City-regions and economic development: an overview

1. City-regions and economic development: an overview Prof. Alan Harding Presentation toTyne and Wear Chief Executives Development Day Workshop on Economic Assessments 7 January 2009, Durham

2. This presentation • Three drivers of city-regionalism: conceptual, empirical, political • Key challenges for city-regional economic assessments

3. 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

4. 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

5. .. 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?

6. THE GEOGRAPHY OF THE UK BOOM…

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

22. POLICY ENVIRONMENT

23. 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…

24. 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

25. 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

26. IMPLICATIONS AND CHALLENGES

27. 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

28. 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

29. 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

30. 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

31. Find out more? www.ipeg.org.uk

32. GEOGRAPHY OF THE BUST?

33. The regional geography of the last housing market crash