Density and social interactions: Impacts on regional innovation and productivity

Large and highly industrialized cities around the world are undergoing an unexpected phenomenon – they are becoming less dense.  However, density is often only thought of in terms of people per unit of area. We instead focus on the density of interactions and density of the networks of interdependence that connect various economic entities within a regional economy.  These types of densities are likely more important determinants of regional productivity and innovation than the density of people.

Inspired by fascinating parallels in the evolution of stars, we seek to understand the role of interpersonal interactions in regional innovation.  For a star to emerge from dust clouds it must have both high density and high temperature – density alone is not sufficient.  Viewing social interactions as analogous to temperature, we believe for a regional to become an innovation engine, it requires both high density and high levels of social interaction. Yet, as the COVID pandemic is accelerates the transition of millions of workers to permanent teleworkers, it is unclear what implications this trend will have on regional innovation and productivity.  Our goal here is to better anticipate those implications, both for individual regions and for individual industries, and to better understand the differences between density of interactions and density of people.