I gave a talk on my diversity and firms research at LSE London on Monday. You can now read summaries on LSE’s British Policy and Politics blog and the SERC blog.
LSE London have also posted up the slides and a podcast. I hope they’ve included the bit at the beginning where Powerpoint stops working …
The paper’s been picking up some interest – thanks to The Economist’s Free Exchange blog – and you can read the whole thing here if you so wish.
Orford Ness is one of the most extraordinary places in England. A spit of land on the Suffolk Coast near Aldeburgh, it was used as an experimental weapons testing site in both world wars and during the Cold War.
It’s now a National Trust nature reserve and Area of Outstanding Natural Beauty. However, it still holds traces of its mysterious former life.
Old military bunkers and pagoda-like blast chambers dot the landscape. From viewing towers, vast diagrams are visible on the ground, purpose unknown. Parts of the spit are still off-limits.
Reuben and I visited the site in October with our cameras. You can see some of the photographs on Flickr. The full set of pictures are in this lovely microsite.
A quick debrief from last night’s Liquid City debate, ably put together by Future Human. I was on the panel, alongside Eric van der Kleij from Tech City UK and Andrew Carter of Centre for Cities. It was a really helpful session for me, with a super-engaged audience full of good ideas and sharp questions.
Unvarnished notes follow.
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Strategy
‘Tech City’ is nice shorthand for London’s rapidly-growing tech scene, especially its nexus around Old St. What can policymakers do to help it along, if anything?
Eric set out his four main tasks:
1 / Stop Government messing things up
2 / Help big firms to come
3 / Help small firms to grow, e.g. through access to finance
4 / Promote ‘talent’.
Still quite vague, but the focus on micropolicies is wise. International evidence gives no clear steer on what Government’s role, and standard cluster policies have a very patchy record. Rather than just ‘building Silicon Valley in the UK’, strategy needs a distinctive London flavour.
The Olympic Park
It’s still not clear to me how the Olympic Park fits in – except as a big space nearby that will need filling post-Games. Officials hope that tech firms priced out of Silicon Roundabout might come to the Park. This feels optimistic , and rather goes against the intention not to masterplan the cluster.
More promising is the idea that the Park can morph into a campus for big firms like Cisco. Siemens have announced something similar in the nearby Royal Docks.
Big firms, small firms
What might global firms like Google and Facebook might do for, or to, Shoreditch? Eric was clear that big firms should be ‘good neighbours’, citing Google’s upcoming hub and Cisco offer of free telepresence as examples. Ministers are ‘encouraging’ them to set up R&D facilities here, but of course can make no promises. Someone suggested using Section 106 agreements to leverage, say, incubators, as a condition of setting up shop here – an idea worth looking at.
The room was divided about the competitive threat posed by big arrivals. A few people worried about small firms being ‘eaten’ by bigger ones. But for most companies in the Bay Area, being bought by Facebook is a dream outcome. More important is that the local ecosystem keeps producing new firms and new ideas. Which brings me to …
Gentrification
As Silicon Roundabout gets more popular, it will get pricier, and some firms will get pushed out. This is part of the neighbourhood change cycle. For small companies it’s of course disruptive, though London is big enough to allow new hot neighbourhoods to form. Policy can help by providing some cheap space, and avoiding any needless property shakeups. The area’s ‘soft infrastructure’ – cafes, bars and public spaces – also helps people get their creative work done. Keeping the feel is as important as keeping physical space available.
Failure
The UK needs to change its attitude to business failure, and develop a more positive view of serial entrepreneurship. This is partly a legal issue – bankruptcy rules in California are more relaxed than here. It’s partly attitudinal – US VCs actively look for entrepreneurs who’ve tried out a few ideas and learnt from their mistakes.
More broadly, we need to remember that Tech City is a long game. A lot of the innovation hotspots mentioned – in the US, Finland and Israel, for example – took decades to mature.
Human capital
We can accelerate innovation by helping smart people cluster together. But current immigration policy will hurt London’s ability to keep international talent. The Entrepreneur Visa, which requires £50k of backup funding per application, isn’t terribly helpful. Equally, London needs to get better at growing its own skilled people – improving education and training systems, and opening up routes into the industry are both forward priorities.
