What Drives 21st Century Cities?
Thanks to a subscriber for this interesting report from Deutsche Bank which is posted without further comment. Here is a section
Cities have increasingly become the hubs for innovation and creativity as value generation has become more about breaking down silos. Till the late of the 19th century, most innovation was driven by generalists and tinkerers. This meant that knowledge accumulation was relatively slow, but its application across different fields was quick. In the twentieth century, knowledge creating became the job of specialists in universities and government/private labs. This dramatically sped up knowledge accumulation within silos but slowed cross disciplinary application and understanding. Although resources are still being poured into specialist innovation systems, there are signs that this source of technological change is slowing. Estimates by Pierre Azoulay (MIT) and Ben Jones (North-Western) suggest that the total factor productivity contribution of an American R&D worker in 2000 was a mere 15% of a similar researcher in 19503! Yet, we seem to live in a world of constant innovation – where is all this innovation coming from? It appears that value generation and innovation is increasingly about connecting the dots between different silos. Thus, we are witnessing extraordinary innovations in diverse fields such as gastronomy, entertainment, media and lifestyle made possible by mixing different technologies and skills (Facebook and Twitter, for instance, are not technological innovations, but are better seen as social innovations made possible by the application of communications technology). As readers would have guessed, this environment dramatically increases the economic value of certain kinds of cities that are able to concentrate different kinds of human capital and to encourage random connections and face-to-face interactions between people4. This, in turn, allows the urban economy to flexibly mix-and match different skills and knowledge silos that generates large productivity increases. Studies show that a doubling of a city's population can increase economic productivity on average by 130%.5 Certain kinds of cities can do much better than the averageBack to top