Unravelling the forces underlying urban industrial agglomeration

Globally, a consensus has emerged that emphasises the role of cities, rather than countries, as key engines of economic growth (Jacobs 1961; Glaeser 2011). Yet, what are the drivers of urban success in the face of high costs arising from factors such as congestion, density, crime, and pollution? Leading scholars have argued that it is the diversity of cities, and in particular the way cities facilitate and foster a diverse ecology of social interactions, that gives rise to new activities, opportunities and innovations (Jacobs 1969; Bettencourt et al. 2007). This view aligns with a growing literature that emphasises the role that larger cities have in better facilitating matching between employers and employees, knowledge spillovers between firms and innovation opportunities (Friedrichs 1993; Duranton and Puga 2001, 2004; Rosenthal and Strange 2006).