By Futurist Thomas Frey
In 2023, I introduced the concept of the Neumann Engine—a self-replicating system for cities to thrive in the AI era by turning economic decline into innovation opportunity. Named after mathematician John von Neumann’s self-replicating machine theories, the Neumann Engine isn’t a single technology or institution. It’s a complete economic operating system that enables cities to generate prosperity through AI-powered entrepreneurship, autonomous coordination, and continuous adaptation.
By 2040, this concept will have evolved into one of the era’s defining megaprojects: The Neumann Engine Mega-Region Initiative—a $1 trillion global fund creating dozens of self-sustaining tech mega-regions across Europe, Asia, and the Americas. Linked AI-driven innovation corridors will connect continents, each designed as a fusion of venture studios, smart logistics, and autonomous governance.
The outcome: cities that don’t just survive AI disruption but use it as fuel for continuous economic reinvention. Self-replicating innovation ecosystems that spread across regions, creating prosperity exactly where traditional manufacturing and service economies are collapsing.
This is how post-industrial cities avoid becoming permanent decline zones—and how the global economy restructures around AI-native innovation rather than trying to preserve jobs that AI makes obsolete.
The Problem Neumann Engines Solve
Traditional economic development is dying. Cities across the industrial world face the same crisis:
Manufacturing jobs aren’t coming back. Automation and AI make labor-intensive production obsolete. Promising workers that factories will return is lying—those jobs are gone permanently.
Service sector jobs are evaporating. AI handles customer service, data entry, scheduling, basic analysis—work that employed millions. These jobs aren’t being outsourced; they’re being eliminated.
Knowledge work is being automated. Even high-skill professions—legal research, medical diagnosis, financial analysis, software coding—face AI competition. The “retrain for tech jobs” solution doesn’t work when AI does tech jobs better.
Traditional economic development tools don’t work. Tax incentives to attract large employers, infrastructure spending hoping jobs follow, and workforce training for jobs that don’t exist anymore—these strategies assume the old economy still functions. It doesn’t.
Cities need fundamentally different economic models. The Neumann Engine provides one: instead of attracting jobs, cities generate entrepreneurs. Instead of competing for relocating companies, cities create self-replicating innovation ecosystems. Instead of training workers for existing jobs, cities build infrastructure that enables anyone to start AI-powered businesses.
What a Neumann Engine Actually Is
A Neumann Engine has five core components working together:
1. AI-Powered Venture Studios
Not traditional incubators or accelerators—comprehensive business creation systems. AI identifies market opportunities, generates business concepts, matches them with available talent, provides initial funding, and manages early operations. The studio doesn’t just support entrepreneurs—it manufactures businesses at scale.
Someone with domain expertise in healthcare but no business training gets matched with an AI-identified opportunity in telemedicine. The venture studio provides AI co-founders handling finance, marketing, and operations. The human provides domain knowledge and customer relationships. Together they launch a viable business in weeks, not years.
2. Autonomous Logistics Infrastructure
Smart supply chains, automated warehousing, drone delivery networks, and digital payment systems—all integrated and available to any entrepreneur instantly. Starting a business doesn’t require building logistics from scratch; you plug into existing autonomous infrastructure the way websites plug into cloud computing.
An entrepreneur launching a specialty food business immediately has access to automated inventory management, AI-optimized supply chain, autonomous delivery systems, and digital payment processing—capabilities that previously required years to build and millions to fund.
3. Open Innovation Commons
Shared intellectual property, research facilities, testing equipment, and knowledge resources available to all entrepreneurs in the ecosystem. Instead of every startup reinventing basic capabilities, they access commons of proven technologies, methodologies, and tools.
This reduces startup costs dramatically while accelerating time-to-market. Why spend six months developing a payment system when the commons provides one? Focus on unique value, not reinventing infrastructure.
