MoneySmart

Where will you find the best minds to tackle difficult technology problems? Call your travel agent. Just as jewelry stores and fast-food joints often huddle with their own kind, high-tech specialists tend to congregate in specific cities or regions. There's a logic to this: After a breakthrough company or top-tier university program lays the groundwork, an area may begin to attract managers and engineers with relevant technological expertise. Throw in a few financiers or venture capitalists to back budding entrepreneurs, and with luck you may find yourself in the next Silicon Valley. Economists refer to these specialized business ecosystems as "clusters," and the tech world is famous for spawning them. Take Cambridge, England, where startup Plastic Logic was founded in 2000 to develop inexpensive computer chips using ink-jet printing techniques. "We knew that ink-jet expertise would be fundamental to our technology," says marketing executive Cranch Lamble. That made Cambridge, home to an ink-jet cluster, the place to be.

Specialized brainpower can be a draw for mature companies as well. Microsoft set up an R&D lab in Beijing partly because the city is rich in computer interface expertise -- a talent nurtured by the need to adapt Western keyboards and software to China's pictographic language. The $80 million research center, which opened in 1998, is developing a digital pen with built-in handwriting-recognition capability and software that reads text in a natural voice. Of course, you don't need us to tell you that San Jose is a great place to go for silicon chips or that Redmond is home to thousands of programmers who know a thing or two about creating software for PC operating systems. In the pdf file above, you'll find Business 2.0's guide to the world's budding pockets of expertise, the up-and-coming technologies they champion, and the companies that are exploiting them.