In broad terms, the sources of economicgrowth are well understood but relatively few countries havesucceeded in effectively harnessing this knowledge forpolicy purposes so as to sustain high rates of growth overan extended period of time (commission on growth anddevelopment 2008; Yusuf 2009a). This study argues, however,that a high growth strategy which puts technology upgradingand innovation at the center might warrant a differentapproach from the one currently favored.It derives fromthe experience of global cities such as New York and Londonand the empirical research on industrial performance and oninnovation. This has yielded four significant findings:first, monosectoral services based economies grow slowlybecause they benefit less from increases in productivity andfrom innovation. Second, manufacturing industries producingcomplex capital goods, electronic equipment, andsophisticated components are more Research and Development(R&D) intensive, generate many more innovations, aremore export oriented, have a solid track record of risingproductivity, and having achieved competitiveness, are in abetter position to sustain it because the entry barriers tothese industries tend to be higher. By giving rise to densebackward and forward linkages these industries can serve asthe nuclei of urban clusters and maximize employmentgeneration. Third, industrial cities create many more jobsfor a middle class and tend to have a more equaldistribution of income than cities which are dominated byservices. Fourth, and finally, cities with a world classtertiary education and research infrastructure linked toindustry, are more resilient in the face of shocks, moreinnovative, and better able to reinvent themselves.
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