CIAO DATE: 11/04

Innovation and Social Capital in Silicon Valley

Abstract

The high cost regions of Europe, North America, and Japan recognize that the key to their economic vitality is innovation. Increasingly, many also accept that the primary units of competition based on high quality, innovative products are not nations, but firms within regions, some of which occasionally bridge national boundaries. This has resulted in a significant increase in interest in the nature and functioning of such regional economies, variously known as clusters or industrial districts.

The distinctive nature of industrial regions was first mentioned in the economics literature by Alfred Marshall more than a century ago. Today a great number of industrial regions have been identified throughout the world, with such clusters as Prato and Modena for Italian textiles (Brusco 1982; Lazerson 1995), and Hollywood for American film production (Scott 2002) being frequently cited. Yet the region that receives the greatest attention, particularly with regard to high technology production, is Silicon Valley.

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