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The success of California lays on the San Andres fault

21 August 2006

Everybody knows Silicon Valley or Hollywood. They are the best examples of innovative places and there are hundreds of attemps to copy their success around the world. But these attemps are aiming at the wrong direction, because they can not copy the very reason of the success.

California is nowadays one of the most successful regions around the world, being the cradle and headquarters to companies like Paramount, Cisco, Sun Microsystems or Apple, to mention a few. Economists have rushed to explain what is so special about it. They explain that Silicon Valley is a “Cluster”, a “Technology District”, or “Technopole” among others. All these terms describe a geographic network of suppliers, providers and education centers that can benefit from being phisicaly close in a geographic area: there is a knowledge transference, they have similar needs of infrastructures and supplies, and it creates a network among them.

Having successfully explained what it is, many have been the attempts to copy them. Governments have poured money and financial help to create universities, attract companies and the best brains. But none of them have become as important as the California ones – well, Bangalore and Bolywood in India have done quite well-. This is because what Economists are not aware that there is one factor that they can not reproduce. This factor is what has made of California as it is now and, at the same time, its single major threat.

Iain Stewart, a PhD in geology has an interesting theory. He is one of those scientists turned communicators by the BBC documentaries. I have had the chance to see a few episodes of Journeys from the centre of the earth and Journeys into the ring of fire. They are really worth watching.
In the latter series, he explains that California lays on the San Andres fault. As you know, the surface of the Earth is divided in plates. The fault is the place where two of them join. And the Pacific plate and the American join just underneath California. The movement of these plates creates earthquakes… and it is the explanation for the presence of gold in the Californian mountains.

When in 1848 the “Gold Rush” started, caravans of people travelled to California looking for gold. These were “risk takers”, those who are willing to take risks in order to get a high reward, in opposition to “risk adverse” people, who prefer lower rewards but more secure.

San Francisco was a little tiny town at that moment, and increased its population 30 times thanks to these gold rushers. But also by all the rest who saw an opportunity to do business with those looking for gold, like a guy called Levi Strauss. When the Gold Rush dissappeared, again the rocks gave another incentive for the risk-takers: the moves of the San Andres fault had trapped in the Californian underground another kind of gold, Oil.

When the oil ceased being a source to make money, California had already become home for people willing to take risks in anything that could seem a good opportunity. And this is how somebody decided to invest in cinema and silicon chips.

Obviously, it is hard to argue that today’s success is due to the earthquakes, but the History of California implies that sometimes, the main factors of a successful economy lay on the most unexpected causes. In this case, the risk-takers that first populated California stated an attitude towards business and opportunities. This created an inertia, and still today, anyone who wants to take risks and explore opportunities will consider moving to California. So what makes a difference between these “clusters” and the rest is the attitude of people… and the rocks.

* “Clusters” by Malmberg and Maskell, “Technology Districts” by Storper, “Technopoles” by Castells and Hall

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