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.
We finally watched Andrew Marr’s Megacities last night. It’s a great piece of spectacular urbanism – endless cityscapes, vast crowds, skyscrapers, huge numbers, expansive metaphors. But it’s also quite badly wrong about what our urban future is going to look like. Let me explain.
The series has two basic premises. One, the world’s population is now majority urban. Two, we’ll be living in megacities – places with 10m people or more.
The first of these is very likely true. For urbanists it’s not an especially new fact, first appearing in this 2003 UN-Habitat report.
The second is part true at best. Megacities are telegenic, but most of the world’s population won’t be living in them.
Sure, the number of megacities is rising – from two in 1950, three in 1975 to 19 in 2007. By 2025, the UN predicts there’ll be 27. But the number of ‘large cities’ – five to 10m people – is already bigger, and growing faster. In 2007 there were 30: the UN suggests there’ll be at least 48 by 2025. More importantly, half the world’s urban population live in much smaller cities, of around 500,000 people. These may be the most common of all.
In fifteen years’ time, then, we’ll see far more Liverpools (around 400,000 people) and Londons (8m people) than Tokyos (26m people).
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Paradoxically, the biggest urban settlements are now hard to recognise as cities at all. Across the world cities are merging into mega-regions: notably China’s Pearl River Delta, the US Eastern seaboard, even the Greater South East.
Some of the numbers here are difficult to take in. An estimated 120m people live in the Pearl River Delta, the largest urban zone on the planet – China is now planning to merge nine cities in the Delta to create a single sprawl of 42m people. The Tokyo-Nagoya-Osaka-Kyoto-Kobe region may comprise 60m people by 2015, almost the entire population of the UK.
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All this may suggest that urbanisation is accelerating. In fact the opposite is true. Globally, cities grew fastest in the 1950s and early 60s: growth rates have been slowing ever since, from 4.1 percent to 2.5 percent today, and a predicted 1.8 percent by 2030. Developing countries are also on the same downward trend.
Urbanisation runs in parallel with economic development, and so as developing countries industrialise, their urban systems tend towards steady state. Of course there is a lot of city by city variation. For example, the UN predicts Dhaka will keep growing – from 15.9m in 2007 to 22.8m in 2025. But Lagos, which has grown from less than half a million people in 1950 to over 13m in 2007, is predicted to reach just 16m in the next fifteen years.
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Megacities makes much of the growth of urban slums. Again, the picture is complex. Over the past decade the share of urban slum dwellers has fallen from 39 to 32 percent, due to economic growth and policy interventions. But as people are flowing into cities faster than infrastructure can keep up, the absolute number of people in informal settlements is growing, and will keep growing.
Marr stays the night in a Dhaka slum, discovering it’s quite like any other suburban neighbourhood – dirt streets and tin shacks aside. Marr echoes Stewart Brand, celebrating slum dwellers’ entrepreneurialism and inventiveness. Ed Glaeser describes slum neighbourhoods as ‘private energy, public failure’: the development challenges of poor public health, chaotic infrastructure and urbanised poverty remain considerable.
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Finally, we need to factor in the geography of climate change. Many megacities are coastal, and will be threatened by rising sea levels. Many will also be increasingly water-stressed in the years to come.
In his excellent book The New North, Laurence Smith explores the economic rise of the NORCS – cooler, resource-rich regions stretching across Canada, Scandinavia and parts of the US, Russia and China. He predicts new ‘hydrocarbon cities’ appearing across Canada and Russia, and new mega-regions like Cascadia – spanning Portland, Seattle, Vancouver and parts of NorCal.
Megacities are a great symbol of the global urban shift. But our urban future is going to be much richer and more complex than this.
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.
The Ed Glaeser roadshow has rolled out of town. Last week the great man spoke at LSE, ippr, Demos, Centre for Cities and Policy Exchange, also finding time for a Guardian podcast, CfC video and an FT op-ed. Phew! He didn’t even change blazer - here he is on the Daily Show wearing it again (at about 14:30).
