Saturday, January 19, 2019

Seattle and Vancouver Seek to Build a Regional High-Tech Corridor

Given their close proximity, their shared culture, and their high-tech, eco-friendly outlook, it would seem to be a natural idea for Seattle and Vancouver to further integrate their economies and create a single Cascadia Innovation Corridor. Microsoft called it “an idea whose time has come,” yet numerous barriers still stand in the way of this vision.

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Barriers to Regional Integration

The first big problem, writes The Economist, is that “connections between Washington state’s commercial capital and Canada’s biggest western city are sparse.” According to an analysis of LinkedIn profiles by the Boston Consulting Group, professionals in Seattle have more contacts with their peers in Atlanta than in Vancouver. Despite being separated by only 118 miles, they behave more like “cities that are thousands of miles apart.”

The second big problem is the massive disparity between their economies. High-tech industries accounts for 22 percent of Washington’s GDP, but just seven percent of British Columbia’s. Over the last decade, $8.9 billion of venture capital have flowed into Seattle’s high-tech startups, compared with only $1.78 billion in Vancouver. Although Vancouver can boast a number of startup success stories — such as Hootsuite, which makes social media tools, and Avigilon, which creates video surveillance equipment — the city cannot compete with Seattle for sheer technical ability.

Another factor is the exorbitant cost of living. A recent study from Demographia ranked Vancouver the third most unaffordable city in the world, behind only Hong Kong and Sydney, while its income levels languish in comparison. According to the New York Times, the cost of living in Vancouver may constrain startup companies that want to get bigger but struggle to recruit senior executives with families.

Shared Strengths

Despite these disparities, Seattle and Vancouver share a number of complementary strengths, such as “a high quality of life, diverse communities, skilled and well-educated workforces, and strong economic and social ties to Asia.” Business leaders hope that harnessing those collective strengths and the power of innovation “will drive greater productivity and business growth across the region,” according to Greg D’Avignon, President and CEO of the Business Council of British Columbia. Several American tech giants, including Microsoft, Amazon, and the data-visualization company Tableau, have already expanded their businesses into the Vancouver area.

The first steps toward planned regional integration began back in September, at a conference of business and political leaders, when Washington Governor Jay Inslee and British Columbia Premier Christy Clark signed an agreement to further deepen ties within the region by working together on joint transportation, trade, capital flow, and research initiatives, including greater collaboration between the University of British Columbia and the University of Washington.

Future opportunities to deepen and expand the connection between Seattle and Vancouver will require regional leaders to work and coordinate together. A recent report from the Boston Consulting Group suggested several different steps that leaders could take, such as bringing local wealth off the sidelines, fostering better investor-entrepreneur relationships, creating joint policies to attract foreign investment, and encouraging a more business-friendly environment.

Reducing Barriers to Work and Transportation

Seattle and Vancouver each possess a strong pool of skilled innovative workers. A study by real-estate firm CBRE ranked Seattle as the third best market for tech talent in North America, while Vancouver was ranked 20th. Yet both cities still experience gaps in sourcing talent. John Wenstrup of the Boston Consulting Group believes that “both cities could benefit from reducing barriers for skilled workers to work and travel on both sides of the border.” Canada’s looser immigration laws are an especially attractive proposition for American tech companies willing to expand into Vancouver.

One of the best ways to facilitate closer integration is to build a transportation system that can eventually reduce the long three or four hour journey time between Seattle and Vancouver. One proposal calls for connecting the cities together through a high-speed rail line, thus reducing the travel time to under an hour. But with an estimated price tag of more than $30 billion, the funding for this grandiose project may not materialize, nor have the details been hashed out yet.

A second less ambitious project from the Madrona Venture Group merely proposes creating a dedicated lane for autonomous, driverless cars on Interstate 5 between the United States and Canadian border. While it may be less ambitious, it has massive implications on Washington’s auto insurance rates as well as taxpayer budget spending. This would reduce congestion and improve the travel experience, but only speed up travel times modestly.

 

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