Krugman wonks out

So what I’m going to do today is offer a heterodox take on U.S. tech dominance. Almost everything I read focuses on things like excessive regulation in Europe, a financial culture that is willing to take risks and so on. I’m not saying that none of this is relevant. But one way to think about technology in a global economy is that development of any particular technology tends to concentrate in a handful of geographical clusters, which have to be somewhere — and when it comes to digital technology these clusters, largely for historical reasons, are in the United States. To oversimplify, maybe we’re not really talking about American tech dominance; we’re talking about Silicon Valley dominance.

Now, there are two big further questions here. First, to what extent does high productivity in a few geographical clusters trickle down to the rest of the economy? Second, is there any way Europe can make a dent in these U.S. advantages?