(1) that no government will successfully establish a startup hub What about the Pearl Delta and Shanghai's Pudong district? Both seem to be smashing successes

(1) that no government will successfully establish a startup hub What about the Pearl Delta and Shanghai's Pudong district? Both seem to be smashing successes. There are two very different types of startup. I don't buy that there is a hard distinction between different types of startups (or even between startups and small businesses). Any small business that tries to grow will create a differentiated offering. An ice cream shop might promote a special flavor, a restaurant will develop a certain vibe, a furniture company will create signature ergonomic chairs, a web form company will create an awesome UI, etc. The amount of uniqueness of the offering can be plotted along a continuum. When it passes a certain point, we call it a "tech startup". The special thing about Silicon Valley is that it attracts a ton of many smart, talented, ambitious people. Therefore the offerings of their businesses tend to be very novel and differentiated. The supply of brilliant innovators is limited so it is not necessarily possible to replicate this everywhere (but I am guessing the world is very significantly under performing its potential). Edit: Perhaps another way of saying this is: 1) A startup is a small business that attempts to scale by developing a new technique (that technique can be a product or a way of doing operations). 2) Different sectors of the economy have different opportunities for developing new techniques. It's harder to develop new techniques in agriculture than in software. 3) In the absence of high transportation costs, industries tend to cluster ( autos in Detroit, entertainment in Hollywood, finance in New York, energy in Houston, education in Boston, software in Silicon Valley). 4) Silicon Valley has a cluster of industries that natural have a high level of new technique development (software and electronics). Therefore Silicon Valley has many startups. That said, now I'm not sure I buy my own argument. Silicon Valley seems to have the most innovative companies in every industry. In addition to software startups, there are energy startups, automobile startups, etc. So Silicon Valley really is a cluster of companies that specialize in innovation. Perhaps the thing that limits the spread of Silicon Valley magic is that there are only so many innovative people, and only Silicon Valley has been able to attract a critical mass.