Chapter 1: Introduction

Chapter 1: Introduction

"The post-information age will remove the limitations of geography. Digital living will include less and less dependence upon being in a specific place at a specific time, and the transmission of place itself will start to become possible." --Nicholas Negroponte, director of MIT's Media Lab in his book Being Digital[1]

"National economies are swiftly breaking down into regional and sectoral parts--subnational economies with distinctive and differing problems of their own." Futurist Alvin Toffler on regional economies in The Third Wave[2]

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The new "information economy" seems to evoke a contradictory debate on regions and decentralization. On one hand, we have technologists like Nicholas Negropante seeing local regions disappearing as important entities in the face of the "spaceless" technology of information exchange.

On the other hand, futurists like Alvin Toffler and his political disciples like Newt Gingrich have argued that the microchip is the midwife of regional rebirth and the deathnell for central political decision-making.

How do we explain this contradiction?

The Internet has emerged as the focus for much of the strongest hype and substance in debates on this new economy. It has become the defining economic event of the end of the 20th century - a fact reflected by the obsessive media attention and to the raw economic explosion of companies associated with it.

The Internet is seen as the metaphor, even the embodiment, of the new information age, of a post-industrial economy, and of a new paradigm in workplace and company organization. Information in this view, rather than raw materials, have become the substance of commerce and the Internet is the highway of the new era.

Most strikingly, the Internet is seen as the herald of the globalization of the economy and the triumph of a deregulated marketplace. In this vision, the economics of place have given way to telecommuting, global production and just-in-time delivery of goods and information from all points on the globe. In such a world, economic regions become an oxymoron as the economy becomes a matter of bits and e-mail in cyberspace, not transit and meetings in local space. The "Third Wave" in this scenario leaves economic regions as the archaic leftovers of the industrial age. Governments, those stalwart institutions tied to such geography, become impotent and unimportant in this new global information society.

Now, there are truths in each of these ideas, but the truths obscure the underlying reality of transformation rather than decline in both the vibrancy of local economic activity and the importance of government action. On the face of it, it's nonsensical to argue that new information technologies like the Internet show the irrelevancy of national governments and economies. The Internet is one of the crowning achievements of central government in the last few decades--planned over decades, funded by a series of federal agencies, and overseen by a national network of experts. And its success is not merely an exemplar of technical achievement but is also an exemplar of the efficiency of government planning over purely private economic development. In the absence of the open standards of the Internet developed and promoted by the federal government, almost all analysts admit that the private vision of toll road information services promoted by industry would not have created the surge of explosive economic innovation we are currently seeing around the Internet. It is only with the success of the Internet (and the profits to be made) that industry is now decrying the interference of government in information access.

The most striking counter to the vision of global placelessness is the very existence of Silicon Valley, the region most associated with the rise of the Internet. If any region were to collapse on the wave of cyber-communication, it would be Northern California's "hotwired" Silicon Valley. Contrary to what some might expect, Silicon Valley not only survives but is thriving, expanding and even consolidating its role as the geographic focus of a supposedly geography-free revolution. From network router companies like 3Com to Web tool makers like Netscape to the multimedia upstarts of San Francisco's "multimedia gulch", companies in Northern California seem to be refusing to let geography die its proper death.

But at a deeper level, the vibrancy of the Silicon Valley regional economy is not in defiance of globalizing trends due to the Internet but that regional strength was in many ways the precondition for the triumph of the Internet. Fundamental technological change like the Internet requires more than the introduction of new products; it requires fundamental transformations in a whole array of mutually supporting institutions, goods, services and standards that must all advance together. While this can happen between people and companies in different places, the organic trust and interaction of those living in the same region has always been a key factor in such broad-based technological advancement, whether in the car industry in Detroit or in the financial districts of Wall Street.

As economic theorists dating back to Alfred Marshall have noted, regional "industrial districts" have always been a breeding ground for specialized innovation where day-to-day interaction support the trust and human interaction needed for such co-dependent innovation. If anything, the intense technological specifications needed in high technology and the rapid technological change we live under just accentuate the need for ongoing local interaction and Silicon Valley has just emerged as the premier space for innovation in networking technology.

In its origins, Silicon Valley itself is largely the creature of federal spending and effort; its pioneering firms like Hewlett-Packard and Varian grew based on defense contracts during World War II and its aftermath which pumped billions of dollars into the Bay Area economy, just as federal research dollars poured into the region via universities like the University of California at Berkeley and Stanford along with government laboratories like NASA's Ames Research Center. The Internet itself was a project directed for a quarter of a century by federal government agencies in association largely with regionally-based university computer departments.

Yet despite what might be seen as the continuity from the past in the role of both regions and government in advancing technology and its associated economic benefits, there is a justified sense that something has radically changed in the economy. While Silicon Valley designers may cluster together at Palo Alto bars, the computer components powering their tools have scattered to factories throughout the country and the third world. Industry itself is using the new technology to extend itself globally as production becomes a global process. Business to business interactions are in turn reshaped as the cost of communication at large distances drops to virtually zero. The Internet promises a global marketing venue reaching consumers around the world. For industries like software companies or banks where the transfer of ideas and commitments (rather than physical goods) are the key, the Internet promises an even more radical reshaping of where and how they distribute core services.

Community in regions increasingly takes the form of regional business associations emerging like kudzu across the economic landscape. It is through these business-based associations, tied to local, state and federal government, that the innovations of specific regions are harvested to leverage corporate profits and global economic changes such as the Internet. This horizontal approach of business-to-business community alliances has largely supplanted the vestiges of the vertical cross-class collaborations that had once somewhat tied the economic fates of rich and poor together within regions. It is these local horizontal business linkages, supported by the federal government, that were key to the emergence of the mutually reinforcing technologies and institutional changes that sped the dominance of the Internet in economic life.

Inequality within economic regions has increased, just as inequality has increased across the country and the globe. What is disappearing is not the importance of geography but the singularity of a "region", of the shared economic fate of those sharing the same physical space. Instead, information technology is being used to link the professional elites of regions within a space of shared innovation in order to market that space to a global marketplace, even as the less skilled workers of regions find themselves locked in geography that whipsaws wages downwards through that same global competition.

The institutions that once linked investments and broad-based economic development within regions - local banks, power utilities and the local telephone company - are being rapidly supplanted by global competitors competing and fracturing local markets in favor of global niches serving different economic strata within regions. This in turn has undermined the shared regional economic development strategies tied to such institutions that had once linked labor unions, community groups and elite businesses in some degree of cross-class collaboration around regional goals.

In this transformation, government is not merely the victim of a deterministic technological trend but has been the trend's enabler through specific political decisions made. Beyond the creation of the Internet, the federal government promoted a program largely mislabeled "deregulation" that deliberately fractured regional banking, utility and telephone institutions in favor of national and global competitors. But government did not disappear in this change of policy: in fact, federal regulation of telecommunications activity crucial to the new information age has accelerated as a whole range of subsidies, interconnection rules, and anti-trust interventions has radically reshaped the economic map at the behest of government regulators and judges.

What has changed within regions is the relative power of global corporations in dictating local government policy and wage levels of lower-skilled workers within specific regions. The economic action of technology innovation may happen overwhelmingly within local venues, but corporations have the ability due to the new technology to quickly pick and choose new venues outside the control of local government and grassroots actors who desperately try to negotiate with these global partners. The lack of the traditional regional economic anchors like community banks and local utilities who once mediated some degree of regional growth alliance has left local actors with few allies for broader economic development.

With this, we see the present reality of local governments teetering on the edge of insolvency and austerity while abandoning any serious thrust for equality. Instead, we end up with a form of local government that increasingly markets services to global corporations over the needs of local lower-income citizens while using tax breaks to lure and keep business in their regions. The Internet and related information technologies promote an increasingly national and global retail market, thereby further undercutting local government revenues dependent on sales taxes on locally purchased goods.

For local government, the promise of the new technology to enhance democracy gives way increasingly to a blurring of the lines between government functions and business interests as "public-private partnerships" and privatization undermine local political control. Desperate for revenue, local governments have increasingly begun marketing information about their own citizens to corporations, even as those same global corporations use the Internet to rapidly survey and play off local governments against each other in bidding for corporate location decisions. The fragmentation of utilities leads to increasing inequality in telecommunications between richer and poorer towns and between schools serving richer and poorer students.

There is a sad irony (and a political agenda) in calls for returning budgetary decision-making powers to local governments prostrate before the power of global corporations to dictate local policy. That this "decentralization" agenda is occurring even as federal regulators increasingly displace local government control over banks, utilities and telecommunications just emphasizes that the ambiguity over the globalizing and decentralizing effects of the new information economy are not merely technological contradictions but political and ideological contradictions that are shaping the economic landscape.

The Focus of this Dissertation

This dissertation is intended to be a case study in the interactions of government, technology and the changing role of regions in our economy using the emergence of the Internet in Silicon Valley as the focus. At one level, the modest goal is to tell that history in the context of the issues raised in the previous section and throw new light on the dynamics of a region and technology too often discussed in purely economistic or technological terms.

The more ambitious goal is to use that case study to build the broader case for how technology, government and regions are interacting with each other in this new economic era. Obviously, Silicon Valley as an early consumer as well as producer of networking technology is a key region in understanding these dynamics, even as its uniqueness make it a problematic region for complete generalization to other areas. The Internet as well is a radically unique innovation whose lessons will only be partly applicable to lesser breakthroughs. Still, Silicon Valley's very precociousness as a high-tech region makes its evolution a credible model for insights into the fate of other regions where technological innovation is increasingly supplanting raw commodity production. As well, the dynamics of economic inequality and the corporate undercutting of integrated regional economic development that this dissertation will explore is inevitably even more pronounced in regions that are at the periphery, and therefore at the mercy, of global production.

