If you think about how innovation works in America, a relatively small metropolitan area such as Austin or Seattle (both of which do not rank among America’s 10 biggest cities by population) can have a disproportionate impact on the future of national innovation. That’s a pattern repeated around the country, as even smaller metropolitan areas — places like Raleigh-Durham or Chattanooga — also play an important role in pushing forward U.S. innovation. Even freewheeling Silicon Valley has always been based on its density of ideas, not the density of its population.
Yet, all the current trends suggest that this uniquely American system of innovation, in which innovation is so geographically diverse and spread out across so many hubs, is about to sustain a major challenge from the relentless pace of urbanization around the world. Just 40 years ago, there were only 3 mega-cities in the world: New York, Tokyo and Mexico City. Now there are 28, and there are plenty more waiting in the wings. It’s now become conventional wisdom that cities are the engines of growth, progress, jobs and prosperity. And the bigger the cities are, the bigger is that potential engine.
Viewed from this perspective, it’s almost impossible to see any way that the United States can keep up with the growth of Asia’s mega-cities without making changes to its national model of innovation. Take a look at the projected map of global mega-cities created by Bloomberg – of the 41 mega-cities in the world by 2030, 24 will be in Asia. By way of comparison, North America will have only three mega-cities: New York, Los Angeles and Mexico City. South America will have five: Bogota, Lima, Sao Paulo, Rio and Buenos Aires. Even Africa — with Lagos, Luanda, Kinshasa and Johannesburg — will have more mega-cities than North America.
You can already glimpse how the inexorable logic of the mega-city is going to play out. Take America’s two mega-cities, New York and Los Angeles. A recurring theme in New York tech circles has been that New York City has finally caught up to Silicon Valley as America’s new innovation leader, based largely on the remarkable confluence of so many industries – media, finance, fashion – being based in such a densely populated urban space. That’s exactly the right environment for new technologies to take advantage of network effects. And Los Angeles seems to be experiencing a new tech boom these days, giving us a whole host of interesting new start-ups. Again, sheer population density is one of the factors at work. “Silicon Beach” is showing signs of being a rival to Silicon Valley these days.
As a recent paper from Kristin Ljungkvist of Uppsala University in Sweden points out, it’s not only technological innovation where these mega-cities have the potential to play a huge role in future innovation. On just about any issue with a political angle to it — climate change, poverty, transnational crime, pandemics and counterterrorism – there’s a good chance that mega-cities are going to be at the forefront of new innovation and creative thinking.
The specific example cited by Ljungkvist in her paper is New York City. In areas such as counterterrorism, New York City is already a national leader. In many ways, says Ljungkvist, New York is acting like its own city-state, with its own approach to climate change and its own counterterrorism policy. And all this policy innovation drives economic growth as part of a virtuous circle: “Local representatives, when they get involved in global issues such as climate change, do it primarily to ensure continued strong economic development for the metropolitan area.”
After all, as the UN argued in its 2013 report “World Urbanization Prospects,” innovation is the single most important weapon these mega-cities have to deal with problems ranging from transportation to health care. In short, to deal with the massive crush of higher population, mega-cities have to get smarter faster. They have a real need for all the innovations that can transform them into “greener, healthier, friendlier and more efficient metropolises.”
Of course, not everyone is upbeat about the growing role of mega-cities. McKinsey has pointed out that some of the talk about mega-cities may be overhyped: “Contrary to common perception, mega-cities have not been driving global growth for the past 15 years.” And other researchers have highlighted how mega-cities present their own unique socio-economic problems — everything from traffic congestion to slums — created by such dense population growth. Joel Kotkin, for example, sees mega-cities as “a tragic replaying of the worst aspects of the mass urbanization that occurred previously in the West.”
So what does all this mean for U.S. innovation? For one thing, tech innovators chasing new opportunities may choose to move to America’s biggest cities in even greater numbers, further exacerbating demographic trends of population shifting away from suburbs to urban metropolises. Immigrants, who typically cluster in larger cities, may play an even greater role in guiding the future of American innovation. And larger cities not typically regarded as national innovation leaders but on the demographic cusp of becoming a mega-city – Dallas, Houston, Miami and Phoenix — may increasingly find their innovation prospects improved at the expense of regional hubs that have smaller or declining populations.
With the rise of mega-cities, Washington policymakers and Wall Street investors may find it harder to sell the Silicon Valley story abroad. Remember when just about every city in the world was attempting to build its own version of Silicon Valley? If mega-cities in China, India and Nigeria take off as many suggest they will, then policymakers could be talking about implementing a “Chengdu” or an “Ahmadabad” or a “Lagos” model rather than a “Silicon Valley” model. That would imply not just a new language of innovation, but also a radically new way of thinking about America’s role in global innovation. When it comes to innovation, maybe size does matter.