Signal Firms in innovation cities remain small, service-heavy and weakly linked to relocated agencies

Summary

Although the number of firms and jobs in innovation cities has grown steadily, their composition shows structural limits. At the end of 2021, services made up 63.8 percent of resident firms and manufacturing 26.0 percent, mostly urban industries that can easily move into office buildings. Firms averaged only 9.4 employees, firms with 30 or more workers were 5.5 percent of the total, or 105 companies, and only five firms employed 300 or more. Many host local governments recorded regional output growth below the national average, and employment effects in knowledge-based industries were not statistically significant. Weak links between agency functions and regional strategic industries delayed the formation of industry, academia and research clusters and left synergy effects below expectations.