Academic journal article Innovation: Organization & Management

Cities, Systems of Innovation and Economic Development

Academic journal article Innovation: Organization & Management

Cities, Systems of Innovation and Economic Development

Article excerpt


Cities play a vital role in the social and economic development of countries. Dynamically efficient and productive cities are essential for national economic growth and strong urban economies are essential for generating the resources needed for public and private investment in infrastructure, education and health, improved living conditions and poverty alleviation. Nowadays sustainability has joined the list of tasks cities will need to address. The road to sustainable development will go through administrative, organisational, institutional and technical innovation. Cities have often been described as the cradles of creativity and as innovative environments and their problem solving capacity has often, but by no means always, been impressive. This paper addresses some issues about how and why some cities are innovative and argues that cities must develop sustainable systems of innovation if they are to solve major questions of sustainability.

Cities have long been thought of as innovative centres. Giovanni Botero (1544-1617) probably first expressed this clearly. In The Magnificence and Greatness of Cities (originally published in Italian in 1588 and in English in 1606), Botero described the importance of great cities for countries and their rulers. He suggested that neither the pleasures of living in a great city nor the necessity of the protection provided to its people explained its magnificence. What matter most, he said, are the city's diversity of industry, trades and crafts, interaction with surrounding agricultural districts, the presence of a community which accepts and includes immigrants, has an efficient and effective justice system, schools and studies, and a physical location with access to good ports, which makes trade with other cities and countries possible. Only cities can provide the necessary environment for increasing incomes and power, he thought.

Discussing the origins of the now strong evolutionary alternative to mainstream thinking about economic development, Reinert (2007: 73) observes that ' was very clear to people early on that most wealth was to be found in the cities, and particularly in certain cities' and argues that Antonio Serra's 1613 observation that the larger the number of different professions present, the richer the city is still valid (Reinert 2007: 281).

More than 300 years later, Jane Jacobs (1969) used similar arguments about the importance of diversity of trades and crafts to explain how cities may stimulate innovation and economic growth. Even agriculture was developed in cities, she says, since only in a densely populated area, where people from different places, with different competencies and trades met to interact, were there possibilities for the new combinations and insights that led to the transition from hunting and gathering to settled agriculture in the neolithic revolution.

In his book Cities in Civilization, Peter Hall (1998) takes the argument further, describing great cities in their golden ages as 'innovative milieus' and 'cradles of creativity' of many kinds, where artistic/cultural, technological, and organisational shifts take place and provide the intersections that can lead to the combinations of artistic and technological creativities involved, for instance, in the new fields of movies, recorded music, television and multimedia displays. The factors that shape cultural and artistic creativity are to a large extent the same as the ones that shape technological innovation, Hall argues, and these are largely found in cities.


The reasons given for the location of innovation in cities by Botero, Serra, Jacobs, Hall and other scholars who view cities as engines of income and growth rely on supply side arguments. The conditions for production and growth, they say, are better in cities than in less urbanized areas because the factors of production (capital and labour) are relatively available, abundant, efficient and complementary and because cities offer relatively good infrastructure for productive activities. …

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