The New Argonauts: Regional Advantage in a Global Economy

Author:   Annalee Saxenian
Publisher:   GRFDT
Reviewer:   Rajiv Mishra

The New Argonauts: Regional Advantage in a Global Economy is a work which started from the interest in development of regional economies. It can be traced back to the research done by two important scholars (Piore & Sabel, 1984)who made an effort to discuss about the mass production system in early 20th century United States and its postwar emulation in other developing countries. This further paved the way for research interest about the economic development of special industrial districts like Third Italy, Germany’s Baden-Württemberg and Silicon Valley in US. It is from this chain of research, the author of this book did her early research on aspects of regional economic development and production networks in Silicon valley and Boston’s route 128 (Saxenian, 1991; Sexenian, 1994). The important part which contextualizes the interest and its further cascading effect on other cross-country regional economic development was the unanticipated dynamism of these industrial districts. Since then the importance to study and understand regional economic development started to get more academic attention. Further the work done by Michael Porter (Porter, 1998)related to regional economies and clusters provided more scope in this area for understanding interconnected nature of specific industries in terms of specialized parts, products, skills, information and its linkages to entrepreneurship and innovation. The author mentions the lack of concern by economists and policy makers about small firms, specific regional economic perspectives and entrepreneurship which provided the impetus for research in this area.

It is interesting to find in the book that author has combined several theoretical frameworks and used them in the context of economic anthropology. The term economic anthropology is important here since author has traced the root of the development of different regional cities and the role played by Chinese, Taiwanese, Israeli and Indian diaspora. Here as discussed in the first paragraph the discussion of regional economic development is contextualized in terms of important role played by networks of diaspora in their native as well as host countries. How ethnic ties, cultural closeness and interactions in Silicon Valley helped Chinese, Taiwanese, Israelis and Indians to form different associations and groups to work together and to help people coming from their native countries. Concepts of regional economic development, supply chain clusters, knowledge networks, organizational and industry structure is used to understand the Silicon Valley model and four other cities Hsinchu, Shanghai, Tel Aviv and Bangalore. Further these concepts are discussed and studied keeping the new Argonauts in the center.

In this context the rise of Silicon Valley was studied as a regional economic success, which became a hub for computer software, hardware and semiconductors industry for the entire world and was the basis for cross-country regional economic development. Here four important cities Tel Aviv, Israel, Hsinchu, Taiwan, Shanghai, China and Bangalore, India come into the picture of the study. The regional economic development of these cities with help of the new Argonauts is the main focus area of the study. Author calls the new Argonauts small number of highly educated and trained immigrant professionals of science and engineering who studied in United States and worked mainly in Silicon Valley for many years. They returned to their native countries when there was economic slowdown in US in 1980s, and found more economic opportunities in their native countries and when US stock market corrections took place in 2001. The author also mentions that apart from these reasons related to lure of better lifestyle, cultural closeness and desire of more recognition attracted them to their native countries.

It is what the author calls brain drain to brain circulation, which holds an important aspect to understand the role played by these new Argonauts. This was done with help of their ethnic professional networks by having formal and informal communications, cultural background, knowledge of different cultures & societies which they used in establishing of firms and startups in their native countries. This process of brain drain to brain circulation provides advantage to these people since they work in two countries, constantly travel and always have complex knowledge and information of multiple markets. This makes the new Argonauts like hybrid entrepreneurs who have information & knowledge of multiple geographies; they are related to a network of professional community who are from their immigrant and native countries having inter-country, inter-cultural and inter-generational knowledge. This could also be understood with help of institutional economic with the analysis of networks of relationships which entrepreneurs have within a firm and outside a firm, this helps their mental models to take economic decisions which would be based on this knowledge and information(Coase, 2007; North, 1993). It is also related fundamentally to what author calls as social structure of the new Argonauts which is derived from the learning and knowledge which takes place in the work culture of Silicon Valley and includes decentralized and fragmented business, constant information flow, collaboration and learning from failures. Entrepreneurship and firms in Silicon Valley are catered by these factors which constantly provide a rapid source of economic change. Here the role of local professional community is important, with reference to this the author mentions about the formation of professional associations and alumni networks prominently by Chinese and Indians. How these professional networks (CIE, SIPA, TiE) helped these returning entrepreneurs to establish business in their native countries.

Author connects formation of these professional and ethnic networks and association as one of the important factors playing role in return of these engineers from USA to their native countries. It marks as a reentry point of these engineers through and using the platform of these associations in their native countries. These associations provided necessary information and business intelligence to returning engineers who wanted to setup their own startups. Entrepreneurship and startups marks an important aspect related to new Argonauts and development of the regional technology hubs like Tel Aviv, Hsinchu, Shanghai and Bangalore.   But there are other important factors which author discuss as simultaneously playing important role in development of these technology hubs and also shows without these measures returning Argonauts would have not been able to achieve much what they were able to achieve.

