// 1 // The findings, interpretations, and conclusions expressed herein are those of the author and do not ne- cessarily reflect the view of the World Bank Group, its Board of Directors, or the governments they re- present. The author would like to thank Elena Gasol, Tim Kelly, Wonki Min, Michael Minges and Arturo Muente for their comments. // 2 // // 3 // CON T E NTS EXECUTIVE SUMMARY .......................................................................................................................................... 5 A/ Technology-led changes are transforming the economic structure ....................................................... 6 B/ Policies to prepare for the technology-led transformation in the economy ......................................... 8 ANNEX – Collaboration and Community Promotion Spaces ......................................................................... 13 END NOTES ............................................................................................................................................................... 17 // 4 // EX EC U T IV E S U MMARY Increasing signs suggest that the economy is in veloped countries, including the United States and the process of a significant restructuring pro- some European Union (EU) countries. This has signifi- cess. cant implications for developing countries, because 70 to 80 percent of the productivity gap between Technology-led transformations are no longer limit- developed and developing countries today can be ed to technology-related sectors and are beginning explained by the lag in transitioning to technolo- to impact structural sectors, including manufac- gy-led changes from previous economic restructur- turing, retailing, transportation, and construction. ing processes (for example, the 18th-century and Disruptions of business models are surging from an 20th-century industrial revolutions). atomized mesh network of entrepreneurs and inno- vators. Cognitive skills are increasingly being substi- Policies to respond to these technology-driven tuted by technology-led productivity, affecting labor economic trends have focused on four key areas: supply in both developing and developed countries. In turn, creativity and social skills are becoming (i) adapting education to provide practical skills for more important and valuable than ever before. a predominately knowledge-based economy, (ii) promoting the development of local innovation eco- This change has potentially significant implications systems, (iii) fostering entrepreneurship that creates for the competitiveness of countries, business, and new sectors and businesses, and (iv) creating inno- people. Countries are facing changes in their tradi- vation networks and collaborative environments (for tional sources of competitiveness based on a global example, innovation labs) for existing core and tra- market composed primarily of physical goods and ditional industries to remain competitive. Countries services. Business organizations are struggling to that have applied these policies are starting to wit- adapt to new structures that require both leaner or- ness preliminary results as they begin to adapt their ganizations and open innovation processes to cope economies to the new sources of growth, particular- with disruptive changes in their sectors. On the labor ly led by new business models and innovations. side, workers are encountering a stagnant or de- creasing offering from the traditional base of physi- If developing countries want to remain compet- cal and basic cognitive skills employment. itive, they will also need to adapt to these eco- nomic trends. The policy areas of focus and the Some countries are starting to react to these eco- examples presented below, although not pre- nomic changes in order to maintain their competi- scriptive, can help these countries to shape and tiveness. Most of these countries, however, are de- design their policy responses to these challenges. // 5 // A / Technology-led changes are transforming the economic structure Technology-led transformation has significant fer a platform for entrepreneurship in digital goods impact on the structure of the economy. Both in- (for example, mobile apps),6 and provide funding dustrial revolutions, in the 18th and 20th centu- to millions of entrepreneurs through crowdfunding ries, reshaped the global economy. platforms (for example, Kickstarter)7. Not only is this trend increasing, it is expanding and affecting the The first industrial revolution ushered in changes physical world. There are already more things con- that are still present today. In less than 150 years, nected to the Internet than there are humans; this the world went from being a rural-dominated econo- number is expected to grow more than four times by my—with less than 5 percent of the population living 2020.8 Data analytics allow for finding trends and in cities1—centered on the agricultural sector, which predicting outcomes in almost real time, thereby employed more than 75 percent of the workforce in automating processes and responses.9 The costs of nearly every country, to a city-centered economy manufacturing have been reduced dramatically: au- based on manufacturing and services.2 This shift led tomation has decreased costs relative to labor by 40 to the highest increase in productivity, output, and to 50 percent since 1990.10 3D printing11 is changing population in world history; however, it also caused production processes in manufacturing, blurring the major social disruptions and inequality, as society need for a physical location.12 Today, pieces of equip- and the labor force coped to adapt to this new re- ment can be produced with an Internet connection ality.3 This first technologyled transformation of the and a 3D printer, as this technology is turning “bits” world economy reshaped countries’ competitiveness into things, digitizing large parts of the manufactur- and positioned those countries that embraced new ing process.13 Automation is also reducing cognitive technologies faster (for example, the United King- labor beyond traditional substitution of physical la- dom, Germany, and the United States) at the fore- bor and, more significantly, it will dramatically im- front of economic progress, while widening the gap pact transport and logistics.14 This can have signifi- with laggard countries at a dramatic scale.4 At the cant consequences for the structure of the economy, beginning of that industrial revolution, the differ- most notably via manufacturing and transportation. ence in living standards between richest and poorest These effects will expand into other sectors (for ex- countries was about 2 to 1. Today that difference has ample, agriculture, construction, and medicine).15 risen to a ratio of between 30 and 40 to 1.5 The gaps in competitiveness and in living standards were fur- Manufacturing processing is at the center of this ther magnified by the second industrial revolution, in new inflection point. It is easy to imagine the fu- the 20th century. ture of manufacturing and transportation in two to five years. Production facilities will be located close Today, there are strong signs that the impact from to demand (that is, within cities) and will be fully or digital technologies is reaching an inflection point semi-fully automatized. They will need few labor- that can produce a similar transformational impact ers— most, as few as 5 to 10 people—and will be able on economy. The Internet has enabled information to produce, 3D print, and assemble in less than a day access, knowledge sharing, and collaboration in ways customized products on demand sent by consumers not seen before. Crowdsourcing communities cre- via digital order.16 This new production dynamic will ate new products, solve complex problems, produce impact supply chains, reshaping their current con- knowledge repositories (for example, Wikipedia), of- figuration based on production costs to one based // 6 // on the value added in this new environment (for ex- tensive flows of trade are already growing 1.3 times ample, proximity to demand, design, and innovation faster than capital- and labor-intensive trade flows.25 centers). Production through a semiautomatic deliv- Supply chain reshaping