Thursday, July 05, 2012

Cities, "creative" types and entrepreneurs

I had earlier blogged my appreciation of Enrico Moretti's The New Geography of JobsHere Adam Ozimek mentions the same book and notes that Moretti's work indicates that "Richard Florida Is Wrong About Creative Cities".  Moretti describes Berlin, which is apparently a magnet for "creative" people but suffers economic stagnation.

To be fair, Berlin has a unique history.  Until the fall of The Wall, the island of West Berlin was a heavily subsidized outpost kept alive at high cost for political reasons.  That ended just over 20 years ago and no one knows whether an enterpreneurial culture can take root in that short a time span.

Closer to home, Stolarick, Lobo and Strumsky (SLS) take up the more interesting angle.  They address a key related question when they ask, "Are Creative Metropolitan Areas Also Entrepreneurial?" 

Florida suggests how to count who is "creative", but SLS look for ways to measure the presence of entrepreneurs.  They study the National Establishment Time Series data base (NETS).  "NETS measures the birth and death of establishments, and the change in employment associated with establishments' births and deaths, the expansion and contraction of existing establishments and the movement of establishments in and out of an area."  SLS report that the average number of new firms arriving in a metropolitan region in any year is surprisingly small, about 2.2% of all new firms.

But that is not the whole story.  The number of surviving, expanding or newly opened firms (“births”), also indicate the arrival of new capital and perhaps new entrepreneurs.  SLS report that they have found an empirical link between entrepreneurs and an area's "creative" talent pool.

I like this study because the discussion moves beyond "creative" people and "creative cities."  The magic comes from enterpereneurs.  If we can identify these and where and why they move, then we have progressed.