Yes, I think this is a very important factor. I'm surprised that Florida
doesn't mention Kenichi Ohmae. He has written more extensively than anyone
of the modern phenomenon of the dominance of major city regions. His
latest book is "The end of the Nation-State: the Rise of Regional
economics" (2008)
Keith
At 16:05 13/09/2010 -0400, you wrote:
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I find Richard Floridas work sometimes too flaky. But this one seems to
be on to something. >From Karen Coles Caseys.
--------------------------------
The Power of Density
By Richard Florida
Density is a key factor in innovation and economic growth. The dense
geographic clustering of economic activities was true of the industrial
behemoths of the past -
<http://www.industrystudies.pitt.edu/papers/cluster-bushelbasket.pdf>steelmaking
in Pittsburgh and
<http://www.druid.dk/uploads/tx_picturedb/dw2002-440.pdf>automotive
production in Detroit. And, despite advances in communications technology,
it applies even more so today: from
<http://business2.fiu.edu/1660397/www/Hi%20Tech%20with%20Carsrud/Saxenian_1990.pdf>high-tech
firms in Silicon Valley to <http://en.wikipedia.org/wiki/Hollywood>film
producers in Los Angeles and
<http://jpe.sagepub.com/content/29/3/310.abstract>recording studios and
record labels in Nashville. There's no doubt: The geographic concentration
of firms, industries, technologies, people, and other economic assets
plays a powerful role in innovation and economic growth.
The great economist <http://en.wikipedia.org/wiki/Alfred_Marshall>Alfred
Marshall long ago outlined the dynamic of
<http://en.wikipedia.org/wiki/Agglomeration>agglomeration - that is, the
process by which co-location of related economic activities and assets
shapes industries and economic development.
<http://www.pps.org/jjacobs-2/>Jane Jacobs showed us how the clustering of
diverse groups of people, firms, and industries in cities provides the
basic engine of innovation and new product development. Harvard's
<http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=bio&facEmId=mporter&loc=extn>Michael
Porter has shown how clusters of related industries, customers, and
suppliers power innovation and growth. Density makes it easier for people
and firms to interact and connect with one another, and it reduces the
effort, friction, and energy that's used to make these connections.
Density increases the speed at which new ideas are conceived and diffused
across the economy, accelerating the speed with which new enterprises and
new industries are created.
The curious thing is that most of our key economic and innovation measures
don't take density explicitly into account. Economists, economic
geographers, and other social scientists tend to normalize the numbers
they're interested in by population, representing the data on a per person
or per capita basis. This approach has led to all sorts of important
empirical insights and findings. But since density itself is an important
factor in certain kinds of economic growth, it's useful and important to
develop indicators that take it explicitly into account. For that, we need
to look at the distribution of activities and key variables across space.
So instead of measuring them on a per capita basis, we can examine them on
the basis of land area or per square kilometer.
A while back, I
<http://www.theatlantic.com/business/archive/2010/05/the-density-of-smart-people/57384/>posted
about this
<http://blog.robpitingolo.org/2010/05/where-smart-people-live.html>analysis
by Rob Pitingolo (h/t: Don Peck) which looked at the density of human
capital. Pitingolo developed an intriguing metric that he called
"educational attainment density." Instead of measuring human capital or
college degree holders as a function of population, he measures it as a
function of land area - that is, as college degree holders per square
kilometer. He did this for the primary urban centers of metropolitan areas.
Inspired by this, I worked with my
<http://www.martinprosperity.org/>Martin Prosperity Institute colleague
Charlotta Mellander to build indicators of density for a wider range of
key economic and demographic variables. We conduct our analysis at the
metropolitan level. It's important to point out that there are limits to
using the metropolitan area as a unit of analysis. Metropolitan areas
combine core cities with their suburbs and come in all different shapes
and sizes. Some are more concentrated at the core (like Portland), others
more sprawling (like Phoenix). Examining the distribution of key economic,
social, and demographic variables at the metro scale is admittedly crude.
But it is also a useful and important starting point, since the metro
level is by far the most common unit of analysis in studies of regional
economic development. In our research on the subject, we're interested in
developing new, more precise metrics and indicators of density within
metropolitan areas - comparing central cities or urban centers to suburbs
and probing the distribution of density across Census tracts and zip
codes, which I will report in future posts.
We also compare our density measures to population density, to see which
metros over- and under-perform relative to their populations. To get at
this, Mellander performed a
<http://www.mathworks.com/access/helpdesk/help/toolbox/ident/ug/bq1sjml.html#bq5nsrt>residual
analysis - a statistical procedure which systematically compares how
metros perform on a given factor compared to what we'd expect based on
their population density. We also look at the associations between our
various density measures and key metrics for regional economic development
- wages, incomes, innovations, and regional economic output. As usual,
I'll point out that these are preliminary, exploratory analyses that
simply point to associations between variables. We don't make any claims
here about the direction of causality, and we acknowledge that intervening
variables may come into play.
Over the next couple of weeks, I'll report the key findings from our
analysis. Later this week, I'll look at density of human capital - based
on the conventional measure of people with a bachelor's degree and above.
Then, I'll turn to the density of the creative class - that is, of people
employed in science and engineering, business and management, health care
and law, and arts, culture, design, media, and entertainment. The fourth
post in this series will look at the density of a subset of this group -
artistic and cultural creatives. In the fifth post, I'll share our
findings on density of innovation and high-tech industry. And, in the
final post in the series, I'll bring it all together and sum it up with
maps of these density measures.
This article available online at:
<http://www.theatlantic.com/business/archive/2010/09/the-power-of-density/62569/>http://www.theatlantic.com/business/archive/2010/09/the-power-of-density/62569/
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Keith Hudson, Saltford, England
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