and relocation of manufac- ery system will become the new norm in delivery of turing closer to consumption and demand will also manufacturing in consumer and business markets.17 impact recent gains in industrialization and foreign Transportation will increasingly become more au- direct investment (FDI) that developing countries tomatized, with semiautomatic vehicles being first have achieved.26 If routine cognitive labor diminish- deployed for short-range travel distances and then es its value to global production and services, then longer ones. Maintenance of fleets and machinery developing countries may see less job opportunities, will change dramatically, with just-in-time produc- increased poverty and inequality, and a decrease tion of pieces and predictive maintenance for ma- in economic gains achieved over the past decades. chinery reshaping supply chains and skills in these Trade patterns will also be impacted, as logistics tasks.18 costs increase the importance of product customi- zation and rapid delivery to consumers. This—com- Technology-driven changes have already started to bined with the diminished comparative advantage of produce a structural transformation in the econo- low-cost labor—decreases the return on investment my and employment. Some authors have suggested of disaggregated international supply chains that that the economic structure is undergoing a major have fueled growth in developing countries. Trade will change of similar proportion to that of the first In- shift gradually from the current structure of trade dustrial Revolution.19 If in that revolution physical in goods and services to a mixed structure where work was substituted by technology, then in this in- networking of knowledge will be more preeminent, stance, cognitive work is being substituted by tech- increasingly resembling the patterns of the flow of nology at a more rapid pace—first affecting routine digital goods.27 This would have major implications work, then expanding to other cognitive tasks. This for global trade and sources of income for developing expansion would have major implications to coun- countries, particularly those with less sophisticated tries’ economic structures, affecting labor, indus- and/or smaller consumer markets. trycompetitiveness, and asset allocation, among other things. Recent studies show that technology is behind the separation of growth and gain in the United States, called “decoupling,” where produc- tivity growth has continued but employment has stalled or declined as technology has reduced labor needs.20 Similar conditions were found in the United Kingdom.21 This situation is impacting labor mar- kets beyond the traditional substitution of physical jobs. Routine cognitive jobs are being eliminated in the economy and substituted by technology and au- tomation of tasks, not only in developed but also in developing countries.22 A recent study shows labor share of income has steadily declined in the econo- my across both developed and developing countries, including labor-intense countries (for example, China, India, and Mexico which is being substituted by cap- ital investment in technology).23 Changes in countries’ competitiveness and trade patterns will affect labor-intense and developing countries the most. Countries less prepared to adapt to these structural changes will suffer in their com- petitiveness. Seventy to 80 percent of the productiv- ity gap between developed and developing countries that we still see today can be explained by the lag in transitioning to technology-led changes from previ- ous economic restructuring processes (for example, the 18th- and 20th-century industrial revolutions).24 If these technology-led trends continue and expand, then developing countries’ recent competitive gains from lower labor costs will decrease. Knowledge-in- // 7 // B/ Policies to prepare for the technology-led transformation in the economy Countries need to take action to adapt to this new environment. Similar to what happened in prior technol- ogy-led economic transformations, countries that embrace and adapt to the transforming economic struc- ture will be more prepare to increase their productivity and competitiveness more than those that do not. Some countries are starting to react to the new economic changes, but most of them are developed coun- tries, including the United States and some EU countries. If other countries want to remain competitive, they will also need to proactively adapt their economies to a predominately knowledge-based economy, where innovation and networks of open collaboration multiply economic effects. The main policy areas, which leading countries are focusing on, are the following: • Adapting education to provide practical skills for a predominately knowledge-based economy • Promoting the development of local innovation ecosystems • Fostering entrepreneurship that creates new sectors and businesses • Creating innovation networks and collaborative environments (for example, innovation labs) for existing core and traditional industries to remain competitive. Infrastructure to support these policies will also be critical, as broadband connectivity becomes an enabler of the digital economy. However, these four policy areas can be addressed even with limited nationwide in- frastructure, as long as there is enough connectivity to knowledge and open collaboration networks in key hubs (box 1). In the following paragraphs, this paper describes these policy areas and the emerging trends and policies adopted in each of them. A/ ADAPTING EDUCATION TO PROVIDE this goal. Many national educational programs are PRACTICAL SKILLS FOR A PREDOMINATELY still based on 19thcentury dynamics, where teachers KNOWLEDGE-BASED ECONOMY lecture students and memorization is the primary method of learning. Teachers need to become facili- Preparing the population for skills that will be de- tators who allow the acquisition of 21st-century skills manded by the new industry environment will be by students. STEM (science, technology, engineering, critical for employability and competitiveness. In the and math) education and skills such as coding and 19th century, introducing mandatory basic educa- 3D printing, along with creativity will become more tion helped reallocate labor from agriculture to in- important.39 Some countries—including the United dustry after the 18th-century industrial revolution.37 Kingdom, Israel, Denmark, and New Zealand—are The new labor force will now need to gain the skills already moving in this direction, adapting their na- for an environment where cognitive tasks are substi- tional curriculum to this new paradigm and includ- tuted by technology. Adapting educational curricula ing mandatory subjects (for example, coding) in to provide what are called “21stcentury skills” (for ex- schools.40 STEAM programs, which add arts to STEM ample, critical thinking, problem solving, teamwork education, are also starting to gain importance.41 and collaboration, communication, creativity, and innovation) will help toward this end.38 However, As technology-driven changes reshape existing a major revamp of education is needed to achieve industries, new skills will be constantly required. // 8 // BOX 1/ Development of technology innovation ecosystems in Africa despite limited infrastructure Technology start-up communities have surged in mobile devices), 80 percent of mobile subscriptions many countries in Africa. South Africa, Ghana, Nige- are second generation (2G) with no Internet access.31 ria, Kenya, and Tanzania are some of the countries This limits possible technology innovations; howev- where technology start-ups have been emerging, er, it also presents opportunities to address mar- forming communities of entrepreneurs.28 This trans- kets that have been ignored by other entrepreneurs formation has occurred despite the level of available and multinationals because they are based on 2G broadband and connectivity, which differs substan- technologies, using SMS and USSD apps, targeting tially from that of European countries or the United local use-cases, which are different from those of States, for instance. In many of these African coun- developed countries.32 These markets today are not tries, there is no