Specialization Versus Diversity in Local Economies Cityscape 93

Regional economists, planners, and geographers have for many years drawn a useful distinction in characterizing the properties of spatial agglomerations or growth cen-ters. However, they are just now providing evidence for the hypothesis of Jane Jacobs: that urbanization is at least as relevant as localization in explaining spatial patterns of innovation and economic growth. The results of our research, conducted at the level of individual companies and plants rather than on the aggregate econo-mies of cities and regions, also corroborate Jacobs ’ theory. Across a national size-stratified random cross-section of almost 1,000 manufacturing establishments, the likelihood that managers will adopt new technology is significantly related to the types of counties in which their factories are situated, and less strongly to the prox-imity or density of clusters of similar businesses. In short, in manufacturing—and probably even more so in services—urbanization definitely matters, while the case for localization is less strong. Over the past decade, economists, sociologists, political scientists, and theorists of busi-ness strategy have rediscovered industrial geography. For some (Arthur, 1989; Enright