The Cambridge High Tech Cluster on the Eve of the Financial Crisis

Abstract

Following the financial crisis of 2008, the UK government has set out new economic priorities which include jobs and returns from investment in science and technology-based activity. In this paper we show that the Cambridge area already provides a microcosm for such a future economy, one that it reveals both strengths and weaknesses. Using longitudinal county-wide data on technology firms in Cambs, we show that these firms have been resilient to recession over the past quarter century (as compared with Silicon Valley) and achieved high survival rates until the past few years. Cambridge tech firms are depicted in terms of size and sectoral distribution on the eve of the credit crisis, using new data on serial spin out from the university as a check on county-wide data. Larger firms showed a recent recovery in jobs and sales after delayed impact from the technology slump of the new millennium. However a fall in the number of start ups and firms in the smaller size groups is a cause for concern, since it is from just such a pool that the more successful Cambridge firms have emerged over the past three decades.