abundance of broadband, quality is only restricted to Africa but also exist in many other low, and Internet access is expensive relative to what countries in South Asia, East Asia, and Latin Ameri- developed countries pay.29 One of the most success- ca.33 It is not by chance that two of the most innova- ful examples of technology innovation ecosystems tive platforms used in 2G environments—M-PESA,34 in Africa is Nairobi, which has grown into one of the the world’s largest platform of mobile payments, largest and most active ecosystems in Africa, with and Usahidi,35 which serves to crowdsource data more than 200 active start-ups, 14 accelerators from users to monitor election processes and help and incubators, 3 collaboration/community man- disaster recovery—come from Nairobi. This has led agement spaces, and several tech-community re- to multinational companies, such as Facebook, to gional events.30 Although Nairobi has enjoyed a sub- set labs in developing countries to emulate the tech- stantial increase in international capacity through nology conditions of countries like Kenya in order to submarine cables, which have provided a base for adapt their products to these markets.36 broadband availability through mobile (99 percent of Internet subscribers access the Internet through Preparing the workforce for learning these new skills velopment, which can be learned quickly with no pre- and adapting to the changed environment will be vious training). Further, many tech jobs require only critical for existing industries to compete. Compa- on-the-job training, either short- or long-term. For nies face a skills gap: to remain competitive in a rap- instance, almost half of the jobs of New York’s tech idly changing environment, their specific needs must start-up system, one of the largest in the world, do be met with an adaptable workforce. Education and not require a bachelor’s degree.44 Creating rapid skills training will need to be more flexible to changing training (for example, the coding and entrepreneur- corporate needs. Real-time experience is critical for ship bootcamps provided by General Assembly in education systems to remain practical, relevant, and New York, London, and other locations; the Ateneus useful in this new environment. For example, appren- de Fabricació in Barcelona; and other similar initia- tice systems, such as those implemented in Germa- tives in other cities)45 and introducing basic tech and ny and Austria, and university-industry platforms, creativity skills in vocational training lets existing which match industry projects with students to pair workers recycle their skills and access new job op- training with real-work experience to address the gap portunities. Initial results from codding bootcamps between academic education and corporate needs.42 programs that target the unskilled and poor popula- Demola, which started in Finland and has expanded tions, such as the Coalition for Queens in New York, to five other countries, and Cornell NYC Tech’s pro- confirm that rapid skills training with mentorship re- gram of engineering, which was specifically designed sults in employability and rapid reskill of workers.46 to support the New York start-up culture, are exam- ples of these university-industry project platforms.43 B/ PROMOTING THE DEVELOPMENT OF LOCAL INNOVATION ECOSYSTEMS Vocational education and rapid training programs of technology- and creativity-related skills will also Cities are becoming the new ground for organic inno- become important for the existing workforce in or- vation. The reduction of costs and the availability of der to access the new job opportunities created by resources provided by digital technologies are allow- technological innovation. Despite the common per- ing innovators to surge all around the world, taking ception that technology- and creativity-related jobs advantage of the agglomeration effects provided by require advanced education, many of these jobs re- cities.47 Most of today’s start-ups do not need large quire just basic skills training (for example, Web de- investments of hardware or office space. A technolo- // 9 // gy-based start-up can develop a functioning proto- new sectors, businesses, and skills. type with as little as US$3,000, six weeks of work, Developing sustainable and scalable locally grown in- and a working Internet connection.48 The focus is novation ecosystems require action. Not all cities are now on sources of networks of knowledge; mentors; growing their innovation and start-up communities interdisciplinary, cumulative learning; and talent.49 at the same pace. Some are growing faster by ac- Cities are most suited to offer all of this, as they pro- tively supporting local innovation. New York, London, vide diversity and allow for constant interaction, cre- Amsterdam, and Barcelona are actively fostering ation of networks of knowledge, and collaboration.50 the creation of collaboration spaces, (for example, These dynamics are driving the urbanization of or- coworking spaces, maker spaces, living labs, fab- ganic innovation ecosystems, not only in the United labs, urban labs, or innovation hubs) and supporting States and Europe but also in developing cities (for networks of entrepreneurs through incubators and example, Mumbai, Buenos Aires, Nairobi, and Cape accelerators (see annex). Cities also host compe- Town).51 Contrary to the model of suburban science titions to solve urban problems, involving the tech and research parks prevalent in the 1990s—which sector in urban life and attaching these entrepre- was centered in large research projects requiring high neurs to real-life problems. New York and Barcelona investments and facilities, and where collaboration serve as platforms for innovation, seeking the active was bounded to research projects’ partners—the city involvement of the entrepreneurial community, and innovation model is easily available to developed and as laboratories for innovators to test their solutions developing countries alike.52 This presents a great (box 2). These policies increase the size of the start- opportunity for developing countries to forge organic up ecosystems and also connect city communities innovation ecosystems and generate a base of inno- domestically and globally by making these challeng- vators and entrepreneurs to support the creation of es open and competitive. Cities that open and con- BOX 2/ The creation of the second-largest U.S. tech innovation ecosystem New York City has experienced one of the largest New York addressed these challenges through a growths in the development of a technology-based strategic program with targeted policies, including innovation ecosystem in the world. From 2006, (i) promoting collaborator spaces linked to mentor when the technology-led ecosystem was almost networks and incubators, (ii) fostering entrepreneur- anecdotic in the city, to 2013, the city has become ial fund to attract VCs into New York start-ups, (iii) the second-largest technology-based innovation attracting engineering schools to develop programs ecosystem in the United States, with almost US$2.5 in the city and providing basic skills training and million of venture capital (VC) investment.53 The New access to open hardware tools in public spaces (for York ecosystem grew by 3.5 times in VC investments example, libraries), and (iv) energizing the commu- in start-ups and almost tripled the number of exits nity through competitions and challenges. This last above US$0.5 billion. This also has implications in job strategy is accomplished by opening data, develop- creation, where the city technology ecosystem is es- ing mentorship networks for tech entrepreneurs, and timated to generate more than half a million jobs, of promotion of the tech community by the city, in- which half of them are generated directly.54 cluding promotion campaigns, support of high-rank- ing city officials, and public awards.56 These actions The surge of New York City’s tech innovation ecosys- were conducted in partnership with the community tem is not random; it has been the result of the ac- and private sector, thereby providing incentives to tive support of city hall, with targeted strategy and the latter. The focus on community development policy actions. New