How do you create a hot tech hub?

The US-China big power competition is the defining geopolitical issue of our times. Undergirding this dynamic is the race for tech, especially AI. In The New Geography Of Innovation: The Global Contest For Breakthrough Technologies , Mehran Gul investigates whether US’s Silicon Valley still retains near-monopoly over cutting-edge tech, or have other global locations such as China’s Shenzhen and even the greater London area taken over that mantle. Plus, what’s truly conducive for creating a hot tech eco-system? Is there a secret sauce that America has and China appears to have replicated? The answers are complex.

At first glance, China’s breakneck development in tech over the last decade appears to be eclipsing Silicon Valley. But closer inspection reveals a nuanced picture. True, Silicon Valley is undergoing change – described in the book as a vibrant rainforest being converted into controlled farmlands. But that necessarily doesn’t translate into US tech decline, the author says. New American tech hubs are coming up in New York, Miami and Austin that are taking the flame of Silicon Valley forward.

China, on the other hand, has created its own tech champions like Tencent, Baidu and ByteDance in record time. It certainly has speed on its side, and its quality and volume of research has also improved tremendously. But it’s still not doing pathbreaking research like US. Why? A combination of factors that includes strict guardrails of the Communist Party – exemplified by the 2021 crackdown on Chinese tech firms – a Chinese university system that is not quite yet at par with American universities, and an environment where govt policy guides the direction of innovation.

But to settle the debate, one statistic is enough to confirm US’s continued tech dominance: Apple became the first American tech company to cross a trillion-dollar valuation in 2018 with seven other American companies joining it since, but the rest of the whole world, including China, doesn’t even have one.


What then is the secret to successful tech eco-systems? The author interviews scores of tech entrepreneurs and stalwarts across geographies and comes to a somewhat underwhelming answer: there is no set formula. Almost all successful tech companies look the same. But they can come up in very different circumstances. In UK, the greater London area is where all the action is. But that has come at the cost of increasing regional disparity that not only puts London at risk but also undermines the dynamism of UK’s tech story. This disparity was also a reason for Brexit.

Switzerland and Germany have great education and no shortage of talent or infra, but their local cultural preference for stability over risk means they are just not able to realise the same tech innovation potential as US or China. South Korea and Singapore created their miracles through huge govt support. But there are also limitations to this approach as seen by calls to reform Korea’s chaebols.

But one thing appears clear, according to the author; societies that are more receptive to change appear to have a better chance of fostering tech successes. That means openness to talent, openness to innovation, and openness to risks. In the Indian context, we may have Bengaluru. But we need many more Bengalurus that incentivise tech entrepreneurship and risk taking. That means a policy framework that fosters innovation and a culture shift that normalises failure. India has lots of catching up to do.