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When tech brains depart Silicon Valley

Economic geographer AnnaLee Saxenian says the migration of Silicon Valley's "New Argonauts" speaks volumes about wider changes in techdom.

Technology expertise that's migrating overseas isn't brain drain. It's brain circulation, according to AnnaLee Saxenian.

As the dean of the School of Information at the University of California, Berkeley, Saxenian's got an eye for how information flows over computer networks, within organizations and between people.

Saxenian, a self-described economic geographer, charts the circulation of ideas in the global technology community in her book "The New Argonauts," which was published by Harvard University Press this spring. Specifically, she hypothesizes that immigrants from Taiwan, China, India and Israel who were trained in the United States as engineers moved to Silicon Valley in the 1980s and 1990s and then back to their respective homes to cross-pollinate cultures and industries.

Saxenian, 51, joined the School of Information Management at UC Berkeley as a professor in 1995, shortly after the specialty school was created as one of the first in the country to combine library and computer sciences. In 2004, Saxenian, who holds degrees in economics from Williams College and political science from the Massachusetts Institute of Technology, was asked to become dean.

During her two years as dean, the program has evolved to take a multidisciplinary approach to education. CNET spoke to Saxenian about her theories and her idea of what it means to be a technology professional in today's world.

Q: Who are the New Argonauts?
Saxenian: These are people coming to the United States mainly in the past couple of decades for engineering graduate degrees. They are the best and brightest from places like India and China, and they've been sucked into the Silicon Valley labor market because it's grown so fast and absorbed so much skill.

It's a massive transfer of talent in a way that creates new opportunities for new regions.

They have been marinated in Silicon Valley and learn how the start-up culture works here. Then they started going back to places like Taiwan, India and China to start companies, or maybe set up a development lab or work with policymakers to set up venture firms.

But they also do something different. They go back to their own counterparts, people they might have gone to high school with or grew up with, who are now running high-tech companies or running the government in those places. Then they share ideas. This is the brain circulation.

What are the advantages of this kind of cycle?
Saxenian: The pluses are these are regions that have historically been peripheral. And this allows peripheral regions to enter the global technology economy very quickly. They link into the production networks of suppliers of components and software that eventually turn into leading-edge technology products.

For example, we see Israel providing security and networking software now. There's also been a shift from Taiwan, a Silicon Valley sibling. It started out in the 1980s providing low-cost assembly and manufacturing, and over time became a Silicon Valley partner because companies there innovated in process and manufacturing to such an extent that their expertise is unparalleled in the world now.

It's a massive transfer of talent in a way that creates new opportunities for new regions.

Can you give me an example of an Argonaut?
Saxenian: From Taiwan, Ronald Chwang. He came to Silicon Valley after getting a graduate degree in the United States and began working for Acer in its early days. His career started in Silicon Valley, then he worked in Taiwan, then came back to run Acer. Now he runs Acer Technology Ventures. His career really spans both regions.

People with basic programming, software skills aren't going to find work. Those jobs are gone. Now you need to bring in specialty design know-how.

Min Wu, who came and worked first at Intel and then various semiconductor companies, started a company in Taiwan. But he kept a development center here. He's a classic example.

There are large numbers of people in China, especially in Shanghai, who started in the U.S. semiconductor industry, but who are now doing chip design or manufacturing business here.

How has this affected the United States?
Saxenian: It's obviously forced the U.S. economy to adapt because essentially if you look at the globalization process, in the late '90s, we had tremendous shortages in technology expertise. That's when these New Argonauts came in to do this work--programming, software development and so on. Then when they set up activities in their own countries, the first motivation here was finding skill. But that's meant that there's a whole layer of jobs that disappeared from the United States. Really, that's forced us to move up market in this industry, meaning that people with basic programming, software skills aren't going to find work. Those jobs are gone. Now you need to bring in specialty design know-how.

I believe Silicon Valley has gone through booms and busts before, and each time it's been forced to adapt. I would say that as in the shift from semiconductors to PCs, then from PCs to software, then from software to the Internet, we're seeing a new generation of Internet-related business, moving beyond the first-generation companies like eBay, Amazon and Yahoo to providing content to mobile devices, new forms of search, and so on.

