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U UNIVERSITY OF CINCINNATI Date: May 19, 2009 I, Guler Irem Yelkenci , hereby submit this original work as part of the requirements for the degree of: Masters in Community Planning It is entitled: An Assessment of Knowledge City Foundations: The Case of Istanbul Guler Irem Yelkenci Student Signature: This work and its defense approved by: Rainer Vom Hofe, PhD. Committee Chair: Menelaos Triantafillou, ASLA, AICP Approval of the electronic document: I have reviewed the Thesis/Dissertation in its final electronic format and certify that it is an accurate copy of the document reviewed and approved by the committee. Committee Chair signature: Rainer Vom Hofe, PhD. An Assessment of Knowledge City Foundations: The Case of Istanbul A Thesis submitted to the Division of Research and Advanced Studies of the University of Cincinnati in partial fulfillment of the requirements for the degree of Master of Community Planning in Department of School of Planning of the College of Design, Art, Architecture, and Planning 19 May 2009 by Guler Irem Yelkenci B.A., City and Regional Planning, Istanbul Technical University, Turkey 2006 Thesis Committee: Rainer Vom Hofe, PhD. Menelaos Triantafillou, ASLA, AICP ABSTRACT The concept of Knowledge Economy has gained significance in a world characterized by escalating use of technology, and increased importance of human capital. What began as an international discourse, Knowledge Economy has recently become a policy concern of local and regional governments. Within the practice of Urban Planning, the phenomenon is examined under the concept of “Knowledge City”. This study attempts to answer the question of where Istanbul’s strengths and weaknesses are in its transition to a knowledge city. As Knowledge Economy gains momentum around the world, there arises a need to analyze, quantify, and qualify the foundations at the city level. Because we are at the early stages of evolution of the knowledge cities, there is neither a coherent framework nor a unified methodology for the design and implementation of successful knowledge cities. Common features of successful knowledge cities are under investigation in the research community. This study first investigates the recognized measurement methods at the international level, and then utilizes an emerging framework to assess Istanbul’s potential as a knowledge city. The recent studies from the European Institute of Comparative Urban Research identifies the knowledge foundational areas for a city as: knowledge base, industrial structure, quality of life, diversity, accessibility, urban scale, and social equity. The institute also offers comparable measures for each foundational area. In accordance with the framework measures, this thesis reveals Istanbul’s strengths and weakness within each foundation for becoming a knowledge city. ACKNOWLEDGEMENTS I would like to direct my sincere appreciation to all my committee members for their guidance and encouragement. Their patience and support throughout the whole process of this study was priceless and considerable. I would like to thank my committee chair, Dr. Rainer Vom Hofe, for introducing me to the field of economic development, and giving me both professional and non-professional advice in the times that I most needed it. His enthusiasm to teach has always been a big inspiration for me. My committee member, Prof. Menelaos Triantafillou for giving extremely valuable insights, and providing me with the motivation I needed, and special thanks to my advisor Dr. David Edelman for simply being a great person. Thanks to you, I will continue my life as a more knowledgeable and successful individual. I would like to mention the name of the most valuable person of all the faculty members and students, Connie Dean, and thank her for all the work she has done for all of us. I also would like to acknowledge my dear friend Carl Victor Pierson for being such a big support and showing me the greatest patience in the world. Finally, I cannot thank enough my precious family who always helped, encouraged, and supported me in every possible way. TABLE OF CONTENTS ABBREVIATIONS 2 LIST OF FIGURES 3 LIST OF TABLES 4 INTRODUCTION 5 DEFINITION AND IMPORTANCE OF KNOWLEDGE ECONOMY 6 KNOWLEDGE ECONOMY IN EUROPE 8 LITERATURE REVIEW 14 FEATURES OF THE KNOWLEDGE ECONOMY 15 1. RESEARCH AND DEVELOPMENT 17 2. TECHNOLOGICAL CHANGE 18 3. GLOBALIZATION 19 4. PRESENCE IN ALL INDUSTRY SECTORS 20 5. HUMAN CAPITAL 21 6. NETWORKS 22 MEASURING KNOWLEDGE ECONOMY 23 ASSESSMENT AT INTERNATIONAL LEVEL 24 THE KNOWLEDGE CITY CONCEPT AND ITS ASSESSMENT 30 THE KNOWLEDGE CITY CONCEPT 32 ERGAZAKIS’ FRAMEWORK 37 EURICUR FRAMEWORK 43 KEY FINDINGS OF THE LITERATURE REVIEW 45 METHODOLOGY 47 RESEARCH FRAMEWORK AND THE SEVEN FOUNDATIONS 