The study of the interaction of information technology like the Internet and the particular area of Silicon Valley highlights the highly mediated nature of regions, by the technology that shapes new industries, by the federal investments that fuel the growth of new population sectors and new innovations, by the shaping of new business relationships that grow around such new industries and by how global markets themselves interact heavily with core regions that produce the innovation fueling those global markets. The particularity of the story of the evolution of the Internet and its interaction with the Silicon Valley region, like the unique story of all technologies and regions, helps to undermine the simplistic models of universal economic development, models that favor abstract "market rules" while ignoring the specific history of government and social interaction that lie at the creation of each new market.

As well, the emphasis on the federal government's role in the evolution of both Silicon Valley and the Internet inevitably raises more universal issues of how and why the federal government acts in technology and economic development areas. In detailing specific issues of controversy, the experience of other regions will be used to highlight similarities and contrasts to throw greater light on these universal dynamics. While no region will be treated with the same integrated and comprehensive view with which Northern California will be treated, these comparisons will help to enrich the overall case study of the region.

Since this dissertation will highlight some of the bleaker implications of technology, it is worth emphasizing that my view is not anti-technology in any sense. In fact, one of the main purposes of this story is to refute the technological determinism of both the optimists of the Right and the technological pessimists of the Left in favor of an analysis that sees the key interaction between political choices and the direction of technology with its specific social outcomes. It is through the application of technology and the social structure created to absorb that technology that the positives and negatives of technology manifest themselves.

In his The Visible Hand, Alfred Chandler wrote of the wholesale transformation of capitalism as a system between the 19th and 20th centuries due to the combined effects of communication and transportation technology along with radical changes in managerial systems. [3] With the Internet and related information technologies, relations of production are being reshaped as deeply in the transition from the 20th to the 21th century.

At the heart of any changes in production are changes in power relations and the Internet itself embodies changing social forces that are themselves reshaping which political and economic actors will hold power in the new era. Karl Polanyi emphasized the way historically that the underlying government-created infrastructure of rules of exchange under capitalism shaped all actors in the economy; those rules set the environment for how economic conflict and technology played out in the rise of industrialization. In the same way, the Internet is less the cables and wires tying homes and offices together than a system of contested rules for information exchange that are constraining the shape of power in the new information age. At the heart of this dissertation is how the battle over those contested rules are reshaping regional economies and politics in the modern era.

Theoretical approaches to the persistence of industrial regions

A basic argument of this dissertation will be the primary role of government, particularly the federal government, in the origins of the Internet and its emergence in Silicon Valley. But to argue that point, it is important to first outline the major debates on the persistence of regions as key engines in the new economy.

Neoclassical economists long had little room in their theories for specialized regions like Silicon Valley or older industrial centers like Detroit or even older craft regions in Europe: traditional economics assumed that firms would locate wherever wages were cheapest, workers had training and/or transportation costs were lowest. However, a range of economic and social thinkers have built on the original insight of Alfred Marshall that firms could gain in both productivity and innovation from geographic concentration. Michael Piore and Charles Sabel were two of the key recent proponents of the idea that such "industrial districts" have been a key alternative to large-scale vertically-integrated firm production. In fact, as their major book title The Second Industrial Divide indicates, they see the choice between such localized "flexible" production versus corporate integration not as some natural economistic result but as a fundamental social choice. In their historical view, it was the combination of corporate power backed by government structures that forced vertical integration on vibrant industrial districts of the 19th century, from silk production in Lyons to ribbons and specialty steel in Saint-Etienne to cutlery in Sheffield to cotton goods in Philadelphia and Pawtucket. Ideologically, the logic of how these districts operated disappeared under the twinned onslaught of classical capitalist and Marxist socialist views that stressed economic centralism at the expense of local craft production - alternatives promoted by cooperative movements like the Knights of Labor in the US and France's Proudon in Europe.[4]

Piore and Sabel do argue that new technology has revived the competitive strength of regional production districts. Specialized "batch" production is now easier and less costly because of computerized machine tools that flexibly shift from one product line to another in contrast to traditional mass production. Whole new regions have appeared with small companies working together to produce products ranging from specialty steel to chemicals to fabrics. The star region for theorists (aside from Silicon Valley itself) are new industrial districts in Italy known as the "Third Italy" whose heart is the province of Emilia-Romagna. Once one of the poorest provinces in the nation, Emilia-Romagna's 3.9 million residents have recently emerged as the fastest growing economic powerhouse of the country. The remarkable fact is that is 1.7 million active workers were divided in 1990 between 325,000 firms - an average of five workers per firm in a region where 90% of firms had less than 100 workers and such small firms accounted for 58% of the workforce.[5]

Economist Michael Best sees these industrial districts as a "collective entrepreneur" where firm relationships can be rearranged as needed to rapidly address changes in the global market. "Coordination in a dynamic industrial district is not planned in that the initiatives, responses, networks, and aggregated constellation cannot be specified in advance, but instead are developed in processes of mutual adjustment in unforeseeable ways." But this is not traditional market coordination since not only money and goods but ideas without set market value are also exchanged. "To the extent that product and process innovation is based upon new ideas and that the creation of ideas is a social process involving discussion, then geographical proximity is important in innovation."[6]

Anna Lee Saxenian has used this view of industrial districts to specifically analyze the success of Silicon Valley in the global high-tech industry. Since its early days, Silicon Valley had a tradition of small firm start-ups and close collaboration between firms. As many small semiconductor firms died out in the late 70s and early 80s as basic computer chips became a commodity item produced by large firms like Intel and AMD, Saxenian noted the burst of new specialized producers like Cypress Semiconductors and Chips & Technologies addressed niche markets. In Saxenian's words, these new producers:

...built on the region's social and regional networks. They introduced specialized, design-intensive devices that allowed them to define new markets and avoid the price wars that plague commodity producers. Many focused on product development and design, subcontracting manufacturing in order to avoid the costs and risks of semiconductor fabrication. And most created flexible, decentralized organizations that allowed them to respond rapidly to market changes.[7]

These newcomers produced small batches of complex, high-value added components, often produced in collaboration with customers to enhance the performance of specialized items ranging from cars to machine tools to missiles to ultrasound machines. Local knowledge and relationships could be converted into innovative products and services. According to Saxenian, because of these kinds of collaborative contracting relationships, Silicon Valley became home to a diverse array of specialized equipment and component makers, from disk drives to networking products to computer-aided design.

In fact, Saxenian argues that it was the self-sufficiency of firms in Massachusetts' Route 128 that led that region's decline as a high-tech bastion in favor of the more flexible, collaborative Silicon Valley. Where Route 128 minicomputer and workstation firms tried to survive as stand-alone companies and failed to enjoy the innovation of working with each other, Silicon Valley firms blossomed by working in a whole environment supporting new products.

Such is the argument that the strongest proponents of industrial districts make. However, many other analysts reject this vision of self-contained industrial districts in favor of a view that situates them within a global production system. Richard Gordon has argued that two-thirds of all component inputs in Silicon Valley hardware firms are sources from outside the Valley and the remaining third comes mostly from divisions and departments located inside the firm doing the final assembly. What comes from local production linkages are in non-technology items like cabinets, casings, power supplies, raw materials and documentation. More technically sophisticated inputs come mostly from outside the Valley and usually from large firms. The expansion of foreign investment is also part of the lessening of local interfirm relationships.[8] Saxenian herself admits that many Silicon Valley firms don't fit the model of collaborative contracting and often keep suppliers at arms-length distances.

Bennett Harrison has launched the most far-reaching attack on the idea that internal regional economic relationships are the key in the new economy. He argues that concentrated economic power is not diminishing in favor of smaller firm relationships; in fact, he sees such concentrated power growing but "changing its shape, as the big firms create all manner of networks, alliances, short- and long-term financial and technology deals - with one another, with governments at all levels and with legions of generally (although not invariably) smaller firms who act as their suppliers and subcontractors."[9] Harrison notes that even in the Third Italy, "lead firms" from both inside and outside the industrial districts are disrupting the collaborative nature of interfirm relationships. Temporary success of a regional specialization just feeds into a global system populated by big companies on the prowl for profit and opportunities.

Harrison emphasizes that the money trail in Silicon Valley and other industrial districts leads away from seeing the region as in any sense a concentration of local firms operating for "regional advantage." The outsourcing of manufacturing content and other goods is one indication, but the heavy financial investment in the region by outside firms, including firms outside the United States indicates a quite different dynamic is at work. "Growing direct foreign investment in the Valley," writes Harrison, "seems aimed more at tapping into the region's exceptionally rich knowledge base in order to improve home-country performance...than at furthering the foreign investors' desire to join a local club of firms interested mainly in the economic development of Silicon Valley, per se."[10]

Stephen Hymer was a key theorist in promoting the idea of an international division of labor where regions are less self-sufficient production areas unto themselves but rather geographically dispersed nodes on a global hierarchy in the production process.[11] Harrison sees the rise of regions like Silicon Valley and the Third Italy as a modification to Hymer's simple hierarchy of corporate headquarters spoking out to home offices and then branch production in a simple global division of labor. Instead, you see the birth of more flexible strategic alliances that rearrange corporate organization to fit collaborations around the world that maximize the exploitation of advantages in any particular locale.

Manuel Castells echoes Harrison's view of the global nature of what he sees as "the network enterprise", although Castells sees the regional components of the enterprise having a certain degree of autonomy beyond central corporate control, what he labels "autonomous systems of goals" depending on its "connectedness" to the broader global network. Castells sees these flexible regional relationships as a response to the uncertainty of technological change and an attempt to externalize the costs as much as possible outside the core global corporation.[12]

Similarly, former Labor Secretary Robert Reich describes this abolishment of clear corporate hierarchy as a move to a "high value enterprise that looks more like a spider's web." The focus is not on organizational relationships themselves but on bringing individual workers within the firm in contact with other specialist problem-solvers. "Each point on the 'enterprise web' represents a unique combination of skills."[13] The nationality of these webs are suspect and their loyalty to any region is ephemeral.

