PORTLAND, Maine — There is apparently nothing wrong with Maine's largest city. Its shops are buzzing in the summer with well-heeled tourists. Zillow rates the real estate market “very hot.” David Geffen's yacht docks in the harbor from time to time. The food scene is great. In November, the unemployment rate was just 2.2%.
However, something worries Portland. Productivity growth is low. Business formation is anemic. And there's a sense that in an era of tech-driven economic winners, Portland's 66,000 residents are being left behind.
“We seem to be doing well,” said Jon Jennings, Portland's city manager. “But just underneath the real estate boom, there's this uncertainty about what's really going to drive the economy going forward.” Lobster and tourism will not be enough.
Hoping to pull itself into the high-tech orbit, Portland is set to become a test case. On Monday, officials including Gov. Janet Mills and Mayor Kate Snyder will gather on Portland's waterfront for the unveiling of a research institute intended to boost the local economy.
If the effort succeeds, it could become a model for the many American cities struggling to share in the nation's prosperity.
Its patron is David Roux, who grew up in nearby Lewiston and graduated from Harvard before making a fortune as an investor in Silicon Valley. Mr. Roux, who co-founded the private equity firm Silver Lake Partners 20 years ago, is giving $100 million to Northeastern University to establish a graduate school and research center in Portland.
The center, to be known as the Roux Institute, will award certificates, master's and doctorate degrees in artificial intelligence and machine learning — specifically geared toward the life sciences.
“What could be more catalytic in transforming and supporting an economy that is not fully participating in today's technology-driven innovation economy?” asked Mr. Roux. His answer is to “bring cutting-edge technology capabilities here to Maine and northern New England.”
The goal is to harness the forces that have channeled knowledge-based abundance into a small number of megacities. Ten cities that are home to less than a quarter of the population generate nearly half of the nation's patents and a third of its economic output, according to recent research.
It is the more advanced and complex industries—such as biotechnology and semiconductors—that are most concentrated. And the geography of invention narrows every year. A report found that Boston, Seattle, San Diego, San Francisco and Silicon Valley accounted for nine out of 10 jobs created from 2005 to 2017 in the nation's most research-intensive industries.
Innovators, apparently, do best when they are around other innovators. They and the companies hoping to employ them flock to the same handful of places. So Mr Roux's initiative is rowing against a strong tide.
And yet it makes sense. Producing highly skilled technologists may not be enough to create an innovation ecosystem, but an educated workforce is certainly a necessary ingredient.
“I don't think it's a crazy idea,” said Timothy J. Bartik, senior economist at the Upjohn Institute for Employment Research.
Universities have been found to encourage growth through a variety of levers: They add demand to local communities, but they also add innovators. Professors can create patents, consult with local companies, or start companies. Companies may partner with university labs for research projects. Having a technology-oriented graduate center could motivate more undergraduates to choose technology-related fields. Graduates will improve the workforce for local businesses and perhaps attract tech companies to the city.
A study including universities in 78 countries between 1950 and 2010 found a direct link with economic growth, in part through their impact on education and their contribution to innovation. Another concluded that increasing funding for public universities; led to more businesses gaining a presence near campus.
Another study looked at colleges founded in the United States from the mid-19th to the mid-20th century. Counties where the colleges arose generated 32 percent more patents rather than places they lost. This effect was mainly caused by immigration: college towns attracted innovative people.
But the research shows that the the impact depends both for the quality of the school and for the qualities of the place. “In general, I think the biggest impact for a smaller town is likely to be if there's already some pre-existing activity to build on, and if there's some reason to think the area might be attractive otherwise,” Mr Bartik said. .
Consider San Diego. One of the nation's leading centers of innovation, it built much of its prosperity at the University of California, San Diego. In 2011, the university produced 80 masters and Ph.D. degrees in fields related to wireless technology, increased fivefold since 1991. Between 1985 and 2001, its graduates founded 16 telecommunications companies in the region, including Franklin Antonio, co-founder of Qualcomm, the city's most valuable company and the world's leading smartphone chip maker.
Instead, Mr. Bartik said, “sticking a high-tech institute in the middle of rural Idaho might not have multiplier effects if there's nothing to build on.” Mr. Roux bet that Portland offers the right environment, with some tech companies already established and with Boston, a tech-rich metropolis, just two hours away.
However, universities don't just spring up. About two years ago, Mr. Roux and a small team of advisers began a hunt from Massachusetts to California to Georgia to New York, looking for a research university that might prove a good fit.
In December, they reached an agreement with Northeastern, a private university whose main campus is in Boston. It will add Portland to a network that includes campuses in Seattle. Silicon Valley? Charlotte, NC; Toronto? and London.
The Roux Institute will open in May – in temporary quarters – offering a range of non-accredited courses to whet the appetite of local employers and their workers. The first cohort of about 100 degree-seeking students will begin in the fall. The number of students is expected to increase to around 2,600 within 10 years.
“In other places, there was already an ecosystem for tech and digital and life sciences,” Joseph E. Aoun, Northeastern's president, said of its expansion efforts. In Portland, “our opportunity is to launch that ecosystem and shape it,” he said. “That's why it's going to be transformative.”
It is also a heavier lift. The challenge is not just staffing. The university and Mr. Roux's team are recruiting other philanthropists from around the state as donors. (There will be operating revenue from tuition and expected federal research grants.) Organizers are also asking businesses — locally and from other parts of the country — to pledge to enroll their employees in the new school and pay their tuition, to provide internships and other opportunities for on-the-job learning and center participation in research projects.
There are other universities in Maine, including famous liberal arts colleges like Colby and Bowdoin. But few offer graduate programs in the sciences, and none have Northeastern's track record in digital sciences and technologies or the experience of partnering with businesses and opening new campuses.
“It's not enough to start a university, because you have to have the players at the table,” Mr. Aoun said. The players, he said, are companies that can identify the kind of talent they're looking for and the problems they need to solve.
So far, 10 have been listed. They include local employers such as Tilson, which makes fiber optic and cellular networks, and Idexx, a veterinary diagnostics company, as well as Boston-based industrial automation company PTC.
“I want employees who want the graduate school experience to be able to do it here,” said Joshua Broder, Tilson's chief executive officer. “A lot of people leave to go to grad school, and there's a good chance that people will end up working where they go to school.”
Mr. Jennings, the city manager, believes the Roux Institute is “potentially the biggest economic opportunity of the 21st century for Portland and Maine” — a chance to fill the hole left by the declining role of forestry and fishing. which provided the middle class with jobs decades ago.
Mr Roux described the project as “an opportunity engine disguised as an educational institution and research centre”. It will have succeeded, he said, if it makes existing local companies better, attracts companies from elsewhere and provides the seed for dynamic new businesses.
“If this works, then what I'm sure will happen is what's happening in every other market around the world,” he added, “where someone looks from Central Florida and says, 'I'd like one of these. “”
That, and perhaps a few more benefactors like Mr. Roux, could help solve America's regional disparities.
“If you had 30 to 40 billionaires who decided to do this in 30 to 40 places that had some technology activity,” Mr. Bartik said, “there would be enough successes that you could justify it even if only half were successful ».
