City-regions and economic development:

an overviewProf. Alan Harding

Presentation to Tyne and Wear Chief Executives Development Day Workshop

on Economic Assessments7 January 2009, Durham

This presentation

• Three drivers of city-regionalism: conceptual, empirical, political

• Key challenges for city-regional economic assessments

Conceptual drivers: the emerging academic consensus

• City-regions are locomotives of the national economies within which they are situated, in that they are the sites of dense masses of interrelated economic activities that also typically have high levels of productivity by reason of their jointly-generated agglomeration economies and their innovative potentials

Scott and Storper, 2003• Metropolitan spaces are becoming, more and more, the

adequate ecosystems of advanced technology and economy…. [T]he decrease of communication costs does not by itself lead to a spreading and diffusion of wealth and power; on the contrary, it entails their polarization.

Veltz, 2005

Agglomeration: the ‘new’ buzz word

• Literally; ‘gathering together in a mass’• Old urban (economic) geography concept with 2

competing traditions• ‘Localisation economies’, benefits experienced by firms from co-location

(Modern version; Porter on ‘clusters’)• ‘Urbanisation economies’, benefits derived by workers and households as well

as firms from city size, density and variety (Modern version; Florida on ‘the creative class’)

• Associated with key observations e.g. productivity benefits of population growth, urban wage premium (within cities and on departure)

• Recent rediscovery by economists who had previously ignored ‘increasing returns to scale’

• Has become basis of new work on, e.g. ‘spillover effects’, ‘effective density’, attempts to explain why falling transport costs should be associated with concentration rather than dispersal of economic activity

.. and its implications?

• Big, dense, diverse, well-connected city-regions increasingly drive regional, and by implication national, economic performance

• But the performance gap between city-regions is growing; stretching urban hierarchies, nationally and internationally

• What’s the empirical evidence?

THE GEOGRAPHY OF THE UK BOOM…

BUT ALSO CROSS-NATIONALLY, WITH DIFFERENT ECONOMIC CYCLES...

Aachen

Amsterdam

Basel

Berlin

Bern

Besancon

Bonn

Bremen

Bremerhaven

Brussel

Cottbus

Dortmund

Dresden

Düsseldorf

Enschede

Erfurt

Frankfurt

Freiburg

GroningenHamburg

Hannover

Ingolstadt

Innsbruck

Kaiserslautern

Kassel

Kiel

Kobenhavn

Köln

Lausanne

Leipzig

Liechtenstein

Linz

Luxembourg

Lübeck

Magdeburg

Metz

Mulhouse

München

Nancy Nürnberg

Odense

Paderborn

Plzen

Praha

Rostock

Rotterdam

Salzburg

Schwerin

Siegen

Strasbourg Stuttgart

Szczecin

Wien

Würzburg

Zwickau

Zürich

Antwerpen

Higher than 15%Between 7% and 15%Between 3% and 7%Between 1.5% and 3%Between 0.5% and 1.5%Lower than 0.5%

Aachen

Amsterdam

Basel

Berlin

Bern

Besancon

Bonn

Bremen

Bremerhaven

Brussel

Cottbus

Dortmund

Dresden

Düsseldorf

Enschede

Erfurt

Frankfurt

Freiburg

GroningenHamburg

Hannover

Ingolstadt

Innsbruck

Kaiserslautern

Kassel

Kiel

Köln

Lausanne

Leipzig

Liechtenstein

Linz

Luxembourg

Lübeck

Magdeburg

Metz

Mulhouse

München

Nancy Nürnberg

Paderborn

Plzen

Praha

Rostock

Rotterdam

Salzburg

Schwerin

Siegen

Strasbourg Stuttgart

Szczecin

Wien

Würzburg

Zwickau

Zürich

Antwerpen

Higher than 5.5%Between 3% and 5.5%Between 2% and 3%Between 1.5% and 2%Between 0.5% and 1.5%Lower than 0.5%

Higher than 15%Between 7% and 15%Between 3% and 7%Between 1.5% and 3%Between 0.5% and 1.5%Lower than 0.5%

Seoul

KwangjuPusan

Kangnung

Kunsan

Chorwon

Chongju

Cheju

Higher than 5.5%Between 3% and 5.5%Between 2% and 3%Between 1.5% and 2%Between 0.5% and 1.5%Lower than 0.5%

Seoul

KwangjuPusan

Kangnung

Kunsan

Chorwon

Chongju

Cheju

AachenAmiens

Andorra

Angers

Barcelona

Basel

Bern

Besancon

Bilbao

Bonn

Bordeaux

Brest

Brussel

Clermont-Ferrand

Dijon

DortmundDüsseldorf

Enschede

Frankfurt

Freiburg

Geneve

Genova

Grenoble

Kaiserslautern

Köln

La Spezia

Lausanne

Le Havre

Le Mans

Liechtenstein

Lille

Limoges

Livorno

Luxembourg

Lyon

Marseille

Metz

Milano

Monaco

Montpellier

NancyNantes Orleans

Paris

Parma

Perpignan

Portsmouth

ReimsRennes

Rouen

Santander

Siegen

Strasbourg Stuttgart

Torino

Toulon

Toulouse

Valencia

Zaragoza

Zürich

Antwerpen

Higher than 15%Between 7% and 15%Between 3% and 7%Between 1.5% and 3%Between 0.5% and 1.5%Lower than 0.5%