Around the third world, many countries have been sorely disappointed that initial support in getting high tech firms off the ground did not lead to national champions, but instead just facilitated the growth of such international webs into new countries. Peter Evans documents the initial government support for high-tech firms in places like India, Korea and Brazil where local firms, once established, quickly turned against investments that would further strengthen those regions but instead looked to global investors and alliances. "With the growth of local companies," writes Evans, "came more, not less, involvement with international markets, global technology, and transnational capital...In the end, greenhouses [for local firm startups] turned out to be an indirect strategy for internationalization, not a means of escaping it."[14]

If there is any consensus on a factor that does fuel the persistence of regional industrial concentration, it is based on the sharing of workers and skills. Robert Reich writes that highly skilled information workers, who he labels "symbolic analysts", end up congregating in specific areas:

Symbolic analysts are concentrated in specialized geographic pockets where they live, work, and learn with other symbolic analysts devoted to a common kind of problem-solving, -identifying, and brokering. The cities and regions around which they have clustered, and the specialties with which these places are identified, are valued around the world: Los Angeles in music and film; the San Francisco Bay Area and greater Boston in science and engineering; New York and Chicago in global finance; Washington, D.C., in international affairs, government relations and the worldwide marketing of weapons; New York for law, advertising, and publishing."[15]

Beyond these are smaller pockets of even more super-specialized workers from medical device research near Minneapolis to molecular biotechnology in Arkansas near Little Rock.

Saxenian describes how only a shared high-skill workforce allowed the firm startups and insecurity that accompanied the turmoil and innovation of Silicon Valley. "The region's social and professional networks were not simply conduits for the dissemination of technical and market information," writes Saxenian. "They also functioned as efficient job search networks." This was crucial since engineers switch jobs so often in the Valley. In the 1970s, average annual employee turnover was 35% in local electronics firms and as high as 59% in smaller firms. This concentration of companies meant that job-hopping was less of a risk for workers. Saxenian quotes one executive as saying, "People change jobs out here without changing car pools." Technical skills and know-how diffused rapidly through the networks following these workers. This network of workers acted as a "kind of meta-organization" for rearranging skills and talents as needed.[16] One purely geographic advantage Silicon Valley had over Route 128 was the compactness of the peninsula where high tech formed initially in Northern California versus the scattered settlements along Route 128's ring around Boston.

Ultimately, geographer David Harvey sees the definition of a region as stemming directly from which people can actually work together on a daily basis. Corporations can change products lines, move products globally and subcontracts to new suppliers worldwide, but "unlike other commodities, labor power has to go home every night and reproduce itself before coming back to work the next morning...Daily labor markets are therefore confined within a given commuting range. The geographical boundaries are flexible; they depend on the length of the working day within the workplace, the time and cost of commuting...The history of the urbanization of capital is at least in part a history of its evolving labor market geography."[17]

However, a shared geographic labor pool among workers does not necessarily mean that all workers in a region are integrated into the same production regime. Saxenian, Piore and Sabel emphasize the unity of regions, but Harrison notes that production regimes ultimately include workers far from the region upon whom elite knowledge workers ultimately depend; "There are whole neighborhoods of Los Angeles - hundreds of miles away from Santa Clara County - where both documented and undocumented workers perform unskilled and semiskilled assembly tasks, often at home, for contractors to the high-tech firms of Silicon Valley...These Urban ghettos are a much a part of the famed "Silicon Valley production system" as are the engineering laboratories at Stanford, or the military R&D facilities within Lockheed's Missiles and Space Division in Santa Clara County."[18]

Even Piore and Sabel themselves note that many of these skilled industrial districts are often elitist at their core. The manufacturing industries of the Third Italy itself were products of attempts by large corporations like Fiat to decentralize production along with the desire of skilled workers who had come "to resent the leveling of wage hierarchies...they were thus lured [to decentralize production] by the prospect of high earnings in runaway shops."[19]

Manuel Castells notes that this spatial division of high-skill from low skill jobs is tied intimately to ongoing social policies of local governments. Zoning laws tend to reinforce real estate prices in these privileged areas, while local governments extend tax benefits to lure low-skilled jobs. "In this way, the spatial division of labor is self-reproductive and self-expansionary. Increasingly valuable spaces first segregate and later expel function and people that are not worth the cost of keeping them in the gold mines of our technological age."[20] Castells emphasizes that information-based services, especially the high end skilled versions, have not ended up in low-cost areas but have in fact continued to be concentrated in large metropolitan areas within central business districts. Some suburbanization has occurred within metropolitan areas to edge urban areas, but only a handful have ended up in small towns. Castells views this failure of smaller towns as tied strongly to their lack of telecommunications facilities.

The government role in promoting technology innovation

This last point brings into relief the issue of how public initiative lies at the heart of promoting both new technology, the conditions for the regional concentrations were such technologies thrive, and the increasing or decreasing inequality of power relations within such local regions. What is clear (and the high technology sectors are exemplars of this) is that state involvement is a key factor in the shape of any region's economic base.

At the most obvious level, government spending has been crucial in providing the public goods necessary for technology innovation in which private sector markets systematically underinvest. The computer industry is a notable example of civilian and defense spending leading to a wide range of innovations that the private sector could then commercialize. Analysts like Kenneth Flamm go so far as to argue that, despite large gains in the horsepower of the processors and increases in memory capacity, the basic architecture of computer design is relatively unchanged from concepts developed under the period of most massive government support.[21] Private companies innovate rapidly around developments with immediate commercial payoff, but it is left to public sector investment for the breakthrough research and public infrastructure that allows breakthrough innovations.

All of this government involvement has clear regional effects. The most comprehensive national studies of high-tech industries have been done by Ann Markusen and Peter Hall along with a series of research partners. What they found in a host of fast-growing technology-based industries was that the location of such industries followed the availability of public and private amenities, from educational opportunities to airports. High technology firms also tended to follow the placement of corporate headquarters, the assumption being that the availability of business services for such headquarters creates an attractiveness for new firms needing such services as well. But an overwhelming result of their statistical analysis of firm startups and job creation was that defense spending played a disproportionate role in the regional location of high technology firms. Strikingly, in the absence of defense spending, the existence of a research university had no effect on high-tech employment.[22] This highlights the fact that merely concentrating engineers and scientists in the same location does not deliver automatic benefits to a region, a fact that a number of local regional investments in "science parks" have discovered.[23]

Not that universities were irrelevant to high-tech growth. Quite the contrary. E.J. Malecki found that such university R&D was critical in combination with other factors. When the government funded self-contained government labs for defense or other government research, it rarely attracted complementary private industrial R&D. Where defense spending went to either large labs or to programs using mostly large companies like the space program, those outfits were usually so self-sufficient that few spin-off companies were generated. On the other hand, defense spending concentrated in regions with leading universities like California and Massachusetts had significant agglomeration of high-tech firms.[24] While the reasons for this clustering around universities is not completely clear, at least one obvious reason is that where government labs and space programs hold onto employees for long periods of time, universities "fire" waves of employees in the form of graduate students who, with the availability of defense contracts or a milieu of government-funded technology, often can be involved in startup firms after graduation.

In their book, The Rise of the Gunbelt, Markusen, Hall and their research partners argued that the whole economic development of the Sunbelt was inextricably tied to government spending fueled by the World War II and Cold War imperatives. For a range of reasons, from building a military presence on the Pacific Coast to establishing military commands far from established pockets of population as in Colorado Springs to taking advantage of talent located in areas like New England that had seen a wave of industries leave before WWII, military spending largely abandoned the traditional industrial heartland of the midwest for the Pacific Coast, Southwest and New England. This gunbelt policy also acted as an "underground regional policy" that allowed backward economic regions like the South and areas with vulnerable resource-dependent economies like the West to stabilize their economies and increase jobs. While there was no national policy to respond to plant closures, defense-related communities qualified for impact-aid programs to smooth adjustment and help such areas gain new defense activities. This regional policy was highly selective and it left most inner-city areas in need of economic revitalization outside of this defense-driven industrial policy and may even have drained resources from those traditional areas in duplicative community building. But the results are the high-tech enclaves of areas like Silicon Valley.[25]

It is clear that government policy has been a key driver of the geography of innovation. Some analysts like Michael Storper and Richard Walker have argued that the rise of new technology-based regional economies was not as a push into new areas by the government but was the natural dynamic of a capitalism that seeks new regions, developing them with each burst of technological innovation and where government spending is at best a follower of this natural trend.[26] Markusen and Hall, on the other hand, have noted in response that geographic development patterns have closely followed military, not capitalist imperatives. Peter Hall and R.J. Buswell have each argued separately that military decisions in World War II in Britain created military garrisons close to the city of London, thereby reinforcing the development of high-technology research and development in the political and economic center of that country, a dramatically contrasting dynamic from the United States.[27] Worldwide, it is clear that government policy has been a key factor in the rise of technology firms in Asia and other third world countries like Brazil.[28]

The reason for the importance of government has been highlighted by a number of researchers under the heading of what sociologist Peter Evans calls public-private "synergy." On one hand, the provision of public goods to supplement private market activity is a basic form of synergy that Evans labels "complementary" relations.[29] Charles Ferguson and Charles Morris in Computer Wars: How the West Can Win in a Post-IBM World (1992) argue for the key role of government in encouraging business to invest in high technology, support basic research and fighting cartels that interfere with US company success.[30] Such investments invariably have a regional character, so to sustain such a concentration, Robert Reich highlights the need for universities and airports. The initial spur for regional development is often some "public amenities coupled with a few inventive geniuses." Then, groups break off and form new combinations in adding to the global web. As a region gets a reputation in the global web, it attracts new talent and support skills, reinforcing its position.[31]

But at a deeper level of private-public engagement is the realm where the government promotes a strong civic culture that itself becomes an engine of economic growth by engendering the trust needed for groups of companies to engage in new kinds of economic relationships. Charles Sabel has argued that a fundamental dilemma for any firm, especially those engaged in technology innovation of any kind, is the tension between learning - changing patterns of organization to advance economically - with the demands of what Sabel labels "monitoring", the necessity of making sure a company is getting a good deal from its economic relationships. By nature, learning and innovation upsets established patterns and undermines traditional assurances of a fair deal previously negotiated. In an industry or environment of heavy learning and innovation, it is hard to write contracts that cover all contingencies or create stable hierarchies that create enforceable rules. So only some degree of trust developed among competitors can encourage radical innovation across a region or society. Sabel argues:

