The venture capital state: the Silicon Valley model in east Asia

Abstract

Milton Friedman famously said: ‘If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand’ (p. 11). The venture capital state offers high-powered ammunition against such neo-liberal attacks on the state. It argues that even quintessential neo-liberal bastions like Silicon Valley have been the result of the visible hand of the state. It is an important contribution to scholarship on entrepreneurship and venture policy along the lines of Josh Lerner's seminal Boulevard of broken dreams (Princeton, NJ: Princeton University Press, 2008). The book's premise is threefold. First, venture capital (VC) markets have not sprung from a free-wheeling market bedrock. In the same vein as Linda Weiss's American Inc.? (Ithaca, NY: Cornell University Press, 2014) and Mariana Mazzucato's The entrepreneurial state (London: Anthem Press, 2013)—both accounts of the instrumental role of the state in advancing the American technology sector—Klingler-Vidra argues that the state intervened to foster venture capital in Silicon Valley. Moreover, governments have deployed tax incentives, investment and regulatory reforms to fuel its internationalization. She makes this assertion based on a proprietary covering from 45 countries, and through deep case-studies of Singapore, Hong Kong and Taiwan.