York consciously followed this and collaboration spaces and mentorship networks strategy to create new sources of income and com- proved to be a success, attracting a community that petitiveness at the time the financial crisis occurred. is self-sustainable and continues to grow. Despite the size and significance of New York, the challenges faced by the city to develop a technolo- The success in developing a sustainable technolo- gy-based innovation ecosystem were very similar to gy-led innovation ecosystem presents lessons for those facing many other cities, including (i) lack of cities around the world, in both developed and de- technology-specialized talent, (ii) insufficient sourc- veloping countries. As its ecosystem grew, New York es of seed capital for start-ups, (iii) lack of physical also actively engaged poor neighborhoods through space for entrepreneurs, and (iv) a limited and un- training and integration into new employment op- coordinated community of tech-led innovators and portunities generated by the ecosystem. Almost half entrepreneurs.55 of the jobs generated in the New York tech ecosys- tem do not require a bachelor’s degree.57 Further, al- // 10 // most a quarter of New York tech start-up founders ing these policies and support. Other cities—includ- do not have any technical background, and most of ing Amsterdam, Barcelona, Helsinki, and London, to these start-ups focus on non-tech sectors, introduc- name a few—are also actively supporting the growth ing technology-driven innovation to existing indus- and sustainability of their innovation ecosystems tries and businesses.58 New York has been able to with similar policies and areas of focus targeted to develop one of the largest tech-innovation ecosys- their local needs. tems with limited tech talent, which is a constraint many cities face. New York is not the only city apply- nect their start-up communities attract more talent are growing in many developing countries where and raise their competitiveness. Without generating these resources are not available locally. However, sustainable innovation ecosystems in cities, coun- as discussed later, access to knowledge, collabora- tries may lose competitiveness in a reshaped global tion, and interdisciplinary creativity are still import- economy. Cities provide the framework for creating ant. For this reason, fostering openness—creation of local innovation ecosystems that generate a pipeline networks of knowledge, common spaces, and men- of projects, which in turn result in new innovations, tor networks where entrepreneurs, academia, gov- industries, and employment opportunities. Because ernment, and users can interact with other stake- these ecosystems are attached to local problems, holders and form ecosystems of innovation—will the innovations and businesses they create direct- become increasingly more important.62 Although ly apply to the local reality, providing a competitive such initiative is necessary, in order to convert ideas edge at the start and solving local problems at the and projects into sustainable start-ups and scalable same time. As the cases of New York and Nairobi businesses, it alone will not suffice. Access to capi- show, city innovation ecosystems can create new tal, particularly seed investment, will remain an im- businesses out of daily challenges, improve com- portant determining factor for entrepreneurship.63 petitiveness of existing industries and businesses, or Angel investor networks—with their focus on very create pioneering new business models applicable to early stages—and accelerator programs—with their existing business or industries.59 Simply developing focus on early-stage capacity building and network these innovation ecosystems alone is not sufficient creation while providing initial seed funding—will for the benefits to occur. Other actions are needed become more important to support the pipeline of to support the conversion of ideas and start-up proj- entrepreneurs coming from nascent innovation eco- ects in viable entrepreneurships, and the absorption systems.64 New developments, such as crowdfund- of innovation by existing industries to adapt and ing platforms, could help the development of micro- transform their business models, as described in the entrepreneurs globally and provide access to seed following paragraphs. However, without the base of financing as equity investments start being devel- local innovation ecosystems generated in cities, the oped.65 impact of innovative transformations in the indus- tries and the economy of a country will be severely Entrepreneurship does not happen in a vacuum; it diminished. requires a conducive environment. Bottom-up inno- vation and co-creation of services and products with C/ FOSTERING ENTREPRENEURSHIP THAT users—where solutions to real problems and rapid CREATES NEW SECTORS AND BUSINESSES prototyping can be adjusted to adoption—is becom- ing more important for entrepreneurship. However, Local entrepreneurs will be critical to create new em- such co-creation is often fostered by engagement ployment and increase competitiveness of existing platforms of commons, where developers of ideas industry. Entrepreneurs translate invention into new and users can interact. The most effective engage- market categories locally, creating new employment ment platforms require a leader who conducts the opportunities for themselves and others. High-ex- platform and drives co-creation dynamics.66 Some pectation entrepreneurs (HEE), where high ambition countries are developing and facilitating these plat- and disruptive technologies meet, drive new employ- forms by providing resources, such as data, thereby ment.60 Decreases in technology costs and global creating local challenges and developing virtual and reach to markets through Internet-based open plat- physical spaces for the coordination and coopera- forms have reduced barriers for entrepreneurship tion of diverse actors and users. The United States globally, resulting in the rise of microentrepreneurs and EU countries are using open data and launch- and HEE.61 In this new environment, location is no ing challenges to foster entrepreneurship locally, and longer as important to determine access to resourc- they are supporting the creation of collaboration es, such as large capital investment or technology. spaces, including co-working spaces, accelerators, As a result, knowledge, technology, and innovation living labs, and fablabs, where multiple stakeholders // 11 // are intertwined and where networks of open domes- (for example, industry innovation labs) that combine tic and international innovation can be interlinked. In companies, academia, entrepreneurs, users, and the European Union, living labs and manufacturing government to build networks, share knowledge, and institutes are evolving and increasingly incorporat- produce shared inventions. These initiatives also help ing fablab methodologies to expand collaboration produce rapid prototyping, iterate and test rapidly in to manufacturing processes and other industries.67 real environments to share results in real time with In the United States, the federal government is fi- the innovation stakeholders. This results in cumu- nancing the expansion of fablabs through TechShops lative and advanced innovation and formation of across the country.68 In the United Kingdom, the stronger links between innovation, design, and pro- government is carrying a nationwide initiative, “Make duction, which shapes new knowledge-based supply Things, Do Stuff,” to raise awareness and introduce chains. By creating networks that link these labs, the the population to creating new digital technologies collaboration community is enlarged and diversified, and applying them to practical innovation.69 These increasing the results on innovation and adoption. initiatives are paired with programs that offer access For example, the United States has launched an to capital and strengthening of entrepreneurship initiative to create a network of advanced manu- skills.70 facturing innovation institutes with these premises, including the digital manufacturing lab in Chicago, D/ CREATING INNOVATION NETWORKS which comprises a network of universities, compa- AND COLLABORATIVE ENVIRONMENTS