The Centre of Innovation

Kat Hanna looks at the role cities can play in economic growth, and argues for the potential of innovation districts in urban centres.

There is a large body of literature looking at the relationship between cities, innovation, and economic growth, from Alfred Marshall (theory of agglomeration) to Jane Jacobs (‘The Economy of Cities’). However, the exact nature of the relationship is hard to quantify. It is easier to observe the impact of geography on economic growth. The City, for example, has been described as an “information processing machine for transforming gossip and speculation into partnerships and profits”, evident in the fact that London’s stock market grew from its street markets, and its insurance markets came to life in the coffee shops of the 17th Century[1]. All city landscapes bear the scars of economic cycles, from the docks and warehouses of trade and heavy industry to the towers and trading floors of financial liberalisation.

More recently, innovation and economic activity is returning to the city centre. Far from causing the end of the office, digital technology, and the ensuing need for content creation, has placed a renewed emphasis on co-location, often at the nexus between creative, digital, and media sectors.

This has profound implications for how cities experience growth. People’s experience of the economy, and in particular, innovation, is no longer solely defined by GVA (gross value added). Discoveries and developments are no longer the preserve of secluded and sterile laboratories on remote business parks. Successful social and economic innovations now arise in much more crowded settings, often on our doorstep. The modern economy is emphatically urban.

The move of innovation activity to the city centre has been driven by a number of trends: the rise of the knowledge economy, the emergence of the millennial workforce, and increasing collaboration between sectors. The result is a new urban form – the innovation district; concentrations of knowledge-creating and sharing institutions, including universities, start-ups and civic and cultural organisations. In US cities, innovation districts have primarily played a role in secondary cities where growth had been sluggish. In these cities, such as Portland and Pittsburgh, collaboration between universities, major employers and city government has seen regions progress from rust-belt to what has been termed a ‘brain-belt’, thanks to investment in skills, real estate and R&D[2].

The most successful cities and innovation districts are those which have realised that a focus on place can not only attract growth, but sustain and democratise it. In cities where the growth of the modern economy has been rapid, innovation districts and their institutions can prove a cool head in a hot real estate market. A number of London’s innovation clusters and districts are located in the capital’s more deprived boroughs, and by working together, institutions within these new districts can set and implement a vision for good growth. Practical offers which would benefit the local residents could include the creation of living wage districts, or improving talent retention and creation by allowing innovation districts and anchor institutions to sponsor Tier 2 visa on the condition that they take on an apprentice for each visa sponsored. Rather than focusing efforts on proving that no suitable domestic worker is available to fill the role in question, these larger sponsoring bodies could then focus their resources on generating talent at a local level.

However, openness and collaboration does not happen of its own accord. It requires consistent planning and dialogue between the institutions involved. Without this, the exponential growth of modern economy industries in urban locations risks the creation of ‘tech enclaves’, complete with dedicated transport and housing for tech and creative workers above a certain income. The democratisation of innovation is not just about job brokerages and school visits – it’s about how people experience the impact of a changing economy on their city. There is something in proximity and the sharing of space that promotes the pragmatism and compromise that is so vital to good growth. The success of King’s Cross redevelopment as a cultural and leisure destination, or current revival of Pershing Square in Los Angeles at the heart of a revived downtown, go some way to illustrating the role of shared urban space in the modern economy.

By looking at growth through the lens of innovation districts, the economy becomes more than some intangible force. It is easy amongst the talk of globalisation, neoliberalism, and innovation for individuals to feel removed from the consequences of the modern economy’s growth – both good and bad. Innovation districts and their underlying principles not only help cities understand the components of the modern economy – they embed it in the very culture and fabric of urban life.