The%20Urban%20Turn:%20From%20regional%20clusters%20to%20creative%20cities

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The Urban Turn From regional clusters to
creative cities

• Session IV From Creative Clusters to Creative
  Cities
• Innovation Systems Research Network
• Seventh Annual Meeting, Toronto, May 5-6 2005
• Bjørn Asheim, Universities of Lund and Oslo

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Perspectives on innovative regions

• The firm/cluster perspective Clusters of related
  and supporting industries operating as
  geographically concentrated collections of
  interrelated firms in which local sophisticated
  and demanding customers and strong competition
  with other firms in the same industry drive the
  innovation process (Porter)

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Why do firm cluster?

• Clustering captures efficiences generated from
  tight linkages between firms
• Positive benefits of co-location (spillovers)
• Activities that require face-to-face contact

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Why do firm cluster?

• But according to Florida, these are only partial
  answers. More importantly, companies cluster in
  order to draw from concentrations of talented
  people who power innovation and economic growth.
  The ability to rapidly mobilize talent from such
  a concentration of people is a tremandous source
  of competitive advantage for companies.

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Innovative regions

• A second view focuses on the role of human
  capital that is, highly educated people. It
  argues that places with higher levels of human
  capital have a larger share of high-tech
  industries and, thus, are more innovative and
  grow more rapidly and robustly over time (Lucas,
  Glaeser)

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Talents and knowledge generation in innovative
regions

• In a knowledge economy, the ability to attract
  and retain highly skilled labour is crucial to
  the current and future prosperity of innovative
  regions as well as nations
• In a knowledge economy in contrast to a
  learning economy new knowledge generation is
  becoming increasingly important for innovation
  and the construction of regional advantage

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Innovative regions

• A third view emphasizes the role of creative
  capital, arguing that certain underlying
  conditions of places, such as their ability to
  attract creative people and be open to diversity,
  inform innovation and growth )creative
  cities/city regions (Florida, Cushing)

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The Urban turn Creative cities

• Constellations of talents and creative people are
  most commonly found in large city regions where
  the diversity of urbanization economies is more
  abundant. This, together with other factors such
  as labour markets characterised by high demand
  for qualified personnel, cultural diversity and
  tolerence, low entry barriers and high levels of
  urban service, largely determine the economic
  geography of talent and of creativity, both of
  which display concentration to large cities.

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• Clusters, localisation economies (efficiency) and
  urbanisation economies (creativity)
• Localisation economies - Specialisation
  achieving efficiency through incremental
  innovations in industries with synthetic
  knowledge bases (e.g. industrial districts)
• Urbanisation economies - Diversity promoting
  creativity resulting in radical innovations in
  industries based on analytical knowledge bases
  (e.g. creative cities/geography of talent)

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Creative cities policy implications

• Florida argues that it is not enough to attract
  firms the right people also need to be
  attracted. He calls for complementing policies
  for attracting firms (business climate) with
  policies for attracting people (peoples
  climate). This suggests that the attention of
  politicians and planners should be directed
  towards people, not companies, i.e. away from
  business attraction to talent attraction and
  quality of place.

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Creative cities policy implications

• This demonstrate that quality of place must be
  understood in broader terms than traditionally
  accustomed to while the attractiveness and
  condition of the natural environment and built
  form are certainly important, so too is the
  presence of a rich cultural scene and a high
  concentration of people working in cultural
  occupations as well as diversity and openess to
  newcomers (tolerence). The presence of such an
  environment or milieu attracts other types of
  talented or high human capitals individuals,
  which in turn attracts and generates innovative,
  technology-based industries.

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• Knowledge bases, clusters and RIS
• The relevance of different perspectives on
  innovative regions must be placed in a context of
  the knowledge base of various industries
• Innovation processes of firms are strongly
  shaped by their specific knowledge base
• Three types of knowledge base
• a) analytical (science based)
• b) synthetic (engineering based)
• c) symbolic (creative)

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Synthetic Analytic
Innovation by application or novel combination of existing knowledge Innovation by creation of new knowledge
Importance of applied, problem related knowledge (engineering) often through inductive processes Importance of scientific knowledge often based on deductive processes and formal models
Interactive learning with clients and suppliers Research collaboration between firms (RD department) and research organisations
Dominance of tacit knowledge due to more concrete know-how, craft and practical skill Dominance of codified knowledge due to documentation in patents and publications
Mainly incremental innovation/process innovations More radical innovation/product innovations
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Creative cities buzz and face-to-face contact
(F2F)

• Storper argues that face-to-face contact
  represents the most fundamental aspect of
  proximity, which favours urban concentrations and
  agglomerations. He argues that F2F is
  particularly important in environments where
  information is imperfect, rapidly changing, and
  not easily codified key features of many
  creative activities

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What is F2F (face-to-face)?