nies, and government with a creative commons ap- (FOR EXAMPLE, INNOVATION LABS) proach focused on manufacturing.75 In Europe, there FOR EXISTING CORE AND TRADITIONAL is a network of living labs that are evolving organi- INDUSTRIES TO REMAIN COMPETITIVE cally toward a more connected ecosystem structure with universities, companies, government, and civil Innovation requires ecosystems where multiple play- society. This network of living labs introduces collab- ers interact and reinforce each other. Innovation orative commons approaches, providing a platform is shifting from large Research and Development to build connected innovation ecosystems.76 (R&D) facilities, traditionally hosted by governments or large corporations, to ecosystems where collab- oration and cumulative inventions thrive and rapid prototyping and adoption happens.71 The following are crucially needed to foster and strengthen the for- mation of these ecosystems: hubs connecting multi- ple stakeholders; networks of innovation; dynamics creating interdisciplinary approaches; and environ- ments for rapid testing, prototyping, and adoption. Moreover, these assets increase the return on inno- vation.72 Companies have been adapting to this shift, and many have adopted open innovation practices. A recent survey of almost 3,000 firms with reve- nues over US$250 million in the United States and Europe found that almost 80 percent of them are using some kind of open innovation. Some compa- nies are integrating tech shops into their facilities to develop internal open innovation and rapid prototyp- ing.73 However, most of these practices are internal and are more prevalent among large companies and technology-driven sectors.74 Traditional industries are slower to adapt to the new models of ecosystem innovation, and there is a slow rate of collaboration with multiple players and broader ecosystems. If existing and traditional industries do not move to- ward an open collaboration environment in order to generate and incorporate innovation, they will lose competitiveness. Governments can help foster an environment for open collaboration and create or- ganic networks of innovation. Some countries are supporting collaboration networks through spaces // 12 // ANNE X – Collaboration and Community Promotion Spaces Collaboration Space Description Examples Coworking Coworking spaces are open spaces that usu- WeWork, New York spaces ally provide broadband connectivity and a https://www.wework.com few other amenities (for example, a cafeteria and a workspace). Typically coworking spac- Impact Hub, London and oth- es tend to be an open floor with shared desks er locations for members, though some offer closed-door http://www.impacthub.net/ offices. The three main characteristics of co- working spaces are that they offer interaction Alt City, Beirut with other people, flexible working hours, and http://www.altcity.me/ an environment for serendipitous discoveries.77 Coworking spaces have multiple models: some are owned by companies and no exter- nal members are allowed (usually aligned with a corporation’s open innovation strategy); some are independently operated and open to the public (some of which create communities of interest); and others are publicly owned (for example, by city governments). Many coworking spaces have evolved into te- chinnovation community management cen- ters that also provide links with, or include in the same space, networks of mentors, skills training courses, accelerators, and incubators. Accelerators Accelerator programs, or accelerators, can be Tech Starts, Boulder, virtual, but most of them are attached to a New York, and other locations physical space, where a cohort of start-ups http://www.techstars.com/ work together to develop their projects for a limited period of time. An accelerator can be Seedcamp, London part of a broader coworking space or incuba- and other locations tor, or a space on its own. Accelerators sup- http://seedcamp.com/ portentrepreneurs and start-ups in early stages of development, and they are often comprised of the following features: (i) a highly competitive and open application pro- cess for entrepreneurs; (ii) provision of small amounts of seed investment; (iii) focus on small teams rather than individual founders; (iv) intensive support for a limited period of time (usually 3–6 months), with active men- torship and networking; and (v) collaborative work among start-ups through a cohort or classes of startups.78 // 13 // Collaboration Space Description Examples Maker Maker spaces are community centers or co- Santiago Maker Space, Spaces working spaces, typically independently Santiago de Chile owned, that provide access to a series of tools http://www.stgomaker- and light equipment for fabrication—most sig- space.com/ nificantly, 3D printers and open-source hard- ware board toolkits and technology (for exam- Maker Space, Madrid ple, Arduino boards).79 Maker spaces can be http://makespacemadrid. more sophisticated, offering more advanced org/ tools and materials for textiles or for met- al- and woodworking. Some of these spaces GearBox, Nairobi also provide mentors and a community of in- http://gearbox.co.ke/ terest around the “makers movement” or DIY (do-ityourself) fabrication and prototyping. Fabrication Fablabs are similar to maker spaces, though Fab Lab Barcelona Labs (fablabs) they have standard requirements, including a http://www.fablabbcn.org/ minimum set of tools for fabrication and an accreditation program for fablab managers.80 Fab Lab Lisboa Fablabs are small-scale workshops that were http://fablablisboa.pt/ originally designed as prototyping platforms for local entrepreneurship but have expanded Fab Lab South Africa to universities and higher education facilities http://www.fablab.co.za/ to provide complimentary hands-on training. Fablabs are part of the fablab program from the Massachusetts Institute of Technology (MIT). Fablabs have to subscribe to the fablab charter and have to offer public access to their facilities. The fablab program has a fablab academy to train and accredit its managers and a network of collaboration (global fablab network).81 Techshop Techshop is an example of a sustainable busi- Techshop, multiple locations ness model of the concept of fablab and maker http://www.techshop.ws/ space, where access to the fabrication equip- ment and mentorship is offered for a fee.82 Techshop has developed partnerships with universities, such as Arizona State University, or companies, such as Ford Motor Company, to develop ad hoc facilities for internal R&D.83 // 14 // Collaboration Space Description Examples Living Living labs are environments where the user- Waag Society, Amsterdam Labs centric design methodology is applied to test https://waag.org/en prototypes developed by entrepreneurs, com- panies, universities, or the public in general. The Citilab, Barcelona basic principle of the living lab is to form col- http://citilab.eu/en laborative environments among different ac- tors and to help developing products through Living Lab Maputo interactive user-centric design. Living labs http://www.micti.co.mz/ have flexible approaches and have been em- micti/index.php ployed for academic purposes in universities and/or city governments to form local com- munities of innovation, companies to develop products, etc. Although there are no specific requirements, the common minimum ele- ments of a living lab are (i) a methodology for product development through user-centric de- sign, (ii) space, (iii) a community of users, and (iv) a vacillator/management structure. There is an international network of living labs, which originated in the European Union and is man- aged by the ENoLL council.84 Some of these living labs have evolved, similar to coworking spaces, into tech-innovation community management centers, becoming innovation hubs (see below) and coordinating the local ecosystem. These hubs provide links among actors (for example, Citilab) networks of mentors, skills training courses, accelera- tors, and incubators. Urban Urban labs is a concept that has been imple- Urban Lab, Barcelona Labs mented by some cities (for example, Barcelo- http://www.22bar- na) to provide companies with a platform to celona.com/content/ test