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Urban Structure: Role In Urban Growth, Net New Business Formation and Industrial Churn

Peter Gordon and Bumsoo Lee
Cities play a critical role in economic development. Considered engines of growth, cities also are places where people do their best work. Economists recognize the key role of entrepreneurs in driving innovation; the economist Joseph Schumpeter established in the early 1900s that specializing in discovery is the key economic activity. Entrepreneurship involves discovering new products and services as well bringing them to market in new and better ways. At least as important as Schumpeter’s contribution is F.A. Hayek’s insistence that local knowledge spreads among large numbers of decentralized actors who implement the many important details, including supply chains. The unique spatial arrangements within urban areas can be expected to form in ways that facilitate the flow of ideas and innovation, enabling successful cities to be congenial hosts to innovative and entrepreneurial activities.