• F2F refers to the communicative advantages of
  physically co-present communication, i.e. when
  two or more persons are physically co-present in
  a way that allows for mutual visual and physical
  contact, not just co-location in the same cluster
  or city (e.g. concrete user-producer
  relationships). In general the existence of
  social capital will promote F2F.

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What is buzz?

• Storper and Venables (2004)
• ...a highly efficient technology of
  communication a means of overcoming coordination
  and incentive problems in uncertain environments
  a key element of the socialisation that in turn
  allows people to be candidates for membership of
  in-groups and to stay in such groups and a
  direct source of psychological motivation. The
  combined effects of these features we term buzz.

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Creative cities buzz and F2F

• However, buzz and F2F cannot be generalised to
  such an extent as Storper attempts
• First, buzz and F2F is not necessarily the same
  types of phenomenon
• The classical F2F situation is the
  user-producer relationships found in clusters
  with manufacturing industries based on a
  synthetic knowledge base, and exploiting
  localisation economies, and where tacit knowledge
  is of great importance (e.g. industrial districts
  with the presence of social capital and trust).

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Creative cities buzz and F2F

• The typical buzz situation is an informal
  meeting place (bar, pub, hotel lobby in
  connection with a conferences and fairs etc.),
  where networking is finding place, and
  information not knowledge is taking place
• The only group which may exchange knowledge in
  buzz situations is people employed in creative
  occupations (incl. advertisement etc.), which is
  based on a symbolic knowledge base, and where
  knowledge is highly individualised, and, thus,
  social capital is of less importance.

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Creative cities buzz and F2F

• Talent working in high-tech industries based on
  an analytical knowledge base, however, does not
  exchange knowledge in informal buzz situations.
  They enjoy F2F when taking advantage of the
  proximity to the diversity of formal, codified
  knowledge and expertise found in leading
  universities in large cities or city-regions,
  and, thus, exploit urbanisation economies

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Different kinds/types of knowledge

• Know-who What is the division of labour in the
  process of search?
• Know-how How is search pursued? What is the
  sequence? How formalized is it?
• Know-why What causalities are at the core of the
  dominant models applied?

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The importance of buzz and F2F for knowledge
types and bases
Knowledge type/ Knowledge Base Buzz for know who Buzz for know how Buzz for know why
Knowledge type/ Knowledge Base F2F for know who F2F for know how F2F for know why
Analytical L L L
Analytical L M L
Synthetic M L L
Synthetic M H M
Symbolic H H H
Symbolic M H H
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Innovative regions/creative cities and social
capital

• Florida argues that places with dense ties and
  high levels of traditional social capital (i.e.
  Putnam/bonding) provide advantages to insiders
  and thus promote stability (i.e. negative
  lock-in), while places with looser networks and
  weaker ties are more open to newcomers and thus
  promote novel combinations of resources and
  ideas.

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On social capital, human capital and creative
capital

• Cushing finds that social capital theory provide
  little explanantion for regional growth. Both the
  human capital and creative capital theories are
  much better at accounting for such growth.
  Furthermore, he finds that creative communities
  and social capital communities are moving in
  opposite directions. Creative communities are
  centers of diversity, innovation, and economic
  growth, social capital communities are not.

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On social capital, human capital and creative
capital

• In a later study Cushing found no evidence that
  social capital leads to regional economic growth
  in fact the effects were negative. Both the human
  capital and creative capital models performed
  much better. Cushing concluded that the creative
  capital model generates equally impressive
  resutls as the human capital model and perhaps
  better.

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On social capital, human capital and creative
capital

• According to Florida, the creative capital theory
  says that regional growth comes from the 3 Ts
  (Technology, Talent and Tolerence) of economic
  development, and to spur innovation and economic
  growth a region must have all three of them
• While social capital is blocking economic
  growth according to Florida, who, thus, is not
  talking about Technology, Talent and Trust.

