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San Jose in California’s Silicon Valley has the world’s most competitive knowledge economy, according to a league table dominated by US regions published on Tuesday.

Despite the economic downturn following the bursting of the technology bubble in 2000, two of the top three knowledge economy regions are in Silicon Valley, according to the annual report by Robert Huggins Associates, the think-tank based in Cardiff, the Welsh capital.

San Jose took top place, followed by Boston and San Francisco, indicating that the knowledge intensity in the region is concentrated within the Silicon valley.

The report uses 19 measures to rate 125 regions on their “knowledge competitiveness” - defined as the ability not just to create new ideas but also to exploit their economic value. These measures include R&D expenditure by business, higher education public spending, levels of employment in knowledge-intensive industries, such as computer manufacturing, and numbers of patents registered.

The World Knowledge Competitiveness Index highlights the gap in competitiveness between the US, which has 41 of the top 50 regions in the index, and the rest of the world.

Stockholm, the top region outside the US, climbed up the table to enter the top 10 for the first time, at number eight. The Nordic regions, including west Sweden, south Sweden and Uusimaa (Helsinki) all performed strongly thanks to high levels of research, innovation and high tech employment.

Regions in the Netherlands and the Ile de France in Paris also improved. However, London fell 10 places to 56 and Europe in general continued to suffer from a lack of suitably-targeted government policies and investment.

Tokyo climbed 16 places to number 22, thanks in part to strong high-tech employment. Shanghai, which more than doubled its performance since 2004, was the region showing the most growth in creating a knowledge-intensive economy.

The report noted that Asia-Pacific was particularly strong in information technology and computer manufacturing while North America’s strength rested on spending on research and development and education, and high patenting levels.

Separately, the Organisation for Economic Co-operation and Development reported that China had become the largest exporter of information and communication technology goods.

After overtaking the European Union and Japan in 2003, Chinese IT exports soared 46 per cent to $180bn (€151bn, £102bn) in 2004.

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