Silicon Valley Technology Hub

Silicon Valley is a region in Santa Clara County located in the southern part of San Francisco Bay. It is known as the global center for technology and innovation since it’s home to the biggest technology companies like Apple, Google, Oracle, Intel, and Facebook. In addition to being the home to the world’s biggest internet, software, and technology companies, Silicon Valley is considered a technology hub because it creates a center for innovative companies to be highly profitable.

Analyze How the Economic Concentration of Silicon Valley Was Influenced by Competition and Pricing

According to Christopher Carbone (2019), Silicon Valley produces $128,308 per capita in GDP annually. Its economic output is $ 275 billion, which is higher than the annual budget of most countries in the world. Silicon Valley’s economy is one of the strongest in the world because of its massive innovation and economic productivity. Despite it being a high-income low-poverty region, housing prices in the region are high, and unemployment rates are at an 18-year low, making it hard for a common citizen to live or establish a residence there. The highest economic expansions in the region are derived from technology and innovation. A large number of technology experts move to Silicon Valley with the hope of becoming successful, like Facebook and Apple.

Most startup companies need outside investors to acquire and retain assets. Additionally, startup companies also need exposure, all of which are available in Silicon Valley as tech investors look for startups to invest in from this economic concentration. This availability of resources in Silicon Valley attracts technological companies and startups into the region, which in turn attracts aspiring investors driving economic growth.

Silicon Valley also has a high demand for talented employees and tech engineers, which increases migration rates to the region. Talented experts from all over the world move to Silicon Valley, causing further developments in the area. In addition, the state of California has favorable policies for starting a business or a company encouraging entrepreneurs to set up shop in California. Unlike other states in America, California’s intellectual property laws cover trademarks, trade secrets, creator rights, license agreements, and legal information, which makes it easy to protect a new invention and company in the area (Davis, 2004). These developments increase competition and reduce prices for starting and maintaining a company in California, hence influencing the economic concentration.

Analyze How the Economic Concentration of Silicon Valley Has Influenced the Supply Chain

Tech companies mostly run the economy of Silicon Valley. The high concentration of tech-related companies attracts tech suppliers to set up shops and offer different tech services in the region. For instance, Hosting companies are more attracted to the area since most web developers, and tech experts need hosting services. Hosting your business infrastructure on a cloud service offered by a company next door gives a company more confidence to operate the business than partnering with a firm hundreds of miles away.

Analyze which of the 4 factors of production were the most and least important in determining the economic concentration of the area you chose.

The four main factors of production are land, labor, capital, and entrepreneurship. Entrepreneurship is the most important factor of production in determining the economic concentration of Silicon Valley. This factor of production involves the idea and motivation of creating a valuable good or service that people can buy (Hanink, 2017). Tech experts go to Silicon Valley with the hopes of improving and selling their innovation, which contributes to the economy of the region. Companies can buy, sell, or nurture new companies and ideas. Among the four factors of production, land is the least important factor of production to consider while determining the economy of Silicon Valley since it is constant and lacks room for improvement. Most companies in Silicon Valley don’t have physical products. Companies such as Google, Facebook, and Adobe, all located in Silicon Valley, have their final products in the form of computer programs and software. This form of products renders land as the least important factor of production in this economic concentration.

Predict changes you anticipate for the area of economic concentration you chose. Support your predictions.

The high immigration rate of tech experts to Silicon Valley creates a high demand for housing in the area. This demand strains the already low supply of housing in the area, causing the inflation of house prices.

Leasing Table

Retrieved 20 October 2020, from https://www.thinksiliconvalley.com/the-silicon-valley-economy-today-and-tomorrow-insights-from-jlls-director-of-research/.

As indicated by the table above, the cost of rent in San Francisco is one of the highest in the United States market. This shows that real estate will be one of the major changes in the region since the prices of leasing or renting a house in the area will keep rising. This lack of affordable housing in the area, coupled with high living costs, may discourage innovative startups from setting up shop in Silicon Valley and looking for a solution in other areas.

References

Carbone, C. (2019). If Silicon Valley were a country, it would be second-wealthiest on Earth. Fox News. Retrieved 20 October 2020, from https://www.foxnews.com/tech/silicon-valley-second-wealthiest-country.

Hanink, D. (2017). Factors of Production. International Encyclopedia Of Geography: People, The Earth, Environment And Technology, 1-2. https://doi.org/10.1002/9781118786352.wbieg0013

Quinn, A. (2019). The Silicon Valley Economy Today and Tomorrow: Insights from JLL’s Director of Research | City of Fremont. City of Fremont. Retrieved 20 October 2020, from https://www.thinksiliconvalley.com/the-silicon-valley-economy-today-and-tomorrow-insights-from-jlls-director-of-research/.

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