Economic Growth and Linkage with Silicon Valley: The Cases of Austin and Boston
Texas Business Review, December 2004
6 Pages Posted: 9 Jun 2005
What creates growth in a local economy? Theories in the 1980s brought to the policy arena the revolutionary concept that knowledge (i.e., a city's stock of ideas), rather than labor and physical capital, is the prime engine of economic growth, associating local economic development with the exchange of ideas among educated workers living in a city. Nowhere is this more evident than in the U.S. cities that have emerged as high-tech centers. High technology and the shift to a knowledge-based economy have transformed not only traditional economic sectors, but many local economies as well, most notably Silicon Valley in California and Route 128 in Massachusetts. In this article, we analyze the case of Austin, a young high-tech city, that has grown not only because of its capacity to develop its own stock of ideas, but also because of its capacity to import ideas from other regions, especially those with a large accumulation of knowledge such as Silicon Valley. We also explore the case of Boston were we find a self-contained, successful high-tech center that is more reliant on a few large corporations than on knowledge flows among many smaller high-tech firms.
Keywords: High-technology, knowledge-based economy, economic growth
JEL Classification: O00, O30
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