London’s cultural diversity is a big plus. My research (here and here) suggests that diversity helps push up innovation. However, Silicon Valley’s heavy dependence on international migrants is a cautionary tale – diversity has done a lot for the Valley, but firms are often at the mercy of DC immigration politics.
Die Zeit has just published a big feature on London as high-powered, on-trend, chaotic world city. There’s a quote from me, plus a cinematic passage in which the journalist and I wander around Hackney Wick before stopping off for a latte.
Also featured are Boris Johnson, Mark Kleinman from the GLA and a grumpy-sounding Hanif Kureishi. You can read the whole thing here. Or for non-German speakers, there’s Google Translate.
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ps more fame: in case you missed it, the Guardian have done a nice writeup of my Munich / Silicon Valley report.
I’ve put out a bunch of new academic and policy stuff in the past few weeks. Fresh from the ideas workshop, here it all is …
LSE’s Spatial Economics Research Centre has just published three of my phd papers in their working paper series. They are:
1) The Economics of Superdiversity [link]
2) The Long Term Impacts of Migration in UK Cities: Diversity, wages, employment and prices [link]
3) Does Cultural Diversity Help Innovation in Firms? Evidence from London (with Neil Lee) [link]
I’ll be presenting paper no.2 next month at the big NORFACE/UCL migration conference in London and at the RSA’s 2011 conference in Newcastle.
I’ll also be talking through all three papers (and discussing Richard Floria) at the AAG 2011 conference in Seattle in mid-April. If you’re there come and say hello!
More importantly, the UN Environment Programme launched a huge piece of work on the green economy a couple of weeks back, with a globally-streamed event in Nairobi and much other fanfare. This includes a report on Cities in the Green Economy [pdf], published by an LSE Cities team (including yours truly). LSE also did a sister report on Green Buildings [pdf].
You can read the whole lot, and some summary papers, on the Green Economy microsite.
‘The first rule of Tech City is, you don’t talk about Tech City,’ someone says. We’re sat in a conference discussing the Coalition’s plans to turn East London into Silicon Valley. Others around me nod their heads. ‘What we’ve got here already is great,’ says someone else. ‘My message to Government is: don’t fuck it up.’
The Tech City proposals still feel like ideas without a strategy. Government wants to support the nascent tech cluster around East London’s Old Street; bring in big investors like Facebook and Twitter; and develop the post-2012 Olympic Park into a high-tech hub.
It’s not hard to see tensions (see above, from one of the breakout sessions). Will big arrivals threaten existing firms? Could start-ups be pushed out by rising rents? How far will East Londoners benefit? And what’s in it for the rest of the UK?
So far, Ministers have mixed hands-on optimism and hands-off caution. ‘This is our attempt to generate Silicon Valley in the UK’, announced one at the event. ‘We seem to have a cluster on our hands,’ said another. ‘Do we need to do anything about it?’
Here are some evidence-based thoughts that I hope will help.
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In theory there’s no need for cluster policies: firms should sort across space to optimal locations. In practice this often doesn’t happen. Because of agglomeration economies, co-locating firms raises their productivity – which raises urban wages. So cities can benefit if we push firms together.
Some sectors are far more location-sensitive than others, though. So a tech city strategy needs to start with the firms we’re interested in, then configure urban space accordingly. First tech, then city.
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BIS already has a shopping list from the tech industry – better access to finance, improving intellectual property regimes, improving workforce skills, easing immigration caps, cheaper rents and widening the open data initiative. Not all of these merit intervention, although some do (more below).
The technology industry also tends to cluster locally. Yet firms’ markets and supplier relationships are often global, and important functions (like customer services) are often offshored.
So how does the city fit in? London’s tech businesses are largely service-sector, and benefit from the matching, sharing and learning economies that big cities offer.
These effects kick in at different scales. At city level, London offers economic diversity, access to skills, finance and world markets. At neighbourhood level, East London offers soft infrastructure – the cheap spaces, bars and coffee shops where a lot of creative work actually gets done.
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We need to be realistic about growing our own Silicon Valley. As I’ve said before, the Valley is a city-region, over 1300 square miles across – more than twice the size of Greater London. It also emerged over decades – Tech City has barely begun.
UK research suggests that science parks can boost innovation rates. But much of this is driven by bringing smart people together. Elsewhere, purely property-led strategies have failed.