The preponderance of historical evidence is that, regardless of their level of development, economies seldom pull themselves out of long-term, low-equilibrium traps by the bootstraps that market prices theoretically provide individual firms. Rather, unless the state reduces the risk of breaking with subsistence strategies or outdated practices by, say, sheltering domestic markets from foreign competition, facilitating the acquisition of new technology, or subsidizing exports, the routines are the routine.[32]

Helping firms escape outdated safe "equilibrium traps" can be accomplished by the complementary relations of the provisions of public goods, but they are also transcended by what Peter Evans labels "embeddedness" where the participation of public officials across the public-private divide helps prevent opportunistic behavior by either private or public entities and encourages mutually supportive endeavors. Instead of a strict separation between government actions and private economic activity, Evans has noted the success of those governments and societies that create civic networks that transcend the division between government and private firms.[33]

Political scientist Robert Putnam in his pioneering studies of the relation of civic organizations to good government and economic development has noted that strongly "civic" regions have become increasingly wealthy in the modern era compared to areas without strong civic networks. Using as his test the contrasting success of different regions in Italy, Putnam has noted that not only does a history of civicness correlate strongly with economic development, but that "Civics is actually a much better predictor of socioeconomic development than is [past] development itself." Putnam argues that his evidence specifically rejects the view that strong government undermines civic trust and cooperation; in fact, the right kind of government action reinforces civic society and what Putnam labels "social capital" that builds the trust necessary for both innovative government and economic development.[34]

All of this points to the sterility of debates over whether industrial policy by government is useful when the real question is what kind of government involvement is most fruitful. Surveying the range of government policies around innovation across the world, Michael Best sees modern government strongly shaping whole industrial sectors, from industrial district policies in Italy to Japanese-style "administrative guidance" that promote cooperation among companies.[35] Evans is even more explicit in lambasting limited debates, pro or con, on government intervention instead of concentrating on the variety of approaches, especially in high technology sectors. He notes that state involvement in the economy is a given and the only question is "what kind" of involvement. Where government has been most aloof, as in India, local information industry was least able to thrive, while Korea's focus on coordinating the basic research needed to get private firms involved in commercialization has been tremendously successful. More crucially, he sees government building the social capital needed for the synergy around which innovation thrives.[36]

A key role for government, and one that becomes ever more prominent in high technology, is that of encouraging standards in industrial and information sectors in order to encourage competition around innovation rather than from just capturing "rents" in proprietary standards. In the 19th century, the US government's Springfield Armory in Massachusetts pioneered the use of interchangeable parts. By creating a standard for part sizes and compatibility and working with small firms, the Armory allowed greater collaboration and innovation among gun part producers since they could all be assured that their individual contributions would fit in guns produced to government specifications.

How government acts in regards to standards and other trust-building policies have important effects on the strength of regional industrial districts. Especially in an age of enterprise networks and the restructuring of firms to take advantage of regional opportunities, building regional trust becomes a decisive difference between innovation and stagnation. Charles Sabel notes that firms often fear trying to decentralize decision-making in order to take advantage of regional resources outside the firm; they worry that if they depend on regional cooperation rather than internal vertical integration, they will through mistakes or bad faith by partners adopt the wrong approach to innovation. By providing uniform standards, Sabel sees regional government authorities helping to overcome managerial obstruction and fears of inequality in dealings between larger and smaller firms. He cites the example of the National Institute of Standards and Technology (NIST) promoting technology centers where small and medium firms collaborate on technical design and organizational problems and, in line with Putnam's argument, these new business networks inevitably push new functions on the public authority in an interactive process that Sabel labels bootstrapping.[37] Similarly, Saxenian has argued that Silicon Valley firms have thrived on open technology standards: "Proprietary systems promoted stable competition by locking customers in to a single vendor of hardware and software services. Open systems, by contrast, encouraged new entrants and experimentation by forcing vendors to differentiate their products while competing within a common industry standard."[38]

Conversely, the withdrawal of government can radically reshape the landscape of competition and inhibit local innovation. Piore and Sabel in their work have argued that the hierarchical corporate integration, considered a natural outgrowth of the industrial revolution, was in fact a reflection of changes in government approaches that undermined regional industrial districts and local craft guilds in favor of such conglomerates. Similarly, Michael Best cites the example of the Springfield Armory as an opportunity lost; in the 1830s and 1840s, the Armory had launched one of the most far-reaching innovations of the industrial age in promoting interchangeable parts, while at the same time encouraging a whole range of smaller firms in the Connecticut River Valley of Massachusetts to collaborate in promoting this innovation. However, in the early 1840s, the War Department ordered the Armory to end its involvement in assisting local firms for fear that it would drain resources from the Department. Without the government aid and its building of trust among metalworking firms, the spirit of cooperation faded in the region and "the region declined as an industrial center" to be replaced by vertically integrated corporations that could create their own internal standards without need for cooperation with other firms.[39] This highlights the view of Best along with Piore, Sabel and others that the nature of hierarchy and regionalism in society is less a technological or economic issue than a social choice tied up with political decisions at all levels of government.

Regionalism, Regulation and Rising Inequality in the New Information Age

If the origins of industrial districts are often shaped by government action, there is the question of what if anything those in a local region can do to sustain their success, especially when central governments may be withdrawing the support that helped build them in the first place, and what factors politically sustain or undermine regional economic development.

In the Third Italy, a whole range of municipal government interventions have been key to the continued success of the region. Cities have bought land and created industrial parks to encourage sector collaboration; loan consortia created capital sources where loans are reviewed by peers; a range of collective services, from marketing assistance to services centers, have been create to give an edge to small companies.[40] Policy people in the United States such as Doug Ross (an assistant secretary of labor under President Clinton) and Stuart Rosenfeld (who helped encourage the formation of the Southern Technology Council) have promoted support for small firms to train their workers and assist them in dealing with long-term trends in markets, technology changes and government regulations. Many local governments are encouraging the linkages of local producers for competition in the global marketplace.[41]

Education and training, a key attribute of local and state government in the US, is seen as a prime tool for local regions in sustaining regional success. While acknowledging other strategies, Robert Reich takes the most extreme position in arguing that given the lack of loyalty of corporations in the global economy, the only factor really under the control of a region are the skills of its residents: " The standard of living of a nation's people increasingly depends on what they contribute to the world economy--on the value of their skills and insights. It depends less and less on what they own."[42]

However, as important as the skills themselves is the environment of ideas and innovations promoted by local educational institutions. Piore and Sabel stress the way universities both provided the initial crop of engineers and technology for many high-tech regions and continue to serve today as a place for diffusion of ideas and a "corner cafe" to meet and set community standards. As the industries have grown, "the new industries have turned to local and state government for lower-level vocational training and other employment services."[43] Castells sees universities as a crucial part of contributing to what he calls a "milieu of innovation" that work with and help attract corporate R&D centers and other research networks.[44] Much of the focus is on building up the "social capital" and civic networks that analysts like Evans and Putnam see as so crucial to economic success.

All this said, the issue becomes whether such policies are either effective for many areas or actually benefit the broad range of taxpayers and workers supporting such public incentives. Pennsylvania State University economist Irwin Feller has criticized the proliferation of state programs in technology policy as unclear in their results. He notes that in many cases, science parks have been built and "no one has come." The oldest technology parks at Research Triangle in North Carolina, at Stanford Industrial Park and the University of Utah Research Park have kept going but most newcomers have failed to attract a critical mass of tenant firms.[45] In their book High-Tech Fantasies: Science Parks in Society, Science and Space, Doreen Massey, Paul Quintas and David Wield describe the notable failure of British government initiatives to create high-tech regions out of those investments. Taxpayers have seen little for their money and, worse, the investments end up contributing to polarizations between older industrial workers, usually working class, and the more suburban regions where the high-tech, usually middle class workers are subsidized.[46]

Castells notes that these new higher-skill investments and changes have involved significant spatial restructuring occurring not just between rust belt and sunbelt areas, but within metropolitan areas themselves like Los Angeles and New York. Because of mismatching of skills between older jobs disappearing and new high-tech jobs appearing, you end up with a complex and harsh transition. In NYC, they added 400,000 jobs between 1977 and 1987, but the city lost over 140,000 manufacturing jobs in that period. Overall, the number of good managerial and professional jobs increased as a proportion of the workforce, but this was matched to a poor and unskilled city population with a resulting above-average unemployment level for minorities. This paralleled the growth of the informal economy of those shut out of formal employment.[47]

David Harvey agrees that "much of the vaunted 'public-private' partnership of today amounts to a subsidy for affluent consumers, corporations, and powerful command functions to stay in town at the expense of local collective consumption for the working class and the impoverished."[48] With local municipal budgets teetering on the end of bankruptcy in many cases, such elite investments feed a competition between urban areas that bid away resources for lower-income citizens in the name of those subsidies. Urbanization takes on new patterns and new divisions as cities gentrify and reindustrialize, even as conspicuous consumption and poverty have both deepened. Harvey writes:

Interurban competition, by concentrating on subsidies to corporation and upper-income consumption, feeds that process of polarization at the local level in powerful ways. Capitalist urbanization thereby drops its seemingly human mask...The rich now grow richer and the poor grow poorer, not necessarily because anyone wills it that way (though there are plainly those in power who do), but because it is the natural outcome of the coercive law of competition."[49]

Local incentives have little meaning, argues Bennett Harrison, when decisions are being made for global network strategic reasons. "How do localities negotiate economic development incentives and responsibilities with the plant or office managers of firms whose strategic decisions are increasingly being made for them a continent or an ocean away?" Still, though decisions are centralized, the decentralization of production means that "paradoxically, the comparative attractions of different locales actually take on an enhanced significance for industrial location."[50]

If local democracy is in danger of giving way before corporate imperatives, the question raised is what is changing in the political and economic landscape that is different from the past?

