A Better Formula for Economic Growth: Connecting Smart Risk Takers and Improving the Education System are Crucial

There are important lessons here for countries such as China, Japan, Malaysia, and Russia, and for regions in the United States and Europe that have been trying for decades to replicate Silicon Valley.

In the long term, most regions need to improve their education systems. A focus on quality and freedom of thought and of expression would go a long way toward preparing children for the high-tech world.

Build a magnificent technology park next to a research university; provide incentives for chosen businesses to locate there; add some venture capital. That is the common recipe for harnessing higher education and industry to spur economic growth as prescribed by management consultants touting the "cluster theory" developed by Harvard Business School’s Michael E. Porter.

Hundreds of regions all over the world have spent billions on such efforts; practically all have failed. Yet others are following suit–such as Japan, with its Okinawa research-and-development cluster, and Russia, with its Skolkovo project.

All of those are well-intentioned efforts to build Silicon Valley-style technology hubs, but they are based on the same flawed assumptions: that government planners can pick industries they want to develop and, by erecting buildings and providing money to entrepreneurs and university researchers, make innovation happen.

By Vivek Wadhwa

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