4. Adaptive Governance Systems
AI-powered municipal governance that responds to ecosystem needs in real-time. Permitting happens automatically for standard businesses. Regulations adapt based on actual outcomes rather than static rules. Zoning evolves as the economy shifts. Government becomes facilitator rather than obstacle.
Traditional economic development requires navigating bureaucracies designed for industrial economies. Neumann Engine governance redesigns government for AI-era entrepreneurship—enabling rather than constraining innovation.
5. Network Effects Amplification
Connections to other Neumann Engine regions globally, enabling businesses to scale beyond local markets immediately. An entrepreneur in Akron, Ohio can access customers, partners, and resources in Turin, Italy and Nagoya, Japan through linked innovation corridors.
This prevents the winner-take-all geography where only San Francisco, New York, and Beijing matter. Dozens of innovation regions compete and cooperate globally, preventing geographic concentration that leaves most places behind.
How We Get There: 2025-2040
2025-2028: Proof of Concept Cities
Five pilot cities—selected from mid-sized metros facing manufacturing decline—receive initial $10 billion each to build first Neumann Engines. Akron (Ohio), Turin (Italy), Nagoya (Japan), Guadalajara (Mexico), and Wrocław (Poland) become testbeds.
Each city builds venture studio infrastructure, implements autonomous logistics systems, creates innovation commons, and redesigns governance for entrepreneurship. AI systems begin identifying opportunities and matching them with local talent. First wave of AI-native businesses launch.
Results within three years: 500+ new businesses created in each city, 10,000+ jobs that didn’t exist before, economic growth rates 3-5x regional averages. Not jobs attracted from elsewhere—jobs created locally through AI-powered entrepreneurship.
2028-2032: Regional Expansion
Success in pilot cities attracts $100 billion expansion fund. Each pilot city spawns satellite Neumann Engines in surrounding regions. Akron’s success spreads to Cleveland, Pittsburgh, and Detroit. Turin expands through northern Italy. Nagoya’s model spreads across Japan’s industrial heartland.
AI systems that worked in pilot cities get refined and deployed across dozens of additional cities. Venture studio models become standardized. Logistics infrastructure becomes interoperable. Governance best practices spread through network.
By 2032, 50 cities globally operate mature Neumann Engines. They’re creating thousands of businesses annually, generating economic growth while traditional industrial economies continue declining. The contrast is stark—Neumann Engine cities thrive while non-participating cities stagnate.
2032-2035: Mega-Region Formation
Neumann Engine cities begin coordinating at regional scale. Instead of individual cities competing, entire regions organize as linked innovation corridors. The Great Lakes Mega-Region connects Detroit, Cleveland, Pittsburgh, Akron, and Buffalo into unified innovation ecosystem. Northern Italy coalesces around Turin-Milan-Genoa corridor. Japan’s Tokaido Mega-Region from Tokyo to Osaka becomes coordinated innovation zone.
These mega-regions develop specialized focuses. Great Lakes emphasizes advanced manufacturing and materials science. Northern Italy focuses on design and luxury goods innovation. Tokaido specializes in robotics and precision engineering.
Specialization creates competitive advantages while connection through global network prevents isolated decline. Cities within mega-regions cooperate rather than compete, amplifying collective capabilities.
2035-2040: Global Network Maturity
The $1 trillion Neumann Engine Mega-Region Initiative reaches full deployment. Dozens of mega-regions across continents operate as self-sustaining innovation ecosystems. AI-driven innovation corridors connect Europe, Asia, and the Americas, enabling instant collaboration and market access globally.
Entrepreneurs in any participating city can launch businesses serving global markets, access talent and resources anywhere in the network, and scale at speeds impossible in traditional economic systems. The geography of innovation becomes distributed rather than concentrated—prosperity spreads rather than accumulating in handful of superstar cities.
By 2040, Neumann Engine regions collectively generate $5 trillion in annual economic output through millions of AI-native businesses that didn’t exist in 2025. They employ tens of millions in jobs created through entrepreneurship rather than attracted through incentives.