One key to exploring this question is how the interplay of class forces have shaped urban politics in the past and how new technology may be reshaping them now and in the future. Harvey Molotch and John Logan have promoted a view of urban politics in the post-World War II period where "growth machines" - alliances made up of various interests often across class lines - create the jobs and economic lift for all residents. Whether in attracting railroad depots, building ports to attract shipping, or in more recent decades in seeking more general capital investments and tourism, cities act as common agents for bringing growth to its citizens. The strongest proponents of such growth are usually those with the most fixed capital invested in a region, whether utilities, local newspapers or banks with a range of loans invested locally.[51]

David Harvey expands on Molotch and Logan's view with an intensive examination of the place of urbanization in capitalist development. He argues that capitalism is always in the process of producing both labor and capital surpluses that need to be reabsorbed; urbanization has been a historical method to assure rapid turnover of both into new production. However, the expansion of those flows as trade and commerce expands repeatedly threatens to dissolve historic coherencies of local community. Government steps in to refocus that local coherency. Where individual capitalists systematically underinvest in public works, government can step in to pick up the slack to prevent overaccumuluation when capital has no place else to move it.

The importance of the city as a region of consumption as well as production is also highlighted in Harvey's model. Mass production created the need for mass markets along with fixed investments that were not easily redeployable outside their urban settings. This "Keynesian city" focused on debt-financed consumption of both private and public goods as a key to regional and national economic health.

All of these complications created a space for a relatively autonomous urban politics where skillful politicians could forge coalitions to govern and unify the community. Harvey notes that such coalition were not necessarily synonymous with local government, since local jurisdictions often divide real labor and production markets. Other means were often used to build higher tiers of cooperation, whether as New York's Bob Moses did through a range of support from state and federal powers or from a base of local government reaching out to civil society in bringing together business and community. This politics created a cross-class alliance in urban politics that Harvey calls a "structured coherence defined around a dominant technology of both production and consumption and a dominant set of class relations."[52] These alliances were by their nature unstable as different partners in the alliance sought power over others through the threat of exit or by pulling new resources into the region that changed the balance of power. Yet for most of the post-war period, these alliances seemed to be the face of urban politics in the United and States and much of the developed world.

However, just as Piore, Sabel and Saxenian see a new imperative for greater regional initiatives by government, Harvey and others see a weakening of the power of local actors and governments to bargain effectively against the global reach of multinationals. Harvey argues that the whole range of flexible production systems adopted in the last decades has led social consumption to increasingly give way to competition between urban areas for jobs. Harvey writes, "Ruling class alliances in urban regions were willy-nilly forced (no matter what their composition) to adopt a much more competitive posture." This competition has led to rapid shifts in urban fortunes as urban areas have accommodated much more flexible labor processes in order to attract urban development.[53]

Harvey argues that the relative autonomy of urban politics is more and more disciplined by this interurban competition as each region shapes itself to the needs of multinational capital. "We have, in short, witnessed another fierce round in the process of annihilation of space through time that has always lain at the center of capitalism's dynamic." This does not mean spatial location is less important; in fact, the freedom of capitalists to move around makes minute differences even more important in daily decision-making and in strengthening capitalist domination over labor. Each area's unique attributes are exploited for advantage by different capitalists which in turn leads local areas to seek to make their areas more attractive to free-ranging companies. [54] However, even as cities seek unique images in this heightened inter-place competition, the whole process ends up producing a 'serial' monotony along established patterns like New York's South Street Seaport or Baltimore's Harbor Place. The end result is ephemeral fashions of Benetton sold in similar malls across the world along with food markets which are now broadly diversified with the same goods from local markets around the world delivered through global distribution.

If Harvey stresses the business imperatives fueling the weakening of local government and low-income actors, another key factor were decisions under the banner of "deregulation" by central governments in the US and around the world that deliberately undermined the traditional anchors of regional cross-class coalitions, namely the "fixed capital" that Harvey Molotch and John Logan highlighted in their examination of urban growth machines. Local banks have given way to interstate and global banking, local power utilities are moving to national and even global competition, and, most decisively for the shape of the Internet, telecommunications is fracturing into a whole range of global competitors with little regard to the needs of regional development or equal access. Whatever the economic effects, the political results have been the disappearance of the "fixed capital" anchors of urban politics.

While free market advocates like George Gilder have hailed new market competition in financial services, power utilities, and telecommunications as the natural order of things, analysts like Steven Vogel have stressed both the government imperatives and the interventionist character of so-called deregulation. In his main work, entitled Freer Markets, More Rules, Vogel has argued that even while markets have grown in these sectors, government power and control has not diminished. And while globalization is a real process, the fact that governments enacted quite different reforms reflects their room for negotiation. Referring to the process as "reregulation" and "liberalization", Vogel argues that "advanced industrial countries have reorganized their control by private sector behavior, but not substantially reduced the level of regulation."

Instead, Vogel argues that "reregulation" was a process serving various government-based imperatives, from fattening government budgets in the case of privatization in Europe and Japan to internal bureaucratic power politics as separate regulatory agencies fought over control of converging markets in financial services, computers and telecommunications. The creation of markets actually increased the power of many regulatory agencies by decreasing the power of regulated utilities and state monopolies, as in the breakup of AT&T or privatizations in Britain in Japan. Each new marketplace needed a welter of new rules to promote competition against the previous monopoly incumbents and to structure access to customers over now shared infrastructure. Vogel attributes the myopic view that this entailed less government as stemming from an ideology where "analysts tend to view governments and markets as having a zero-sum relationship, as if more of one necessarily implied less of the other."[55]

Vogel's argument that markets and regulation often have a synergistic relationship parallels Robert Putnam's argument that civic society and government have a reinforcing, not zero-sum relationship, and the question is always the form of intervention, rarely whether it is there. In fact, researchers like Michael Burawoy have noted that the withdrawal of government in places like Russia without reference to building new public institutions has not leveraged new markets but instead created dysfunctional cartels that frustrate market competition.[56] What is clear is that markets in the networked economy are every more so the product of social and political relationships and rules. To merely laud or blame technology or "economic globalization" for the rise of these new markets is to ignore the crucial and deliberate acts by central government that made them possible and continue to sustain them.

If Vogel sees the motivation for liberalization in the interests of government bureaucrats, Jill Hills more strongly sees the hand of corporations looking for entry into previously monopoly industries and to strengthen their hand within regional economies. Starting as part of US policy for increasing its technological dominance around the world, global corporations in her view began to push liberalization in telecommunications as a way to break the local political alliances that had kept residential costs down. Writes Jills, "The movement for deregulation can be understood as a movement to shift perceived costs from business to residential consumers of the telephone service, possibly even to provide a subsidy to some business at a time of recession."[57] Increasing inequality of income within regions in this view is then not a deterministic result of technology and global economic forces but a political program implemented in this case with the consent, often enthusiastic, of central state governments.

This political result is largely reflecting (and reinforcing) the economic fault lines between less skilled and more skilled workers in the new, flexible economy. Robert Reich has argued that, politically and economically, "America's symbolic analyst class have been seceding from the rest of the nation."[58] One form of secession has been shifting the tax burden to lower-income Americans, both through physical separation of where rich and poor live and what kinds of income is taxed. This is linked to a decrease in funding for the public investments that would help the unskilled. In a nation that does not rise and fall together, the elite sees less interest in general social investment for their own well-being. Where collective investment is needed, "The symbolic analyst has shown no lack of willingness to engage in collective investment. But increasingly, the public goods that result are shared only with other symbolic analysts...the communities they create are composed only of citizens with incomes close to their own. In this way, symbolic analysts are quietly seceding from the large and diverse publics of America into homogenous enclaves."[59] Reich notes that general spending on public infrastructure has declined markedly, since "Many of America's symbolic analysts transmit their concepts through the air via private telecommunications systems and transport their bodies through the air via private airlines. Most other workers rely primarily on public highways, bridges, ports, trains, buses and subways in order to add economic value."[60]

Evans observes that worldwide, the hope has been that alliances between government and local business in promoting regional economic development would build a cycle of profit and reinvestment in public goods that would eventually reach all citizens. Instead, the most successful state regimes in supporting economic development have been the gravediggers for broad political support for continued public investment. The more successful local firms become around the world, the more transnational corporations see them as viable economic partners and the less those local firms see an interest in local government.[61] Similarly, Harrison argues that local politics is unlikely to have much effect when firms' fates in the United States and Europe are voluntarily tied to decisions made far away in corporate headquarters. Saxenian herself worries in her writings that Silicon Valley's individualistic heritage could easily lead straight back to the autarchic economic strategies of production that almost killed it in the early 1980s. Cuts in social funding of education, research and training, congestion and souring housing prices could overwhelm the local conditions that have created its economic revitalization.[62]

In recent years, "reinventing government" has largely meant privatizing public services and undermining the very public authorities needed for autonomous economic planning highlighted by Piore, Sabel, Putnam and Evans. Instead of local government acting as a referee or coordinator of local economic development, it increasingly becomes merely the servant of the corporations blackmailing it for tax breaks and services based on the threat of the company's departure if its demands are not met. Even as the elite may seek to conserve the benefits of "civicness" through purely business-based associations, its secession from the general public leaves inequality in its wake. The very technology and economic growth that have fueled these regional engines of innovation may end up being their gravediggers as broad civic society is undermined.

Piore and Sabel have argued that with trust and community a key to the shared information and resources that fuel innovation in regional districts, inequality does pose an ultimate threat to their vision of regional cooperation. In their paradigm of the Third Italy, both unions and religious ties have been key in restraining the excesses of exploitation and opportunism. Where associational ties did not "check the shops' temptation to reject community standards of decency, the trade union or the church - in concert with local government - would remind them of their responsibilities."[63] Evans argues that while many nations like Brazil and the US have seen local economic development fail to address rising inequality, the regimes that have managed to escape this divergence of public and private interests have focused on the mobilization of non-elite sectors to keep the state balanced between capital and society. Citing both the Indian state of Kerala and Austria, he notes that both have strong mass-based political parties with a vibrant civil society to keep the focus of state action on the broad interests of all citizens in society.

