Why can’t we all have a Silicon Valley?

Jane Marceau, University of New South Wales and The University of Sydney

Margaret Pugh O’Mara Cities of Knowledge: Cold War Science and the Search for the Next Silicon Valley Princeton, Princeton University Press, 2004 (298 pp). ISBN 0-69111-716-0 (hard cover) RRP $84.95.

Since the late 1990s policymakers in most OECD countries have been looking for ways to maintain the employment that underpins the wealth of their countries’ citizens. The 21st century ‘knowledge era’ promises that science will kick start new industries and refashion older ones. In this vision of the future, economies will no longer rely on steel and ‘rust belt’ industry. IT and biotechnology are keystones of the ‘new’ industrial order, the ‘clean’ and ‘knowledge-based’ engines that will drive both economies and societies.

In Australia, as in other OECD nations, the search for the policies to fuel this engine of industrial renovation has taken a more and more central place in industrial development strategies, in higher education reform and in expectations for the ‘engagement’ in our cities (OECD 2001). Travels around the industrial districts of Italy and visits to Silicon Valley, Route 128, or the North Carolina Research Triangle in the United States have provided policymakers with models that seem to exemplify the desired future. Australian policy makers frequently emulate others’ approaches, taking this ‘safe’ option when venturing into the difficult waters of industrial and educational planning. A few years ago the original Danish networks policy, for example, was adapted wholesale in a federal industry department program, down to the number of dollars allocated. The government’s recent adoption of ‘cluster’ approaches, this time based on perceptions of US experiences, seemed to promise similar returns on investment in land (for example, in technology parks), research, and new firms.

Margaret O’Mara’s book shows how very far from simple was US experience when dissected in detail and how very hard it was in reality to emulate Silicon Valley/Stanford success even for other American cities. This is a very interesting book. And a very timely one. It is refreshing to read a book with the historical perspective that policymakers and analysts alike too often lack, although it would have been even more interesting and relevant if the history had brought the reader closer to the present day. And what a relief to get below the spin currently spread by Australia’s politicians and universities that they are pioneers in university-industry engagement. Cities of Knowledge has several lessons for Australian policymakers. It shows that there is in this field, as in so many others where we seek to emulate other experiences, no single right way.

Cities of Knowledge is about the United States. We now need a similar study of Australia to look more closely at the particular circumstances that have shaped our university-industry development and that can support home-grown policies for the future. Relations between university-industry-government players in the ‘Triple Helix’, as it has become known, are extremely complex (see, for example, Marceau 1998) and both analysts and policymakers are learning as they go.

Research, real politic, real estate and urban realities

O’Mara shows that higher education institutions and their science alone will not automatically produce the wealth, the spatial patterns, and the industrial technologies associated with the Silicon Valley holy grail. Universities and cities might build technology parks and link laboratories to companies and scientists to market forces, but success is not guaranteed. That alone is a useful lesson for us. But the book does more—it links iconic local geographical, research, and industrial development patterns firmly to the defence policies of Washington’s Cold War. It also shows how local differences in the relative power of the players and the socio-economic circumstances of city locations have shaped how cities of knowledge do or don’t develop.

What a relief to get below the spin.

O’Mara begins by explaining how Cold War politics shaped American cities and the success and location of new science-based high tech industry, particularly electronics, between 1940 and 1965. She goes on to examine why the role of universities in their communities changed, and how the concept of ‘community engagement’ emerged. Research universities gradually agreed to accept the new charge of public responsibility for economic development and this both changed universities and gave them unprecedented opportunities for expansion. In showing how this happened, O’Mara also asks the spatial questions: why did new high tech industry grow in the suburbs and how did the ‘suburbanization of science’ come about? Why did high technology thrive in certain places and why have these regions proved so hard to replicate? She suggests that the answer lies in links between the politics and economics of the Cold War, the spatial reorganisation of American industry, and particular interactions between powerful knowledge institutions and their local environments. She shows that the well known high tech regions did not result from fortuitous combinations of capital and entrepreneurship—rather they are ‘cities of knowledge’, consciously planned communities shaped by forces derived from a political and cultural moment in the relationship between the state and civil society (p. 1), a relationship itself shaped by the needs of a war-oriented economy. The City of Knowledge, O’Mara says clearly,