AachenAmiens

Andorra

Angers

Barcelona

Basel

Bern

Besancon

Bilbao

Bonn

Bordeaux

Brest

Brussel

Clermont-Ferrand

Dijon

Dortmund

Enschede

Frankfurt

Freiburg

Geneve

Genova

Grenoble

Grosseto

Kaiserslautern

La Spezia

Lausanne

Le Havre

Le Mans

Liechtenstein

Lille

Limoges

Livorno

Luxembourg

Lyon

Marseille

Metz

Milano

Monaco

Montpellier

NancyNantes Orleans

Paris

Parma

Perpignan

Portsmouth

ReimsRennes

Rouen

Siegen

Strasbourg Stuttgart

Torino

Toulon

Toulouse

Valencia

Zaragoza

Zürich

Antwerpen

Higher than 5.5%Between 3% and 5.5%Between 2% and 3%Between 1.5% and 2%Between 0.5% and 1.5%Lower than 0.5%

POLICY ENVIRONMENT

Formal (decentralist) position: SNR

• The end of national urban policy based on top-down, needs-based prioritisation, targeted national programmes

• Instead, passing of responsibility to regional, sub-regional and local scales (without prioritising any in particular), strengthening of oversight by Westminster and Whitehall

• Recognises importance of city-regions…• ‘[O]ur towns and cities are often the engines of economic growth and many economic

markets operate at the level of sub-regions, including city-regions’

• …and makes provision for development of CR strategies and governance arrangements, voluntary and statutory

• ..but sees CRs as just one type of sub-region, between which there is no prioritisation

• Contrast this with…

Informal (centralist) position: CSR and ‘place blind’ policy reform

Tight spending settlement for 2008-11: cuts in sub-national e.d. & regeneration budgets, BUT

Response to growth management agenda in Eddington, Barker, and Leitch (coping with agglomeration pressures)

Realignment of major capital projects to support and manage the growth of the London super-region: e.g.

London Olympics, Crossrail, and ‘growth areas’, added to Heathrow 3rd runway, Chunnel rail link, and ‘incidental’

spatial policy (e.g. HE R&D) No equivalent package for any northern or midland

CRs

The ‘problem’ according to SNR

• Limited co-ordination and leadership of economic development policy in areas not covered by a single administrative unit. Product of:

Administrative fragmentation between local authorities and between local government and other key agencies

The patchiness of sub-regional governing arrangements and confusion about who does what on the part of key stakeholders

The limited capacity of existing sub-regional partnerships, and;

The paucity of accountability and leadership at the sub-regional scale

IMPLICATIONS AND CHALLENGES

Post-SNR, post-national urban & regional policy

Benign centralism and devolution within London SR Decentralisation rather than devolution for the rest

Policy environment characterised by: Lack of formal, national spatial development priorities (or

at least delivery mechanisms) Opaque decision-making, potentially radical change in

central-local relations; shift to inter-governmental bargaining, deal-making, informal coalition-building

Premium on leadership, assertiveness, having the right narrative, pressing the right buttons

Four overall challenges

Deciding whether to play the game, given uncertain rewards

The ‘it will pass’ position ignores the (international) economic and policy context and the likelihood that elements of the CR agenda would likely accelerate, not disappear, under a non-Labour govt.

Quality of evidence/understanding Relational analysis; economic, not administrative ‘units’; area-specific issues,

assets, interactivity, potential Persuasiveness of CR strategy

Parsimonious strategic goals, not shopping lists; how addressing ‘problems’ releases ‘potential’; ringing Govt. dept. bells: facilitating PSA delivery

Effectiveness of governance Influence; capacity; accountability and hard choices; delivery machinery

Specific challenges for city-regional economic assessments

Maintaining an economic focus; primarily about employment, productivity, transport, labour and housing markets

Address key headline questions re- where leading economic activities will be located in future and where the people who service them will come

from/choose to live Clarity about geographies: what is the CR scale and why is it important? [CR

vs region, admin. sub-region, other cross-district entities. urban-rural links] Developing a dynamic, future-orientated, forensic approach to analysis of

hot/cold spots and the assets that support them; Looking below district scale and outward to relationship to rest of region, other CRs, international

links Economic functions of key nodes, corridors; polynuclear or not?

Understanding linkages; employment & housing, TTW, migration, transport infrastructure; supply chains, purchases & sales;

Underpin clear view of priorities (USP), feasible use of policy levers Scenario-based flexibility; making analysis recession-proof

Manchester Independent Economic Review as the gold standard?

Independent 18 month programme of fundamental research & dissemination activity

£1.4m budget (from NESTA, NWDA, local partners) 6 main projects, focusing upon agglomeration economies,

innovation capacity & networks, inward & indigenous investment, trading links & supply chains, thick labour

markets & skills, sustainable communities (segregation & polarisation)

Comparative, within UK and (to limited extent) internationally

3 big challenges: building a common narrative, achieving consensus on policy implications, translating into practice

Find out more?

www.ipeg.org.uk

GEOGRAPHY OF THE BUST?

The regional geography of the last housing market crash

Prices Peak Trough Ave (end of trough)

Duration (quarters)

% decline

Region

East Q4, 1988 Q1, 1993 57,200 17 33.9

South East Q1, 1989 Q4, 1992 73,556 15 30.7

South West Q1, 1989 Q4, 1992 60,522 15 29.3

London Q4, 1988 Q1, 1993 75,832 17 27.9

East Midlands Q2, 1989 Q4, 1995 52,618 26 20.1

North West Q2, 1991 Q3, 1995 52,158 17 14.2

West Midlands Q2, 1989 Q2, 1995 60,441 24 12.3

North East Q4, 1991 Q3, 1995 48,750 15 11.3

Yorks/Humber Q1, 1991 Q3, 1995 50,249 18 10.2

England average Q3, 1989 Q4, 1995 61,115 25 12.5