Urban agglomeration plays an important role in fostering innovation (Feldman and Audretsch 1999, O’Huallachain 1999). As shown above, economies in developing Asia are becoming increasingly innovative. At the same time, they are experiencing rapid urbanization. Urban innovation clusters or hubs can be a powerful promoter of innovation. Silicon Valley, the birthplace of the global tech industry, is perhaps the bestknown example. Some well-known urban innovation clusters in developing Asia are Zhonguancun, Shenzhen, and Zhangjiang in the PRC; Bangalore and Hyderabad in India; and Pangyo Tech Valley in the ROK. But is there a systematic relationship between innovation and urbanization? Most existing evidence on the effect of urban agglomeration on innovation comes from developed economies. Systemic evidence is lacking as to whether urban agglomeration affects innovation, and if so, what the channel might be for it to occur in the developing world, including Asia.
Share of urban population and innovative firms in the 10 most innovative cities in selected countries
PRC = People’s Republic of China, R&D = research and development.
Note: The 10 most innovative cities in each country are the ones with the highest share of firms that undertake process innovation. Each cell is the sum of shares of these 10 cities.
Source: Chen, Hasan, and Jiang, forthcoming.