Is innovation in cities a matter of knowledge-intensive services? An empirical investigation

Abstract

The presence of large cities in a region represents a potential for regional innovation capacity: cities are in fact expected to generate dynamic agglomeration economies and knowledge spillovers. The paper adds to previous analyses on this topic by investigating whether the linkage between the presence of cities in the region and the innovative performance is mediated by the urban industrial structure. In fact, a positive correlation is likely to exist between the presence of large cities in a region and its innovative performance. Such a relationship could also depend on the presence of knowledge-intensive service, rather than on advanced manufacturing activities. In order to verify this statement, we classify European NUTS2 regions both from an industrial perspective, as well as by spatial typologies. We integrate this classification with a novel data set on regional innovation, based on the Community Innovation Survey. On this basis, geographical and descriptive analyses of regional innovation patterns are developed and explained. The descriptive results support our expectations. Regions hosting large urban areas are the most innovative, and this statement is reinforced in regions characterized by specialization in knowledge-intensive services. The simultaneous presence of advanced manufacturing and knowledge-intensive service activities generates synergic effects, fostering innovative performance.

Keywords:

• innovation
• cities
• knowledge-intensive services

Notes

1. The project is called KIT (“Knowledge, Innovation and Territory”) and is led by the Politecnico of Milan, and in particular by the authors of this paper. For further details on the project and the consortium members, see http://www.espon.eu/main/Menu_Projects/Menu_AppliedResearch/kit.html.

2. Medium-high and high-tech manufacturing industries include chemicals (NACE 24), machinery (NACE 29), office equipment (NACE 30), electrical equipment (NACE 31), telecommunications and related equipment (NACE 32), precision instruments (NACE 33), automobiles (NACE 34) and aerospace and other transport (NACE 35); KIS include water transport (NACE 61), air transport (NACE 62), post and telecommunications (NACE 64), financial intermediation (NACE 65), insurance and pension funding (NACE 66), activities auxiliary to financial intermediation (NACE 67), real estate activities (NACE 70), renting of machinery and equipment (NACE 71), computer and related activities (NACE 72), research and development (NACE 73) and other business activities (NACE 74).

3. Statistics are calculated with the exclusion of the French Overseas Department, Iceland, Switzerland and Norway.

4. Additional information on spatial patterns in innovation data can be found in Appendix 2.