What Makes Neumann Engines Self-Replicating
The “self-replicating” aspect is crucial—why this is Neumann Engine, not just “innovation hubs”:
Success creates resources for expansion: Successful businesses generate tax revenue that funds additional venture studios, infrastructure improvements, and expansion to new cities. The system funds its own growth.
AI learns and improves: Each business created teaches AI systems what works. Venture studios get better at identifying opportunities and supporting entrepreneurs. The system becomes more effective over time through continuous learning.
Talent development scales automatically: Successful entrepreneurs mentor next generation. Business creation expertise spreads through network. The capability to generate innovation becomes self-reinforcing rather than dependent on importing expertise.
Infrastructure investments compound: Each improvement to logistics, governance, or commons benefits all future businesses. Infrastructure gets better continuously without requiring ongoing external investment.
Network effects accelerate growth: As more cities join, the value of participation increases. Access to larger markets, more talent, and more resources makes the network more attractive, drawing additional cities and accelerating expansion.
Like von Neumann’s theoretical self-replicating machines, Neumann Engines use resources from their environment (declining industrial cities) to create copies of themselves (new innovation ecosystems), spreading economic vitality without requiring continuous external inputs.
Why This Succeeds Where Other Approaches Fail
Previous regional innovation attempts—tech hubs, innovation districts, startup accelerators—mostly failed because they tried attracting innovation rather than generating it. They competed for limited pools of entrepreneurs, venture capital, and anchor companies. A few superstar cities won; everyone else lost.
Neumann Engines work differently:
Generate rather than attract: Create entrepreneurs from existing populations rather than trying to lure them from elsewhere.
AI-powered rather than human-limited: Venture studios using AI can support vastly more businesses than human-only accelerators.
Infrastructure-focused rather than subsidy-dependent: Build permanent capabilities rather than offering temporary incentives.
Network-amplified rather than zero-sum competitive: Connected regions help each other rather than competing for fixed resources.
Adaptive rather than static: AI governance and logistics evolve continuously based on what works rather than following fixed plans.
The $1 Trillion Investment
The Neumann Engine Mega-Region Initiative requires:
- Venture studio infrastructure ($300B): AI systems, facilities, initial business funding across dozens of mega-regions
- Autonomous logistics networks ($250B): Smart supply chains, automated warehousing, delivery systems, digital payment infrastructure
- Innovation commons ($150B): Shared research facilities, IP libraries, testing equipment, knowledge platforms
- Governance transformation ($100B): Redesigning municipal systems for AI-era entrepreneurship, training officials, implementing adaptive regulations
- Network coordination ($50B): Building connections between mega-regions, enabling global collaboration and market access
- Talent development ($150B): Training programs converting industrial workers into entrepreneurs, educational infrastructure, mentorship systems
This creates self-sustaining systems that generate returns exceeding investment within a decade through tax revenue from new businesses and economic growth.
Final Thoughts
The Neumann Engine concept I introduced in 2023 addresses the central economic challenge of the AI era: how do cities generate prosperity when AI eliminates most traditional jobs?
The answer isn’t preserving jobs that AI makes obsolete or retraining workers for jobs that don’t exist. It’s building self-replicating innovation ecosystems that enable anyone to become an entrepreneur, supported by AI systems that handle what used to require years of experience and millions in capital.
By 2040, the Neumann Engine Mega-Region Initiative will have created dozens of thriving innovation regions across continents—not by attracting jobs but by generating them, not by competing for limited resources but by creating self-sustaining systems that spread prosperity.
The industrial economy is dead. The Neumann Engine is how we build what comes next—not in a handful of superstar cities but across regions where economic decline seemed inevitable.
Self-replicating innovation ecosystems spreading across the globe. That’s the future the Neumann Engine makes possible.
Related Stories:
https://www.brookings.edu/articles/the-future-of-innovation-districts/
https://mitsloan.mit.edu/ideas-made-to-matter/how-cities-can-foster-innovation-age-ai