was a creation of the Cold War, whose policies and spending priorities transformed universities, created vibrant new scientific industries and turned the research scientist into a space-age celebrity. And it was a product of the suburban age, when economic realignments, demographic changes and public subsidies transformed patterns of living, working and economic opportunity. Suburbanization created ideal environments for science to grow and prosper … away from the distractions and disorder of the changing industrial city. The Cold War made scientists into elites and mass suburbanization reorganized urban space in a way that created elite spaces (p. 2).

Cities of knowledge did not just spring up anywhere; they favoured the affluent postwar suburb. Power, politics, and people thus take centre stage in the analysis.

American research universities were at the heart of this process, O’Mara says, acting as economic development engine, urban planner, and political actor. The government-university relationship that emerged from Cold War politics gradually turned universities into land management and economic development agencies in various conjunctions with state, federal, and local actors. America’s leadership of the Cold War greatly stimulated federal spending on research and increased regulation of industrial spaces. The success of the Soviet Union in launching the space race and especially the moon landing sparked a determination in the United States to match these developments as part of the defence effort and to maintain the strong economy on which America depended for Cold War success.

Why did high technology thrive in certain places?

The decentralisation of industry to the suburbs coincided with the growing racial disturbances and urban renewal problems in the cities for which the United States became notorious in the 1950s and 1960s. Suburbs came to be places where ‘desirable’ professionals could both live and work, educate their children, and use their cars to move between living and work places that resembled college campuses more than industrial spaces or down town high rises. In turn, these largely white, low-density, professional communities proved fertile ground for scientific development and its industrial applications. These suburbs became the heart of cities of knowledge even though they were mostly far from the geographical centre of the cities with which they were often associated. The new areas were seen as classless (middle class), as good real estate investments, and as safe havens for families as well as providing both work and residential amenities.

The second part of the book presents three case studies of how these forces played out in different city environment and examines the importance of implementation and its context to the final outcomes of industry-university-city spatial interlinkages.

The relationship between politicians and scientists was close during the period O’Mara covers. Politics created both a new industrial spatial map and a new political order in which scientists had new status. Scientists came to be seen as the key to the production of both new weapons and a new industrial world that would underpin the economic success of the United States and the West. Critically, university planners and leading scientists, working together with federal and some local politicians, built the institutional framework within which certain geographic areas became the most economically attractive locations for scientific activity. As O’Mara tells the story, in less than twenty years, the top American research universities went from being institutions with few research funds to being central actors in the new environment. The change of mission came about not only through large public programs but also through close but low profile relationships between key players. Working through local policy implementers, she implies, enabled a strong state to masquerade as weak and to maintain the rhetoric of entrepreneurship and individual local initiatives while in reality careful planning was the key to successful local development.

On the university side, politics were also at the core. Battle was locked in decisions about the distribution of the increasingly enormous federal research funds. In an action not unfamiliar to observers in today’s Australia, elite US universities initially argued against some legislators’ wish to broaden access to federal research funding on equity grounds; instead, a coalition of military officials, industrial researchers and scientists from elite universities argued that the country was best served by leaving scientific research policy in the hands of the ‘best men’ and best laboratories rather than dissipating scientific projects and talent over too wide a range of more middling institutions (p. 27). This argument was ultimately lost, it is interesting to note in the light of the current push in Australia to restrict public research funding to institutions already research-intensive.

Politics created a new political order in which scientists had new status.