products and services in the real environ- view/698/897/lang,en/ ment within the city.85 The city can provide a specific area for testing or allow companies to New Urban Mechanics, request real-life testing environments. The se- Boston lection of companies to test their products and http://www.newurbanme- services usually follows an open call, and prod- chanics.org/boston/ uct testing lasts for a limited period of time. // 15 // Collaboration Space Description Examples Industry Industry Innovation Labs provide a platform U+I Labs, Chicago Innovation Labs connecting industries with other stakeholders http://www.uilabs.org/ in the ecosystem, particularly entrepreneurs and universities, to create open innovation and commons environments for existing industries and business.86 Innovation labs include living lab concepts of rapid prototyping and itera- tion, and are similar to innovation hubs in pro- viding a platform coordinating a community of diverse stakeholders. Innovation Although there is no common definition of an NUMA, Paris hub innovation hub, this concept can be applied to http://en.numa.paris/ define the evolution of collaboration spaces into community managers that coordinate Forum Virium, Helsinki or integrate many of the other functions of http://www.forumvirium. collaboration spaces defined above, including fi/en coworking, maker spaces, fablabs, acceler- ators, living labs, and urban labs. Innovation Ruta N, Medellin hubs’ main function is to coordinate all actors http://rutanmedellin.org/ of the ecosystem and help manage the com- munity of tech-innovators and entrepreneurs iHub, Nairobi to grow sustainably. Many of these innovation http://www.impacthub.net/ hubs enjoy the participation of the most rele- vant actors of the technology innovation eco- system, including entrepreneurs, universities, private sector, collaboration spaces, accelera- tors, incubators, other providers of seed capi- tal, community managers, and government— particularly city government. Some of these innovation hubs have collaboration spaces in their facilities, such as coworking and maker spaces, while others coordinate their functions with those spaces. Typically, these hubs will phase out their other functions when there are enough offerings for the community provided by third parties. For a detailed description of how this concept of innovation hub can be applied to develop and strengthen a technology-led innovation ecosystem, see description of the Lebanon Mobile Innovation Ecosystem Project at http://www.mie-p.org // 16 // END NOTES 1. Malanima, Paolo, and Oliver Volckart. 2007 “Urbanisation: 1700–1870.” Chapter prepared for the Third RTN/CEPR Summer Symposium in London: An Economic History of Modern Europe http://dev3.cepr.org/meets/wkcn/1/1679/papers/malanima-volckart-chapter.pdf. 2. As an example, in Europe, urban population almost doubled from 8.2 percent in the year 1700 to 15 percent in 1870. The increase was higher in Northern Europe, which further absorbed technologies from the industrial revolution, going from 13 percent to almost 28 percent. See Malamina and Volckart. For agriculture data, see Grigg, David. 1987. “The Industrial Revolution and Land Transformation.” In Land Transformation in Agricul- ture, ed. by M.G. Wolman and F.G.A. Fournier, Chapter 4. John Wiley & Sons. http://dge.stanford.edu/SCOPE/SCOPE_32/SCOPE_32_1.4_Chapter4_79-109.pdf. 3. See Clark, Gregory. 2014 “The Industrial Revolution.” http://www.econ.ucdavis.edu/faculty/gclark/papers/HEG%20-%20final%20draft.pdf; and Economist. 2004. “The Onrushing Wave.” January 18. http://www.economist.com/news/briefing/21594264-previous-techno- logicalinnovation- has-always-delivered-more-long-run-employment-not-less. 4. Comin and Marti estimated that between 70 percent to 80 percent of the productivity gap between de- veloped and developing countries is due to the lag in the adoption technologies, suggesting technology ab- sorption throughout the economy is the main cause of the gap. See Comin, Diego, and Mestieri Marti. 2013. “Technology Diffusion: Measurement, Causes and Consequences.” http://www.dartmouth.edu/~dcomin/files/ chapter_v8.pdf. See also Comin, Diego, and Bart Hobijn. 2010. “An Exploration of Technology Diffusion.” Amer- ican Economic Review 100 (December): 2031–2059. http://www.people.hbs.edu/dcomin/aerBART.pdf. 5. O’Rourke, Kevin, Ahmed Rahman, and Alan Taylor. 2011. “Trade, Technology and the Great Divergence.” Preliminary Draft. Working Paper 2011-35. United States Naval Academy Department of Economics. ftp://ftp.repec.org/opt/ReDIF/RePEc/usn/wp/usnawp35.pdf. 6. Digitalization is creating online platforms that facilitate production and cross-border exchanges, elimi- nating barriers and reducing costs for small and micro-companies. Digitalization also allows access, distri- bution, and production costs at marginal, near zero, costs. Online platforms such as eBay, or applications platforms (Apple IOS, Google Play, or Android platforms), access a global market from almost any location in the world. See Manyika, James, Jacques Bughin, Susan Lund, Olivia Nottebohm, David Poulter, Sebastian Jauch, and Sree Ramaswamy. 2014. “Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy.” McKinsey Global Institute. http://www.mckinsey.com/insights/globalization/ global_flows_in_a_digital_age. 7. See kickstarter, https://www.kickstarter.com/) and indigogo, https://www.indiegogo.com/ as examples of crowdfunding platforms. For the growth of the crowdfunding industry, see Broderick, Daniel. 2014. “Crowd- funding’s Untapped Potential in Emerging Countries.” Forbes. http://www.forbes.com/sites/hsbc/2014/08/05/ crowdfundings-untapped-potential-in-emerging-markets/; and Carmichael, Stephanie. 2013. “Crowdfunding Nearly Doubled Last Year with 1M Successful Campaigns.” VB News. http://venturebeat.com/2013/04/08/ crowdfunding-nearly-doubled-last-year-with-1m-successful-campaigns/. 8. Evans, Dave. 2011. “The Internet of Things: How the Next Evolution of Internet Is Changing Everything.” Cisco White Paper. https://www.cisco.com/web/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf. 9. See Economist Intelligence Unit. 2012. “Agent of Change: The Future of Technology Disruption in Business.” http://www.economistinsights.com/sites/default/files/downloads/EIU_Agent%20of%20change_WEB_FINAL. pdf. 10. See Cohen, Daniel, Matthew Sargeant, and Ken Somers. 2014. “3-D Printing Takes Shape.” McKinsey Quarterly (January). http://www.mckinsey.com/insights/manufacturing/3-d_printing_takes_shape. 11. 3D printing is also known as additive manufacturing, a technology that allows users to fabricate physical objects by the deposition and/or fusing of material layer by layer. See Kilkenny, Maureen. 2014. “3D Printing: Economic and Public Policy Implications.” Entreprenorskaps Forum. // 17 // http://entreprenorskapsforum.se/wpcontent/uploads/2014/01/3Dprint_rapport_webb.pdf. 12. Economist. 2012. “The Third Industrial Revolution.” April 21. http://www.economist.com/node/21553017. 13. Anderson, Chris. 2010. “In the New Industrial Revolution Atoms Are the New Bits.” Wired. January 25. http://www.wired.com/2010/01/ff_newrevolution/all/. 14. See Manyika, James, et al. 2012. “ Manufacturing the Future: The Next Era of Global Growth and Inno- vation.” McKinsey Global Institute. http://www.mckinsey.com/insights/manufacturing/the_future_of_man- ufacturing; and Brynjolfsson, Erik, and Andrew McAfee. 2014. “The Second Machine Age.” Google Talks. Fe- bruary 10. https://www.youtube.com/watch?v=kum_7D9EORs. 15. Agriculture, construction, and medicine are already being affected by this technology. Today, 3D printers allow users to “print” foods and structures, including small houses or cells, and automation is being introduced in more cognitive functions, such as medical diagnostics. See Molitch-Hou, Michael. 2014. “The Foodini 3D Food Printer Hits Kickstarter!” 3D Printing Industry. March 31. http://3dprintingindustry.com/2014/03/31/3d-print- er-foodinifood-kickstarter/; ScienceDaily. 2013. “3D Tissue Printing: Cells from the Eye Inkjet-Printed for the First Time.” December 18. http://www.sciencedaily.com/releases/2013/12/131218100227.htm; Peters, Adele. 2014. Fast Company. 