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Creative cities on efficiency and equity

• However, increased social and economic
  polarization in American creative cities the
  living conditions of the thinking class vs the
  serving class - represents the greatest
  challenge to retaining US position as the world
  leader in technology and in its ability to
  attract top talent. While attracting talent and
  improving quality of place are easy enough to
  find support for, more often than not the real
  consequences and costs for the low-skilled
  serving class (displacement and gentrification)
  are neglected and overlooked.

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Innovative regions/creative cities on
efficiency and equity

• In a new study Europe in the creative age
  (Florida and Tinagli) it is shown that Sweden is
  the top performer on the Euro-Creativity index,
  outperforming not only all of the other European
  countries, but the US as well
• Also the other Nordic countries as well as
  northern European countries (Ireland, the
  Netherlands and Belgium) is performing well

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World Economic Forum Growth Competitiveness Index
(Oct. 2004)

• Finland 7. Singapore
  
• US 8. Switzerland
• Sweden 9. Japan
• Taiwan 10. Iceland
• Denmark 11. UK
• Norway 12. Netherlands

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Where does SOCIAL CAPITAL matter most?

• The presence of social capital in the form of a
  strong tradition of cooperation in the society in
  general as well as of a social regulation of the
  labour market specifically in the Nordic
  countries adds to the high level of human capital
  in the work force in a synergistic way (in
  learning forms of work organisations). This
  builds on social capital rooted in civicness
  (bonding), but is further developed through
  formal organisations at the system level of the
  society (bridging).

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Innovative regions/creative cities on
efficiency and equity

• This indicates that it is not only a question of
  finding the optimal trade-off between efficiency
  and equity (getting th trade off right), but
• That it might be a question of producing synergy
  between efficiency and equity (more equity also
  results in more efficiency), found in the Nordic
  countries, as the best policy to promote and
  reproduce creative cities (advantage of
  coordinated market economies)

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Innovative regions/creative cities varieties of
capitalism

• Soskice and others convincingly argue that
  different national institutional frameworks
  support different forms of economic activity,
  i.e. that coordinated market economies have their
  competitive advantage in diversified quality
  production, while liberal market economies are
  most competitive in industries characterised by
  radical innovative activities

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VARIETIES OF CAPITALISM Liberal market economies Coordinated market economies
Financial regulation Short-term financial markets, equity financing Long-term patient capital, debt financing
Corporate governance Shareholder value, limited business coordination antitrust laws Stakeholder value, strong business associations, intercorporate networks
Innovation systems Radical innovation, involving sharp breaks with extant processes Incremental innovation involvinf continuous process development
Capital-labor relation Decentralized bargaining, contentious workplace relations Coordinated bargaining, statutory worker representation
Training and employment Basic education and firm-specific training, short tenure, high turnover jobs, high interfirm labor mobility Vocational training, long tenure, low turnover jobs, low interfirm labor mobility
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Talents and innovative regions/creative cities
what about the ordinary regions?

• This problematic has also an inter-regional
  (centre-periphery) dimension (i.e. within the
  EU). If cities are the centres of the
  knowledge-based economy attracting and retaining
  most of a nations talent, then the development
  of the knowledge-based economy will be
  geographically uneven and knowledge poverty will
  become a new kind of locational disadvantage.

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Talents and ordinary regions

• In policy terms the focus must be on how, without
  destroying what makes cities attractive places to
  be in, the less knowledge-based and peripheral
  regions can make themselves better capable of
  retaining and attracting industry that is likely
  to offer qualified, higher value-adding, more
  knowledge-intensive jobs for their own educated
  youth and attract other talents as well. Social
  capital may well play an important role here.

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Talents and ordinary regions

• In upgrading peripheral regional economies to
  knowledge-based (learning) economies the
  formation of regional innovation systems could
  play a strategic role either defined narrowly by
  using local universities as motors and agencies
  for change, or through a learning region approach
  based on broad social participation in a
  bottom-up perspective (i.e. a broad definition of
  an innovation system where the presence of social
  capital is a structural prerequisit).

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Talents and ordinary regions

• In this context it is important to be reminded of
  Porters view on the competitive advantage of
  firms and regions being based on the exploitation
  of unique resources and competencies (which need
  not be RD based), which must be reproduced
  through continous innovation understood as
  interactive learning, in which cooperation and
  social capital is of strategic importance.