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Pages from FINAL Tale of Two Cities

Tale of Two Cities: From Farmland to Tech Mecca

Mar 22, 2018

Michael Lin and Perry Wong 


While the San Francisco Bay Area and China’s Shenzhen operate under two different and distinct political and economic systems, both have been recognized as innovation and technology hubs with unique economic success. This study examines the factors contributing to their development. By analyzing both areas’ historical rise and evaluating the applicability of the measures they utilized to accumulate their innovation and technology capacity, the report assesses the extent to which these contributing factors can be replicated.

Key Insights: 

  • Prestigious education institutions played a key role in spawning Silicon Valley to become the global innovation frontier. Shenzhen instead began with low-cost manufacturing, later copycatted electronic products, and currently strives to continue its rise by nurturing its indigenous innovation capacity.
  • An open policy that allows free flow of capital and labor contributes to a flourishing environment for innovation and entrepreneurship.
  • A sufficient number of human capital and talents is vital to the formation of robust innovation clusters, while universities and research institutes are essential to long-term economic development.
  • Innovation and entrepreneurship arise spontaneously within the Bay Area’s market economy, while in Shenzhen, institutions that allow free flow of capital and talent and streamlined administrative processes for businesses are most essential to the semi-market economy.
  • Streamlined and transparent rules and services to facilitate a spontaneous and open ecosystem for innovation and entrepreneurial activities are indispensable aspects of the development of tech and innovation hub.
  • Silicon Valley and Shenzhen’s status as innovation and technology hubs cannot be easily replicated because of the complexity and variety of factors that have to be in place simultaneously