Friday, February 12, 2010

Silicon Valley Worries

Silicon Valley, facing a slowdown in innovation and a shortage of funding, may lose its competitive advantage to emerging U.S. technology hotbeds such as Huntsville, Alabama, and Washington, D.C., a study found.

A certain arrogance and belief has existed in the Valley that they are indispensable to the US economy. But centers of economic power are as capable of shifting in the United States as they are internationally. Silicon Valley benefited from a previous shift when it took over US economic leadership from the industrial Midwest. And this largely came on the back of government investment:

The government is a growing source of funding for new technologies, as venture funding remains sluggish, said Emmett Carson, CEO of Silicon Valley Community Foundation in Mountain View, California. Communities outside Silicon Valley, such as Washington, Huntsville and Austin, Texas, are doing a better job getting these funds, he said...

Silicon Valley received $6.7 billion in federal procurement spending in 2008, about 1.3 percent of the total, according to the report. In 1993, that figure was more than 2 percent.

“If you look at the history of Silicon Valley, we benefited in the past from defense spending and other spending,” Carson said. “It didn’t happen because of a garage -- that’s a great mythology -- but it happened because people took advantage of federal investments and what that meant for offshoots.”

A government in disarray and large public debts, are two obvious problems in California. But I would also point to futures challenges of its port dominance, such as the widening of the Panama Canal, and proposed mega-ports in northern Mexico, as equally troubling.

1'Silicon Valley Struggling to Keep Competitive Edge, Study Says' - Bloomberg; Flinn

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