Regional Advantage in a Global Economy

Professor AnnaLee Saxenian, Dean

UC Berkeley School of Information

AAAS Annual Meeting

San Diego, California 18-22 Feb 2010

The old global economy: core & periphery

Following WWII the best and brightest students from around the world gained access to US higher education

Most, especially from poor nations, remained in US due to superior professional and economic opportunities

US accused of creating a vicious cycle: the brain drain made developing nations poorer and rich nations richer

Core-periphery model: Technology, capital, and skill reside in wealthy, developed nations (the core). Poor nations (periphery) remain underdeveloped suppliers of natural resources or cheap labor for corporations based in core. Uneven or dependent development.

The brain drain: US doctorate recipients

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1978 1983 1987 1993 1998 2003 2008

U.S. citizen and permanent resident Temporary visa holder Unknow n

12%of total

33% of total

Source: National Science Foundation, SRS. 2009

The brain drain: engineering doctorates

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1978 1983 1987 1993 1998 2003 2008

U.S. citizen and permanent resident Temporary visa holder Unknown

32% of total

57% of total

Source: National Science Foundation, SRS. 2009

Visa-holding doctoral recipients, 2008

China & HK

Turkey

Other 152 countries

India

South KoreaTaiwan

Canada

Source: National Science Foundation, SRS. 2009

Top 6 countries = 21% of all doctorate earners and > 60% of visa-holding doctorate recipients

Visa-holding doctorate earners stay to work in US -- at least initially

0

10

20

30

40

50

60

70

80

90

1988 1993 1998 2003 2008

% w

ith d

efin

ite p

ost

grad

loca

tion

com

mitm

ent

U.S. location

Foreign location

The view from

Foreign-born engineers in SV workforce

0

10

20

30

40

50

60

1970 1980 1990 2000

India

Vietnam

Philippines

Korea

Japan

Taiwan

China

Canada

All other foreign born

Europe

% of totalengineers

15%

53%

20%

31%

Immigrant professional networks

Immigrants build self-help networks to aid integration and professional advancement in Silicon Valley Help seeking jobs or promotions when “glass ceilings”

limit advancement within companies Professional and technical associations offer advice,

relationships and learning the Silicon Valley model Learn the “Silicon Valley” model of entrepreneurship

Chinese and Indian networks especially strong …

Indian and Chinese started ~27% of technology companies in Silicon Valley, 1980 -2000: 4,146 companies, 122,386 jobs and $37 billion sales

The new Argonauts set sail

Silicon Valley’s high skilled immigrants seek wealth and professional success in their home countries--like Jason and the Argonauts of Greek mythology who faced hardship in search of the golden fleece

From brain drain to brain circulation

The rise of “brain circulation” is altering developmental opportunities in the periphery

Taiwan and Israel, peripheral in 1970s, became centers of entrepreneurship and innovation when “brain drain” was reversed1980s and 1990s

The rise of dynamic hubs of technology in China and India in past decade demonstrate the transformative impacts of brain circulation

Returnees to Taiwan, 1970-1997

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

Hsinchu Science Park: Silicon Valley sibling

Silicon partner: Taiwan’s IC foundries:

Silicon Shanghai

Tel Aviv, Israel

Mirabilis: ICQCheckpoint security software

Bangalore: a software services partner

Innovation in the periphery

The new Argonauts transfer global best practice-- support growth of new technology ecosystems Silicon Valley pioneers new product definition,

architectures, leading edge technologies Taiwan specializes in global logistics and design Israel specializes in sophisticated security software

and telecommunications Shanghai leads low cost, high quality manufacturing Bangalore leads low cost, high quality software and

services

Not zero-sum: Cross-regional collaborations deepen innovative capabilities of ecosystems

Silicon Valley’s foreign co-inventors

Foreign co-inventors listed on patents with Silicon Valley inventors

0

100

200

300

400

500

600

700

Taiwan Israel Japan Singapore SouthKorea

Germany China India Finland

No o

f pat

ents

2000-05

1995-99

1990-94

Source: Analysis of data from Tracey Grose, Collaborative Economics Inc., Palo Alto, 2007.

Rethinking the global economy

Not just global corporations The New Argonauts: Cross-border professional and

technical communities transfer technical, market & business information rapidly between distant regions

Not just the nation-state Sub-national clusters of skill and technology in peripheral

regions, supported by aggressive local policymakers, pursue cross-regional collaboration, reciprocal upgrading

Not low-cost labor Highly mobile scientists and engineers pioneer

entrepreneurial experimentation and innovation that supports upgrading and rising wages in periphery

Concluding thoughts

1. Researchers vs. entrepreneurs/managers: Korean case

2. Central importance of policy reform: venture capital, education, telecoms

3. Enclaves in global economy vs. development of domestic markets?

Thank you!

Silicon Valley’s global collaborations

Top regions for collaboration with inventors in Silicon Valley 1993, 1997, 2001, 2005

0

510

1520

25

3035

4045

50

Source: Analysis of data from Tracey Grose, Collaborative Economics Inc., Palo Alto, 2007.