400 Tech Parks Help Firms Act Globally. (Perspectives)

Article excerpt

Many regions of the world, including the less developed, are emerging as magnets for attracting technology-intensive companies. In many respects, this phenomenon is due to the development of technology parks (sometimes referred to as science or innovation parks).

Briefly defined, technology parks are premium real estate development projects typically sponsored by government, academia, and/or the private sector, and offering an array of activities to support technology transfer and development. The majority provide advanced telecommunications infrastructure.

Technology parks serve a vital role for both host and foreign companies. More countries are developing parks in efforts to entice and encourage technology-based economic development within their boundaries; at the same time, this goal serves to provide benefits to those companies willing to locate within the parks.

The technology park concept has now been implemented by many countries. While there are numerous variations on the theme, all share the common characteristic of attempting to make foreign direct investment--in the form of location of technology-intensive companies--an easier undertaking.

A Powerful Draw

It is estimated that over 400 technology parks worldwide serve as a powerful draw for foreign corporate investment. Indeed, in 2000, the International Association of Science Parks found that 58 percent of tenant companies were relocations and expansions, with most originating from other countries. What types of enterprises locate in the parks? The majority are industrial, including biotechnology and electronics. Service companies, particularly those in information technologies, comprise the next largest type of operation, followed by basic and applied research activities. The remaining tenants are technology intensive start-ups and existing companies from within the host country.

I recently participated with Lockwood Green Engineering (www.lg.com) in studying over 80 technology parks in the Caribbean, Central and South America, Europe, and South Asia. We found that the benefits to companies located within these parks can be substantial. For example, technology parks tend to provide a safe, secure environment that serves as an excellent point of first contact for companies new to operating in an area. Because many are sponsored either wholly or jointly by national or regional governments, the parks provide vital links to agencies and organizations within the host countries.

Intellectual property protection, as well as freedom to operate as wholly owned foreign subsidiaries, are other benefits of the direct government support. Financial incentives are often provided, including duty-free importation of equipment and various measures of tax relief. In some cases, technology parks are also designated as Free Trade Zones, in which exemptions from various taxes and customs duty are routine.

Further, park campuses offer a host of collaborative opportunities with companies from other countries. We found that most parks have a tenant base from a number of countries--what better environment to explore collaborative efforts than with other tenants? Technology start-ups and existing companies in the country are often located in the park and are eager to explore relationships with established North American, European and Asian companies. In some cases, financial incentives are offered by the park sponsors to encourage collaborations. For example, Visionics India is a joint venture between Norlinvest Limited of Sweden and Alpha Imager of Bangalore. It receives substantial benefits by virtue of its location within the Kerala Technopark, which is also a Free Trade Zone (see below).

Another benefit of locating in technology parks can include substantial cost savings on labor, particularly in parks of less-developed countries. For example, North American companies are quickly realizing the cost savings of operating in the Caribbean where software programming salaries are less than half those in the U. …