Office of Advocacy
U.S. Small Business Administration

NEWSRELEASE

SBA Number : 00-10
Contact: John B. Johnson
(202)205-6941
For Release: June 2000

Small Firms Sparked San Diego Growth, Advocacy Study Says

WASHINGTON San Diego's remarkable economic rebirth-from a period of 7.7 percent unemployment in the early 1990s to about 3 percent today-can be attributed in large part to the growth of small high technology firms, according to Developing High Technology Communities: San Diego, a new study sponsored by the SBA's Office of Advocacy.

The author, Diane Palmintera, from Innovation Associates of Reston, Virginia, set out to analyze the reasons for San Diego's transformation after its once-dominant employers-military and other federal contractors, aerospace companies, and large businesses-contracted sharply following the defense cutbacks of the late 1980s and early 1990s. She examined data on employment, numbers of firms, per capita income, retail sales, regional imports, exports, cross-border manufacturing, patent grants, Small Business Innovation Research awards, and venture capital investments. She also interviewed more than 30 government, university, non-profit, and corporate leaders.

The answers came from small businesses and entrepreneurship, with coordinating support from academia and government. Talented former defense sector employees, working with local university and government resources, began starting new small firms in cellular communications, biotechnology, pharmaceuticals, and computer software.

"New technology clusters don't just happen," said Chief Counsel for Advocacy Jere W. Glover. "They need the support of a driving force, available capital, pro-business government policies, a less restrictive regulatory climate, and a skilled labor force. In San Diego, the chemistry was right. But San Diego's experience can certainly be replicated elsewhere."

The efforts of individuals can also make a difference. In the case of San Diego, one of them was Dr. Richard Atkinson, then chancellor of the University of California at San Diego, who built a new world-class engineering school and used all the tools at his disposal to ensure the interaction of the university, government, and business communities. UCSD's CONNECT program provided information and connections to the financial community, to potential customers of the new small high-tech firms, and to local political leaders who reduced business taxes and streamlined regulations.

Developing High Technology Communities: San Diego and other Office of Advocacy studies may be found on the Internet at http://www.sba.gov/advo/stats/. Paper and microfiche copies of all Advocacy reports are also available for purchase from the National Technical Information Service, (800) 553-6847 or visit the NTIS Web site at www.ntis.gov. Comments and technical questions about this study may be directed to Bruce Phillips at bruce.phillips@sba.gov or to the Office of Advocacy, U.S. Small Business Administration, 409 Third Street, S.W., Washington, D.C. 20416, telephone (205-6530), fax (202) 205-6928.

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The SBA’s Office of Advocacy was created by an act of Congress in 1976 to protect, strengthen and effectively represent the nation’s small businesses within the federal government. As part of this mandate, the office conducts policy studies and economic research on issues of concern to small business and publishes data on small business characteristics and contributions. For instant access to small business resources, statistics and research visit the Office of Advocacy’s home page at http://www.sba.gov/advo/.