In light of these broad patterns, it is unlikely that the benefits of regional production districts will be long-lasting without the mobilization of non-elite groups to sustain the community that undergirds innovation. Michael Best writes, "The norms that sustain cooperation are subject to erosion if they are not reinforced by community--a shared vision of a just society which presumes a mutual awareness of unwritten norms of what it means to be a respected member of the community."[64] Thus, geographic proximity is of key importance not just to facilitate communication but a shared sense of justice and responsibility. Without that trust engendered by broad community participation and sanction against exploitation, the advantages of industrial districts dissolve in the face of opportunism to "overgraze" the commons--i.e the collapse that Harrison sees as multinational capital tries to capture the best resources of the region for internal global strategies.

On the other hand, while David Harvey emphasizes the way corporations use resources from outside a region to increase their bargaining bower and undermine previous local alliances for general growth and prosperity, he also notes that grassroots organizations like unions can also build their capacity to bring in outside resources in support of their interests. Strike funds supporting local labor actions and generalized boycotts promoted beyond the region are examples of the ability to counteract the power of multinationals. General political mobilization at central government and even global institutional levels is another option to redress the balance of power at local levels, as well. While this ability of grassroots organizations has been undermined in recent decades by the power and new flexibility of the multinationals, it is an open question whether this is a permanent condition of merely a failure by the grassroots to readjust to a more global strategy as quickly as corporate capital.

In the end, rebuilding civic strength at a broad national and international level may be more important to regional economic strength and economic equality as the traditional litany of education and research promoted by the evangelists of the new technology.

Outline of Chapters: The Internet and Silicon Valley

In looking at the whole issue of regional development, the Internet and its related technologies are a key area of study. The Internet itself is emerging as an economic engine involving an array of actors and new economic alliances. Its growth has been astronomical with software sales alone for the Internet estimated to be at least $10 billion annually by the year 2000.[65] What makes the Internet a fascinating area to study is that it embodies so many different facets of the discussion around regional development: the role of public initiative in its formation, the rise of Internet-related regional districts in places like Silicon Valley, the Internet's use as a globalizing communication and production tool, the need for physical infrastructure around its deployment and the coinciding regulatory changes, its emergence as a new marketplace for exchange that has the potential to undermine traditional geography-based consumer (and taxing) markets, and the rise of the counter-organizing by grassroots organizations using the Internet to link up with other activists worldwide.

Chapter 2: This chapter will outline how the Internet evolved as one of the foremost examples in decades of how public initiative creates the basis for the creation and expansion of industry. Through funding from national agencies ranging from the Defense Advanced Research Projects Agency (DARPA) to the National Science Foundation (NSF), the federal government in association with state universities and research centers across the country created the original backbone of the Internet and pioneered the networking technology to make it work. As importantly, it created the standards and protocols that created the trust extending far outside the original research community that allowed for the exponential growth in the Internet. It would leverage public space and volunteer energy, a classic use of civic networks, to create a stream of free, quickly shared innovation. The success of the government-created Internet over the proprietary standards of corporate behemoths like Microsoft or IBM is in many ways a classic illustration of Saxenian and Best's argument that open standards are the key to innovation and growth in an industrial sector.

But beyond the creation of the Internet as a public good, the government's "embedded" relationship with the emerging networking industry was a key factor in leveraging government innovation into explosive economic activity. Many of the founders of this new industry, as in preceding generations of computing innovation, would get their initial training on the government payroll or through government contracts, expanding the pool of talent while inculcating them in the values of open computing standards. As well, a substantial number of the initial networking companies started life as government spin-offs or contractors. The Internet's existence would counteract proprietary networking strategies, notably by Microsoft, and thereby open the possibility for a wide range of companies to compete based on innovation around these public standards. The last part of the chapter will examine the privatization of much of the management of the Internet in the early 1990s and the dangers raised by allowing particular industry players, again notably Microsoft, to attempt to subvert open networking in favor of proprietary standards backed by market power.

Chapter 3: If the Internet is a classic example of public initiative and its embeddedness in economic development, its relationship to the concentration of Silicon Valley economic firms is paradigmatic of how public initiative works through regional collaboration. From its earliest days when railroad money from the federal government flowed into the region, the area now known as Silicon Valley has been shaped and reshaped by federal investments. Research labs at both Stanford University and the University of California at Berkeley, both increasingly supported with federal funds throughout the 20th century, would play a key role in directing funds, talent and coordination of innovation in the region. World War II and its aftermath would create a proliferation of defense contracts that would build a computer industry literally in the fields and orchards of the area. As importantly, close relationships between universities, federal research labs and industry leaders would increasingly shape the collaborative and entrepreneurial network of firms in the region.

Out of this environment emerged many of the Internet visionaries, notably Doug Engelbart whose Augmentation Research Center would be one of the key labs in the 1960s from which would emerge many of the key computing and Internet innovations. Key to both the personal computing and Internet revolutions of the 1970s was the bubbling civic energy of the region derived from a unique combination of government investments, entrepreneurial zeal and anti-war, counter-culture civic networking. In rather direct ways, that civic energy would be channeled into economic networking that would build a commitment to shared knowledge and open computing standards.

In turn, the federal government would intervene in computing markets to reinforce open standards around which Silicon Valley firms would build their businesses. One notable example would be Sun Microsystems, founded by Stanford and UC-Berkeley graduates trained within the community of early Internet pioneers, which would promote the government-backed open operating systems and Internet standards in every computer they would sell throughout the 1980s. Other Bay Area companies, from the Internet router company Cisco Systems to Netscape to database-maker Oracle would build their businesses tied to government contracts and standards. With that base of innovators tied to these open standards supported by the government, a vibrant collaborative network of Internet companies would explode and lock in leadership for the region as the Internet itself expand exponentially.

However, as the federal government has withdrawn from strong intervention to assure open Internet standards, it has become a more open question whether that collaborative model will survive as companies merge to face off against the strength of vertically integrated companies like Microsoft seeking to dominate through proprietary approaches. Much as the withdrawal of the government from support of the Springfield Armory undercut the blooming of a metalworking industrial district in the Connecticut Valley in the 19th century, the withdrawal of strong government-backed Internet standards may be hastening the erosion of the Silicon Valley model.

Chapter 4: With the configuration of new industries in Northern California, from software engineers to networking companies to multimedia content providers, the question then becomes whether the character of these Internet-related firms will resemble more the industrial district model of Saxenian, Piore and Sabel or more closely follow the corporate "strategic alliance" model of Harrison and Reich. The Internet itself adds in a whole new factor to that question since it itself enhances the globalizing trends that information technologies have been accelerating.

Contrary to what some might expect, Silicon Valley not only survives but is thriving, expanding and even consolidating its role as the geographic focus of a supposedly geography-free revolution. What makes the region worth examining in this context is the consciousness of many firms of the fragility of their region's success. Under pressure of the California recession of the early 1990s and explicitly citing writers like Saxenian in many instances, leading local technology companies formed a consortium called Joint Venture: Silicon Valley to address a wide-range of fears around technological collaboration. With federal funding for a number of its initiatives, the consortium would launch a whole range of civic initiatives spanning the public-private divide.[66] A number of these initiatives involved Internet company collaborations through consortiums with such names as Smart Valley, CommerceNet and the Bay Area Multimedia Technology Alliance (BAMTA). The results of this endeavor are in many ways a natural experiment for studying the relationship between civic energy and the formation of industrial districts in the context of the Internet.

The success of these initiatives has been overwhelming in the view of the participants, so much so that companies from around the world, including Cable & Wireless, Olivetti, the European Union bank and Toshiba have joined as members. And this latter fact is the rub. What started out as regional consortia rapidly shed their specifically local orientation in favor of global networks. Where CommerceNet was formed initially as a way to electronically link suppliers and contractors locally over the Internet, the primary interest of participants rapidly became the use of the Internet for marketing goods to global customers. CommerceNet and BAMTA quickly evolved into forums for creating strategic alliances and expanding the worldwide market on the Internet, rather than a network for strengthening regional ties around production. Yet the regional nature of Silicon Valley was not being erased, merely revealing itself less and less as the flexible industrial district model promoted by Saxenian, Piore and Sabel and more as Bennett Harrison's description of strategic alliances. Northern California can then be seen as a useful enough concentration of skilled workers and innovative firms for corporations from around the world to seek to establish relationships there.

Yet these regional alliances in Silicon Valley are tied to a form of civic networking and business-to-business consortia that go far beyond traditional market relationships. Looked at in the context of other regional consortia, such as SEMATECH and MCC in Texas and the hundreds of other multi-firm research-oriented consortia around the country, the explosion of Internet companies in Silicon Valley is recognizably the creation of the social capital highlighted by Putnam and Evans. Local regional collaboration becomes a key mechanism for developing cooperation around industry-backed technology standards that need the day-to-day interaction to sustain themselves versus the proprietary strategies of global competitors outside the consortia.

The Internet itself is an active force in shaping whether firms deal more closely with local firms in Northern California or whether it ties them more easily into global production systems. While many in Silicon Valley see the Internet as strengthening the informal communication and exchange that has made the region such a powerhouse in innovation, others see it making non-local intellectual and commercial exchange easier between Reich's symbolic analysts. Projects developed by CommerceNet are seeking to create standards for computerized Internet databases that can substitute for the informal specifications of local contractors in favor of seeking the best global partner for supplies, which has obvious implications for eroding the traditional advantages of regional collaboration. The growth of the Internet also promises more development of software in "virtual industrial districts" in cyberspace as tools are developed to strengthen the illusion of proximity for collaborators at long distances. Already, simple coding of software is entering world commerce with India leading in this function. With the Indian government building teleports in key cities, all that is needed are systems for easily specifying design specifications for coding and other support to become much more common using the Internet. In the end, the collaboration achieved by the consortia is focused on marketing strategies and knowledge exchange that may benefit the elite engineers of the region (for whom electronic communication enhances local collaboration) but has little to do with the overall health of the region.

