Technology as an Urban Solution to Economic Decline

Over the last half-century, many US cities have faced dramatic changes to their local economies, as seen through a decline in manufacturing activities and the rise of new industries. However, cities across the country have responded differently to the same shocks, as some have experienced impressive growth while others have been hit with long-lasting economic downturns. Researchers believe that these different outcomes can in part be explained by the notion of technological resilience, which seeks to measure a city’s capacity to remain productive when faced with adverse events.

A study by Pierre-Alexandre Balland, David Rigby, and Ron Boschma sheds light on how effectively cities react to and recover from external shocks to their economies by examining the regional impact of technological change on the knowledge economy over the course of multiple decades. Including this historical perspective allows previous incidences of economic shocks to help color how and why certain cities may recover more quickly than others from simultaneous crises.

For the purposes of this study, technological resilience is measured through the growth of inventions during periods of technological crisis. Using patent data from the United States Patent and Trademark Office (USPTO), the research analyzes the relationship between technological resilience and a workforce’s knowledge base in American cities between 1975 and 2002.

Patent filings in the US have generally increased at a steady rate over the course of the 20th century. However, significant increases in patent records have been linked to major historical milestones, such as the expansion of the US economy preceding the Great Depression and the economic boom following World War II. Technological crises are defined as periods with a substantial slump in patent production activity. Overall, the study assesses the technological resilience of a city by its ability to maintain patent productivity, especially during times of technological change and economic recession.

Focusing on the vulnerability of cities to technological crises, as well as their durations and intensities, the study finds that cities experiencing expanding employment and technological growth in prior years are less susceptible to later technological crises. Additionally, cities with a more “flexible” knowledge base, where patent filings exist in fields with a “[high] degree of relatedness,” face less extreme crises, with a slight decrease in duration. In contrast, cities that only specialize in certain industries or have high percentages of patent filers working independently from one another face a higher probability of technological crisis.

For example, the City of Detroit historically only specialized in automotive technology, which likely contributed to its economic decline. However, recent efforts, such as the business accelerator Tech Town Detroit, offer innovative space and support services to entrepreneurs to help diversify the city’s technological portfolio and encourage collaboration, which may help mitigate these effects in the future.

The overall findings support the hypothesis that metropolitan areas with a technologically diverse knowledge base experience milder periods of economic downturn and are able to recover more quickly. While this study relies heavily on quantitative analysis of patent applications and crisis trends to assess technological resilience, future research must assess a wider range of attributes, including the qualitative aspects of a given city that impact these areas, like local political structures, policies, and programs that support economic growth. Linking related findings from research in both of these areas will provide local leaders with a more comprehensive perspective on the many factors that impact technological resilience.

Article Source: Balland, Pierre-Alexandre, David Rigby, and Ron Boschma. “The Technological Resilience of US Cities.” Cambridge Journal of Regions, Economy, and Society, 2015.

Featured Photo: cc/(peshkov, photo ID: 74946015, from iStock by Getty Images)

Rachel Gordon
Rachel ('18) is a staff writer for Urban Affairs. She is interested in economic development and housing policy.

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