The most important factor responsible for the localization of high-tech firms in Silicon Valley of California is __________​

Correct option is C

The localization of high-tech firms in Silicon Valley is primarily due to agglomeration economies rather than cheap labor, market access, or transportation. Agglomeration economy refers to the benefits gained by firms when they cluster together in a particular region, fostering innovation, knowledge sharing, and efficiency.

Silicon Valley has world-class universities (like Stanford and UC Berkeley), venture capital networks, a highly skilled workforce, and a culture of technological entrepreneurship, all of which contribute to the region’s dominance in the tech industry.

• Agglomeration economies allow firms to benefit from shared infrastructure, skilled labor, and research institutions.
• Silicon Valley thrives due to knowledge spillovers, where firms benefit from close proximity to top engineers, tech experts, and venture capitalists.
• The presence of major companies like Apple, Google, and Intel attracts startups, creating a self-sustaining innovation hub.
• Universities play a key role in providing cutting-edge research and tech talent.
• The availability of venture capital funding encourages new firms to establish in Silicon Valley.

1. Cheap Labour – Incorrect:

   • Silicon Valley is not known for cheap labor; in fact, it has one of the highest labor costs in the world.
   • High-tech firms hire specialized professionals who demand high salaries.

2. Access to the Market – Incorrect:

   • High-tech firms in Silicon Valley operate globally, with markets spread across the world.
   • Unlike industries that depend on local demand, tech firms focus on international markets rather than regional customer access.

3. High-Speed Transportation – Incorrect:

   • While transport infrastructure is important, Silicon Valley’s success is based on technology, talent, and funding rather than transport connectivity.
   • Many firms operate remotely or digitally, reducing reliance on physical transportation.