Building the Knowledge Capitals of the Future

Cities worldwide are in a race to transform themselves into hubs of science and technology expertise. Here’s a look at how a few plan to achieve that goal—some with help from the Academy.

Published November 1, 2008

By Adrienne J. Burke
Academy Contributor

If you made a list today of the world’s innovation hotbeds, Mexico City wouldn’t be on it. Sure, the city has become known since the 1980s as an international hub of financial services. And it’s long been seen as a center of manufacturing. But if Mayor Marcelo Ebrard Casaubón has his way, that image will soon change. Not only will Mexico’s capital become known as the Knowledge Capital of Latin America, but it will, in the near future, be respected as a global hub of scientific and technological excellence.

Ebrard, who took office two years ago and recently joined The New York Academy of Sciences President’s Council, aims to trade in the smog-ridden region’s dependence on “old economy” industries for a so-called “knowledge economy” by incubating a sci-tech cluster in the sprawling city.

Toward that end, Ebrard has commissioned the new Institute for Science and Technology to prompt collaborations between academia and industry. He has established a government-funded company, Capital En Crecimiento (City in Growth), to bolster technology infrastructure and improve the skills of the metro-area’s 22 million residents. And he has retained the US-based RAND Corporation to identify Mexico City’s strengths in science and technology development.

Ebrard has also entered a multi-year partnership with the Academy, the first product of which was a week-long innovation conference in September organized by the Academy and local officials. Jorge de los Santos, an Academy member and former director of business development and technology transfer at Columbia University whom Ebrard recruited to run Capital En Crecimiento, says he saw the Academy as a neutral body that could help the Mayor “to have the private sector working with universities on a common strategy and vision.” He adds that the Mayor’s team is “working to create a knowledge hub because our city needs to be good at something that is higher value-added than a service economy.”

“A knowledge-based economy will empower people,” says Ebrard. “It’s people producing and absorbing knowledge and people creating and using technology that will add value to Mexico City’s economy.”

Nurturing a Knowledge Economy

Many economists share Ebrard’s anticipation of a future in which scientific prowess is the key to superpower—or at least super-city—status. Their predictions are at the root of a trend among urban areas worldwide to ramp up capacity to compete for the unofficial title of “Global Knowledge Capital.” Leaders in China, India, and the United Arab Emirates are among those who believe that economic vitality in the 21st century hinges on the ability to generate and deliver scientific solutions to problems such as climate change, energy, healthcare, housing, and transportation.

Juan Enriquez, author of the 2001 book As the Future Catches You: How Genomics & Other Forces Are Changing Your Life, Work, Health & Wealth, advises a dozen national governments on sci-tech economics. He describes a worldwide movement to excel in scientific innovation. “There’s absolutely a race on to be the capital of ideas, to get the best entrepreneurs and the smartest people,” Enriquez says.

“In the past, you had competition for raw material, then for money and resources,” says Mexico City’s De los Santos. “Now the competition is for the human mind. All the cities are trying to attract the best and brightest in the world.” The same way US high-tech hotbeds like Boston and San Francisco have attracted sharp minds from around the world in recent decades, top talent from the US and elsewhere will migrate to cities that emerge as leaders of the knowledge economy, he and others predict.

Ideas about how to nurture a knowledge economy have been percolating since at least 1969, when management guru Peter Drucker used the phrase in his book The Age of Discontinuity: Guidelines to Our Changing Society. The concept is now widespread enough to have its own Wikipedia entry. Contributors define a knowledge economy as “strongly interdisciplinary, involving economists, computer scientists, software engineers, mathematicians, chemists, physicists, as well as cognitivists, psychologists, and sociologists.” A knowledge employee, they say, “works with his or her head not hands, and produces ideas, knowledge, and information.”

A “cluster”—a concept popularized by Harvard Business School Professor Michael Porter in his 1990 book, The Competitive Advantage of Nations—is at the heart of a knowledge economy. According to theories about clusters, whether they be business clusters, industry clusters, or science clusters, when information flows openly among stakeholders pursuing solutions in the same field in a concentrated geographic area, innovation happens sooner. Investors and talent move to the region, and the economy thrives.

What It Takes to Make a Cluster

Silicon Valley—where an industry cropped up around a research university, lured venture capital, and grew wildly as entrepreneurs flooded the area—is commonly invoked as a model of a cluster. But Silicon Valley’s tech roots go back to the 1956 choice of inventor William Shockley to locate his semiconductor company near his ailing mother. Clusters emerging around the world today are by deliberate design. In the view of New York University President and Academy Board Chair John Sexton, few US cities today are pursuing knowledge economies with the “purposefulness” of places like Mexico City.

Experts list several features crucial to knowledge economy success: commitment by the government; a major research university anchor; a critical mass of skilled employees; a technology infrastructure; business, labor, and intellectual property policies that facilitate rapid growth; and an easy flow of knowledge among and between sectors. Mexico City is just one of many regions following that formula.

In China, the State Council in 2006 approved a 20-year “out-line” for science and technology expansion. It calls for a near doubling of R&D investment, banking policies and fiscal incentives to support sci-tech startups and venture capitalists, a system for evaluating researchers and research institutes, intellectual property rights strategy, improved government support of industry, and “an enhanced capacity to build creative personnel.”

Mao Zhong Ying, science and technology counselor for China’s Consulate General in New York, says China will focus its cluster building efforts on four scientific subjects: protein research, nanoscience, growth and reproduction, and quantum modulation research. “In those technologies, we are at the same point as Western countries,” Mao says, explaining one of the principles that economists say will enable cities in lesser developed countries to compete with US and European cities: “These are brand new technologies, so we need to focus on these to realize the benefits of leapfrog development.”

