Abstract
Cities are important centres of service activities and hubs of new knowledge. The changing structure of production and consumption in post-industrial cities has been analysed by building on the recent economic literature in three related fields, such as: the ‘endogenous development’ of industrial clusters, the regional development of knowledge intensive business services and the regional factors of innovation and knowledge creation. The increasing interaction between users and producers for the development of new services within cities creates the internal aggregate demand, which is mainly concentrated within cities, and can be a powerful driver of national growth and the new motor or the drivers of the economy in a modern city.
Highlights
Services represent the largest component of total employment at the national level and by far in the largest cities
Knowledge intensive business services (KIBS) promote innovation in the industrial activities (Strambach 2001, 2008; Muller, Zenker 2001; Bryson, Monnoyer 2004; Howells 2006; Wood 2006; Cappellin 2009; Muller, Doloreux 2009; Cappellin 2009), commercial and transport services are needed for managing the transaction costs in the product exchanges (Cappellin 1988), and personal services integrate the industrial goods and represent an increasing share of private
Service firms become more similar to industrial ones so that innovation is important in services activities and in industrial activities (Gallouj 2002; Gallouj, Weinstein 1997; Howells 2006a; Metcalfe, Miles 2000; Miles 2005; Hipp, Grupp 2005)
Summary
Services represent the largest component of total employment at the national level and by far in the largest cities. The growth of services is to a large extent explained by the fact that industrial firms in the last 40 years have evolved from a strongly vertically integrated ‘fordist’ model, to a new model of industry where the continuous and fast external change requires innovation, tight specialization and strong integration/cooperation with external firms. Firms in the most developed countries should specialize in the production of ‘complex goods’, which can’t be produced by emerging countries. These products require the integration of many different sectors and technologies together with the use of a highly educated and skilled labour force to respond to the new needs emerging by customers concentrated in the most developed urban areas. Mr Löscher, the CEO of Siemens, has branded Siemens a ‘green infrastructure giant’, emphasizing the German group’s roots as a leading innovator and the vast growth potential in supplying infrastructure, such as trams, smart power grids and water treatment facilities, for the ever growing number of megacities around the globe
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