Pierre DesrochersUniversity of Toronto - Geography
Introduction
1) Geography & Economic Development
2) Silicon Valley & Clusters- SV: Facts & Myths- Replicating SV & Creating Clusters
3) Case against Regional Economic Specialization
Conclusion
First, back to the basics
of regional economic development…
Economic Activity in a Spiky World (Florida et al.)
Canada
Nordhaus et al.
USA
France
Russia
India
Japan
SCHEDEL, Hartmann , Nuremberg, 1493
Towns = crossroads
Conventional explanations:
Trade (marketplace)
Urbanization economies
« Where there is city growth, humanity moves forward…;
Élisée Reclus (1895)
Where they flounder, civilization itself is in danger. »
1990s
“In Russia…
there are an immense number of villages
each of which carries on only one branch of production,
or even only a part of one.”
Alfred Marshall, Principles of Economics (1890)
« There are for instance over 500 villages devoted to various branches of woodwork;
one village makes nothing but spokes for the wheels of vehicles;
another nothing but the bodies and so on;
and indications of a like state of things are found in •histories of oriental civilizations •chronicles of medieval Europe »
Combination of factors
specialized labour pool
localized economies of scale (specialized suppliers & infrastructure)
knowledge spillovers
research institutions
Chicken (cities/clusters)
or Egg (economic development)?
Tautology (cities/clusters & agglomeration economies)
Proximity & smart people (and then what?)
State Vs Markets: Decades of experience(s)
What have we learned?
Silicon Valley
Early decades 20th C: •San Francisco - radio technology & maritime hub;•Local businesses: Federal Telegraph (1909), Magnovox (1917), Heintz & Kaufman (1921), Kolster Radio Corp (1928), Litton Engineering Laboratories (1932), Eitel & McCullough (1934)
Mid 20th C: •Cluster of vacuum tube manufacturers•Stanford U & Frederic Terman •Bill Shockley & transistors (left Bell Lab NJ for Palo Alto – family & business (« buzz ») reasons•Spin-offs: « Traitorous Eight » - Fairchild semiconductors•« Fairchildren » and others: Intel, H-P, Apple…
Growth processes?•Same as elsewhere (Detroit/Akron/Italy/Germany)
Government Interventions?•Military contracts (but typically building on existing firms)
University?•Stanford University – applied and very good / best
Many • policy makers • intellectual entrepreneurs• real estate promoters
have tried to create• “growth poles”• “high-tech parks”• “industrial districts,”• “clusters”
Charles de Gaulle
(1955) “Note sur la notion de pôle de
croissance,” Économie Appliquée 8: 307-320
« Growth Poles » climax: 1965 – 1975
Political and Economic/Geographic Logics incompatible…
« Targeting » and « Planned External Economies of Scale » don’t deliver…
Spontaneous « Growth Poles » kept appearing…
Clusters (pro-specialization, but with nuances…)
1990
Successes few and far between
Main factors of success•Prior locations (near thriving areas)•Formalization of spontaneous growth•Exceptional locations & sustained public efforts (Raleigh-Durham; Sophia-Antipolis), but mostly relocations of large firm operations
Most overhyped factor:•“World Class” academic institutions
What is a cluster?
Politicians picking winners? stealing from Peter to pay Paul everyone targets same trendy industries knowledge of time and place
Politics (corruption) as usual… selection of locations favored businesses
Urbanization economies
Multiplier effect
Stability & resiliency
Jacobs’ externalities
Regional Multiplier
Putting all eggs in one basket?
Local Economy
Specialized Diversified
Monopoly
Several small
│││││││││││││││││││││││││││
____________________________________________Firms
+
=
Case for Jacobs’ SpilloversIf innovation = new combinations; then diverse region = more opportunities; then more opportunities = more innovativemore innovative = more economically
prosperous
Can you plan “diversity” and “Jacobs spillovers”?
• Can you plan spontaneity?• Growth poles experience• How does cross-fertilization actually occur?
work experience individuals acquire and sectors in which know-how will likely be transferred
network of knowledgeable people
tacit knowledge
agglomeration economies
Alceus ~ 600 BC
“Not houses finely roofed nor the stones of walls well built nor canals nor dockyards make the city,
but men able to use their opportunity.”
Crucial (except for world cities)
Reasonably affordable housingGood schoolsDecent infrastructureSafety/security (personal – property rights)Entrepreneurial mindsetReasonable taxation and regulation
Not crucialLocation (transport, weather)Public transportationWorld class universities Cluster or Silicon Valley-inspired policies…
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