Overdependence in Silicon Valley on the Technology Industry

The purpose of this paper is to use the Audretsch framework to analyze the Silicon Valley economy in relation to place. A thorough literature review was conducted regarding its socioeconomics. Looking through the lens provided by David Audretsch, in his book “Everything in Its Place, Entrepreneurship and the Strategic Management of Cities, Regions and States”, (Audretsch, 2015) it was concluded that although a quick look at the economic numbers shows a robust economy, closer investigation reveals that several factors exist that currently render Silicon Valley vulnerable to economic collapse. In this paper, the following four problems have been identified, analyzed, and fitted solutions for each have been offered. (1) The industry is composed of high-risk startup ventures that tend to be volatile in nature, over-valued by investors and with a high rate of failure. (2) The high-tech industry does not create a high number of jobs, but rather high levels of wealth for relatively few people. (3) The possibility of a negative effect due to several external threats which are developing may affect the high-tech industry. (4) The non-tech, middle-wage industries such as manufacturing, construction, transportation, and consumer products are underdeveloped in the area and lack competitive innovations.