Innovation in urban systems: The interrelationships between urban and national economic development

Abstract

The theoretical basis for analysing the role of innovation in economic development is assessed, as is the application of such theories to urbanisation processes. It is concluded that innovation lies at the heart of economic development and that urban development has important feedback effects on national economic development. Analysing these feedbacks requires a sophisticated data set allowing the analysis of input-output relationships in urban systems over time. In the absence of such data, industry employment classifications are used as a proxy for economic structure in an analysis of United States and Australian cities. Particular kinds of cities in the urban hierarchy can be analysed in terms of their economic structure and this can then be related to national economic development trends. The contributions of categories of city (particularly by size class) to economic development can then be explored. Obviously, results will vary with the era of economic development covered by the data. However, in all eras, certain kinds of cities will emerge as leaders in the process of urban economic development and will also play a crucial role in national economic development.