“… policymakers shouldn’t be trying to copy Silicon Valley. Instead, they should be figuring out what domain is (or could be) specific to their region—and then removing the regulatory hurdles for that particular domain“.
An interesting article in Politico Magazine by Marc Andreesson this past weekend “Turn Detroit into Drone Valley“. While the Academic Entrepreneur is not a particularly big fan of drones, Marc’s point was well taken: differentiation amongst regions based on regulatory frameworks. The actual easing of regulations and creation regional competitive advantage and lead to clusters of innovation.
“There’s a key difference from the if-you-build-it-they-will-come argument of yore. Here, the focus is more on driving regulatory competition between city, state and national governments. There are many new categories of innovation out there and entrepreneurs eager to go after opportunities within each of them. Rethinking the regulatory barriers in specific industries would better draw the startups, researchers and divisions of big companies that want to innovate in the vanguard of a particular domain—while also exploring and addressing many of the difficult regulatory issues along the way.
Why this approach? Compared with previous innovation-cluster efforts where governments contrived to do something unnatural, this proposal flows from what governments naturally do best: create, or rather, relax laws.
Another advantage of this approach is that it’s a way for clusters to differentiate from each other and successfully compete for resources. Think of it as a sort of “global arbitrage” around permissionless innovation—the freedom to create new technologies without having to ask the powers that be for their blessing. Entrepreneurs can take advantage of the difference between opportunities in different regions, where innovation in a particular domain of interest may be restricted in one region, allowed and encouraged in another, or completely legal in still another. For example, the laws and guidelines for using drones or taxing bitcoin already vary widely across the globe, just as they do for ride-sharing services across different cities in the United States.
But the biggest advantage of the 50-different-Silicon Valleys approach isn’t just in what it affords isolated regions or entrepreneurs—it’s in accelerating innovation everywhere. Removing regulations across different regions allows multiple innovation categories to advance together at once, in parallel, without being bottlenecked by time or place.”
And as an illustrative example:
“Imagine a Bitcoin Valley, for instance, where some country fully legalizes cryptocurrencies for all financial functions” – says Marc.
Yes imagine Scotland as the first true cryptocurrency state as discussed before in this blog. An ideal time and opportunity for the country to re-invent finance as we know it today, and possibly disrupt the entire system of central banking itself. A new cluster of an alternative currency industry could emerge that would lead to innovation around other aspects of the financial system and the emergence of new firms and even new models of banking itself. This would be a truly Scottish contribution to the global economy.