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I think this leaves six big challenges for London.
First, what is London’s USP in the global tech field? New York City might be a better comparator than Silicon Valley. Like NY, London’s tech scene is cross-pollinated by the wider creative economy.
Second, how much strategy do we need? The wider role for government isn’t clear from international experience. In the Bay Area government did little, except spend large amounts on defence-orientated research. But Bavaria’s leaders took the opposite approach, developing a cluster through political leadership, public spending and public research agencies like the Fraunhofer Institutes.
Third, finance. Both the Bay Area and New York have large local venture capital scenes. London firms complain about this. Are there information gaps or deeper structural problems in connecting London VC to London businesses? What, if anything can policy do to help?
Fourth, how best to build human capital? Bavaria grows its own skilled workforce; Silicon Valley depends heavily on skilled immigrant workers. London is somewhere in between, although the Coalition’s migration cap is already making life harder for tech firms.
Fifth, should we worry about gentrification? Silicon Roundabout is a vibrant local scene, but higher rents could push local firms (and services) out. London is big enough for that cluster to reform, but does short term disruption outweigh any wider gains?
Finally, what’s in it for the rest of the UK? At the moment, very little. Whitehall can probably help by concentrating on ‘tech’ – sectoral support that helps firms everywhere – and devolving the ‘city’ bit – property, planning, economic development – to the GLA.
A new year’s present for you all. I’ve got a new (old) mix out on the Broken20 label, a spin-off from the all-conquering Numbers empire. The mix is part of Broken20′s series of podcasts (here’s the iTunes feed) which is well worth signing up to.
Click here to download the mix. Blurb and tracklisting below.
Thanks again to Broken20 and to Rauridh for putting this out.
Happy listening!
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I put this mix together in summer 2005. It was originally designed for playing on Sunday afternoons at the Foundry, East London, where slow sound system ran sporadic listening sessions from 2003 to 2009.
I took a fairly loose-limbed approach in assembling the thing. There’s a lot of the new weird america and free-folk / psyche stuff my friends and I were listening to at the time, alongside some field recordings, lo-fi stuff, electronics, outish rock, John Fahey and Can. Heroically, I included pretty much the full 18 minutes of ‘Augmn’ which seemed like a good idea at the time. You’ll have to judge for yourselves.
The mix was recorded on three portable cd players to minidisc. One take, no edits or post-production.
www.slowsoundsystem.net
Chris Watson – The Crossroads (Touch)
Growing – Primitive Associations / Great Mass Above (Kranky)
Rafael Toral – We Are Getting Closer (Touch)
Masaki Batoh – Benthos (Drag City)
Janek Schaeffer – Love Song (Room40)
Black Dice – Skeleton (Fat Cat)
Can – Augmn (Spoon / Mute)
Kammerflimmer Kollektief – Unstet (für Jeffrey Lee Pierce) (Staubgold)
Beta Band – The Monolith (Regal Recording)
Jackie-O-Motherfucker – Lost Stone (ATP / Ecstatic Peace)
John Fahey – Untitled With Rain (Revenant)
Saya, Takashi Ueno, Koji Shibuya & John Chantler – Mizumitaida (Fat Cat demo)
Motion – Dispersal Patterns (Motion)
Motion – Outlev (Motion)
So – j (Thrill Jockey)
Chris Watson – The Crossroads (reprise) (Touch)
Last week David Cameron launched ‘East London Tech City‘, which he hopes will become ‘one of the world’s great technology centres’. Could it work? Up to a point, according to research from LSE. Science parks can pay off, although it’s unlikely they’ll create the next Silicon Valley.
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Theoretically, we shouldn’t need science parks at all. In spatial economics models, firms sort across space to optimal locations. In practice, this doesn’t always happen. Planning restrictions limit space; businesses may lack the funds to move; and some firms will head to prestigious addresses, rather than the most productive.
So policies that try to cluster firms together might be a good idea. Theory and evidence suggest businesses benefit from co-location. Big labour markets, a rich mix of input-output linkages and knowledge spillovers help firms become more innovative – and more productive. In turn, this helps explain why cities form and grow.
