Small and medium-sized cities: Endogenous or exogenous development trajectories?

The issue of small and medium-sized cities (SMCs) is a topic which, with a few exceptions, has until now not received the attention it deserves, both in the academic and public policy debates. The recent draft opinion of the Commission for Territorial Cohesion “Towards an Integrated Urban Agenda for the EU” may represent a turning point in this view. Hosting nearly forty percent of the EU total population, SMCs are supposed to contribute to a more balanced territorial distribution of economic activities as well as to improve regional innovation potential. This topic is crucial for Italy, where the urban and productive fabric related to SMCs is remarkable and widespread across the entire national territory. This paper aims at assessing what opportunities and risks follow for SMCs from the entry into the knowledge economy. After having introduced this issue in the first Section, Section 2 reassesses the interplay between agglomeration economies and diseconomies in the knowledge economy by taking a hermeneutical viewpoint on the knowledge itself. A set of hypotheses on the role SMCs can play in this new condition is put forward in Section 3. An empirical analysis follows on the Italian case to test the consistency of the above hypotheses. Finally, Section 5 will draw conclusions and suggestions for policies.