 jobs. Michael R. Fein, Paving the Way: New York Road building and the American State, 1880–1956 (Lawrence: University of Kansas Press, 2008), pp. 215–216; “Kingston: The IBM Years Gives a Peek into Tech Giant’s History,” Hudson Valley Magazine (June 4, 2014).

As noted in the front matter of this book, the study also drew on interviews carried out by the authors and numerous articles from The Times Union (Albany), The Daily Gazette (Schenectady), the Albany Business Review (Albany), The Post-Star (Glens Falls), The Record (Troy), The Saratogian (Saratoga Springs), The Buffalo News (Buffalo), The Observer-Dispatch (Utica), The Daily Messenger (Canandaigua), and the Post-Standard (Syracuse). These are not individually included in the bibliography.