In our knowledge-based society, prosperity derives from knowledge and innovation rather than from natural resources or a favourable geographic location. Knowledge-based societies organise, renew and recombine knowledge resources effectively. Networks of companies, research institutes and entrepreneurs turn existing and new knowledge into innovative products, services or concepts that they sell on the market. Fast technological developments urge firms to invest massively in knowledge and learning. Economic dynamism is further enhanced by ICT-powered start-ups that shake up virtually any economic sector with disruptive effects on incumbent players and labour markets.     

Industries still produce tangible manufactured products, but their value embeds technology, design, symbolic meanings and added services, empowered by sophisticated organisational, logistic and financial know-how. Knowledge-based production depends on the competences of highly educated people from many trades and disciplines, organised in local and global networks of collaborating organisations each with their distinct specialisation. 

Universities play a crucial role in the knowledge society as creators of new knowledge and by preparing a growing share of the younger generation for a knowledge-intensive career where learning never ends. Machines, robots and algorithms are replacing routine labour in more and more realms. There are good reasons to assume that, unless repaired by the government, economic and societal fractures will deepen, as the rewards for skilled people rise, while lesser educated see the value of their work decrease. 

The knowledge society is not spatially neutral. It has a distinct urban geography, characterized by a process of selective re-urbanisation in which some cities are witnessing a remarkable growth dynamic (as we will discuss later), while others still struggling (mostly those cities with heritage of mass manufacturing and poor in knowledge assets). 

Cities compete with each other for knowledge resources such as R&D investments, high tech firms, and highly skilled people. Key urban attraction factors are high quality jobs (in firms and knowledge institutes), mixed urban environments, urban amenities, international accessibility. To an important extent, the Matthew effect applies: success breeds success, because there are economies of scale and knowledge spill-overs. Thriving knowledge-based cities with skilled inhabitants, top universities and knowledge-intensive firms tend to attract more of those resources, and hence become even more attractive.  Skilled people are more productive in environments where there are many of them, and where they interact and learn from each other; Moreover, cities with a highly educated population tend to develop more amenities that appeal to these groups; Likewise, R&D institutes function better in a local ecosystem that is rich and diverse. 

In the academic world, the Matthew effect applies as well. Top-ranking universities attract the best minds from around the world, and benefit strongly from the (relatively recent) massive internationalisation of higher education. Also, they obtain more external research funding – because excellence is being increasingly rewarded by science funders everywhere. R&D-intensive companies prefer to work more closely with top universities as well. As a result, the gap between the best and the rest grows. Top universities have increasingly become economic engines of their urban umfeld, spawning a growing number of successful tech start-ups in the fields of ICT, biotech, new materials etc. and attracting high tech firms that establish a presence near these institutes to tap into the rich knowledge sources and to cherry pick the best graduates.

In our urban system, the double Matthew effect (in cities and in academia) creates 2 types of winners.  The first are large and diverse metropolitan cities. Capitals like London, Berlin or Amsterdam, and large cities such as Munich, Hamburg, Milan and Barcelona – have become magnets for international talent and investments, because they “have it all”: Accessibility, attractiveness, top-level knowledge, a conglomeration of talent, the thrill of being big, sexy, international, and cutting edge in economic, cultural and social innovation. These cities face the challenge how to manage growth: keeping the growing city liveable and sustainable, fighting congestion, facilitating growth by increasing density and transforming obsolete urban functions and areas. 

For the the second type of winners, I coined the term “knowledge pearls”. These are smaller-sized cities, located not too far away from a bigger metropolis, with a world class university that is the central node in a strong local knowledge ecosystem. Knowledge pearls lack the scale advantages and big city buzz, but thanks to proximity and good connections, they benefit to a reasonable extent from nearby big city benefits (amenities, facilities, an international airport, a big labour market), without suffering the typical big city problems (congestion, pollution, crime). In this respect, they differ from “provincial” university university cities that lack such an urban embedding.

Examples of knowledge pearls are Leuven (near Brussels), Leiden, Delft (both at a central position in the Dutch Randstad region), Oxford and Cambridge (in London’s orbit) and certainly also Heidelberg. All have renowned universities that dominate the cities’ heritage, identity and image. These cities have shown above-average economic performance, in terms of GDP per capita development, unemployment rates and skilled in-migration. In many knowledge pearls, real estate prices have risen to levels not remote from those in successful knowledge capitals. 

Knowledge pearls are economically successful, but face critical challenges as well.

First, they face the risk of falling apart into parallel societies, undermining civic life (a cherished asset of such cities). In many knowledge pearls, the rapidly growing community of highly skilled foreigners (students, expats) hardly participate in the regular social, cultural and political life of the host society. This is reflected in foreign students not mixing in the traditional student unions and living in dedicated dormitories, children of expats going to international schools etc. Another divide grows between the academic communities and the more locally bound other segments of the urban society (including growing numbers of poorly educated migrants). The latter groups may dissociate from strong urban branding and investment strategies envisioning a “knowledge city” or “science city”, so typical for knowledge pearls. Countering segregation asks for creative urbanistic interfaces/cross points where different worlds meet, and requires open platforms where the changing direction and identity of the city are debated and negotiated by all communities. From its part, the internationally oriented university might increase its local significance and embeddedness by becoming more civic and engaged, linking its educational and research programmes to local issues. Exploring the city as experimental living lab, as container of research questions, as classroom for students. This asks for new institutional arrangements with local stakeholders. 

Another challenge for knowledge pearls is to rethink and re-design the city-campus nexus. The growing economization of academic knowledge brings more intense links between academia and business, entailing new spatial configurations. University campuses have long ceased to be ivory towers for scholars –if they ever really were. They have extended with incubators for start ups, and science parks for tech firms; some universities develop strategies to lure high tech firms to their campus, seeking to align the interests of business with those of research groups and higher education. RWTH Aachen for example managed to attract over 100 hightech firms to their new campus, and lets them sign a collaboration agreement to deliver guest lectures, engage in common research projects and share research facilities. Many campuses have become less monofunctional and more “urban”, adding functions such as student and expat housing, retail facilities, restaurants and hotels. At the same time, campuses face new competition from organically grown and lively city districts (typically rebranded as “innovation districts” or “knowledge quarters”) with growing appeal to knowledge-based economic activity; Urban policy makers everywhere have discovered knowledge and innovation activity as catalysts for urban revitalisation. 

Let’s conclude: Pearls have very special cleaning needs to hold their lustre, and the same story goes for knowledge pearls. Their development is highly contingent and context specific, but in all cases, they benefit from a closer alignment between university and city. The typical annual “mayor meets dean” meetings, are not sufficient. Town and gown have a wide array of shared interests, but also areas where conflicts loom. They need a vision-building and negotiation arena where, in all their layers, they discuss their interdependencies, discover common ground but also identify area of conflict and competition.