Innovation Clusters
Duke University’s Vivek Wadhwa offers an interesting take on what leads to the successful creation of innovation or research clusters in his piece in The Chronicle
An interesting point from the piece:
“By the 80s, Silicon Valley and Route 128 looked alike: a mix of large and small tech firms, world-class universities, venture capitalists, and military financing. ….
Yet, today, most people don't even know where Route 128 is. Silicon Valley raced ahead because of its dynamism, which overwhelmed the slow pace of technological change in the Boston area. What gave Silicon Valley its advantage were its high rates of job hopping, new-company formation, and a culture of information exchange and risk taking. Silicon Valley firms understood that collaborating and competing at the same time is a recipe for success in the tech world, where complex products often comprise chunks of technology harvested from many organizations. In addition, failure was tolerated and often worn proudly”.
Financial Innovation
The famously libertarian UCLA Economist, Deepak Lal, offers (in his op-ed in The Business Standard) some interesting insights on why financial innovation (and financial engineering) is good as long as government does not get into the habit of bailing out financial institutions at the first sign of trouble:
“The immediate official response to the crisis, in which the insurer AIG was bailed out, which then led it to fully repay its counterparties like Goldman Sachs, bailing them out in turn, only justified the beliefs of those who had undertaken the imprudent lending that any losses would be borne by taxpayers. Moral hazard increased even further. It was further accentuated with the classification of institutions as being “too big to fail”, and has given an incentive for the creation of even larger universal banks “too big to fail”. With the authorities egging on the conversion of previous investment banks into bank holding companies, the US financial structure has become even more oligopolistic”.
Innovation in Brazil
http://www.economist.com/node/17522484/print