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Why won’t the pandemic take down the role of cities?

Juan Capeáns

Juan Capeáns

Senior R&D&I Consultant

It is a hard time for cities. A recent United Nations report on the impact of the COVID-19 in the world concludes that cities are the most affected areas by the global pandemic, and they are considered to be the main sources of infection and spread of the virus. Due to this, more and more people are associating the high population density of large cities like Madrid and Barcelona with a bigger risk of spreading the virus, higher rates of infection and, therefore, higher mortality rates. All this anticipates the negative consequences that the pandemic could have for the future development of cities. In the face of these threats, it is important to remember the fundamental role of cities as an engine of economic development and social progress for society.

As a consequence of agglomeration economies (the benefits that emerge when companies and individuals are grouped together in a certain geographical location), the positive effects derived from the spatial concentration that cities provide not only cause a reduction in production, distribution and financial costs, but also constitute the essential element for the promotion of innovation.

The real driving force behind innovation is the presence of companies providing specialised services, the existence of advanced research and training structures (universities and research centres), the creation of intense inter-industrial links as a result of the close spatial location and the development of sophisticated and specific demand, typical of large cities. Thus, cities, with all these attributes that define them, reduce the uncertainties and business risk that innovation processes involve. They also concentrate a great multiplicity of individuals, ideas and concerns in a very small space, which makes them a source of entrepreneurial creativity and industrial renewal.

Three processes that confirm the role of cities as guarantors of innovation:

Cities are natural business incubators

Business incubators are initiatives designed to accelerate growth and ensure the success of entrepreneurial projects. They provide support through a wide range of resources and services that can include the rental of physical space, capitalization, coaching, introduction to networking, and other basic services such as Internet or cleaning. Cities naturally play the role of incubators by ensuring access to more precise information, to a wider and more sophisticated market and to knowledge in each area of specialisation. They do it through a consolidated network of services (transport, water, telecommunications, electricity and so on), proximity to the main decision-making bodies and a larger population. Moreover, thanks to the presence of a diversified and specialised network of urban services, which reduces the costs of setting up, the city enables the initial size of the companies to be small.

The product life cycle

Cities also play a key role in the life cycle of products and in industrial dynamisation. Their own spatial concentration is essential for the renovation or modernisation of products that are already marketed at a late stage and have a low sales volume. The conception and design functions typical of large cities, where creators and designers come together, play a strategic role in these relaunching processes, and this reinforces their function as motors of innovation.

Another condition that determines the decisive role of cities in innovation processes is the reduction of the life cycle of products. This is because many products have seen their period of permanence on the market drastically reduced from 20 to 3-5 years, when they are replaced by new goods. Such product innovation is developed in close connection with innovation in manufacturing processes, since these must reach the market in a short period of time, in conditions of low production costs. Once again, all this gives an advantage to large metropolitan areas, where integrated research-manufacture-engineering units for new products can be located in a single physical space. For example, this is the case of the revitalisation of Mexican border cities as a result of the maquiladora phenomenon or the take-off of large Chinese metropolitan areas as a consequence of the country’s industrial dynamics in recent decades.

Innovation processes in large cities

New products find, in the initial and pioneering phase of their life cycle (from invention, industrialisation and marketing), that large cities are favourable ecosystems for their launch. Similarly, many small companies and entrepreneurs, in which innovation processes are identified with their very existence, show a similar localisation preference.  Thus, it seems legitimate to ensure that the city is the preferred place for innovation processes to take place.

Cities are essential elements for innovation processes that ultimately contribute to the progress of humanity for many reasons: the density of relevant information typical of large urban agglomerations where public and private decision-making bodies converge, advanced research and training structures, the concentration of interactions and synergies between companies, the reduction of uncertainties and risks for companies and the existence of favourable supply and demand conditions, as well as greater ease in establishing direct contacts with large foreign research centres.

Thus, far from representing a threat to society as a result of the coronavirus pandemic, cities are a fundamental element in finding the solution to the current crisis, as they concentrate the innovation and research processes necessary to find a vaccine that will make it possible to return to normal, and prevent future pandemics that threaten our lifestyle.

Juan Capeáns is an expert in economics and urban development in our Department of Social Innovation

See the Huffington Post article


Expert person

Juan Capeáns
Juan Capeáns

Madrid Office

Senior R&D&I Consultant

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