Information technology opens the possibility of telecommuting from home and expanding the effective physical radius for those who need come to work only a few times a week, but in the end this emerges more as a coping strategy for elite engineers who need not face the inadequate physical infrastructure of gridlocked roads that the "unwired" face due to an underfunded public sector. The Internet thereby becomes a further tool for the secession of the elite from that decaying public sector. Additionally, it makes affordable housing less of an issue since engineers can comfortably live in cheaper suburbs farther from the firm when they need only come into work a few times per week.

And this leads to the dark side of concentrated economic power and its regional effects that Harrison documents from Italy to studies of Silicon Valley: of dual labor markets, of peripheral inhabitants bypassed by "flexible" conditions, and a general squalor of public infrastructure. This is reflected in the fact that while Joint Venture: Silicon Valley started with broad goals around strengthening the local infrastructure of the valley to the benefit of both industry and local communities, by the end of the 1990s its focus revolved around technical alliances, business incubation and making local government more pliable to the needs of business.[67] Instead of broad cross-class civic collaborations, you have a new politics of business-government relations focused on collaboration between elite engineers and corporate leaders as the new basis for regional development with little regard for or involvement by less skilled workers in the region.

Chapter 5: Along with federal funding, a large source of funds for Joint Venture and its associated consortia have been the traditional regional anchors of economic development in Northern California: California banks like Bank of America, the regional power company Pacific Gas & Electric and the local telephone company Pacific Bell. Yet their participation has not had the effect of tying the consortia efforts into broader economic development, a fact reflecting that these "anchors" are increasingly global market players in hot competition with competitors both within the region and outside it.

Notably, all three companies are in network-based industries whose functions are rapidly converging with the Internet itself and, as noted earlier, have seen the regulatory regime under which they operate radically changed. Earlier banking, telecommunications and power utility regulatory regimes were dedicated to the idea of spatially-bounded markets where companies would be encouraged to expand access to their networks with pricing models allowing them to recover the fixed costs of those investments With the geographic scope of their markets limited, it was in their self-interest to participate in economic develop that maximized growth in every sector, rich and poor, within that region.

The new "reregulation" regime has created a constant tinkering with market rules that undermine regionally defined markets in favor of national and global competition where companies concentrate on richer, high-profit customers while short-changing investment in the broader public infrastructure on which lower-income families depend. Bank of America and Wells Fargo, the largest California banks, have become increasingly global in their aspirations and have seen Joint Venture and its associated consortia as a way to help set standards for dominating cyberbanking in the future. Power utilities are now buying and selling energy wholesale in national spot markets over the Internet and, more recently, within the state on Internet-based power exchanges. All of this is cutting power costs for business customers while shifting costs onto residential customers and taxpayers.

Most critically for the Internet itself, the breakup of AT&T and market competition in telecommunications has ended the mandate for equal access to telecommunication services as the variety of business services available has exploded and the price for basic residential access has climbed precipitously. Despite the rhetoric of "deregulation", a range of telecommunications rules mandate competitive behavior in the field, most dramatically in the requirements that mandate that local phone companies allow interconnection to any other telecommunications business without requirements that those businesses necessarily pay to support the network as a whole. The most dramatic example of this are Internet Service Providers themselves who, due to early regulation in the 1980s, have had subsidized access to the telephone infrastructure while paying almost nothing for its maintenance. The result, as in the banking and power industries, has been economic subsidies for business and upper-income residents (the main users of such Internet providers) as lower-income residents trapped in local geography have had higher bills and a neglect of the basic infrastructure they depend upon.

Politically, the outcome has been a whole series of national and local regulatory battles as to what constitutes an "ideal" market in each networked industry. Instead of regional anchors whose private interest is geographically bound to the public interest of regional development, we have a whole set of arrangements that are jury-rigged to police against predatory pricing, compensate for defunct infrastructure, mandate interconnection between different services, and provide sporadic measures for assuring that rural and the poorest customers are not completely dumped out of the system. Many market evangelists have called for doing away with subsidies for the poor altogether (while maintaining the regulatory regime that subsidizes business) and dumping the responsibility for assuring universal access on local governments' welfare budgets. Even as subsidies for business interconnection to networks would remain implicit in public policy, the subsidies for the poor would be laid out as a line item in budgets ripe for political attack.

Chapter 6: As economic allies of local government retreat into global competition, the costs of assuring access for the "information have-nots" are increasingly shifted from the networks directly onto public budgets. This is hard enough given almost two decades of cuts in national government subsidies to local government and tax restrictions such as Proposition 13, which themselves responded to earlier waves of global speculation in housing markets. All this has weakened the fiscal strength of city governments. However, Internet commerce itself is threatening to itself further undermine local tax revenues.

Local government and economic development has always depended on a virtuous cycle where income generated in a region tended to trickle down through local retail purchases that in turn generated sales tax revenue to continue public initiatives to support production. Now, as commerce increasingly moves onto the Internet, there is a large and growing portion of that income spent on untaxed out-of-state purchases which further incapacitates local government's power and stability. Mail order sales have been a growing drain on local revenues for decades but the Internet through computerized outreach, online showrooms and growing online transactions have made it easier for companies to dispense with the local stores or personnel that would, under interstate commerce laws, trigger local sales tax payments.

The result, especially in states like California where local governments depend on sales tax, has been a desperate competition for the remaining retail outlets. This has introduced a terrible distortion of economic development patterns as cities bid for successive waves of retail, from suburban malls to "big box" discount retailers to "call center" retailers marketing through mail order and the Internet to the rest of the country. Rather than targeting local spending on infrastructure, education or research networks, most local governments are desperately handing out tax subsidies in the desperate competition to influence the location decisions of these outlets. Instead of regional cooperation around development, regions end up with a nasty zero-sum competition that fragments development, especially as rich communities "opt-out" by retreating to separate gated communities with their own services and no burden of paying for services for the poor. In an increasingly global consumer market and systems of production tied to global decision-making, it is increasingly clear that fractured local governments have neither the revenue nor the political strength to negotiate real economic development deals for their citizenry.

Chapter 7: Despite the fiscal and political pressures on local governments, many are heralding the Internet as the opportunity to decentralize political decision-making and strengthen the kind of civic networks that Putnam and Evans highlight. With the highest concentration of Internet access in the country, the Bay Area has been talked about as a "beta site" for a new electronic democracy. The unfortunate reality has been that despite broad access to the Internet, its public "Information Superhighway" can best be described in John Kenneth Galbraith's phrase of "public squalor amidst private affluence."

Networked technology is driving a restructuring of the physical infrastructure of regions that is not only heightening inequality but is driving dramatic restructuring of the functions of local government. The modern professional government was a child of Progressive Era reform that itself was largely a product of the need to coordinate and extend the new public water systems and utility networks of their day. As those networks fracture, so too is coordination between local jurisdictions as they seek to use competing telecommunications systems, from hardware to Web sites, as a competitive advantage in attracting businesses from other locations.

In an age of information, it is ironic that the budgets of local, state and even federal agencies are so strapped that many are discontinuing the collection of key areas of public information, even as they could be distributed to the public most effectively. This leaves information control in the hands of private companies. In the cases where information can't be collected effectively by private companies, public leaders like Pete Wilson's Chief Information Officer John Flynn have pushed to have agencies sell it rather than give it to the public free. In this way, private companies are able to rent the coercive power of government to collect the information for its own needs that it could not collect on its own.

In many cases where governments are putting government economic information online, such as government purchasing or contract information, this is threatening to undermine the informal local economic development control cities had through targeting local business who were the only one's who found it worthwhile to track local bid information. Many local governments on the Internet see it mostly as a global advertisement to attract business investment. With Smart Valley's main focus on assisting government's on-line presence in order to speed government permitting of industry projects, this has meant that support for local government from industry has focused on making communities in the region more pliable to the needs of industry. And this has usually meant concentrating support on the richer communities where the companies are based.

Many local and state government agencies are intensely interested in using the Internet to assist job placement by the unemployed or underemployed. California actually has an extensive electronic system connecting its many local and regional employment offices with use of e-mail prevalent across the state. However, this does not translate easily into simpler job placement of the unemployed, mostly due to the fact that, while the unemployed register their availability for work, employers are under no requirement (and show little inclination) to list job openings for marginal workers electronically. Whether because of racism or convenience, employers resist efforts to make their hiring practices more open to marginal communities seeking employment for through such systems. Lacking either the union strength or the legal ability or will, local governments end up not pursuing the measures that could use the new technology more aggressively for the unemployed.

All this in turn follows Bennett Harrison's contention that, contrary to many proponents of the "industrial district" model, local regional actors have much less role in the development of their regions that the global corporate giants and the nation-state governments that create the underlying rules, implicit subsidies and public investments that create opportunities for regions to prosper. And given the dark side of flexible production on peripheral employees and the unemployed in the new economy, a stronger role for that nation-state level of government is even more needed. For many local governments and their lobbying associations, the strongest power of the Internet is to more effectively unite local municipalities to lobby for state and federal legislation they see needed to maintain services in their communities.

Chapter 8: This final concluding chapter will summarize the above arguments in the context of the national debate over political and economic decentralization in our society. What is clear is that the contradictions between elite regional business networking and global production create a broad confusion over what level of economic and political organization is most critical in the new economy. As nation-state mass production systems give way to networked enterprises, a political opening was made for ideologies of decentralization that, while espousing grassroots political empowerment, end up strengthening the power of global corporations versus local governments without the resources or power to negotiate as equals.

However, even as this rather bleak story unfolds, there is a counter-trend of grassroots organizations using the new networked technology, particularly the Internet, to strengthen their power at national and international levels. Even as the Bay Area has been a center for promoting networked technology for global corporations, its parallel history as a source of radical civic energy has manifested itself in the regions support for global electronic networking. The union of janitors in Silicon Valley firms like Apple and Oracle have used electronic networking not only to tarnish the images of those "model" employers but have used the technology of the Internet to directly inform and influence the attitudes of the engineers whose offices they cleaned each night. Hotel unions have used the Internet to distribute boycott information globally and even target the stockholders of computer companies like Powersoft to pressure those companies to keep corporate business out of anti-union hotels. Unions nationally are increasingly using the resources of the Internet to build solidarity and strengthen their organizing drives.