Until now Glaeser has been a bit of an academic’s academic. With his new book, The Triumph of the City, he’s making a bid for public intellectual territory. Saskia Sassen, Peter Hall and Richard Florida have had this space to themselves for the past decade, so it’s good to see someone else step up.
Here’s the podcast and video of his LSE lecture. Below, my quick notes.
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1) Cities still matter because they’re ideas engines. In a knowledge-driven economy, products and services are getting progressively more complex. Cities help manage this by bringing people face to face, helping ideas spread, and cross-pollinating new ones. As the returns to skills increase, cities help people get smarter.
This is actually a very old argument, dating back to Jane Jacobs (1970) and Alfred Marshall (1918). Glaeser brings it to life with some terrific examples of ‘urban ideas chains’ – such as the birth of Detroit’s auto industry from shipbuilding (engines) and carriage works (wheels and bodies), and the growth of financial services in NYC.
2) Technology is making cities more important, not less. Rather than killing distance, social media and the internet are producing more immersive, interactive urban environments. Again, plenty of evidence (Bill Mitchell, Castells) says that online and offline are complements, not substitutes. Glaeser rightly plugs this into the development of smart cities and the internet of things. Adam Greenfield’s incoming book will tie a lot of this together.
3) We need to build cities up, not out. Glaeser thinks Jane Jacobs was right about cities, but wrong about neighbourhoods. Long term, planning controls in urban cores tend to price poorer people out of the city. Similarly, high density cities tend to be greener, but if they restrict space, people relocate to lower-density, car-dependent communities. The answer is to allow denser development and more high-rises.
4) In the West, urbanisation is basically done. The cities of the future are happening elsewhere. 50% of the planet now lives in cities – but the biggest urban transformations are happening in South and East Asia. This is also where the need for sustainable urban development is highest. LSE’s green cities project for UNEP echoes much of this.
5) Cities are good for poor people. But we shouldn’t save failing cities. Agglomeration economies benefit everyone. Like Stewart Brand, Glaeser sees slums as hives of enterprise – but where public infrastructure and planning has failed. Glaeser also argues that in declining cities, policy should focus making the population more skilled and mobile – rather than improving decaying urban environments.
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A few reflections. First, is there anything bad about cities? At LSE, Glaeser suggested diminishing returns don’t really matter. I’m not so sure. Above is a classic urban economics ‘net wage’ curve. Up to point B, agglomeration effects rise with city size. Diseconomies like congestion and pollution then start to kick in. At point C, in theory, everyone leaves. In practice, this doesn’t happen – but plenty of real world cities are probably between the two (Bangkok, Lagos, LA?).
Second, Glaeser’s prescription for struggling cities might be internally robust, but in the real world it’s a very hard sell – as he found out when encouraging the US Government to move people out of New Orleans post-Katrina. Glaeser’s right that declining places can’t be preserved forever. But as I’ve argued, it’s the job of elected city leaders to make these choices – not national government.
Which brings me to devolution. Glaeser was surprisingly lukewarm on this. He argued that when central government is weak (e.g. in a failing state), then devolution is essential. But only central government can handle redistribution, or economies of scale in service provision. This chimes with my reading of the literature. Devolution doesn’t translate directly into economic growth – although it helps indirectly, by allowing city leaders more flexibility and room to innovate. As the Coalition pushes localism ever further, Ministers should keep these caveats in mind.
LSE Cities have just published a new paper of mine on innovation and growth in the Munich city-region. In terms of high-tech growth, the Munich metro is probably Germany’s Silicon Valley – it’s a fascinating story, with lessons for both the Bay Area and for British policymakers.
The report (written with Philipp Rode, Gesine Kippenberg and others) was launched last week at the Brookings-LSE Global Metro Summit in Chicago. You can find other speeches, papers and video here.
