Cities as sites of innovation

David A. Wolfe

Chapter 3 in The Governance of Innovation Spaces, 2026, pp 54-74 from Edward Elgar Publishing

Abstract: This chapter surveys the role of city-regions as primary sites of innovation, knowledge creation, and economic growth in a knowledge-based economy. It addresses three central debates: whether industrial specialization or diversity generates more innovation in cities of different sizes; how urban agglomeration economies interact with diseconomies of scale; and what role the concentration of talent and creative workers plays in driving urban economic performance. Drawing on the work of Jacobs, Glaeser, Florida, Storper, and Scott, it argues that cities function as “Schumpeterian hubs” of innovative activity, but that the benefits of urban agglomeration are unevenly distributed. The chapter examines this hierarchy from superstar global cities (New York, London, Tokyo) that dominate high-end financial and knowledge-intensive services, through national and regional hub cities, to smaller and medium-sized cities that face greater challenges in adapting to the knowledge economy. The growing concentration of innovation-intensive employment in leading cities is associated with rising social polarization and income inequality, posing significant governance challenges. It also discusses how older industrial cities in North America and Europe have pursued economic revitalization by mobilizing civic and institutional assets, developing innovation districts, and building new governance coalitions. The case of Cleveland, Ohio illustrates how community-based philanthropic and civic organizations can drive economic transformation even in deindustrialized regions. The chapter concludes that governance arrangements – particularly the presence of civic capital and effective institutional supports – are critical variables determining how cities of all sizes respond to the opportunities and challenges of the knowledge economy.

Keywords: City-regions; Agglomeration Economies; Creative Class; Global Cities; Urban Hierarchy; Knowledge Economy (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035320783
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