Leaving Silicon Valley for the future of home
A small but meaningful proportion of individuals who left their home countries for better lives abroad have reversed course, transforming a brain drain into a brain “circulation,” AnnaLee Saxenian, dean of the School of Information Management and Systems,* writes in her new book, The New Argonauts: Regional Advantage in a Global Economy, to be published by Harvard University Press in April. This turnabout will profoundly transform our global economy, she contends. It will decentralize business and technology and become a powerful economic force for the development of formerly peripheral regions.
Those joining the brain circulation, armed with top-flight educations from Stanford and Cal, Silicon Valley experience and networked relationships, and the ability to operate in two countries simultaneously, return home to China, India, Israel, or Taiwan to quickly identify market opportunities. In the process, they locate foreign partners and manage cross-border business operations while leveraging their regional advantages. This, she says, is perhaps the greatest expression of modern networking.
As an example, she cites Apple Computer’s wildly popular iPod, which is perceived as a quintessentially American product. In fact, not only was it manufactured in China by companies based in Taiwan, but its major components come from Hitachi, Sony, Toshiba and Samsung—Japanese and Korean companies. The iPod is the product of a network chain, she says.
This emergent networking phenomenon is changing and will continue to change the world economy, she predicts, as well-educated, highly trained, tech-savvy entrepreneurs travel back and forth between Silicon Valley and their home countries.
In her study of the international re-migration group (cross-regional or transnational entrepreneurs), Saxenian analyzes the components of these new networks and the bonds that not only enable but sustain them. Some of her findings include:
- Former university classmates and business colleagues who also share ethnic identities reconnect to start business initiatives in their native countries while maintaining close connections to U.S. counterparts.
- Often, these networks pool their own private resources in lieu of corporate or state seed money or private venture capital.
- They are forces for decentralizing information exchange and experiments while acting as major forces for international collaboration on emerging technology.
- With increased mobility of highly-skilled workers and advances in communications, the need to centralize technology and resources no longer exists, hence the dream of forming new Silicon Valley-type centers globally is unnecessary.
- Once peripheral, Taiwan and Israel now host the largest venture capital industries outside the U.S.
- China, already the world’s information technology manufacturing center, collaborates actively with both the U.S. and its political enemy Taiwan.
- Even small U.S. companies tap overseas expertise, cost savings, and new markets in places like India. As a result small startups become global businesses from the first days of operation, especially if they can demonstrate the ability to subcontract manufacturing or software development and market their products outside the U.S.
“The ‘New Argonauts,'” she writes, “have transformed the old pattern of one-way flows of capital and technology from the core to the periphery into far more complex and decentralized two-way flows of skill, capital and technology. And they have created innovative collaborations in distant and specialized regional economies while avoiding head-on competition with industry leaders.”
The benefit for the U.S. is equally large, she argues, saying: “Some conclude that America has been foolish to educate foreigners who steal American technology and export American jobs. The economic evidence weighs against this view. The Argonauts have made America richer, not poorer. Far from stealing jobs, immigrant entrepreneurs have created them in large numbers, both in the United States and overseas.
However, she cautions: “No other country could have spawned the new Argonauts; none has benefited more from their labors; and none would be hurt more by policy that undermined the openness of the entrepreneurial ecosystem in America’s technological regions.”
*This spring SIMS is scheduled to be renamed the Berkeley School of Information (or iSchool) for short.
From the March April 2006 Can We Know Everything issue of California.