In previous posts I have looked at data that showed that bigger cities produce more patents per capita. For instance, over the 30-years that the OECD database covers, Auckland has produced one PCT patent for every 750 people, whereas Sydney has produced one for every 550 people. Why is this?
We have seen that inventors that participate in large collaborative networks tend to be more productive. It could be that the opportunities to collaborate, which will presumably be greater in a larger city, increase the productivity of inventors in bigger cities. For instance, if you are putting together a research team that needs specialist skills, it is more likely that you’ll find people with the right skill set in a larger city.
We can test this by looking at the dependence of inventor productivity on city size. On the left I have plotted the inventor productivity (that is, the number of patents per inventor) versus city size for cities in Australia. This can be less than 1 as typically there is more than one inventor per patent application. As you can see, inventor productivity does not have a dependence on city size in this data. We have found similar results in all the countries we have looked at, including New Zealand.
The corollary is that the number of inventors per capita increases with city size in a similar way to the number of patents. Bigger cities have more patents and more inventors per capita. This seems to rule out collaborative network effects as the cause of the higher number of patents per capita in bigger cities.
What else could be going on? Economists talk about knowledge spillovers where innovations that take place in one business, spur innovation in neighbouring businesses. In this scenario, we would expect to see inventors clustered together, while not necessarily being more productive. This idea is at least consistent with the data above. We’ll explore this in later posts.