The Urban Turn: From regional clusters to creative cities

1. 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

2. 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)

3. 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

4. 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.

5. 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)

6. 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

7. 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)

8. 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.

9. 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)

10. 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 (people’s 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.

11. 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.

12. 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)

14. 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

15. 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.

16. 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’.

17. 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).

18. 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.

19. 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

20. 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?

21. The importance of ’buzz’ and ’F2F’ for knowledge types and bases

22. 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’.

23. 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.

24. 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.

25. 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.

26. 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.

27. 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

28. 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

29. 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).

30. 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)

31. 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

33. 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 nation’s talent, then the development of the knowledge-based economy will be geographically uneven and knowledge poverty will become a new kind of locational disadvantage.

34. 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.

35. 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).

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