The term “Industrial Revolution” entered modern parlance in 1799, courtesy of the French diplomat Louis-Guillaume Otto. What began with incremental improvements in steam power and textiles would sweep the world, freeing societies from the Malthusian trap while upending the distribution of political power. But for all that epochal significance, scholars have never arrived at a consensus on why it began in Western Europe and not, say, East Asia. After reading Mehran Gul’s The New Geography of Innovation, one suspects that the present revolution in silicon and algorithms will also evade simple explanations.  Most social scientists think and write in terms of models. There’s much to be said for their disciplined and objective approach, but some topics are so prone to contingency and serendipity that a peripatetic narrative captures reality better than axioms and deductions. Hence Gul’s story traverses eight countries across three continents, each chapter a collage of business, history, economics, interviews, and observations both astute and eccentric.

Gul starts his investigation of China with a corporate history of Tencent: how Ma Huateng’s firm moved from desktop messaging to mobile apps, becoming ubiquitous in China while making a fortune for early investors like South Africa’s Naspers. Gul’s main source for this chapter was an American named David Wallerstein, the one-time Naspers consultant who today sits on Tencent’s board. His early role negotiating distribution rights for Western video games evolved into managing the firm’s acquisition of movie and music studios worldwide. Tencent’s trajectory reflects a larger inflection in the world economy: outbound investment from China today vastly exceeds foreign investment in.

The most cited paper in the history of computer science emerged from a Microsoft lab in Beijing in 2015; at the time of publication all four authors had studied and worked only in China. That indigenous capacity for world-leading innovation extends to engineering: Baidu’s robotaxis have completed more trips than Alphabet-owned Waymo. But even a labour pool as deep as China’s has its limits. While the US still attracts talented would-be entrepreneurs from across the globe, in percentage terms China’s immigrant population remains smaller than North Korea’s.

For all its capitalist bona fides, Singapore’s leaders offer the market plenty of encouragement.

Tiny but open, Singapore offers a mirror image of China. It leverages an effective legal system and access to ASEAN to entice start-ups and established firms alike. Xiaodong Li, a Chinese national with an MBA from Stanford, moved to Singapore in 2006. His first business failed within two years. But he leveraged those early connections to found Garena, initially focused on video games optimized for the region’s less powerful phones. One such game, Free Fire, earned Garena over $4 billion in revenue. That accomplishment proved less a capstone than a launching pad: Li expanded into ecommerce and mobile payments, temporarily becoming Singapore’s wealthiest resident in 2021.

For all its capitalist bona fides, Singapore’s leaders offer the market plenty of encouragement. The government kick-started the venture capital industry in 1999 with the foundation of a “Technopreneurship Innovation Fund”. Gul applies a critical eye here, noting that the state’s largesse at times kept unprofitable firms afloat. Still, a $10 million investment from its sovereign wealth fund convinced Grab, the “Uber of Malaysia”, to relocate to Singapore in 2015. Grab went public on the NASDAQ in 2021 at $40 billion.

For all the heady progress in apps and AI, the chapter on South Korea shows that rapid changes in technology can perpetuate older institutions. When Park Chung-hee took control of the country in 1961, he leaned on Samsung and the other chaebols to meet his promise of “rich country, strong army”. When his daughter Park Geun-hye assumed the office of President decades later, Samsung still produced a fifth of the country’s GDP. But Samsung only sustained its dominance by shifting away low-margin consumer electronics like microwaves and VCRs towards high-end products like smartphones and medical equipment.

One key to Silicon Valley’s enduring success is the tendency of employees to abandon their steady jobs in order to launch a competitor: think Gordon Moore leaving Fairchild Semiconductor to found Intel, or Jensen Huang leaving Sun Microsystems to start Nvidia. Few company men had a more secure future than Kim Beom-su, with a degree from Seoul National University and a job at Samsung. Still, he left and founded a string of tech businesses before starting Kakao, a messaging service that dominates Korea’s market. Kakao expanded into fields as diverse as banking, publishing, and ride-sharing. Given Kim’s penchant for nepotism and Kakao’s anti-competitive practices, it seems the chaebols might survive in spirit, if not in name.

Gul takes readers on a whirlwind tour of the ideas and industries competing for new customers while pushing the boundaries of knowledge.

While the Asian chapters emphasize the role of the state, the book’s analysis of the West shows how culture still matters. For centuries, Switzerland maintained its independence by remaining neutral; bank secrecy laws tracing back to 1713 earned them goodwill in capitals throughout Europe. That penchant for discretion led them to develop a COVID-tracing protocol that relied on Bluetooth to alert the exposed, without creating a central database under the government’s aegis. Germany’s post-WWII distrust of concentrated power resulted in today’s Mittelstand; an ecosystem of small- and medium-sized private businesses. While that arrangement enables expertise in niche markets, the lack of public equity funding limits their expansion. Meanwhile, much of Canada’s success in AI traces back to a handful of brilliant immigrants. But that nation’s open door to talented newcomers might not win many votes in countries with longer histories tied to a particular language and ethnicity.

By the book’s close, readers will recognize the various components necessary for large-scale, ongoing technical innovation: a government providing public goods like education and infrastructure, functioning capital markets, investors with a tolerance for failure, a culture that encourages start-ups, openness to immigration, and enough consumers to scale up. The US still has all of that in abundance. For now, every competitor has one or more binding constraints.

Gul never proffers a grand theory or turnkey set of policies. Instead, he takes readers on a whirlwind tour of the ideas and industries competing for new customers while pushing the boundaries of knowledge. Like Louis-Guillaume Otto before him, Gul’s assessment of a dynamic landscape offers an early glimpse of a revolution poised to change everything.

A former US Marine and Iraq war veteran, Dr James Herndon worked in Udaipur, India while completing his PhD in Economics. He currently works as a consultant in Birmingham, Alabama.