Geography Is Destiny

14 February 2007 at 10:55 am 1 comment

| Peter Klein |

When it comes to innovation, that is, writes Greg Zachary in Sunday’s New York Times. “[T]he inescapable lesson of the iPod, Google, eBay, Netflix and Silicon Valley in general is that where you live often trumps who you are.” Increasing returns and first-mover advantages — “debated in head-scratching terms by professional economists” — explain the geographic concentration of technology firms. (HT: Richard Florida)

No time for head scratching today, but I’ll throw this out for your consideration: I think the literature tends to overemphasize localization economies as a source of increasing returns, downplaying the gains from urbanization stressed by Jane Jacobs. Could this be because economists generally underappreciate the importance of uncertainty, experimentation, and serendipitous discovery, preferring to stick with equilibrium models of endogenous growth?

Here’s more on Jacobs from Richard Florida and from Lynne Kiesling.

Update: The Rockefeller Foundation has created a Jane Jacobs Medal.

Entry filed under: - Klein -, Entrepreneurship.

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