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For over two decades, Munich has had Germany’s highest share of technology patents per population. Like the Bay Area, it’s led the rest of the country on ICT. And Munich’s story has some further, surprising parallels to the history of the Valley. Over the past 60 years, both have shifted from mainly rural communities to high-tech hubs. Both offer a strong economy and an excellent quality of life – something that’s helped keep people in the area. And both benefited from Federal defence funding – Pentagon money helped fund the early Internet, while in Munich’s case defence cash built up the advanced manufacturing sector.
In other ways, Munich is very different. The metro has a notably diverse economy – the ‘Munich Mix’ spans manufacturing, ICT, life sciences, finance and creative industries, unlike the Bay Area which is still dominated by computing.
More importantly, Munich’s economic development has been hugely influenced by the State, especially the Bavarian regional government. It’s essentially a social democratic Silicon Valley.
Government spends heavily on public schools, universities and strategic infrastructure. Munich is at the centre of a network of innovation intermediaries – public research agencies like the Fraunhofer Institutes, dedicated to technology transfer. And there are very strong networks between public and private sectors.
In the jargon, this is ‘institutional thickness’. It’s created a strongly technocratic vision of economic progress, and a clear sense of common purpose. Or as they say at Audi: Vorsprung durch Technik.
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As a result, Munich’s leaders rode out a potentially disastrous period in the early 1990s when the area was hit by a triple whammy of re-unification, recession and global competition. Over the next two decades, state and city developed a rolling programme of policies to grow innovation capacity.
Our research suggests it paid off. Munich’s per capita economic output remains comfortably above regional and national averages. The metro has also markedly increased innovative activity in ICT, biotech and green industries – with a three-fold rise in green patents over the last 20 years.
The growing green economy sector has also benefited from pro-green federal policies, which have guaranteed a market for green energy and thus spurred a new industry of green energy products and services.
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Of course, Silicon Valley’s market-led model has yet to face such a crisis point. But as the Valley focuses on ‘cleantech’, Munich’s state-led model is looking increasingly attractive. VC money is pouring into green economy start-ups across the Bay Area. But California still lacks the quality public education system that will connect local people into new jobs.
More importantly, the US has not introduced market-making incentives like carbon pricing or feed-in tariffs. So California is going its own way – although its State-level cap and trade scheme has only just survived a Big Oil-sponsored public vote.
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What can the UK learn from the Munich experience? A lot of lessons are familiar. High-tech regions grow out of what’s there. Economic diversity is helpful, adding resilience and helping stimulate new ideas. Human capital is critical, as are good schools and universities. Both time and luck matter more than we’d like.
For me, the crucial lessons from Munich are about what the public sector can do. There are three.
First, decentralisation has given Munich flexibility to develop policies that suit its needs. It’s also helped strong leaders to develop, and over time, effective working across boundaries (and political parties).
Second, both local and national governments have kept up public investment in the things that matter – notably human capital, public services and strategic infrastructure.
Third, incentives and market-making are really important – especially in moving towards a greener economy. British cities can do something here, but it’s really about national policy, and political leadership.
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.
Worries about multiculturalism go way back: in 883, fearing unrest, King Alfred banished the Danes from London. So when Leeds University researchers suggested that by 2051 a fifth of Britons would be from an ethnic minority, the reactions were predictable. The Daily Express’s full-page headline was ‘One in 5 Britons will be Ethnics’, complete with picture of women in burquas. Daily Mail readers also excelled themselves – ‘the only effective way to combat this situation is to vote BNP at every opportunity’ etc etc.
Let’s try and dig a little deeper. I’ve now read the (long and complex) report [pdf], so here’s a few thoughts. I’m not a demographer, so I’m focusing on the implications rather than the detailed modelling.
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Britain has a long, often hidden history of multiculturalism. And as the report makes clear, Britain is already getting more culturally diverse. Immigration is a major driver, as is ‘natural change’ – variations in birth/death rates across social and cultural groups. The first tends to feed the second, since a share of migrants tends to settle.
