Working Paper | HBS Working Paper Series | 2014

Agglomeration and Innovation

by Gerald Carlino and William R. Kerr


This chapter reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then describe how these factors are frequently measured in the data and some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).

Keywords: Industry Clusters; Innovation and Invention;


Carlino, Gerald, and William R. Kerr. "Agglomeration and Innovation." Harvard Business School Working Paper, No. 15-007, August 2014.