Innovation Districts for Local Economic Development

Governments in various cities worldwide are adopting an increasingly active role in promoting local economic development, creating conditions to enhance their cities’ appeal and, with it, attract talent and investment in high-value-added sectors. In countries like the United States, this approach has solidified through what are known as innovation districts. Its relevance extends to Mexico, where many cities still rely on industries such as automotive manufacturing, whose global competitiveness is increasingly uncertain and vulnerable to new emerging economies. Mexican cities aspiring to strengthen their economic development must not only seek to attract high-value-added companies but also become excellent places to live, work, and enjoy. Highly qualified professionals and entrepreneurs are no longer just seeking better jobs but also better places to live: cities with affordable and well-located housing, efficient mobility, attractive cultural life, modern infrastructure, and quality public spaces. This is where the importance of promoting the creation of innovation districts lies.

A New Model for Concentrating Talent, Businesses, and Creativity

Innovation districts are areas within cities where universities, research centers, technology companies, entrepreneurs, business accelerators, and incubators are grouped, forming ecosystems in which physical proximity facilitates knowledge transfer, idea exchange, and collaboration. They represent a transition from the traditional model of industrial parks located on peripheries, disconnected and designed for other industries. Currently, innovation in sectors such as technology often occurs in more compact, accessible spaces connected to urban life. According to the Brookings Institute, these districts contain three fundamental types of assets:

• Economic Assets: Businesses, educational institutions, research centers, laboratories, startups, flexible offices, and collaborative spaces that drive and cultivate innovation. They form the intellectual and productive foundation of an innovation district.
• Physical Assets: Buildings, plazas, parks, walkable streets, efficient transportation, and quality public spaces that strengthen connections among people. Active ground floors, co-working spaces, parks, among others, often serve as settings for social and cultural interaction and knowledge exchange.
• Network Assets: Events, workshops, business meetings, technology fairs, and a continuous agenda of activities that generate synergies among individuals and institutions, accelerating the execution of ideas and projects.

International evidence shows that these spaces can emerge in multiple forms: around university campuses, in neighborhoods with a high concentration of small businesses, in strategic urban corridors, or in former industrial zones repurposed into modern areas for creative, technological, medical, and similar industries.

Opportunities for Mexican Cities

In Mexico, where many cities have for decades relied on traditional manufacturing industries, innovation districts represent an opportunity to diversify the local economy towards more competitive sectors with greater future potential. The transition towards an economy less dependent on industries like the automotive sector, for example, is fundamental.

Cities with strong economic performance, such as Querétaro, Guadalajara, or Monterrey, could strengthen their local economies through strategies aimed at attracting high-value-added talent and investment, leveraging their advantages in quality of life, location, infrastructure, and education.

State and municipal governments can play an active role by articulating alliances, defining long-term visions, and creating urban and fiscal conditions that foster investment and talent attraction. They can bring together universities, businesses, entrepreneurs, and investors to build a shared vision for the economic future of their cities. Furthermore, they possess urban policy tools, such as land use, urban development incentives, infrastructure, transportation, and public space, which can transform underutilized areas into attractive hubs for new industries.

International examples, such as Kendall Square in Boston or District 22@ in Barcelona, demonstrate that innovation districts do not emerge spontaneously but are the result of deliberate public decisions, strategic investments, and the construction of alliances and functional urban ecosystems.

Mexico needs to advance towards a more sophisticated economic model, capable of generating better jobs and attracting higher-value-added investments. Innovation districts can help achieve this objective. The question is whether our cities are ready to make the leap and create new opportunities for local economic development.

fernando.granados@alumni.harvard.edu | @fgranadosfranco

The article

first appeared in Líder Empresarial.