British diversity is also heavily urbanised. People mix is greatest in and around cities, especially major urban centres (with big labour markets and good transport links) and ex-industrial places (which had lots of jobs in the past).
In some urban neighbourhoods we’re seeing ‘super-diversity’ appearing – with dozens of new communities alongside established minority groups. Conversely, recent migration from Eastern Europe was less urban [pdf] – partly because many people were doing agricultural work.
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The researchers make three major predictions about Britain in 2051.
First, the UK will be both bigger and more diverse. Under their favoured model, the population grows to 77.1m, from around 60m today. Black and minority ethnic populations rise from 8% to 21%.
Second, diversity looks different. Essentially, super-diversity will be more common. The ‘other ethnic’ population will be 350% higher, with various mixed ethnic groups increasing by 148% to 249%. Chinese communities will over 200% larger, ‘Black African’ communities 179% larger, and the main South Asian groups 95-153% bigger. The model’s held back a bit here because UK Census categories are so crude.
Third, diversity will be more spread out. The researchers predict that people in minority groups will shift from more to less deprived areas, which (very roughly speaking) will take them from inner city to more suburban locations, and from larger cities to smaller towns and rural areas. That continues a long term historical trend – London neighbourhoods like Spitalfields have historically housed new migrants, who progressively shift to outer London suburbs as they become established in the UK.
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The bigger question is what the economic and social impacts of a bigger, more diverse Britain will be. There’s some evidence, particularly from sub-Saharan Africa, that fragmented countries are prone to conflict and poor governance. Conversely, diverse societies may be more inventive and productive. Given ‘where the diversity is’, a lot of the action will be happening in urban areas.
My academic work is looking at these questions in detail, focusing on British cities. Here’s a recent working paper which fills two major gaps. First, with help from UCL’s Pablo Mateos, I’ve developed some new descriptive analysis, including a ‘Super-diversity Index’ which is more powerful than the categories used in the Leeds model.
Second, I’ve looked at the links between people mix, wages and employment in urban areas. I find some positive connections between super-diversity and my economic performance measures, suggesting higher diversity might be an economic good for British cities. Other papers and current research take a closer look at what’s behind this – more on those in the coming months.
Excitement online and in the twittersphere about the Cisco ‘city in a box’ being built in Songdo, South Korea. There seems to be a bit of a utopian city meme at the moment – instant cities, floating cities and Paul Romer’s Charter Cities (which I discussed a while back). Last week’s Economist even showcased a whole series of prototype ‘cities for 2030′.
As the Economist piece points out, there’s something slightly odd about these kind of exercises. Cities tend to emerge and evolve organically, even chaotically, rather than being built from scratch: and their residents and users tend to be resistant to masterplanning.
A closer look at Cisco’s instant city actually confirms all this quite neatly. First, it’s not a city, it’s a business district – albeit one that could house up to 1m people. Second, it’s neither new or self-contained. Instead, it’s a bolt-on to an existing city, Incheon, the 3rd biggest in S Korea.
This kind of CBD megaproject has been done before – in Canary Wharf, for example, which works pretty well as a financial service cluster, if not as a functioning community. (With a working population of around 90,000 people, it’s over ten times smaller than Songdo.)
I can see the potential for this kind of plug-in planning in China in particular, given the pace of urbanisation there. The developer at Songdo reckons there’s a market for at least 20 more in China and across South East Asia. That’s plausible if the demographics and national economies hold up. But ‘build it and they will come’ is an inherently risky strategy – just look at Dubai.
I’d also love to see Cisco try this in a small, highly urbanised Global North country like the UK. Our biggest urban planning challenges in years to come is going to be greening the cities and buildings we’ve got. The eco-towns initiative doesn’t tackle this, and the programme is basically marginal.