2014. “3D Printing Cells for Drug Testing Could Help Animals out of Harm’s Way.” January 27. http://www.fastcoexist.com/3021871/3-d-printing-cells-for-drug-testing-could-keep-animals- out-of-harms-way; YouTube. 2010. “Future of Construction Process: 3D Concrete Printing.” May 29. https://www.youtube.com/watch?v=EfbhdZKPHro; and Khoshnevis, Behrokh. 2012. “3D Printer Can Build a House in 20 Hours.” Wimp.com. http://www.wimp.com/printerhouse/. 16. See, for instance, Foresight. 2013. The Future of Manufacturing: A New Era of Opportunity and Challenge for the UK. U.K. Government Office for Science. https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/255922/13-809-futuremanufacturing-project-report.pdf; Saenz, Aaron. 2010. “No Humans, Just Robots: Amazing Videos of the Modern Factory.” SingularityHUB. February. http://singular- ityhub.com/2010/02/11/no-humans-just-robots-amazingvideos-of-the-modern-factory/; Kelly, K. 2012. “Better Than Humans: Why Robots Will—And Must—Take Our Jobs. Wired. December 24. http://www.wired. com/2012/12/ff-robots-will-take-our-jobs/all/; Rotman, D. 2013. “How Technology Is Destroying Jobs.” MIT Technology Review (June). http://www.technologyreview.com/featuredstory/515926/how-technology-is-de- stroying-jobs/; or ”Factory of the Future.” http://www.ignou.ac.in/upload/Unit-13-55.pdf. 17. Semiautomatic and automatic vehicles are already in use for testing logistic and processing tasks. Ama- zon is testing small automatic vehicles for merchandise delivery, and Google and some car manufacturers are testing self-driven cars. Automatic vehicles are already in use for short-haul trucks in mining, and it is expected to expand to long-haul trucks. See YouTube. 2013. “Amazon Prime Air.” December 1. https://www.youtube.com/watch?v=98BIu9dpwHU; Etherington, Darrell. 2014. “Google’s Self-Driving Car Project Is a World’s Fair Fantasy Turned City-Street Reality.” TechCrunch. May 14. http://techcrunch.com/2014/05/14/googles-self-driving-car-project-is-a-worlds-fair-fantasy-turned-city- streetreality/; KPMG. 2013. “Self-Driving Cars: Are We Ready?” http://www.kpmg.com/US/en/IssuesAndIn- sights/ArticlesPuWlications/Documents/self-driving-cars-are-weready.pdf; Berman, Dennis K. 2013. “Da- ddy, What Was a Truck Driver?” Wall Street Journal. July 23. http://online.wsj.com/news/articles/SB1000142 4127887324144304578624221804774116. 18. See Annunziata, Marco. 2013. “Welcome to the Age of the Industrial Internet.” TED. December. https://www.ted.com/talks/marco_annunziata_welcome_to_the_age_of_the_industrial_internet. 19. Brynjolfsson, Erik, and Andrew McAfee. 2014. “The Second Machine Age.” Google Talks. February 10. https://www.youtube.com/watch?v=kum_7D9EORs; and Brynjolfsson, Erik, and Andrew McAfee. 2014. “The Second Machine Age.” Google Talks. February 4. https://www.youtube.com/watch?v=78xauoUHl2U. 20. Brynjofsson, Erik, and McAfee Andrew. 2012. “Jobs, Productivity and the Great Decoupling.” New York Times. December 11. http://www.nytimes.com/2012/12/12/opinion/global/jobs-productivity-and-the-great- decoupling.html?_r=0. 21. Plunkett, James. 2011. “Growth Without Gain? The Faltering Living Standards of People of Low-to-Middle Incomes.” May. http://www.resolutionfoundation.org/wp-content/uploads/2014/08/Growth-without-gain. pdf; and Pessoa, Joao Paulo, and John Van Reenen. 2013. “Decoupling of Wage Growth and Productivity Growth? Myth and Reality.” London: Centre for Economic Performance. http://cep.lse.ac.uk/pubs/download/ dp1246.pdf. 22. Autor, David H., and David Dorn. 2013.,” The Growth of Low-Sills Service Jobs and Polarization of the US Labor Market.” American Economic Review. http://economics.mit.edu/files/1474. 23. Karabarbounis, Loukas, and Brent Neiman. 2013. “The Global Decline of the Labor Share .” Unpublished. http://faculty.chicagobooth.edu/brent.neiman/research/KN.pdf. 24. See note 4. 25. See Manyika et al. “Global Flows.” // 18 // 26. See Economist. “The Third Industrial Revolution.” 27. Digital trade has been growing in the global economy, and it is having significant impact in trade flows in countries, such as the United States. See United States International Trade Commission (USITC). 2013. “Di- gital Trade in the US and Global Economies, Part 1.” Washington, DC: USITC. http://www.usitc.gov/publications/332/pub4415.pdf. 28. Sturgis, Sam. 2014. “Mapping Africa’s Growing Tech Hubs.” Atlantic. October 14. http://www.citylab.com/tech/2014/10/mapping-africas-growing-tech-hubs/381317/. 29. See, for instance, Akue-Kpakpo, Abosse. “Study on International Internet Connectivity in Sub-Saharan Africa.” ITU. http://www.itu.int/en/ITU-D/Regulatory-Market/Documents/IIC_Africa_Final-en.pdf; or McCa- lla, Joan, Robert Petter, and Enrique Rueda-Sabater. 2009. “Broadband Across Africa: Accelerating Benefits.” Cisco White Paper. http://www.cisco.com/web/about/ac79/docs/Broadband_WP_0831REV_FINAL.pdf. 30. GSMA. “Digital Entrepreneurship in Kenya 2014.” http://www.gsmaentrepreneurshipkenya.com/GSMA_ KENYAAR2014-060214-WEB-SINGLE-PGS.pdf. 31. See GSMA. 32. Jidenma, Nmachi. 2011. “Why Nairobi Is Exploding as the Tech Hub of East Africa [Interview with Erik Hersman].” The Next Web. May 31. http://thenextweb.com/africa/2011/05/31/why-nairobi-is-exploding-as- the-tech-hub-ofeast-africa-interview-with-erik-hersman/. 33. See Economist. 2012. “Upwardly Mobile.” August 23. http://www.economist.com/node/21560912. 34. See, for instance, http://www.safaricom.co.ke/personal/m-pesa. 35. See http://www.ushahidi.com/. 36. TechMoran. 2014. “Ericsson and Facebook Launch Joint Innovation Lab to Help Make Internet Accessible to All.” February 24. http://techmoran.com/ericsson-facebook-create-innovation-lab-to-make-internet-ac- cessible-toall/#sthash.o7HLVldx.dpbs. 37. See Economist Intelligence Unit. 38 For a discussion of 21st-century skills, see Ananiadou, Katerina, and Claro Magdalean. 2009. “21st-Cen- tury Skills and Competences for New Millennium Learners in OECD Countries.” Paris: Organisation for Econo- mic Co-operation and Development. http://dx.doi.org/10.1787/218525261154. 39. Countries are increasingly including creativity as a critical skill for innovation. See, for instance, U.K. De- partment for Culture, Media and Sport. 2008. “Creative Britain, New Talents for the New Economy.” http://webarchive.nationalarchives.gov.uk/+/http://www.culture.gov.uk/images/publications/CEPFeb2008. pdf; (Ireland) Expert Group of Future Skills Needs. 2009. “Skills for Creativity, Design and Innovation.” http://www.skillsireland.ie/media/egfsn-091104-cdi.pdf; Finland Ministry of Education. 2010. “Creative Eco- nomy and Culture in the Innovation Policy.” http://www.minedu.fi/export/sites/default/OPM/Julkaisut/2010/liitteet/OPM13.pdf?lang=en. 40. See Economist. 2014. “A Is for Algorithm.” April 24. http://www.economist.com/news/internation- al/21601250-global-push-more-computer-science-classrooms-starting-bear-fruit. 41. See, for instance, SAE International. “Autodesk Moves Full STEAM Ahead with Its Commitment to Educa- tion.” http://articles.sae.org/13409/; and Intel. 2011. Asia Science Educator Academy, Concept Note. http://www.intel.com/cd/corporate/education/apac/eng/asea11/concept/489068.htm. 42. For apprentice programs, see Gareis, Karnstein, et al. 2014. “e-Skills in Europe: Measuring Progress and Moving Ahead.” Empirica. http://www.cedefop.europa.eu/EN/news/23978.aspx. For entrepreneurship skills for growthoriented entrepreneurs, see Cooney, Thomas. 2012. “Entrepreneurship Skills for Growth-Orienta- ted Businesses.” Danish Business Authority. http://www.oecd.org/cfe/leed/Cooney_entrepreneurship_skills_ HGF.pdf. 43. See http://demola.net/ and http://nyc.cornell.edu/. 44. Up to 44 percent of jobs in the New York tech ecosystem do not require a bachelor’s degree. See: HR & A. 2014. “The New York City Tech Ecosystem.” http://www.nyctecheconomy.com/. 45. See https://generalassemb.ly/ and http://ateneusdefabricacio.barcelona.cat/xarxa-de-ateneus-de-fab- ricacio/. 46. Coalition for Queens (http://www.c4q.nyc/) provides targeted skills training programs of three to six months, with mentorship, for unskilled and poor populations. Out of the first batch of 20 graduates, 70 percent obtained full-time employment, 15 percent became entrepreneurs, and the rest entered formal edu- cation programs. Interview with Jukay Hsu, Coalition for Queens (August 2014). 