Grow Your Own Silicon Valley

SAN FRANCISCO: The dot.com boom may have gone bust for the moment, but that is not stopping governments from wanting to encourage their own high-tech industries. Many countries, indeed, are envious of Silicon Valley outside of San Francisco, the world's center of the computer, software, and Internet industries. Microsoft's huge investments in Cambridge, England, and the $200 million Bill Gates gave its ancient university for scholarships for technology students from around the world, helped Cambridge become a powerful center of technological innovation. Cities and university towns everywhere now want to get into the act.

Indeed, across Europe and in Asia other nations have either started, or are considering offering state subsidies to encourage the growth of their own high tech clusters. After observing Silicon Valley during my many years at the Hoover Institution of Stanford University, however, I am convinced that dynamic industrial clusters require a flexible economic environment, not government industrial policy.

Silicon Valley started in the 1950's with a modest plan by Frederick Terman, a farsighted dean of Stanford's Engineering School, to create an Industrial Park on unused Stanford land. A few companies took up Stanford's offer, but the area was still sleepy and unimpressive when I first visited Stanford in the early 1960's.

The region took off in the 1970's with Apple's development of the personal computer, and it has exploded since then following the creation of the Internet and the enormous demand for software. Silicon Valley now employs over 1 million persons, almost 40% have at least a bachelor's degree, and more than one third are foreign born. They are attracted by the good jobs with excellent prospects, and by the early access to frontier developments in the high tech field.