The stage on which universities played and how they played thus changed. To win federal resources, universities discovered the need to be more entrepreneurial, to have permanent representatives in Washington, and to adjust their academic orientations. The patterns of power, O’Mara states, and the competition they engendered among universities for prestige and resources had a critical bearing on the eventual geography of scientific production. In short, because science became the domain of elites, science-intensive places came to be elite as well (p. 28). And some rapidly became more elite than others. Strong universities further strengthened their position through public funding, their strength allowing them to maintain their independence through access to corporate funds when the public ones reduced. The shift did not happen with the support of all participants, it should be noted, with many scientists reluctant to be involved with defence projects they considered unethical.

In parallel, on the industrial side, for reasons of national security, Washington promulgated a policy of industrial dispersion. The Defense Department specified the location of contractors and in doing so also ordered that new facilities must be capable of rapid expansion as needed. This often meant that the emerging suburbs, created in part through the simultaneous flight from the cities by professional families, were the most favoured by the science-based industries undertaking critical research. The government’s expansion program for these industries was expected to reach $5.9 billion dollars, an almost unimaginably enormous sum for the time, a monetary inducement completed by new tax concessions and an extensive public relations campaign. The result was that by 1957 federal funds made up 61 per cent of electronics industry R&D, 54 per cent of R&D in the communications industry and 30 per cent in the professional and scientific instrument sector: manufacturers of specialised electronics equipment and other sophisticated technologies were in many cases kept afloat entirely because of military R&D grants. Many of these industries were the basis of the successful suburban regions now seen as Silicon Valley and its counterparts in other locations.

The case studies: success, partial success and delayed success

In the second part of the book, O’Mara analyses three cases of successful or attempted creation of ‘cities of knowledge’, of urban and industrial development with universities at their heart. The first and only really successful one is Stanford, the second and third are the much more difficult cases of the University of Pennsylvania in Philadelphia and Georgia Tech in Atlanta. Nowadays everyone with an interest in industrial development and the rise of the ‘new economy’ knows something about the Stanford (Silicon Valley) story. In this sense, the book offers little totally new but in Australia the story is often retold, highly simplified, by policymakers always searching for policy models and seeking the holy grail of high tech, low pollution, politically non-controversial industrial development. Their simplified story is that a gifted Stanford leader developed high level research and engineering faculties which led to entrepreneurial development close by. Somewhat more developed versions of this story include the fact that US defence funding was somehow important.

The first and only really successful ‘city of knowledge’ is Stanford.

The reality is, of course, more complex and much more chancy. The heart of the story, as O’Mara tells it, is first one of real estate: a large farm gifted by a local millionaire for cultural purposes in an area then little developed. The university used its resources to obtain enormous amounts of defence funding (including for biological and chemical weapons development) to build a tremendous research base and its administrators linked their institution’s knowledge work to real estate development for industry and the professionals fleeing city problems. Stanford’s land was located near vital defence facilities and was economically desirable, placed as it was in one of the nation’s fastest growing and most affluent suburban areas. Control of that development by the university enabled a successful mix of residential and industrial uses by ensuring high architectural standards and well-landscaped buildings while Stanford’s intellectual champions generated much of the new knowledge that spun off into the new firms that created local wealth.

The other two stories O’Mara tells show the difficulties of imitating the Stanford model even in the United States and are of great relevance to Australian policymakers trying to push universities into trying to create new Silicon Valleys. The cases of U. Penn and Georgia Tech highlight the critical importance of high levels of federal funding and a favourable overall industrial and urban policy/political framework on one hand, and the difficulties of implementation in different geopolitical local circumstances on the other.

In the U. Penn case, over the period considered, the university consciously developed great strengths in science and medical research. It sought to create around itself a ‘community of scholars’ in which teachers, researchers, and associated professionals would live and work locally as they were perceived to do in Silicon Valley. U. Penn, however, was located in a highly populated, poor, black segment of town rather than an empty suburb, and it became engulfed in disputes about the urban renewal required both for expansion of the research and teaching facilities and for fulfilling the desire to transform the nature of the neighbourhood. The university’s own student activists prevented much of what the university administration wanted to do, by highlighting the implications for the original poor black residents and energising opposition.

