Innovation is assumed by many analysts to be intimately connected with cities and with clusters
of economic activity. The geography of innovation – as an area of study – does not seriously examine
innovation by isolated firms or in remote areas, which it considers atypical. In this chapter I
argue that the evidence upon which this assumption is based is biased towards identifying innovation
in clusters and urban areas, and that innovation theory contributes to this bias. I outline a theory
that accounts for innovation both in urban and in remote areas, and which also accounts for the
decline of many remote regions. This theory rests upon distinguishing initial firm-level innovation
(that occurs similarly in urban and remote areas, as an increasing body of evidence shows) from
subsequent growth and innovation diffusion (that often requires the market access and resources that
cities provide). Evidence is presented that corroborates certain aspects of this theory. The
chapter’s central argument is that once urban bias is overcome the geography of innovation can
abandon some of its inhibiting assumptions and move in new directions.
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