There are two main points that Fred summarized that are to be addressed: the decline of the Valley in terms of innovation and the decline of global innovation. It's easier to look at each point separately.
There are three main elements of a healthy ecosystem, of which in my blog post I mentioned the free flow of human capital, intellectual capital, and financial capital. The Valley has been hampered because of more difficult immigration policies and rising cost of living, but this has been covered away by better financial capital flowing into the Valley, relative to anywhere else.
But no longer. Financial capital now can be deployed in startups anywhere in the world with more private and public capital available. The human capital friction that the Valley has still persists, so people are now choosing to stay in their home countries. And the intellectual capital available to build a startup is largely publicly available and decentralized.
Thus, this phenomena isn't a decline of the Valley, but the relative rise of everywhere else
The relative rise of everywhere else means that innovation can happen in big cities like Shenzhen, London, Hong Kong, or Tokyo, or small cities like Nairobi, Amsterdam, or Wenzhou.
One evidence of this is the performance of original apps and services that serve local markets. For example, the Uber launch in Hong Kong has not been successful because it hasn't served local use cases, but the local variant GoGoVan has gone on to become a unicorn. Uber in mainland China also didn't fare well against Didi, and before arguing it is because of regulation and protectionism, I would argue that those two topics are extremely important parts of localization; failure to address these risks is a failure of localization, pure and simple.
Thus, the rise of everywhere else, or decentralized innovation, should lead to more global innovation
What's funny though in the Economist article is how the above two points are linked - a decline of Valley innovation equates to lessening innovation everywhere - when clearly it should be decentralized innovation leads to more innovation. Either one has a bias towards Valley innovation as the end-all of innovation, or one disagrees with one of the above premises I deconstructed above.
Whichever way it is, I look forward to a future celebrating the rise of a decentralized rise of everywhere else.