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So, can science parks can replicate these dynamics? Christian Helmers, a research economist at SERC, is trying to find out. There are now at least 85 parks in the UK, with over 76,000 workers on site. Helmers looks at two: Cambridge Science Park, the UK’s first and most prestigious, and the St John’s Innovation Centre next door.
Christian is interested in whether science parks drive up firm’s innovative activity. So he tests whether co-location raises patenting rates. He finds it does. He also looks at what types of firms tend to gain. Controlling for various other factors, he finds that inside the park, firms of the same industry tend to patent more. Science parks can pay off.
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What does this mean for policy? Christian suggests policymakers should promote specialised science parks, dedicated to single industries. I think there are some wider lessons here too – not all of which are good news for East London.
1) Lifecycle – Helmers finds no significant effect of firm age on patenting – that is, start-ups don’t particularly benefit from being in science parks. This echoes other work which suggests that economically diverse cities act as ‘nurseries’ for young firms – basically offering a big pool of ideas, suppliers and people. In turn, it suggests that unless they’re in big cities, incubators might not be effective.
2) Mix and scale – Christian’s research basically tells us that at small scale, similarity matters – firms gain from having others like them around. (In the jargon, science parks exhibit ‘Marshall-Arrow-Romer’ externalities.) But at city scale, the opposite seems to be the case. Economic diversity matters. Jane Jacobs first suggested knowledge spillovers across industries – recent work by Duranton and Puga and a team at SERC empirically confirms this . So we shouldn’t expect science parks to drive cities.
3) Expectations – Silicon Valley is not a valley – it’s a city-region. By contrast, science parks are tiny. Taken together, Cambridge Science Park and the St John’s Centre cover around 2m square feet. At a conservative estimate, Silicon Valley covers 1300 square miles. To put point 2) another way, no science park (or Silicon Roundabout) is going to be the next South Bay.
4) Surroundings – some of Christian’s results have to be driven by what’s outside the science park – in this case, Cambridge University and the Cambridge high-tech cluster. All the firms in the park benefit from high quality research and a big pool of skilled workers. The East London park will have to draw on the whole of London’s innovation system if it’s to benefit its tenants. The London location will clearly help. But as Vivek points out here and here, high-tech growth is fundamentally about people and culture – not property.
I’m presenting a couple of papers at a Regional Studies Association Conference at Manchester University on Tuesday 2 November. The conference is titled Regions in a Shifting Global Landscape, and both my presentations will look at connections between cultural diversity, innovation and urban/regional economic development.
The first is work in progress, and looks at the role of ‘ethnic inventors’ in the UK. It’s the first UK work of its kind, so I’m excited to be doing it. In the US, ethnic Indian and Chinese communities play a huge role in the science and technology sectors, especially in places like Silicon Valley. I’m interested in whether anything similar is going on here – in cities like Manchester, or our own Silicon Fen. My initial results suggest we may have a similar diaspora of British-Indian high-tech inventors emerging. More on that on the day …
The second paper, done with Neil Lee, looks at whether London’s cosmopolitanism helps the capital’s firms to innovate. We find small but pretty robust ‘diversity effects’ for London businesses. That raises the question of whether other big and diverse British cities – like Manchester or Birmingham – might benefit in the same way. We hope to crunch some more data on this in the coming months.
Here are the conference details. Hope to see you some of you there.
ps. I realise the picture is only loosely related to diversity, innovation or Manchester. But I like it, so it’s going up.
Some new art stuff.
First up, Mat and I have finally completed our photo essay on Shepperton, where JG Ballard spent most of his adult life. We’ve combined our pictures with text from Ballard’s own novels, autobiography, interviews and other text about the town and its history. In the process we’ve shamelessly taken inspiration from Patrick Keiller, Chris Marker, Iain Sinclair and many others. We hope they, and you, like it.
A shorter version of the essay appeared in Shadows Have Shadows, a limited-run newspaper published earlier this year by the mysterious SFHAA. It’s a nice collection of pieces on street-level urbanism – spanning London, San Francisco, Caracas, fictional cities and cities of the future. The paper itself is an A4 object of beauty, produced with the help of Newspaper Club. Sadly there’s only 100 copies, but you can also read it online here.
Finally, here are my pictures of the astonishing Red Sand sea forts, which I visited with Reuben a few weeks back. More about the forts and how to reach them at the Project RedSand website.
Now, back to the PhD …