What makes for a thriving technology community like Silicon Valley? Is it government incentives, cash resources or access to engineers and universities?
Saxenian: It is certainly not government incentives. Silicon Valley has evolved over the past 40 years to be a rich community of skill and social networks that allow people to come together, come up with new ideas, and implement them very quickly.

Because you have a deep base of technical skill, marketing capital, managerial skill that's been around, you also have an ecosystem of suppliers--everything from legal, design, banking, venture capitalists--so if you come up with an idea, like a new mobile media, you can pull together a team faster than any other place in the world. That's a product of learning in a community, and it's very hard to replicate.

In your mind, what comes close to Silicon Valley?
Saxenian: These new regions, Taiwan, Bangalore, Shanghai, they are extensions of Silicon Valley. This happens from people with deep roots in Silicon Valley, and then they take with them elements of the Silicon Valley business model--the start-up culture, the venture capital, the idea of minimizing hierarchy and creating more open organizations, which is often alien in places like India and China. Those economies have been dominated by family run firms or state-supported enterprises. And they're not creating head-on competitors to Silicon Valley; they're creating linked partners.

Those places look like hybrids, a cross between Silicon Valley and domestic institutions. They're similar, but they don't have the accumulated know-how and talent there.

The brain drain doesn't need to be a one-way process, largely because the technology created in Silicon Valley allows for much cheaper communication.

We have tremendous assets here we overlook--like the U.S. capital market, which allows investors to exit from deals quickly, the U.S. legal system, which is more reliable than the rest of the world. The technology capital of leading-edge researchers is still far ahead of other parts of the world.

Why do you think developing countries like India and China shouldn't worry about brain drain, when their young people immigrate to the U.S. to study and work in tech?
Saxenian: What we've learned is that, today, for the first time in history, the brain drain doesn't need to be a one-way process, largely because the technology created in Silicon Valley allows for much cheaper communication. You could have a team half in Taiwan, half here, and they could talk real-time over IM and it's cheap. It's easy both to travel and communicate across great distances.

It's really opened up for peripheral economies like China and India because rather than simply losing their best and brightest--the old idea of brain drain--now those people come home to connect places like India and China to a global technology production network.

Doesn't technology globalization harm engineers in the U.S. by taking away their jobs?
Saxenian: There is certainly some displacement in this process. It means U.S. engineers need to have a more diverse skill set than they've had in the past. But labor markets in the last couple of years have tightened up again, meaning that now people who were displaced are being absorbed back into the market. That earlier job loss was not permanent.

All of the low-end processing has moved to places like India, but the United States has been able to hold on to its advancement by defining new technologies, new architectures and new markets.

What would you advise engineers starting out today in the face of technology work force globalization?
Saxenian: I would advise them to be sure to get a broader training than simply programming and engineering. They need to increasingly have an understanding of working with multicultural teams and be able to understand the social components of the products they're developing.

If you're building a search engine today, you need to understand the human interaction with that search engine. In the second half of the 20th century, there was a technology push, and people didn't pay attention to the user. Today, you need to understand how people will react to the products.

What would you advise entrepreneurs starting out today about where to set up their companies?
Saxenian: Entrepreneurs should start companies in the market that they understand. If an entrepreneur is staring a business that will provide low-end handheld devices that will be used in China, then they should set up in China, and maybe do some research and development here.

The classic example, which was best based in the United States, is the iPod. The price point is not accessible by people in developing economies. Doing the design, architecture and the customer interface is better near the final customers. But the components came from Taiwan, because there it's more efficient.

At Berkeley, you're helping to define and develop a new generation of information professionals. Who are these people?
Saxenian: It's not just about having technical skills anymore; it's about management and understanding customers better and developing products that meet and define new needs.

So the new generation of information professional understands software programming and back-end development, and they're trained in understanding the legal and business environment. They're required to take product management classes and social science, too. Ours is a very multidisciplinary program--with connections to computer science, social science and anthropology, as well as the business school and the law school. We believe those types of people will add the most value in the coming decades.