48 ANALYSIS: ASSESSING ISTANBUL’S KNOWLEDGE FOUNDATIONS 57 KNOWLEDGE ECONOMY FOUNDATIONS IN ISTANBUL 57 1. KNOWLEDGE BASE 57 2. INDUSTRIAL STRUCTURE 63 3. QUALITY OF LIFE/AMENITIES 66 4. ACCESSIBILITY 68 5. DIVERSITY 70 6. URBAN SCALE 71 7. SOCIAL EQUITY 72 LIMITATIONS AND FINDINGS 74 CONCLUSION 78 APPENDIX 81 REFERENCES 83 1 Abbreviations CIP Competitiveness and Innovation Framework Programme/EU CORDIS Community Research & Development Information Service/EU ESRC Economic and Social Research Council EU European Union EURICUR European Institute for Comparative Urban Research FP7 Seventh Framework Program/EU GDP Gross Domestic Product ICT Information and Communication Technologies IMM Istanbul Metropolitan Municipality IT Information Technologies KAM Knowledge Assessment Methodology KBE Knowledge-based Economy KC Knowledge City KE Knowledge Economy OECD Organisation for Economic Co-operation and Development PwC PriceWaterhouse Coopers R&D Research and Development SPO State Planning Organisation/Turkey STI Science, Technology and Innovation UN United Nations WB World Bank WEF World Economic Forum 2 List of Figures Cumulative Projected GDP Growth by 2020. 13 Chain-Link Model of Innovation in the New Economy. 17 Ergazakis’ Knowledge City Concept. 37 Developmental and Operational Functions of a KC. 38 The EURICUR’s Approach to Knowledge City. 44 The Foundations and Activities of a Knowledge City. 48 Total Number of Students in Universities 2000-2007. 59 The Trend in Graduate and PhD Students 2000-2007. 59 The Number of Students in Universities and Further Education Establishments per 1000 Resident Population, 2004. 61 Students in Tertiary Education per 100 Resident Population Aged 20-34, 2004. 61 IMM Public Satisfaction Survey. 67 Neighborhood Satisfaction in Istanbul. 68 Number of Passengers Carried Through the International Flights. 69 Percentage of Foreign Population, 2000. 71 Population of Cities, 2001. 72 Number of Hospital Beds per 1000 Residents. 73 Unemployment Rates, 2001. 74 3 List of Tables Ranking and Scores of Potential EU Member Countries. 11 Variables Used in the “Standard” 14-Variable Scoreboards. 26 OECD Science, Technology and Industry Scoreboard 2007 Indices. 29 The Seven Foundations and Their Comparison Measures. 54 The Seven Foundations and Their Indicators. 55 The Share of Medical Students 2000-2007. 62 Istanbul’s Share of the National GDP. 64 Istanbul’s Share of GDP by Industry Sectors. 64 Employment Shares in Istanbul by Industry Sectors. 65 Summary of the Findings. 75 4 INTRODUCTION “ Economic success is increasingly based on upon the effective utilization of intangible assets such as knowledge, skills and innovative potential as the key resource for competitive advantage. The term “knowledge economy” is used to describe this emerging economic structure” (ESRC1 Knowledge Economy, 2005). In the 1980’s, advancements in neoclassical growth models resulted in the creation of the ‘New Growth Theory’. New Growth Theory emphasized the importance of new technologies and human capital in the production process (Romer, 1990). Conceptually rooted in New Growth Theory, knowledge economy (KE) or the “new economy” highlights the use of knowledge in driving nations’ success in the new economic era. Today, almost all developed economies are moving towards a knowledge-based economy (Organisation for Economic Co-Operation & Development [OECD2], 1996). Many nations, regions and cities are challenging each other on a global scale. Some are doing significantly better in knowledge activities by attracting a more talented workforce and growing in knowledge based industries. This study aims to assess the city of Istanbul’s readiness in becoming competitive in the new economy. 1 The Economic and Social Research Council (ESRC), an independent organization in the United Kingdom (UK), established in 1965, funds research and training in social and economic issues. It receives most of its funding through the Department of Innovation, Universities, and Skills of UK Government, and it funds over 2,500 researchers in academic institutions and policy research institutes throughout the UK. 2 OECD was established in 1961 and aims to support sustainable economic growth in more than 100 countries. OECD provides a setting where governments compare policy experiences, seek answers to common problems, identify good practice, and coordinate domestic and international policies. The organization is also a reliable data source for national and regional KE measures. 5 This beginning chapter introduces the KE concept and underlines its recognition worldwide with an emphasis on its significance in Europe and Turkey. The literature review presents the key features of KE along with its recognized measurement methods at the international levels, and investigates Knowledge