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Start-up town: Ben Casnocha describes how a quiet little hippie city, Boulder, Colorado, has emerged as a serious technology hub.

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The discussion in the United States about national competitiveness has rarely been more lively. Two recent books, Fareed Zakaria's The Post-American World and Kishore Mahbubani's The New Asian Hemisphere, stress the rise of other nations, particularly China and India, and suggest there will be a decline in American influence. These authors and dozens of other commentators prescribe steps the U.S. government can take to help ensure, among other things, America's status as the preeminent place for scientists and entrepreneurs to work.

Their suggestions are mostly sensible, such as reforming our immigration policy to accept a larger number of highly skilled immigrants. But they often emphasize a national solution--proposed reform in Washington, D.C.--and give short shrift to particular cities that are trying to be more attractive places for big brains.

Professor Richard Florida argues in his book Who's Your City? that it is in fact "mega-regions" (not nations) that will drive the economy in the 21st century and that the competitiveness discussion should take place on this front. Financiers choose between New York and London (or Hong Kong or wherever), not between the United States and the United Kingdom. Technologists choose from among San Francisco and Boston and Shanghai: specific cities. In other words, this desirable class of economic growth generating talent--entrepreneurs, scientists, bankers, engineers--choose exactly where they want to live with great precision and care.

We have had to relearn that location matters. When the Internet first emerged, globalization manifestos foretold a world where place was irrelevant. 'Anyone, anytime, anywhere" was the catch phrase. Yet certain industries continue to be overwhelmingly concentrated in certain physical places. For starters, creative output tends to come from teamwork, and teamwork still happens best in person. Florida calls this "the world is spiky" phenomenon, with the spikes representing economic activity bursting up from specific regions.

"Despite all the hype over globalization and the 'flat world,' place is actually more important to the global economy than ever before," writes Florida.

This is particularly true in the world of entrepreneurship and innovation. Think Silicon Valley. Think eBay, Yahoo, Google, HP, Intel, Apple, Facebook, Oracle, Cisco, Sun, and dozens of other companies populating that small geographic pocket in Northern California. Other regions envy Silicon Valley mainly because of how it has contributed to the economic vitality of the Bay Area and California in general. It is the poster child for how high levels of entrepreneurial activity can accelerate economic growth. Consequently, American...

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