Policy makers around the world are anxious to find tools that will help their regions emulate the success of Silicon Valley and create new centers of innovation and high technology. Unfortunately, although we have learned a great deal about firm clustering, the composition of Silicon Valley, and the various components of successful high-tech regions, we know little empirically about the effectiveness of activist policy interventions. The list of potential policies is long and cannot all be examined in one essay. This chapter examines two common policy approaches intended to generate regional technology growth. Some regions create public venture capital (VC) funds – direct government subsidies for small high-tech firms – to stimulate entrepreneurship. Other regions (or, sometimes, the same regions) build science parks to lure high-tech firms.

These approaches remain popular around the world. The International Association of Science Parks currently has members in 49 countries outside the United States. And while some parks are quite small, others represent significant investments. Hong Kong, for example, is spending more than $2 billion to develop a research and technology park (Cheng 1999). Malaysia recently opened a planned, 7,100-acre, high-tech region, Cyberjaya. Public venture capital funds, meanwhile, have been established in several Asian countries, while European Union (EU) nations are increasingly turning toward direct subsidies of small, high-tech firms. The United States witnessed large growth in both science parks and public venture capital in the 1980s, making it possible by now to investigate their effects empirically.