World City Innovation and Service Networks and Economic Growth

In addition to their often-cited role as global service hubs, world cities are also global innovation hubs with their connectivity in knowledge networks crucial for the innovation clusters they harbour. While both aspects of world cities' global connectivity may allow their urban economies to grow, we argue that specialization in one of these two networks may increase economic performance. We provide systematic evidence of this substitution effect by examining the changing positions of 129 world cities in inter-city innovation and service firm networks (2000-2012). Fixed effects panel analysis of city GDP growth confirm that the two networks are partial substitutes.