Will NYC's bet on innovation pay off?

New York City aims to be the next Silicon Valley by attempting to attract excellent students and professors. But it's unclear whether this approach will make any gains for the city.

Mike Segar / Reuters / File
The Statue of Liberty and the New York City skyline are seen in this photograph taken from a tour boat in New York Harbor, June 30, 2008. What would it take to turn the city into a center for innovation?

Is New York City the right place to build the "next Silicon Valley"? The Mayor appears to believe so and he is prepared to use a fair bit of $ to try to achieve this goal.

"The RFP is the next step in the initiative – unveiled in December 2010 – that seeks a university, institution or consortium to develop and operate a new or expanded campus in the City in exchange for access to City-owned land – at the Navy Hospital Campus at the Brooklyn Navy Yard, the Goldwater Hospital Campus on Roosevelt Island, or on Governors Island – and the full support and partnership of the Bloomberg Administration. The City is also prepared to make a significant investment in site infrastructure, offering up to $100 million in a competitive process designed to select the proposal that yields the most benefit to the City for the lowest commitment of City resources. The City expects that any public contribution will be matched several times over by resources raised by the winner or winners themselves."

Will excellent students and professors and new firms want to locate in these areas? I realize they need to be gentrified but will these "desirable engineers" want to live and work in these locations? If they do want to live and work in these locations, is it obvious that there will be a significant "spillover" effect that benefits incumbent New Yorkers such as my parents? Will the imported engineering nerds really make a discovery that they would not have discovered had they not been in NYC? It is true that access to Wall Street may offer some synergies as engineers seeking venture capital for their own version of Facebook will have an easy time getting to Wall Street to make a presentation but should city money be used to subsidize such activities?

How will the people of NYC gain from being an engineering mecca? I lived for years near MIT while my wife worked there. I deeply respected the people at MIT and met many very successful people but I can't claim to have seen any "multiplier effects" for the local economy. Perhaps a booming business at Legal Seafoods was a side benefit of a booming MIT.

I can't tell if the Mayor's team seeks to gentrify a couple of neighborhoods or if they are serious about diversifying NYC's economy. Given Columbia's major investment in engineering, why hasn't this been sufficient to trigger a NYC version of Silicon Valley? How will this new school nudge NYC to the top?

Rather than simply betting all of this land on an abstract idea that "applied science" is the best bet, why not run a field experiment in which some of the land will be given to different types of activities and see which ones prosper and which ones are attractive to incumbents who already live and vote in the City? As learning takes place, the rest of the land can be allocated to the pursuit that offers the highest expected value. The leaders in NYC should be honest that they do not know what will be NYC's next golden goose. A flexible approach would allow them to re-optimize as they learn.

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