Negative Consequences of Innovation-Igniting Urban Developments: Empirical Evidence from Three US Cities

Abstract

Emergent economic development policies reflect the challenges urban growth coalitions face in attracting the footloose tech-entrepreneurs of the global economy. This convergence between the focus on place and the harnessing of global capital has led to the proliferation of innovation-igniting urban developments (IIUD)—place-based economic development strategies to boost the local knowledge economy. Economic developers are using IIUD strategies to convert areas of the city into entrepreneurial “launch pads” for innovation. However, because these developments remain young, considerations to implement IIUDs lack an evidence-base to show the potential for negative consequences on the communities where they are embedded. This research addresses this gap through: 1) a review of studies of similar developments to identify negative consequences; and 2) using a quasi-experimental method composed of Propensity Score Matching and Average Treatment Effect analyses from IIUDs in three US cities (Boston, MA, St. Louis, MO, and Buffalo, NY). Combined, results demonstrate that the greatest implications of IIUDs are the increased polarized division of labor, housing unaffordability, and income inequality. As IIUDs gain in popularity, it is critical to correlate negative consequences with IIUDs to inform economic developers in assessing trade-offs.

A critique of innovation districts: Entrepreneurial living and the burden of shouldering urban development

“…Whether innovation district strategy will meet wealth-generating objectives remains to be seen. However, the role innovation districts play in increasing land values and catering to wealthier demographics is evident (Zandiatashbar and Kayanan, 2020). As argued in this paper, the strategy derives profit from the livelihoods of the people who live–work–play within its boundaries.…”

Impact of Transit Quality on Anchor-Mediated Knowledge Economies Across Large U.S. Cities

“…Key private stakeholders in growth machine coalitions are business leaders, civic boosters, property owners, and local financial institutions who shape public funds expenditure and alter land use regulations to create a climate for attracting and retaining businesses ( 22 ). The public sector uses the tools of infrastructure investment and fiscal incentives including subsidies and preferred interest loans, which frequently serve the local growth machine rather than the community at large ( 21 , 22 ). Private actors in growth machine coalitions benefit from fiscal and social resources that enable them to continue steering private–public coalitions’ policy agendas in favor of growth machine interests ( 22 ).…”

“…As interest in anchor-based urban revitalization and innovation-friendly urban development thrives, it is critical to consider possible disadvantages, particularly those identified by growth machine and urban regime theories (18)(19)(20)(21). These theories have identified unequal outcomes and unfair distribution of the benefits and costs of growthoriented public-private coalitions typically led by private actors and anchor-based proponents (19,22).…”

Transportation Amenities and High-Tech Firm Location: An Empirical Study of High-Tech Clusters

“…For instance, manufacturing and service-based industries might not be attracted to similar locations, as they have different labor and customer markets, logistic mobility requirements, and land acquisition needs ( 11 , 15 ). Understanding these differences is critical since high-tech industries play a pivotal role in regional economic development ( 33 ). In recent years, a substantial portion of regional and local policy developments have dealt with attracting and accommodating high-tech industries.…”