Creating new “high-tech clusters” was a growth business in the 1990s. Government policy makers and executives looked to Silicon Valley for the “magical cocktail” to jump-start the virtuous cycle of entrepreneurship, innovation, growth, and global leadership. Hyperbole about the new economy, declining barriers to entry, network effects, and how the Internet changed everything thus propelled an explosion in top-down, government-directed regional and national policies designed to build the next Silicon Valley. Despite billions of dollars in subsidies and focused public policy attention, the results of these efforts have been mixed. Taiwan is a global leader in personal computer (PC) components and in integrated circuit manufacturing (Saxenian 1999). Singapore has emerged as the Asian hub for hard disk drive manufacturing and process design (McKendrick, Doner, and Haggard 2000). India and Ireland have had mixed results – the success in building strong services and localization capabilities has not been matched in building globally branded firms capable of capturing significant producer rents.

Scandinavia's achievements in wireless telecommunications is largely viewed as a “cluster” success story. Scandinavia is home to two of the leading firms in wireless hardware, Ericsson and Nokia, each with more than 30% of the global market in its core business (infrastructure and handsets, respectively). With the highest wireless usage levels in the world, the region's carriers have also been in the vanguard of firms developing wireless data software and services.