Two major studies have recently appeared focusing on American cities and regions as drivers of national prosperity: a report by the Association of University Research Parks (AURP), The Power of Place; and corporate and political consultant John Kao’s new book, Innovation Nation. Both the AURP and Kao address familiar concerns—insufficient federal funding of basic research, a short supply of scientists and engineers, and poor test performance by American students. Their emphasis on cities makes sense, since only by pursuing economic policies centered in urban regions will the United States continue to enjoy prosperity. But cities, by their nature, have always encouraged human creativity; they do not need external entities to swoop down and bestow innovation upon them. This stubborn reality collides with the AURP and Kao’s place-based proposals.
The AURP report, for instance, wants a “national strategy” that will build “formal zones of innovation”—a phrase that should win the prize for oxymoron of the year. For his part, Kao envisions a National Innovation Council that would create two dozen “Innovation Hubs” around the country. It’s not that geographically concentrated areas of innovation are undesirable—places like Silicon Valley, Tysons Corner, and the Research Triangle have been hugely important to recent American economic performance. What’s mistaken is the notion that we can set out to plan and construct such areas.
Take Silicon Valley: the oft-told (and simplistic) tale is that Stanford University acted as its font of entrepreneurship and that other regions need merely establish similar incubators and research parks to emulate this success. While it’s true that Stanford played an important role in the Silicon Valley story, the region’s road from naval research in the early 1900s to Google in the 1990s was hardly planned or anticipated. Rather, innumerable contingencies and accidents shaped developments that only in retrospect seem inevitable. An important element in Silicon Valley’s rise, in fact, may be that no one sat down and composed an “innovation construction plan” for the region.
A similar dynamic prevails today among myriad locations seeking to become the next Silicon Valley. In the Kansas City region, where I live, much energy has been expended in the last several years on turning the metropolitan area into a biotechnology hub. Not often mentioned, however, is the primary reason Kansas City can even begin to envision such a future: Marion Laboratories, a company that serves as what some call a “surrogate university,” has fostered talent and knowledge that resulted in dozens of spin-off companies. Kansas City benefited from no innovation-strategy plan and no regional guiding council, but only from the efforts of individuals and firms working toward their own ends.
This isn’t to say that government doesn’t have a role. But the public sector is most effective when its policies act indirectly to encourage spontaneous enterprise: keeping barriers to entry low, allowing businesses to grow without excessive regulation, and making a region attractive for newcomers. Rather than the top-down visions of planners, such modest, commonsense policies are the best kind of place-based innovation strategy.