In the 1970s and 1980s, the competitiveness of American economy seemed to be eroded away in the face of Japanese challenge. But all of a sudden, applauded Japan lost its way in the 1990s and by middle of the decade, American industries resurged. This book is one of attempts to explain such dramatic rise and fall, and find the underlying mechanism of industrial success stories. The author demands us to delve into the regional growth dynamics to solve those puzzles. Best attributes the rise and fall of nation economies to the underlying dynamics of local clusters. The unit of analysis in conventional economics is either the economy or the individual (including firm). But such approaches haven't provided acceptable explanations. Michael Porter argues the basic unit of analysis should be the industry, to understand competitiveness and productivity. Actually Michael Porter's conception of competitive advantage, cluster has been widely adopted in 1990s. Competitive advantage of the firm is created and sustained through local competition in its industry, Porter maintains. But local industry is not isolated from other local industries. It's connected to clusters of industries through vertical and horizontal relationships. Cluster is firm's home base environment. For example, Porter argues that, in "Can Japan COmpete?" , Japanese industry, like auto or electronics, is competitive where its backing cluster is strong, while uncompetitive, like petrochemicals or aerospace, where backing cluster is weak. Cluster is the ecology of the firm. And firm's competitive advantage is shaped in its ecology. Advantages in its ecology are necessary for achieving and sustaining competitive success. For Porter, rivalry between leading firms in the local is the driver and the weapons to compete comes from the local environment. The firm read and identify the market opportunities and shape its strategy to exploit the opportunities and mobilize the resources from the local cluster. So the firm is the real actor in the economic drama, Porter points out. But ironically, the internal organization of the firm does not feature in Porter's cluster.To construct the acceptable framework to explain the cluster dynamics, Best argues the firm should be given the due role in economic drama. Here comes the Schumpeterian entrepreneur. There are so many clusters. But there are few successful cluster like Silicon Valley. Few develop the regional growth dynamics. In competition between the two regions, the higher productive region will create regional competitive advantage. The difference lies in a few driver or creator of cluster dynamics: the entrepreneurial firm. To the entrepreneurial firm, competition is not price-based but product-based. To do so, the entrepreneurial firm pursues market niches by developing unique production capabilities, often of a technological form, to differentiate its product from competitors. In turn, the process of such developing precipitates new market opportunities to guide the new product development. Capturing those opportunities leads to another round of developing production capabilities. We could identify such process in Japanese practice of kaizen. In the Japanese production system, production process and developing process are integrated. Best calls it as technology management. In kaizen system, the innovation of technology is systemized in production process so developing technology is not one-off event but continuous process. The production is the process not only of producing product but also of finding new knowledge. In short, the entrepreneurial firm refers to a few firm in cluster with the dynamics of such virtuous circle. Best call it technology/market dynamic. The internal dynamics of the entrepreneurial firm induces the regional cluster dynamics. It's a virtuous circle too. No firm, no matter how big, can pursue all technological possibilities it created. Apple could not make all the peripherals for its Apple computer, like applications, printers, monitors and so on, on its own. Apple had not enough resources to make all of them. Those were possibilities to other firms opened up by Apple. And Apple PC was itself the given-up possibility by Xerox. Those are not pursued internally become market opportunities for other firms, resulting in so-called Silicon Valley effect. New small entrants can exploit new technology capability, advance the emerging technology and develop the new market. The entrepreneurial firm start-up system is particularly strong in the Silicon Valley and Route 128. Best attributes the resurgence of American economy to such cluster dynamics.