Edward L. Glaeser discusses the importance of entrepreneurship and innovation in New York's economy.
Like the rest of America, New York City has been buffeted by the recession that began in December 2007. This past August, the city's unemployment rate stood at 9.6 percent, just over the national rate of 9.5. But New York's economy will never recover from the downturn by trying to compete with China's labor costs or with Houston's housing costs. Nor can the city continue to rely on finance, which came to dominate it over the last 40 years: as the sad history of Detroit illustrates, one-industry towns rarely succeed in the long run. Rather, New York's success will depend on its ability to produce a steady stream of new products and ideas.
Indeed, studies have shown that all over the country, entrepreneurship—along with January temperature and education—is one of the three great predictors of urban success. But nowhere is that more the case than in Gotham, whose very history is a tale of entrepreneurship. To survive, New York must continue to bring forth innovators who will reinvent the city—with luck, making it more economically diverse. If they succeed, it will change as much between 2010 and 2050 as it did between 1970 and today.