Much of the grassroots progressive networking in the country is done through a Bay Area based organization called the Institute for Global Communications (IGC). IGC is the center for progressive electronic networking in the US with over 7000 progressive environmental, peace and labor organizations having accounts by 1997 and through its international branch, the Association of Progressive Communications (APC), connects directly with over 50,000 activists and non-profits in over 133 countries. Reaching out to a range of previously technophobic organizations in communities around the nation and the world, IGC and APC have helped build a global community of activists that are increasingly making their strength felt.

With the experience of "deregulation" undercutting local economies and political power, grassroots activists ranging from union locals to environmental groups have become more focused on the dangers of international trade deals for undercutting grassroots power in favor of global corporate power. Mobilization against NAFTA and GATT were some of the earliest broad-based campaigns over the Internet, and while those deals were passed over the opposition of most community-based organizations, a number of analysts have noted the role of Internet lobbying in defeating "fast track" legislation in 1997. With local power undercut by global corporations, more and more organizations are using the new technology to build the global alliances that, perversely, are seen as the only way to preserve local sovereignty.

What this all promises is a growing struggle in the workplace and in urban politics over both the positive and negative trends of the information age. As global companies create strategic alliances using the human resources of a region, labor and community organizations are beginning to marshal the tools of information technology to organize contingent workers pushed to the fringes of economic and political power. The growth of the Internet embodies a broad change in the urban space where control of time and communication, especially to resources and people outside one's region, is becoming the ongoing and critical issue in local power, making semi-permanent local growth coalitions a thing of the past. Instead, while internal regional alliances will remain crucial, local power is inevitably flowing to those who can use the new information technology to deploy global power for local control of resources.

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ENDNOTES FOR CHAPTER 1

[1] Negropante, Nicholas. 1995. Being Digital. New York, Vintage Books, p. 165.

[2] Toffler, Alvin. The Third Wave. New York, William Morrow and Company, Inc., p. 246.

[3] Chandler, Alfred, Jr. 1977. The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA. Harvard University Press.

[4] Piore, Michael and Charles Sabel, The Second Industrial Divide: Possibilities for Prosperity (Basic Books, New York, 1984)

[5] Best, Michael. The New Competition: Institutions of Industrial Restructuring. Harvard University Press, Cambridge, MA: 1990.

[6] Michael Best, Ibid, p. 235.

[7] Saxenian, Annalee. Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge: Harvard University Press, 1994), p. 118.

[8] Gordon, Richard. "Collaborative Linkages, Transnational Networks and New Structures of Innovation in Silicon Valley's High-Technology Industry." Report no. 4, "Industrial Suppliers/Services in Silicon Valley." Silicon Valley Research Group. University of California at Santa Cruz. January 1993.

[9] Harrison, Bennett. Lean And Mean: The Changing Landscape of Corporate Power in the Age of Flexibility Basic Books: US: 1994, p. 8.

[10] Harrison, Ibid, p. 24.

[11] See Hymer, Stephen. 1972. "The Multinational Corporation and the law of Uneven Development." in J. Bhagwati, ed. Economics and the World Order, New York: The Free Press. 113-40.

[12] Castells, Manuel. The Rise of the Network Society. Basil Blackwell. Cambridge, MA. 1996, p. 171.

[13] Reich, Robert. The Work of Nations: Preparing Ourselves for 21st Century Capitalism. Alfred Knopf, New York: 1991, p. 89.

[14] Evans, Peter. Embedded Autonomy: States and Industrial Transformation (Princeton, Princeton University Press: 1995), p. 216-217.

[15] Reich, Robert, Ibid, p. 234.

[16] Saxenian, Ibid 1994, p. 34-37.

[17] Harvey, David. The Urban Experience. John Hopkins University Press, Baltimore: 1989, p. 19.

[18] Harrison, Ibid, p. 26.

[19] Piore and Sabel, p. 156.

[20] Castells, Manuel. The Informational City: Information Technology, Economic Restructuring, and the Urban-Regional Process. Basil Blackwell, Cambridge: 1989.

[21] Flamm, Kenneth. Creating the Computer: Government, Industry, and High Technology. The Brookings Institute. Washington, DC. 1988, p. 252-253.

[22] Markusen, Ann; Peter Hall, and Amy Glasmeier. High Tech America: The What, How, Where, and Why of the Sunrise Industries. Boston. Allen & Unwin.

[23] See Doreen Massey, Paul Quintas and David Wield. High-Tech Fantasies: Science Parks in Society, Science and Space (Routledge, London: 1992). Florida and Kenney also emphasize the lost public funds by local authorities that have ended up merely subsidizing local business in university-business "partnerships."

[24] Malecki, E.J. "Public Sector Research and Development and Regional Economic Performance in the United States" in The Regional Impact of Technological Change. A.T. Thwaites and R.P. Oakey, ed. St. Martin's Press. New York. 1985.

[25] Markusen, Ann; Peter Hall; Scott Campbell; Sabina Deitrick. The Rise of the Gunbelt: The Military Remapping of Industrial America. Oxford University Press. New York. 1991.

[26] Storper, Michael and Richard Walker. The Capitalist Imperative: Territory, Technology, and Industrial Growth. Basil Blackwell. New York. 1989.

[27] Hall, Peter. "The Geography of the Post-Industrial Economy." in The Spatial Impact of Technological Change, ed. by John Brotchie, Peter Hall & Peter Newton. Croom Helm. London. 1987. and Buswell, R.J, R.P. Easterbrook, and C.S. Morphet. "Geography, Regions and Research and Development Activity: the Case of the United Kingdom" in The Regional Impact of Technological Change. A.T. Thwaites and R.P. Oakey, ed. St. Martin's Press. New York. 1985.

[28] See: Castells, Manuel. The Rise of the Network Society. Blackwell Publishers. Cambridge, MA. 1996, p. 88-89. See also Evans (1995); Amsdem, Alice. Asia's Next Giant: South Korea and Late Industrialization. Oxford Unviersity Press. New York. 1989.

[29] Evans, Peter. "Introduction: Development Strategies across the Public-Private Divide." And "Government Action, Social Capital and Development: Reviewing the Evidence on Synergy." World Development, Vol. 24, No. 6, pp. 1033-1037, pp. 1119-1132.

[30] Bennett Harrison, Ibid.

[31] Robert Reich. Ibid, p. 239.

[32] Sabel, Charles."Learning by Monitoring: The Institutions of Economic Development." In The Handbook of Economic Sociology. Princeton University Press. Princeton, NJ. 1994, p. 137.

[33] Evans, Peter. "Introduction: Development Strategies across the Public-Private Divide." And "Government Action, Social Capital and Development: Reviewing the Evidence on Synergy." World Development, Vol. 24, No. 6, pp. 1033-1037, pp. 1122.

[34] Putnam, Robert D. With Robert Leonardi and Raffaella Y. Nanetti. Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press. Princeton, NJ. 1993, p. 156.

[35] Michael Best. The New Competition: Institutions of Industrial Restructuring (Harvard University Press, Cambridge, MA: 1990)

[36] Peter Evans. Embedded Autonomy: States and Industrial Transformation (Princeton, Princeton University Press: 1995)

[37] Sabel, Charles. "Bootstrapping Reform: Rebuilding Firms, the Welfare State, and Unions." Politics and Society, Vol. 23 No. 1, March 1995: 5-48.

[38] Saxenian, Ibid., p. 135.

[39] Best, Ibid., p. 44-45.

[40] Best. Ibid.

[41] Harrison, Ibid.

[42] Reich. Ibid., p. 154.

[43] Piore and Sabel, Ibid., p. 287.

[44] Castells. Ibid., 1989.

[45] Harrison, Ibid.

[46] Massey, Doreen; Paul Quintas and David Wield. High-Tech Fantasies: Science Parks in Society, Science and Space. Routledge, London: 1992.

[47] Castells, Ibid.,1989.

[48] Harvey. The Urban Experience, p. 260.

[49] Harvey. The Urban Experience, p. 52.

[50] Harrison, Ibid., p. 222.

[51] Molotch, Harvey. 1976. "The City as Growth Machine: Toward a Political Economy of Place." in American Journal of Sociology 82: 309-32. Exanded into the book, Logan, John R. and Harvey Molotch. Urban Fortunes: The Political Economy of Place. University of California Press. Berkeley. 1987.

[52] Harvey, The Urban Experience, p. 206.

[53] Harvey. The Urban Experience, p. 259.

[54] Harvey, David. The Condition of Postmodernity. Blackwell, Cambridge: 1989, p. 293.

[55] Vogel, Steven K. Freer Markets, More Rules: Regulatory Reform in Advanced Countries. Cornell University Press. Ithaca. 1996, p. 3.

[56] Burawoy, Michael. in World Development, Vol. 24, No. 6

[57] Hills, Jill. Deregulating Telecoms: Competition and Control in the United States, Japan and Britain. Quorum Books. Westport, CT. 1986, p. 7.

[58] Reich, Ibid, p. 252.

[59] Reich, Ibid., p. 268.

[60] Reich, Ibid., p. 254.

[61] Evans. Embedded Autonomy, Ibid.

[62] Saxenian, Ibid., 1994.

[63] Piore and Sabel, Ibid., p. 229.

[64] Best, Ibid., p. 237.

[65] "A World Gone Soft" in The Economist, May 25, 1996.

[66] Center for Economic Competitiveness, SRI International. An Economy at Risk: The Phase I Diagnostic Report prepared for Joint Venture: Silicon Valley, 1992.

[67] Joint Venture: Silicon Valley. The Joint Venture Way: Lessons for Regional Rejuvenation. Report in 1995.