Close enough for innovation

Once and again in this blog I have wondered about the seeming contradiction of information technologies favouring more concentration of the economic activity instead of a more distributed economy. I have taken the time to understand the economics of agglomeration and the key role of cities as innovation hubs, and I admire the work of economists like, for example, Ed Glaeser, but…

I have a hunch that sooner rather than later we will see with surprise that a lot of what we are forecasting about business travel will turn out to be wrong. (Why Do We Move Brains Instead Of Bytes?)

As it happens, it had to be an external shock, a pandemics, what triggered change and obliged us to rethink key assumptions behind our current understanding. It seems to be happening now.

Here is an interesting recent note on the matter, by Matt Clancy: Cities aren’t the innovation incubators they used to be.

  • Evidence from patents: When examined across the span of multiple decades, physically proximate inventors no longer seem to have much of an advantage over physically distant ones.
  • Evidence from research papers: they are increasingly likely to cite distant work.
  • Evidence from (business) partnerships: there is no evidence businesses based in big cities enjoyed more serendipity than those in smaller ones or the country.

A variety of studies document that when it gets easier to travel between locations (either because of new rail lines, airlines, or roads), collaboration between these distant locales increases. Other studies have documented how internet access decreases reliance on locally available knowledge.

[…] fears about the impact of remote work on innovation are probably overblown. The flow of knowledge no longer requires us to be close enough for coffee. Instead, knowledge circulates online, either via formal writing (like the kind you’re reading now), or informal chat. It’s just the chat is now more likely to take place on Twitter or Slack than over drinks.

The debate will go on for sure, for many years, but I continue to think that, for all many of us (including myself) like and enjoy cities, the future of civilization might not be civitas, after all.

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