In September I attended a presentation by a group of distinguished movers and shakers in the region and by Silicon Valley Joint Venture Network’s President and CEO Russell Hancock. In the midst of a bleak economy, those who reside in this region were eager to learn everything they could about the present and the future: What the present outlook is, how long the re-cession may last, what the current trends are and what kind of prosperity and security may come again to that region and to the United States in general.

As a citizen of the world and a local business player, I attended this presentation to find out how Silicon Valley’s innovative business climate might rally the best traits of capitalism to help the world and whether it might contribute to overturning the current grim economic outlook.

Silicon Valley Joint Venture Network was established in 1992 as a neutral forum to bring together leaders from business, labor, government, universities and non-profits to think outside the box and build creative solutions for the overall well-being of the region.

One of their important contributions is the annual Silicon Valley Index. It tells the real story about this region based on indicators which measure the economy and health of the community. The Index analyzes strengths and challenges that can influence local leaders’ decision-making. Such indicators are valuable bellwethers which reflect fundamentals of long-term regional economic health, reflect the interests and concerns of the community, are statistically measurable on a frequent basis and measure outcomes rather than inputs.

Silicon Valley is a central intellectual hub in the United States, one which possesses influential soft power worldwide, and is considered as the world’s center for innovation. This region’s attractiveness has been played down as no more than a high-tech hub where today’s household names — Hewlett Packard, Intel, Apple, Google, Sun Microsystems and eBay are based. In truth, this region is much more than that. It has long been the birthplace of innovation-based capitalism.

Silicon Valley’s distinguished character is unlike any other on the planet. It is not just a “psychological geographical location” which cannot be found on any official map. It is made up of 1,500 square miles, 40 cities and four counties with 2.6 million people. The region boasts 1.3 million workers, 42 percent of its residents are foreign born, 40 percent hold college degrees and 25 percent of the labor force work in highly skilled occupations. The average income is 60 percent higher than most U.S. regions, it produces 6 percent of U.S. GNP, 11 percent of U.S. patents, and its productivity rate is 50 percent higher than the U.S. average. Even though Silicon Valley is only a small part of the state of California geographically, its economic output is greater than that of the whole state of New York.

As in any technology region, boom-and-bust cycles and economic bubbles are natural and expected. Each bust brings with it the opportunity to experience another bubble. The key is to be prepared for whatever the future brings and make the most of the bubble.

To ride high in the wake of Silicon Valley’s future booms is probably the best thing other countries — Indonesia included — can expect to do, which explains why Indonesia should catch up technology-wise. Their new products will become run-of-the-mill commodities which may in turn give birth to another creative outburst. This could provide continual opportunities to outsourcing firms, like those based in Chennai and Shanghai.

Grady Means and David Schneider coined the term “metacapitalism” in 2000 to refer to worldwide competition characterized by brand-owning firms which focus on product innovation while establishing alliances with other firms to function as suppliers.

Metacapitalism trends go hand in hand with high levels of outsourcing, except for design and research and development departments which are likely to be kept in house. And such a trend allows small companies to take part in this highly equalized playground as the flattened world has empowered smaller players.  

An increase in the number of jobs in the area is expected, but an incremental rather than a prodigious increase. And with a credit thaw coming, this center of innovative capitalism is becoming the center of world metacapitalism again. It is not just wishful thinking: Silicon Valley has morphed itself many times during the last half century. Believe.

The writer is an author and columnist based in Northern California.

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