February 12, 2013

The Geography of American Invention

After the American Century                                                                                                                                                        

A new study from the Brookings Institution reveals that a relatively small part of the United States produces most of its patents. As reported in the New York Times, the Census Bureau divides the nation into 370 "metropolitan statistical areas" but two out of every three patents is produced in just 20 places. 

It is even more interesting to study the top five of these 370 areas. Those with "the most patent filings per million people, from 2007 to 2011, were San Jose-Sunnyvale-Santa Clara, California; Burlington-South Burlington, Vermont; Rochester, Minnesota; Corvallis, Oregon; and Boulder, Colorado." None of these places are large cities. All are attractive small cities, in beautiful natural settings where it is more desirable to live than most other locations in the US. All of them have universities and/or large medical centers at their core. All of these places now are, or at least once were, less expensive than major cities. In short, these are upscale, attractive areas with highly educated populations in smaller cities. The extremes of urbanism or rural life are not represented. These are middle landscapes that talented people will choose to live in or that they will be happy to move to. Not Philadelphia, but Princeton. Not New York City, but Ithaca. Not Denver but Boulder.

Patents per worker, 2011

In such locations innovative people can afford to live and to establish offices or labs more easily than in the large cities. In such places they also can find like-minded  innovators more easily than in large cities. These smaller places have a critical mass of talent, but not much heavy industry such as steel mills, and they have less traffic and better public schools than most places.

The implications for other nations need to be underscored. Rather than try to make Europe's largest cities the centers of innovation, it makes more sense to look for smaller university towns analogous to Austin, Burlington, Boulder, or Corvallis. In Denmark the potential for innovation per capita should therefore be higher in Aalborg or Odense than in Copenhagen. In Britain, innovation should flourish not in London or Manchester but in Cambridge or York. 

Furthermore, the study shows that it is much smarter for a city to invest in research universities than in football stadiums or downtown shopping malls. Stadiums represent the "build it and the consumers will come" school of thought. However, fans and consumers may go elsewhere. Universities generate patents and new businesses that create new sources of income, jobs, and production, with consumption an inevitable by-product of the high incomes characteristic of such communities.

This is not to say that no innovation takes place in large cities. Of course it does. But in the United States the most innovative locations have other demographics.

The Brookings Institution report can be found here.