Friday, 15 April 2011

Don' confuse cause and effect!

It is the dream of every policy maker: build in their region a new Silicon Valley. Many policy makers have tried to bring people together from business, science and relevant policy makers. In a next step with huge money state of the art infrastructures are build including nano-labs, biotech labs, broadband internet, nice office buildings etc. With huge subsidies and/or tax breaks some research intensive companies are attracted and than the policy makers wait till the benefits will manifest. And in most of these cases the initiative fails. Partly because nobody has thought about 'soft-infrastructure' - the services that provide support for new businesses (moving in or starting up) and provide an added value for locating in the valley. Just bricks and stones are not attracting new companies. A second problem is the huge competition between the different valleys. There is only one Silicon Valley in USA, while there are hundreds of wanna-be Silicon Valleys in Europe. A Third problem is that cause and effect might be mixed up. The innovative companies in Silicon Valley might not be innovative because of Silicon Valley, it might be the other way around, that Silicon Valley became innovative because of the companies there. The rule is: talent attracts more talent. As long as there are no talents in the valley, it is not attractive for other talents to go there. So it is not clustering that makes companies succesfull, it might be that succesfull companies together make a cluster.

For a similar argument, see this link

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