Innovation tends to follow the agglomeration effect, whereby scale plays a crucial role in how innovative an area is. This is due to the greater availability of minds, money, and local consumers and it has led to cities like London and New York hoovering up a greater share of their national economies, to the detriment of second-tier cities. A recent book from Trinity Business School’s Dr. Giulio Buciuni highlights how these secondary cities can fight back.
“The growing concentration of entrepreneurship and innovation activities in a few global ‘superstar’ cities is fueling the geographic polarization of innovation, with capital, talent and ideas increasingly flowing to a selected number of cities while other cities are ‘left behind,'” the authors explain. “While inequality across countries is decreasing, inequality within countries is widening, posing serious threats to the economic and political stability of numerous countries.”
Closing the gap
The researchers analyzed both primary and secondary data as well as conducted various interviews and site visits with stakeholders in four second-tier cities.
Galway, once considered among Europe’s most economically deprived regions during the 1980s, has now transformed into a thriving hub for the bio-tech industry, showcasing an exemplary entrepreneurial ecosystem. This transformation serves as a testament to the capacity of innovation to flourish even in geographically isolated and underdeveloped areas, provided three crucial factors are present, as identified in our analysis.
“Key for the economic development of the bio-tech ecosystem in Galway was the initial flow of foreign direct investments from American multinationals in the 1980s and 1990s; that was later followed by several public-private collaborations, including collaborations with University of Galway, and led to ad hoc educational curriculum in bio-tech engineering,” the authors continue. “This, paved the way for the emergence of local new ventures, most of which were established by engineers formerly employed by the subsidiaries of foreign multinationals. This entrepreneurial spirit was supported by financial resources coming from both the public sector and private investors.”
Bologna has emerged as the sole mid-size city in Italy capable of keeping pace with the remarkable growth of Milan, the country’s preeminent superstar city. This surge in Bologna’s economic development can be attributed to the successful integration of well-established industries, particularly in the automotive and machinery sectors, with fresh knowledge emanating from local universities and the active engagement of local firms in global supply chains.
In contrast to Galway, where the biotech industry was cultivated from scratch, Bologna’s stakeholders effectively collaborated to leverage the region’s preexisting industrial expertise, ensuring sustained competitiveness and innovation capabilities. In a manner akin to Galway’s experience, the synergy between firms and universities played a crucial role in amalgamating traditional industrial assets with novel innovative inputs and a skilled labor force. Furthermore, Bologna demonstrated a unique ability, unlike other industrial regions in Italy, such as Veneto, to preserve its local banking sector.
The collaborative efforts and astute utilization of existing resources have positioned Bologna as a noteworthy player in Italy’s economic landscape, providing a compelling case study for other cities seeking to thrive amidst intense competition and economic transformations.