But in growing places, there’s potentially an important role for high-tech, resource-efficient urban extensions – around Greater London, Manchester, York, Cambridge or Brighton, say. The problem will be the total lack of public funds to help actual building. Perhaps Cisco can step up to the Big Society plate and donate one?
ps. I’m now finally on Twitter – find me here.
pps. We’re now on holiday for a bit. Blogging returns in July.
Green jobs are hot. All three political parties want to shift Britain onto a low-carbon growth path. It’s a powerful meme. Two questions, then: what are green jobs? And where will they be? My guess is: mostly quite boring. But they will be everywhere, and they will be a big deal for towns and cities.
So what are ‘green jobs’? ippr’s new report suggests that ‘all jobs should be green’ in future. I’m not sure. Let’s focus on activities with the biggest carbon footprint: energy, waste, transport and construction. Some jobs in other sectors can be greened too, say if manufacturers adopt more sustainable workflows.
Where will green jobs be? To answer that, we need to consider how the UK moves onto a greener growth trajectory. There are two basic approaches, impling different roles for government – and different levels of political engagement.
Let’s call the first the Green Industries approach. This is about increasing the UK’s global share of high-value green activity – like wind turbines and low-carbon vehicles. It also encompasses major infrastructure like high-speed rail. National Government holds the policy levers: public money, tax breaks, business support (and to an extent, picking winners).
The second approach we could call Green Places. This is about making towns, cities and households more sustainable. The focus is on non-traded activities: buildings, energy and waste systems, local public transport – and things like repairing windmills on roofs.
Local government has a critical role here, alongside Whitehall: via recycling, local planning standards (like the Merton Rule), procurement and PPPs (like the ESCOs in Woking and Birmingham). Whitehall matters behind the scenes – for example, through DECC’s new Feed-In Tariff rules.
Green Industries are the sexy, photogenic things politicians get excited about, and are the focus of Labour’s Low Carbon Industrial Strategy, the Conservatives’ ‘Marine Energy Parks’ idea, and the Lib Dems’ green growth plans. Interestingly, the Tories seem keener on Green Places than Labour – see proposals for a ‘green deal’ for households, and support for micro-generation.
My guess is that Green Industries, though exciting, will only take the UK so far. First, only a few places will have them. The range of green technologies is vast. With no global standards, potential for international growth is capped. Most importantly, geographies of innovation, production and sales already differ. Silicon Valley leads the US in ‘cleantech’ R&D – but large-scale manufacturing is already shifting from the US to China and other cheap locations.
Second, the UK is already lagging. In wind turbines – where Britain should be a leader – the top firms are German and Scandinavian. (From this perspective, one of the saddest things about last year’s Vesta dispute is that Vesta is Danish).
Third, policy options are pretty limited. Green industries in the US are supported by Government stimulus money and a massive VC sector. Other European governments have funded producers for years. Britain has plenty of strategy, but limited cash to back these up. Low Carbon Economic Areas have no funding attached, and rely on existing RDA / LA budgets plus local ingenuity. The experience of Science Cities, a similar approach, doesn’t get my hopes up.
The Green Places approach is much more prosaic, but will have bigger impacts on more people. Cities’ carbon footprint is large: the C40 group estimates that worldwide, urban areas represent around 75% of the world’s energy use and CO2 emissions. Fiscally, Green Places largely involves redirecting existing budgets. (Some costs are passed on to firms and households – but councils should be allowed to use tools like TIF to ease financing constraints.)
Finally, British local government is already on the case. The Merton Rule is a classic example of how local policy innovation has shaped national thinking. Woking is a leader in decentralised energy. And Greater Manchester’s LCEA proposals look pretty good, with a five-year retrofit programme, small-scale renewables and smart meters for thousands of households across the city.
The UK needs both green industries and green places. But let’s not get over-excited about the first, while underplaying the second. Green jobs might be more dull than we thought. But they’re important as ever.
