Academic journal article Innovation: Organization & Management

Innovation in the City and Innovative Cities

Academic journal article Innovation: Organization & Management

Innovation in the City and Innovative Cities

Article excerpt

Cities matter. By 2006, more than half of the total OECD population lived in urban areas. Major cities in OECD countries generate almost one third of their nations' production while in some countries more than half national output is produced by one city and some Canadian cities generate half or more of their provinces' value added (OECD 2006: 13). Cities are a nation's innovation hubs, producing almost all patents and other measures of new products and processes in business.

Cities also matter increasingly because they are hotspots of consumption and hence waste generation and already responsible for 75% of global energy consumption and 80% of greenhouse gas emissions. Moreover, while cities in most rich developed countries are the motors of economic growth and the development and maintenance of the population's living standards, they are also generators of major social problems, social inequalities and economic disadvantage.

Cities are complex entities and play multiple and complex economic and social roles. Governments are only now coming to grips with issues about how to best deal with the problems while also encouraging the generators of their wealth. Doing so makes enormous new demands on governance mechanisms and the skills of politicians and administrators as well as the imaginations and willingness of city populations to finance and accommodate change.

Over recent decades, as several papers in this volume make clear, the economic literature on contemporary development has focused increasingly on innovation as the key to the long term competitiveness of modern western nations and drawn attention to the role of technological change as an endogenous factor in growth and the shift of techno-economic paradigm which causes nations and their component firms to move to new products, processes and organisational forms in all areas of production - resources, manufacturing and services. The emerging international economy among western countries has become known as the 'knowledge economy', increasingly reliant on the generation and use of knowledge, formal and informal, as a major factor of production. Institutional and knowledge-generating arrangements brought together in national systems of innovation underpin this shift (see eg Edquist 1997), even though much of the shift to the new economy has been linked to shifts in international production systems, known collectively as globalisation.

Attention has been drawn to the bases of the innovation necessary for competitiveness. The outstanding factor is usually agreed to be knowledge. While all production has always involved often quite important inputs of knowledge, there now seems to be agreement that modern economic systems are based on formal knowledge to a much higher degree than older ones. This knowledge can be scientific or linked more closely to information about customer needs, overseas markets or new organisational possibilities, often themselves made possible by radical new technologies and their application as platforms for a wide variety of industrial and service sector uses. Both formal and informal knowledge are carried by people as they work and move around different spatial arenas. So knowledge, its generation and diffusion, visible as innovations, have come to the heart of policies for modern economic development.

Innovations are made by people operating in organisations and firms but it has become clear that much of the impetus for innovation comes from the socio-economic and technical systems in which any firm or organisation operates and innovates. These systems are composed of institutions, both in the sense of organisations and the regulatory 'rules of the game', legal arrangements, especially for intellectual property and labour markets, education and training provision, financial and other support organisations and governance via formal governments and the more informal partnerships that provide input to the formal regulation and political systems. …

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