47. Florida, Richard. 2013. “The New Global Start-Up Cities.” Atlantic. June 4. http://www.citylab.com/work/2013/06/new-global-start-cities/5144/. 48. If in the 1990s an entrepreneur needed US$2 million and months of work to develop a minimum viable prototype, today she would need less than US$50,000 and six weeks of work (in some cases, these costs can be as low as US$3,000). See, for instance, Center for an Urban Future. 2012. “New Tech City.” // 19 // https://nycfuture.org/pdf/New_Tech_City.pdf; and Mytton, David. “How Much Does It Cost to Start a Tech Company?” Server Density blog. https://blog.serverdensity.com/how-much-does-it-cost-to-start-a-tech- company/. 49. Mulas, Victor. 2014. “Fostering Cities Innovation Ecosystems: A Big Opportunity for Developing Coun- tries.” World Bank blog. September 19. https://blogs.worldbank.org/ic4d/fostering-cities-technology-innova- tionecosystems-big-opportunity-developing-countries. 50. Florida, Richard. 2012. “Why Creativity Is the New Economy.” YouTube. September 26. http://www.youtube.com/watch?v=VPX7gowr2vE. 51. See Florida, Richard. 2013. “The Urban Tech Revolution.” Urbanland. October 7. http://urbanland.uli.org/economy-markets-trends/the-urban-tech-revolution/; Florida, Richard. 2013. “Why Today’s Start Ups Are Choosing Urban Lofts over Suburban Office Parks.” Atlantic. September 4. http://www.theatlanticcities.com/jobs-and-economy/2013/09/why-todays-startups-are-choosing-urban- loftsover-suburban-office-parks/6311/; and Florida, Richard. 2014. “The Urban Shift in the US Start-Up Economy, in One Chart.” Atlantic. March 31. http://m.theatlanticcities.com/jobs-and-economy/2014/03/ur- ban-shift-us-starteconomy-one-chart/8749/. 52. Katz, Bruce, and Julie Wagner. 2014. “The Rise of Innovation Districts: A New Geography of Innovation in America.” Washington, DC: Brookings Institution. http://www.brookings.edu/~/media/Programs/metro/Images/Innovation/InnovationDistricts1.pdf. 53. Florida. “Start Up City.” 54. HR & A. 55. Interview with Dmytro Pokhylko, Director, Vice President, New York City Economic Development Corpo- ration (October 2014). 56. Interview with Dmytro Pokhylko, Director, Vice President, New York City Economic Development Corpo- ration (October 2014) and Rachel Haot, former Chief Digital Officer, New York City (September 2014). 57. HR & A. 58. HR & A; and Center for Urban Future. 59. For Nairobi, see, for instance, Mariach, Mark. “Nairobi: East Africa’s Startup Hub.” Entrepreneurship.org. http://www.entrepreneurship.org/policy-forum/nairobi-east-africas-startup-hub.aspx. 60. High-expectation entrepreneurs (HEE) are defined as those entrepreneurs who expect to employ 20 employees or more within five years. HEE are a major source of employment among entrepreneurs (between 40 percent to 70 percent of jobs created, depending on surveys). See Morris, Rhett. 2011. “2011 High-Impact Entrepreneurship Global Report.” Center for High-Impact Entrepreneurship. http://www.gemconsortium.org/ docs/download/295. 61. See Economist Intelligence Unit. 62. See Prahalad C.K., and Venkatram Ramaswamy. 2003. “The New Frontier of Experience Innovation.” MIT Sloan Management Review (Summer). http://sloanreview.mit.edu/article/the-new-frontier-of-experience-in- novation/; and VCCIRCLE.com. 2010. “Management Guru Venkatram Ramaswamy on Co-creation, Startups and Tech.” Reuters. December 8. http://in.reuters.com/article/2010/12/08/idINIndia-53438620101208. 63. See, for instance, Wilson, Karen, and Filipe Silva. 2013. “Policies for Seed and Early Stage Finance: Fin- dings from the 2012 OECD Financing Questionnaire.” Paris: Organisation for Economic Co-operation and Development. http://dx.doi.org/10.1787/5k3xqsf00j33-en. 64. Miller, Paul, and Kirsten Bound. 2011. “The Startup Factories.” NESTA Working Paper. http://www.nesta.org.uk/sites/default/files/the_startup_factories_0.pdf. 65. See Manyika et al. “Global Flows”; and infoDev-World Bank. 2013. Crowdfunding’s Potential for the Deve- loping World. Washington, DC: Information for Development Program/The World Bank. http://www.infodev. org/infodevfiles/wb_crowdfundingreport-v12.pdf. For platforms providing access to seed financing see, for instance, http://www.seedups.com/. 66. See Prahalad and Ramaswamy; and Reuters. 67. See, for instance, Waag Society in Amsterdam, https://waag.org/en; and the Manufacturing Institute in Manchester, http://www.manufacturinginstitute.co.uk/fabuk/events/fab-lab-events/. 68. See Kalil, Tom, and Jason Miller. 2014. “Announcing the First White House Maker Faire .” White House Blog. February 3. http://www.whitehouse.gov/blog/2014/02/03/announcing-first-white-house-maker-faire. 69. U.K. Department of Treasury. “100,000 Young People to Become Digital Makers.” May 30. https://www.gov.uk/government/news/100000-young-people-to-become-digital-makers. 70. See, for instance, White House. “Fact Sheet: White House Launches ‘Start-Up America Initiative.’” http://www.whitehouse.gov/startup-america-fact-sheet. 71. Curley, Martin, and Bror Salmein. 2013. “Open Innovation 2.0: A New Paradigm.” http://ec.europa.eu/information_society/newsroom/cf/dae/document.cfm?doc_id=2182. // 20 // 72. For interdisciplinary, see Johanssen, Frans. 2012. “The Medici Effect.” YouTube. https://www.youtube.com/watch?v=JzlX5iYW8kE. Dynamics that emphasize adoption and user-centric in- novation are crucial to maximize results from innovation. The highest return from innovation comes from business model innovation, ecosystem orchestration, user-experience innovation, and brand innovation. See Keeley, Larry. 2011. “10 Types of Innovation.” YouTube. https://www.youtube.com/watch?v=LynPj6pOn14. 73. See Keegan, Matt. 2012. “Ford Advances Inventive Creativity Through Its TechShop Partnerhip.” Auto Trends. May 11. http://www.autotrends.org/2012/05/11/ford-advances-inventive-creativity-through-its-techshop- partnership/. 74. Chesbrough, Henry, and Sabine Brunswicker. 2013. “Managing Open Innovation in Large Firms.” Fraunho- fer Verlag. http://openinnovation.berkeley.edu/managing-open-innovation-survey-report.pdf. 75. See National Network of Manufacturing Innovation, http://manufacturing.gov/nnmi.html. 76. Curley and Salmein. 77. Johns, Tammy, and Lynda Gratton. 2013. “The Third Wave of Virtual Work.” Harvard Business Re- view (January–February). http://www.crowehorwath.com/folio-pdf-hidden/TheThirdWaveofVirtualWork_ FW13206V.pdf. 78. Miller and Bound. 79. Open-source hardware refers to hardware whose design is made publicly available and can be freely modified, made, distributed, and sold. Arduino boards are the most prominent open-source hardware. See http://www.oshwa.org/definition/ and http://www.arduino.cc/. 80. Fablabs’ minimum equipment includes “a laser cutter that makes 2D and 3D structures, a sign cutter that plots in copper to make antennas and flex circuits, a high-resolution NC milling machine that makes circuit boards and precision parts, a large wood router for building furniture and housing, and a suite of elec- tronic components and programming tools for low-cost, high-speed microcontrollers for on-site rapid circuit prototyping.” See http://fab.cba.mit.edu/about/faq/ and http://www.fabfoundation.org/fab-labs/. 81. See http://www.fabfoundation.org/fab-labs/fab-lab-criteria/. 82. See http://www.techshop.ws/. 83. For Arizona State University, see http://techshop.ws/ts_chandler.html; for Keegan. 84. See http://www.openlivinglabs.eu/. 85. For Barcelona example, see http://www.22barcelona.com/content/view/698/897/lang,en/. 86. See, for instance, U+I Labs’ description at http://www.uilabs.org/#about. // 21 // This work is available under the Creative Commons Attribution Non-Commercial 3.0 IGO license (CC BY NC 3.0 IGO). Under the Creative Commons Attribution Non-Commercial license, you are free to copy, distribute, transmit, and adapt this work for non-commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Mulas, Victor; Gastelu-Iturri, Mikel. 2016. Transforming a City into a Tech Innovation Leader. License—Creative Commons Attribution Non-Commercial CC 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attri- bution: This transla¬tion was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. 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