These important factors are related to role of government policy, economic measures, clusters of supply chain, education and investment in R&D and encouragement for entrepreneurship. This could be well related to development of security and military communication entrepreneurship in Tel Aviv, Hsinchu Science Park, Shanghai technology hub and software development in Bangalore. Here the case of native social and cultural background of these new Argonauts matters for example, Israel due to its security requirements has made compulsory provisions for military training of its citizens. This could be understood that why many of the returnee Israeli engineers started firms related to military electronic communications and security. The context of the background of Taiwan’s computer gaming industry is also important to understand the development supply chain clusters in Taiwan. Here the role of government, private firms, R&D firms, universities, financial systems, legal systems, supply chain all worked together to provide the necessary ground for the new Argonauts in Israel, Taiwan and China with exception of India. So without the presence of this complex actor-network mechanism much would have not been possible in these cities, it can be understood by some questions why Hsinchu Science Park failed initially? Why did Silicon valley bank and investment firms move to these cities? What other factors hampered the returning entrepreneurs?

These questions are connected to the essentially to the factors related to organization of capital markets and financial systems, development of venture capitalism, international investment and co-ordination of various local institutions to work together for the development these cities. How family based financing and support of Israeli army help returning Israeli entrepreneurs to setup their firms. How in Taiwan introduction of venture capitalist in Hsinchu Science Park changed the game, rigid economic system hampered returning Chinese entrepreneurs. How in India linkages between government, universities, private firms, R&D institutes and private investments hampered entrepreneurship from the very beginning and still does to a great extent.

But as author discusses the case of these countries more specifically Taiwan, China and India she has posed an important question that why Silicon Valley will always remain a technological leader? This question is related to the historical nature of business and market functioning of Silicon Valley and the connection it has with these cities as regional technology hubs. Taiwan became the source of manufacturing and production of hardware and Integrated Circuits (ICs) for Silicon Valley firms and big American computer firms like Dell, IBM, Apple and HP. As manufacturing of semiconductors and computers was shifted from Taiwan to China in terms of cost advantages foreign companies carried the same nature of manufacturing and production collaborations in China. The case of Indian software industry is also same as it from the very beginning catered to the demands and business requirements of foreign clients. Bangalore became a hub of cost affective source of high level software products. These points relate to the fact that it is Silicon Valley and western business that is deriving and sustaining business of Taiwan, China and India. Silicon Valley remains the ultimate hub of future and advanced level of technology design and development. This question is further discussed by author in terms of strength of Silicon Valley.

Author discusses strength of Silicon Valley system based on decentralized and fragmented market, open labor markets, continuous trial and error and jointly creating new markets. But this couldn’t be said for United America as whole which the author highlights; that the post war period attracted and still continues to attract thousands of students and professional from developing countries. The best of talent, mixed with ideal economic, social and political factors provided all the grounds for the development of Silicon Valley as successful global technology hub. Why couldn’t it be replicated exactly in these cities? The answer lies in the fact that the structure of Silicon Valley is build on a cosmopolitan and global workforce having diverse knowledge and learning experiences from the time of its genesis. Ways in which the technical community is organized and flow of information and knowledge which they have termed as ubiquitous knowledge spillovers, is not present in other cities like Bangalore. On the contrast this type of social structure is not build in these cities and economies, where they have their own contextual social, cultural and political factors which impacts business and development of entrepreneurship.

Author has not discussed specific aspects of theoretical framework but by reading the book one can find that author has used and synthesized different aspects of economic and anthropological analysis. It would have been much better to theoretically grasp the book if there was a dedicated chapter which could have talked about conceptual framework and theoretical base. Furthermore, one important thing which author mentions in the introductory chapter about neglect of economist and policy makers to study regional success stories and entrepreneurs, but in the concluding part author has not completely synthesized the linkages between regional economic development and several anthropological aspects related to different diaspora which she has studied in her work.  But the strength of the book is based on the fact that it deals with one of the most important aspects of global economy which is networks of people. The complex interplay between cultural connections and professional accomplishments is one key thing which is highlighted in the book.  How with help of networks these Diasporas have extended the markets for Silicon Valley and make these regional technology hubs integrated with the Silicon Valley in terms of access for latest technology design and developments. The case of next generation IC design, future technologies, new product development, client operations and advanced technology managerial skills are always defined by Silicon Valley. That’s why the author ends by saying that new Argonauts will always remain vital for regional economic development; this is related to the fact that they carry with them most advanced knowledge and learning experience.

A Review by Rajiv K. Mishra, Research Student, Center for Studies in Science Policy, Jawaharlal Nehru University, New Delhi. He may be contacted at: "Rajiv Mishra" <[email protected]>, 

Keywords: Argonauts, New Argonauts, Clusters, Networks, Semiconductor, Ethnic, Sourcing, Out Sourcing, ICs


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