In the end, U. Penn was partially successful, although it still has not created the community of local scholars originally planned. Importantly for O’Mara’s argument, U. Penn is a private university and was able to write many of the rules that underpinned the success it did obtain. In other places, state-funded institutions were not able to develop the close relationships with local politicians and powerbrokers that U. Penn had brought round to its overall cause.

In the other case O’Mara presents, that of Georgia Tech in Atlanta, the situation was even less favourable to the development of a ‘Silicon Valley’. The central university is a public institution, dependent on the vagaries of state funding, and ‘saddled’ with a brief to consider the interests of the whole state and not just those of the city of Atlanta. As a result, its administrators had not developed the close relations with city authorities that Penn had while its location in the city engendered the same difficulties with large scale urban renewal problems and industrial dispersion as had the developments U. Penn had planned. Georgia Tech took longer to develop research strengths and attract the attendant federal funding and long remained a weaker intellectual institution with fewer links to its city region. Atlanta, moreover, had a different set of local politicians and more real estate developers who were the effective planners and less in tune with university needs than those in Philadelphia.

Federal governments are not giving out large amounts of money for research.

Interestingly, a longer view than that O’Mara takes would have shown that Georgia Tech has more recently succeeded in becoming both a major science university and one that plays a very active role in local development (see, for example, Western Australia Technology and Industry Advisory Council 2002). The importance of the time period selected seems critical here and it is also worth noting that the state government now plays a very considerable role in funding/facilitating links between Georgia Tech and local industry.

Lessons for the United States and Australia

So what are the lessons for those of us in Australia who are interested in the potential of science as a development tool and in the position of universities as public intellectual agencies? O’Mara states that the lessons on replication for the United States are clear: the geography of high tech industry in America is neither an accident nor a simple process such that its essentials can be translated into new areas. Lesson One, she says, is that, to be successful, you need a lot of money. And money follows money. In the course of the later 20th century in the United States, the sources of funds for high tech development shifted from the federal government as consumer purchasing finance kicked in when tools originally created for the military became mass consumption items and venture capital took over investment in emerging science fields. Venture capital, however, goes where the action already was, to the very same places that had developed from public funding over several critical decades.

Lesson Two is that you need a very powerful university. Successful cities of knowledge in the United States have strong research universities at their centre. Internally, these institutions have the research capacity to attract both public and private funds (as public funds have declined, corporate alliances have become critical) and the resources and willingness to embrace corporate partnerships. Externally, they have the necessary political clout, underpinned by the institutional ability to play a leading role in local economic development.

The next lesson has major implications for many universities seeking to make themselves the centre of cities of knowledge and speaks directly to planning agencies. Lesson three is that you need control over land in the right location; in short you need control over the development of large parcels of land in locations desirable to middle class professionals.

In Australia it is hard to see how these prerequisites are to be achieved. Universities seldom own large parcels of undeveloped land and most state governments have increasingly divested themselves of their own land banks. Universities on the edge of cities, such as that in western Sydney, do own land but are scarcely large and powerful, research-rich organisations. They certainly have less clout with the federal government than do their more research-intensive colleague institutions.

And federal governments are not giving out large amounts of money for research. The funds they provide for new science is almost derisory in most fields and more general federal funding for universities has fallen consistently in recent years. The federal government has thus required that universities in Australia miss out on the public sector development route. Instead, they must compete for corporate funds in a country where corporate giving is by no means well entrenched. And the large firms that are the core of the economy are almost all foreign-owned and so more interested in the R&D they conduct near home than in supporting local initiatives. In New South Wales at least, state governments are not taking up the slack, although Victoria and Queensland are currently more generous and have local development policies that critically incorporate university partners and science-based initiatives.

There are trade offs between economic and social goals.

