Why Are Some Cities More Entrepreneurial Than Others?

When one city has the smallest possible benefit to entrepreneurs that it's worth moving there, it will gain huge benefits over time (cumulative advantage). New York was smaller than Philadelphia, Boston, Charleston, and Baltimore when the colonies were primarily trading with England, but when internal trade grew, New York's larger, deeper harbor and the fact that its river connected it to its hinterland made it the logical depot and it quickly outgrew the other cities. People were making cars lots of places for decades before Detroit gained the production, materials, suppliers to become the place to build cars. Phoenix, Boston, Texas, New Jersey and SV all had transistor and electronics technology, but Fred Terman and William Shockley were enough to turn one of those into a global power.

Now, the connections, ideas, investors, and labor pool mean that SV has a much bigger advantage than any other place when it comes to web tech. You can either do it where you are, where your personal connections matter, or you can move to SV. Few people that don't go to school there even move to Boston to start companies. No other city (anyone from Austin, Seattle, or Boulder want to correct me?) has people move there to start a company. Maybe they move there for a job and start a company later, but if you want to move to help you start a tech company, there's only one place to move to.

Key quote: "An abundance of small, independent firms is, along with January temperature and share of the population with college degrees, one of the best predictors of urban growth." References cited:

Abundance of small firms: http://www.economics.harvard.edu/faculty/glaeser/files/Clust...

Jan temp: http://www.economics.harvard.edu/pub/hier/2007/HIER2135.pdf

College Degrees: http://www.economics.harvard.edu/pub/hier/2003/HIER2025.pdf

"If the self-employment rate captures entrepreneurship, then West Palm Beach is by far the most entrepreneurial place in the country and the San Jose metropolitan area, that home of Silicon Valley, is one of the least."

So is self-employment rate a poor gauge of entrepreneurship, or is Silicon Valley less entrepreneurial than we tend to think and West Palm Beach more so? Are all the people working for other people's companies in Silicon Valley really as entrepreneurial as they think they are?

I was a bit reticent about posting this since economics articles tend to lead to flame wars, but it is interesting, and based on research, and doesn't have much in the way of policy/politics. Flag away if you don't think it should be here.