In an illuminating piece for the Boston Review, Ben Armstrong crunches the numbers to determine whether tech startups really are the solution to urban decay that city governments around the world seem to think they are. Does giving tax breaks and other incentives to tech startups really lead to significant urban job growth? Armstrong's answer: not really. Here's an excerpt:
Slate identifies thirty-one cities around the world that have received the moniker “Next Silicon Valley” from news outlets including The Wall Street Journal, The Economist, NPR, and the BBC. New York City has claimed the title Silicon Alley; Kansas City considers itself Silicon Prairie; and Dublin, Ireland calls its tech scene Silicon Docks. In many of these places, city governments have subscribed to a kind of Silicon Valley mimicry. They have launched incubators, supported investor incentives, and sponsored innovation challenges like hackathons with big prizes—all with the hope that high-growth startups will follow.
The Silicon Valley Consensus is that innovative cities grow faster than non-innovative ones—but that’s not always the case.
Michael Piore, an MIT economist, calls governments’ enthusiasm for supporting high-tech entrepreneurship the “Silicon Valley Consensus.” The Washington Consensus of the 1980s claimed that free trade and deregulation were the most promising growth policies for developing countries. The Silicon Valley Consensus suggests that innovative cities grow faster, that startups are the only real hope for job creation, and that high-tech growth helps rich and poor alike.
But, like the Washington Consensus, the Silicon Valley Consensus offers a false promise.
Image via Boston Review.