This phenomenon has been fairly well studied in the academic literature, and you can sum it up to a variety of factors including productivity from co-location (

This phenomenon has been fairly well studied in the academic literature, and you can sum it up to a variety of factors including productivity from co-location (Skype just won't cut it in some circumstances!), capitals flows (VC funding is only located in certain places), and other fuzzy things like quality of life and access to similar people. The emergence of "technopoles" led Richard Florida to call the globe not "flat" but "spiky." Consider also the case study of complex geographies and languages (not English!) in Brazil: http://codingplaces.net http://codingplaces.net [full disclosure: Takhteyev was on my PHD committee]