1. Introduction
Silicon Valley has been heralded as the paradigm of modern industrial success. It is an initiative to encourage the formation and growth of high-tech companies, and the active promotion of technology and business skills in new ventures with the collaboration of educational institutions. Over the past few decades, Silicon Valley has made great strides in its economy: “In 1999, employment rose by 1.7%, with the software industry as the fastest growing sector of job growth; venture capital grew to $6.1 billion; initial public offerings reached a record level of 77; average wage increased in real terms by 5.1%; 12% of the US’s fastest growing 500 top firms were based in Silicon Valley, including three of the five fastest growing companies; and an average of 11 new firms were born there per day.”(H Teawil, Silicon Valley’s Table of elements) Consequently, the Silicon Valley model has become “the Holy Grail of economic development”(H Teawil, Silicon Valley’s Table of elements). Why can Silicon Valley achieve such rapid rate of growth in such a short period of time? What are the competitive advantages of Silicon Valley? In this essay, we will investigate the elements that directly or indirectly contribute to the success of Silicon Valley. In the first part, the competitive advantages embraced by the region including geographic advantages and historic advantages will be analysed. In the second part, an expounder for the emergence of clusters in Silicon Valley and the underlying economic concept of agglomeration economies will be provided. Finally, a case study of Hewlett-Packard Company, one of the pioneers of Silicon Valley, will serve as an example to illustrate the arguments established in the previous sections

1 Introduction.
2 Competitive advantages of Silicon Valley:
a) Cumulative Causation Theory
b) Geographic
c) Historic
d) Agglomorative
3 The formation of the Silicon Valley Clusters: The Concept of Industrial Clusters and Agglomoration Economies:
a) Availability of Finance
b) Concentration of Education Facilities
c) Supply network/collaborative practices/resource allocation.
d) Government support
e) Skilled workforce
f) Technology transfer
4 Case Study: Hewlett Packard
5 Conclusion

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