Lesson Four is that you need to make high tech development the end, not the means. This somewhat more complex lesson suggests that it is only universities that focus totally on creating science research and high tech industries for themselves will succeed. Those that seek to use their knowledge for other community aims, such as the reduction of poverty, dissipate their efforts and get enmeshed in the local and national politics of welfare and community demands. This lesson suggests that there are trade offs between economic and social goals.

The existence of these trade offs brings us back immediately to politics and policies, and so to electoral realities. It is not clear that in Australia voters (yet) care enough about high tech industry, or even about their universities, to allocate them the priority in spending taxpayer dollars that seems to be needed. While Australia in the 21st century is not the United States in the half century following the Second World War and the Cold War is now behind us, O’Mara’s examples do suggest that the search for simple and unified policy solutions here needs to be fundamentally reconsidered. Each area, industry, city or regional site has specific political, social and economic characteristics so that each must be seen as a new and different case. Most Australian policy makers, whether focusing on industry or city development, seem to have forgotten that effective policies must take careful account of local history, industrial and intellectual, and socio-economic characteristics. Policy flexibility is essential.

In Australia over recent years, as in many OECD nations, a new justification for public university provision has emerged: the increasing ‘engagement’ of universities in their local communities with the dual aim of developing financial and economic partnerships to mitigate the universities’ financial difficulties and provide better public support. This ‘engagement’ lies behind much rhetoric about closer university-industry-community relations but seldom directly involves state or urban policy makers in strategic development of knowledge institutions, let alone knowledge cities. Currently, the federal government seeks ever greater control over the research and education systems while preaching diversity and engagement with economy and society without providing the funding and other policy tools. And universities in Australia are much weaker and less well-endowed institutions than are private American ones, wherever they are located. Finally, industry gives little money for research in universities in Australia as the 2003 DEST report on Australia’s innovation system shows—only 4.9 per cent of funds spent on R&D in the higher education sector came from business in 2000–01 (Department of Education, Science and Training 2002, p. 364) while city planners and their political masters seldom think, in some states at least, of universities as catalysts for social gains.

Different social and economic structures and circumstances require local policies, adapted to their environments, backed up by supportive national directions in which industry and education both figure. O’Mara shows how contingent university-industry success has been in the United States. In Australia the success factors will be equally contingent. In a small country, with few non-governmental research resources and scarce public funding, policy makers and universities alike could usefully focus more on collaboration and sharing of skills and resources, whether these be land, political influence or the researchers themselves, than on inter-institutional or inter-state competition. As in the United States, however, planners of cities and the governments behind them still need to learn a lot more about how their local knowledge institutions function, just as these institutions need to understand more about urban planning politics and policies. Separation between urban planning and knowledge planning is clearly no longer an option. Federal policymakers should stop relying on resource scarcity to push major behavioural change in the nation’s knowledge generation and transmission systems.


Department of Education, Science and Training 2003, Mapping Australia’s Science and Innovation, Canberra.

Marceau, J. 1998, ‘Triple helix relationships in a national context’, Industry and Higher Education, August, pp. 251–258.

Organization for Economic Co-operation and Development (OECD) 2001, Cities and Learning Regions, Paris.

Western Australia Technology and Industry Advisory Council 2002, The Organisation of Knowledge: Optimising the Role of Universities in a Western Australia ‘Knowledge Hub’, Perth.

Jane Marceau has worked in universities in Australia and overseas and has been a frequent policy consultant to governments. She worked some years for the OECD on education and local economic development before setting up the Public Policy Program at the ANU. From the mid-1990s she was Pro-Vice Chancellor (Research) at UWS and simultaneously directed an industry innovation research unit there. Since retiring from UWS in 2004 she has since worked on the NSW government’s Metropolitan Strategy for Greater Sydney as an industry and employment expert and undertaken some international consulting on science policy. She is currently an Adjunct Professor at UTS (in ICAN) where she pursues her industry-related research and in both the Planning Centre at The University of Sydney and the Faculty of the Built Environment at UNSW where she pursues her interests in planning and urban development.