Economic activities are increasingly concentrating in cities. Especially complex industries, such as biotechnology and semiconductors show a great degree of spatial concentration in urban areas. An international team of researchers, including Pierre-Alexandre Balland, economic geographer at the department of Human Geography and Spatial Planning, have published an article in Nature Human Behaviour explaining this concentration and highlighting the implications for urban planners and policy makers. If the economy of the future is dominated by countries that succeed at developing the right industrial policies and megacities that are needed for knowledge and innovation to flourish, what should governments do to remain competitive?
Complex economic activities, such as biotechnology, neurobiology and semiconductors, concentrate disproportionately in a few large cities compared to less complex activities. The paper argues that this is particularly due to the fact that these complex economic activities require a deep division of knowledge and labour. The activities need large networks of people with specialized expertise in order to be conducted successfully.
The paper draws this conclusion on the basis of data for 353 metropolitan areas in the United States (e.g. number patents, scientific papers and employment) and suggests that there is a reinforcing cycle between the increase in the complexity of activities and urbanisation. Even though we might expect knowledge to travel through digital communication in today’s day and age, the study finds that this is not necessarily the case in complex economic activities, which prefer to spatially concentrate in a few specific cities like New York City and San Francisco.
These findings imply that the growth of spatial inequality may also be connected to the increasing complexity of the economy. Countries need to critically rethink their urbanisation and transportation strategies in order to remain competitive. Especially in the West, there is a need to develop and remain competitive in the high complexity activities of the future, the researchers argue.
Balland, P., Jara-Figueroa, C., Petralia, S.G. et al. Complex economic activities concentrate in large cities. Nat Hum Behav (2020) doi:10.1038/s41562-019-0803-3