Still, Mao concedes, China has a long way to go training its young people to be innovative and bridging private and public sector researchers.

Beijing, Shanghai, Tianjin, Jiangsu, and Guangdong are presently the country’s most promising centers of knowledge, Mao says. All five have strengths in biotechnology. And local government policies in those cities support R&D investment, enable industry access to academic research, and promote quality science and engineering university education. They’re policies support a shift from a “made in China” period to an “innovated in China” period, he says.

Three years ago in India, Prime Minister Manmohan Singh formed a National Knowledge Commission to identify strategies for transforming his country into a knowledge society. The high-level, seven-person team’s recommendation to improve access to education will result in a $65 billion expenditure on education in the next four years.

Telecommunications inventor and entrepreneur Sam Pitroda, who chairs the commission, considers human capital the key to a knowledge economy. In the 1980s, the telecom revolution he launched in India succeeded only because thousands of Indians were trained to work on network management and fiber optics. “Knowledge,” he says, “will be the next driver for India. The first challenge is to expand the knowledge base, improve access to knowledge, and improve the quality of knowledge. We have 200,000 students appearing for entrance exams, and only 2,000 get into good technology colleges. So, we need more engineering or biomedical colleges.”

Pitroda argues that turning manufacturing or service-based economies into knowledge capitals also requires a complete re-thinking of urban infrastructures. “In the past we built cities and suburbs based on the idea of manufacturing plants,” he says. “The idea now is to focus on knowledge as the key driver to re-structure everything.”

Indian cities Bangalore and Hyderabad have become famous for their IT booms but aren’t knowledge economy models.

“The cities haven’t transformed,” Pitroda says. “They’re crowded and the infrastructure is not in tune because nobody thought it through.” True knowledge capitals must be designed with a sustainable plan, he says. “Start from scratch and go vertical.” He advocates building clusters that “bring large numbers of people together in a setting where they live, work, and innovate together.”

Start from Scratch

Masdar City in Abu Dhabi could be a utopian version of what Pitroda describes. The $22 billion, eight-year project launched in 2006 by Crown Prince Sheikh Mohammed bin Zayed Al Nahyan is constructing an entire town focused on engineering solutions to problems in energy, security, climate change, and sustainable human development. The “green” city, designed by Foster + Partners to be entirely solar- and wind-powered with zero carbon emissions, will be anchored by a major new scientific engineering university, the Masdar Institute, to welcome its first students in September 2009.

The institute’s founding president, Russell Jones, former president of the University of Delaware, says three things persuaded him to move with his wife to Abu Dhabi to take the helm: A strategic decision had been made by the government to build a cluster; the graduate-level-only university is being staffed through a partnership with MIT; and research there will focus on solving one of the world’s most important problems—alternative energy.

Jones says the state-funded Masdar Initiative has a $15 billion seed fund (projected to increase to $80 billion) to bring alternative energy companies to the region. His university “is the human capital piece” of the knowledge economy equation, training the scientists and engineers who will staff and startup the alternative energy companies that will fuel the Masdar City economy.

Identifying Ways to Win

As host to some 20,000 scientists conducting three-quarters of the nation’s research, Mexico City has a leg up on Abu Dhabi in the human capital department. Mexico City is already “a hub for producing human capital,” says Mayor Ebrard. “Graduate students flock to our many universities and research institutes.”

But unlike Abu Dhabi, Mexico City doesn’t have the wealth to build a knowledge city from the ground up. The Mayor’s various initiatives are directed instead at improving upon what exists.

As General Director of the Mayor’s new Institute for Science & Technology, Esther Orozco has dedicated a $17 million budget to five distinct programs for improving Mexico City’s infrastructure and assets. Teams from the institute evaluate the region’s needs in water, energy, and food; sexual, nutritional, and mental health, including addiction; digital connectivity; small business incubation and competitiveness; and science and technology education.

Orozco says the teams address those issues in partnership with experts from government, industry, and academia. In just over a year, their work has resulted in the installation of an optical fiber network throughout the metropolitan area, which she says will “close the digital gap” between Mexico City and more developed cities by providing free internet to all residents.

Orozco’s education team has brought scientists to the city’s street fairs to teach citizens how cell phones and other modern technologies work. An interactive exhibit to educate kids about the effects of drug use will soon open. And a team of scientists and engineers working on the water program has mapped a system to automate the handling of Mexico City’s deep sewage.

Meanwhile, another of the Mayor’s initiatives, Capital En Crecimiento, is looking at additional infrastructure challenges. Jorge de los Santos, CEO of the government-owned company, says, “We’re like the Port Authority. We build tunnels, roads, transportation hubs—anything we need to in order to enhance the competitiveness and productivity of Mexico City.”

De los Santos is also working with the RAND Corporation to identify the sectors Mexico City can dominate. “What sectors should we be targeting to be the best in the world?” he asks. Whether it be personalized medicine, digital design, financial IT, or healthcare informatics, Capital En Crecimiento will build communities within the city with R&D campuses, parks, and housing where technology-focused clusters can grow. “Here you would be able to live, work, study, research, and shop,” says De los Santos, who predicts it will be three years before the first such development is inhabitable.

Mayor Ebrard is nothing but optimistic for his city’s chance to contend as a Global Knowledge Capital. “The East Asian tigers of the 1980s, like Singapore and South Korea, and the rising giants of this century’s first decade, India and China, all had economies smaller than Mexico’s not too long ago,” he says. “India’s mastery of software technology has transformed its economy and raised its global competitiveness. They’ve made tremendous leaps and we think we can too.”

This story originally appeared in the Autumn 2008 issue of The New York Academy of Sciences Magazine.