Specialization Versus Diversity in Local Economies: The Implications for Innovative Private-Sector BehaviorAbstractRegional economists, planners, and geographers have for many years drawn a useful distinction in characterizing the properties of spatial agglomerations or growth centers. However, they are just now providing evidence for the hypothesis of Jane Jacobs: that urbanization is at least as relevant as localization in explaining spatial patterns of innovation and economic growth. The results of our research, conducted at the level of individual companies and plants rather than on the aggregate economies of cities and regions, also corroborate Jacobs' theory. Across a national size-stratified random cross-section of almost 1,000 manufacturing establishments, the likelihood that managers will adopt new technology is significantly related to the types of counties in which their factories are situated, and less strongly to the proximity or density of clusters of similar businesses. In short, in manufacturing—and probably even more so in services—urbanization definitely matters, while the case for localization is less strong.Specialization Versus Diversity in Local Economies: The Implications for Innovative Private-Sector Behavior (*.pdf, 2193 KB)
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