Complex economic activities concentrate in large cities

By Pierre-Alexandre Balland, Cristian Jara-Figueroa, Sergio Petralia, Mathieu P. A. Steijn, David L. Rigby, César A. Hidalgo. Nature Human Behaviour, 2018

441 citations recorded by the source corpus.

Human activities, such as research, innovation and industry, concentrate disproportionately in large cities. The ten most innovative cities in the United States account for 23% of the national population, but for 48% of its patents and 33% of its gross domestic product. But why has human activity become increasingly concentrated? Here we use data on scientific papers, patents, employment and gross domestic product, for 353 metropolitan areas in the United States, to show that the spatial concentration of productive activities increases with their complexity. Complex economic activities, such as biotechnology, neurobiology and semiconductors, concentrate disproportionately in a few large cities compared to less--complex activities, such as apparel or paper manufacturing. We use multiple proxies to measure the complexity of activities, finding that complexity explains from 40% to 80% of the variance in urban concentration of occupations, industries, scientific fields and technologies. Using historical patent data, we show that the spatial concentration of cutting-edge technologies has increased since 1850, suggesting a reinforcing cycle between the increase in the complexity of activities and urbanization. These findings suggest that the growth of spatial inequality may be connected to the increasing complexity of the economy. Balland et al. use data on scientific papers, patents, employment and GDP for 353 metropolitan areas in the United States to show that economic complexity drives the spatial concentration of productive activities in large cities.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/ddc198944c5553b48cf10ad1bcd3e12e7323319c

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Citations in the corpus

Technological complexity and economic growth of regions (2020, background): “Moreover, existing empirical evidence focuses on the national level, ignoring the substantial variations of (technological) capabilities at the sub-national level (Balland and Rigby, 2017; Balland et al., 2020).”
Complementary interregional linkages and Smart Specialisation: an empirical study on European regions (2020, background): “Therefore, knowledge diffusion is often geographically bounded (Balland & Rigby, 2017; Balland et al., 2020; Jaffe et al., 1993).”