New Orleans: America’s Next Great Innovation Hub?


New Orleans is not giving up, and it’s not merely trying to restore its status as a “sleepy southern belle.” Rather, New Orleans is choosing a “third path” by aiming to transform itself into a regional innovation hub. The city is using its low cost of living, increasing quality of life, and some generous tax credits to draw entrepreneurs and start-ups.

The strategy seems to be working, at least in part: Forbes ranked New Orleans as the country’s biggest “brain magnet” and the Coolest Start-Up City. Part of the city’s success is due to a handful of non-profits that focus or developing and promoting entrepreneurship. One such organization, IdeaVillage, provided more than $326,000 of seed money for city start-ups in 2012 and recently held an entrepreneurship conference that drew more than 1,700 people. Another, perhaps unexpected, contribution to New Orleans’ entrepreneurial growth is the city’s new school choice regime, which has drawn dozens of education start-ups.

The city does face challenges, however.  In Richard Florida’s seminal 2002 book, The Rise of the Creative Class , he argues that in order to attract the kinds of workers who drive the modern economy, a city must provide talent, tolerance, and technology. In 2002, Florida ranked New Orleans a “bottom 10 city” in terms of creative-class attraction, and not too much has changed. In the area of talent, the percentage of citizens with a bachelors degree has grown, but slower than the national average. In terms of tolerance, Louisiana’s 2004 Constitutional Amendment banning same-sex marriage and civil unions certainly cannot have contributed to a more welcoming environment. Finally, although New Orleans’ information technology sector has grown impressively since Hurricane Katrina, the city started from a very low base.

Another concern is that the city’s focus on “the economy of the future” is disenfranchising and dis-empowering poor black residents. The city’s tax breaks for start-up companies may have helped grow tech jobs at six times the national rate, but 21% of homes in New Orleans remain blighted.

Overall, however, the city’s efforts are impressive, and New Orleans seems to be well on its way to remaking itself into a center for the modern economy. If all goes according to plan, and school choice continues to improve school quality while organizations like IdeaVillage build entrepreneurial capacity, New Orleans may one day become the southern capital of “people and ideas.”