Negative Consequences of Innovation-Igniting Urban Developments: Empirical Evidence from Three US Cities

Abstract

Emergent economic development policies reflect the challenges urban growth coalitions face in attracting the footloose tech-entrepreneurs of the global economy. This convergence between the focus on place and the harnessing of global capital has led to the proliferation of innovation-igniting urban developments (IIUD) - place-based economic development strategies to boost the local knowledge economy. Economic developers are using IIUD strategies to convert areas of the city into entrepreneurial “launch pads” for innovation. However, because these developments remain young, considerations to implement IIUDs lack an evidence-base to show the potential for negative consequences on the communities where they are embedded. This research addresses this gap through: 1) a review of studies of similar developments to identify negative consequences; and 2) using a quasi-experimental method composed of Propensity Score Matching and Average Treatment Effect analyses from IIUDs in three US cities (Boston, MA, St. Louis, MO, and Buffalo, NY). Combined, results demonstrate that the greatest implications of IIUDs are the increased polarized division of labor, housing unaffordability, and income inequality. As IIUDs gain in popularity, it is critical to correlate negative consequences with IIUDs to inform economic developers in assessing trade-offs.