Posts Tagged ‘globalisation’

‘After Florida’ wins a prize

December 21, 2016

I’m delighted (and honestly, surprised) to have won the 2016 Jim Lewis Prize for my paper on the economics of diversity – After Florida – which is out in European Urban and Regional Studies. The prize is awarded for the most innovative paper published in EURS the previous year.

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You can read the whole paper here. To give you a flavour, the abstract is below.

In recent years, most European countries have experienced substantial demographic changes and rising cultural diversity. Understanding the social and economic impacts of these shifts is a major challenge for policymakers. Richard Florida’s ideas have provided a popular – and pervasive – framework for doing so. This paper assesses Florida’s legacy and sets out a ‘post-Florida’ framework for ‘technology, talent and tolerance’ research. The paper first traces the development of Florida’s ideas. ‘Florida 1.0’, encapsulated by the Three Ts framework, has performed badly in practice. There are problems in bringing causality to the fundamental relationships, and in consistently replicating the results in other countries. ‘Florida 2.0’, though suggests that Creative Class metrics have value as alternative measures of human capital. This creates space for a post-Florida agenda based on economic microfoundations.

I argue that the growing body of ‘economics of diversity’ research meets these conditions, and review theory and empirics. Urban ‘diversity shocks’ shift the size and composition of populations and workforces, with impacts operating via labour markets, and through wider production and consumption networks. While short-term labour market effects are small, over time low-value industrial sectors may become migrant-dependent. Diversity may help raise productivity and wages through innovation, entrepreneurship, market access and trade channels. Bigger, more diverse cities help generate hybridised goods and services, but may also raise local costs through crowding. All of this presents new challenges for policymakers, who need to manage diversity’s net effects, and address both economic costs and benefits.

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The paper has its origins in the intro chapter to my PHD thesis. If you fancy wading deeper in, that’s here.

Physicists explain things to me

August 19, 2016

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I’ve written a long post on cities, superlinear scaling and universal laws over at Medium.

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I’ve been gradually building a presence there: it’s a platform that works particularly well for long-form pieces like this. Go take a look!

 

RGS talk on migration

May 13, 2016

(c) 2016 RGS

A late plug for this. I did a panel event on ‘Europe’s Migration Crisis’ with the Royal Geographical Society a few weeks back, alongside Heaven Crawley, Madeleine Sumption and Christina Boswell. The Guardian’s estimable David Walker chaired it.

I gave an overview of the local economics of migration, focusing on the recent UK experience, and drawing on some of my work – as well as borrowing a couple of nice maps from the Migration Observatory.

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Here’s the summary I sent the organisers:

My talk will look at migration impacts at the local level, especially in cities. I’ll argue that we should look both at people flows, but also at the diversity that migration brings. Today’s public conversation about migration is focused on jobs, housing and public services. That’s understandable, and there are some real concerns here.

I also want to shift the conversation to cover migration as an influence on long term economic growth, with impacts on productivity, innovation, entrepreneurship and trade. Skilled migrants (from inside and outside the EU) are central to this, and the evidence we have suggests that there are positive effects of these groups on economic outcomes policymakers should care about. We need to know much more about how these channels work, of course. But national government and cities can start – now – to adjust policy to make more of these opportunities. 

There’s a nice write-up of the event on the RGS blog. If you want more detail, my slides are here.

First-Person Flaneur

November 1, 2015

 

(c) 2015 Laurence Lek

 

Bonus Levels is a series of beautifully realised recreations of London locations, re-imagined as Ballardian dreamscapes, elements of an impossible city. In After Us, creator Lawrence Lek describes his work as ‘architecture as site-specific simulation’, in which existing parts of the cityscape and its institutions are ‘reconfigured and subverted’ by some apocalyptic or economic shock. I think this can help us think about real-world urban change too. Let’s look at a couple of examples.

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In ‘Dalston, Mon Amour’, some familiar landmarks of the Kingsland Road – the Rio Cinema, Gillett Square and once on-trend Efes Bar are rendered empty and open to the elements after a biblical weather event. Terraformed by desert and water, Renais’ film plays in the background as the sky darkens.

 

(c) 2015 Laurence Lek

 

You can certainly treat this work as satirical – hipster touchstones crumbled into dust – and Lek is clear that this is part of the point. The use of video game aesthetics is also nice, although as Lek points out, ‘the player begins when the game is already over’: it’s first-person flaneur. The game framing also exacerbates the dreamlike quality of each episode – background sounds pan around, and there are sudden changes in perspective or time of day.

There’s also a deeper, uncanny power to it. Places we knew and hold dear, transformed into dreamspaces. As Adam points out, Vermilion Sands, The Sprawl or De Chirico are never far away. But also – for some viewers – their own memories are reconfigured. As Lek argues, the more time you spend in each episode, the more meaning your own mind layers over it.

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I experienced a real-world retelling of my own world a few months back, in farcical form, as a group of us were taken on a guided tour of ’Silicon Roundabout and Tech City’. The tour had felt like a good idea as part of a new paper we’ve been writing on the East London tech scene: in practice it involved much psychodrama.

As the tour went on, for example, I was alarmed to find that the guide’s spiel included numerous factoids taken from my own research, fed back in slightly distorted form. Even worse, as we left Old St roundabout we were taken to the Foundry, a now-deceased bar and venue my friends and I spent much time in during years gone by, and which was shut down amid much protest. The guide described it as an ‘important cultural institution throughout the 90s and some of the 00s’: opening up a chasm of lost time in the process. The site now houses the Hoxton Pastry Union, an almost comically resonant symbol of the changes the neighbourhood has since gone through.

Sharing this moment with friends afterwards, it became clear what a powerful charge it packed.

 

 

A more formal way to think about Lek’s project is a series of spatial imaginaries, Bob Jessop’s term for the mental maps we all use to get purchase on everyday life. More formally, Jessop means imaginaries to act as mapping systems or ‘fixes’ that allow agents to navigate otherwise impossibly complex late capitalism.

Imaginaries – like Silicon Roundabout / Tech City itself – are necessarily partial, pushing some elements to the fore and ignoring others. They are thus ripe for the kind of reconfiguring and questioning Lek engages in.

Part of the paper I’m working on looks at Here East, the vast Olympic Broadcast and Media Centre which is being rapidly transformed into a new, maker-focused neighbourhood. On a recent visit the site was still under construction, but we got a clear sense of the developers’ vision.

 

(c) 2015 Max Nathan

 

Notice how the rebrand involves both a new name, a new industrial niche, and a spatial repositioning of the site, away from Stratford and into Hackney, specifically the artist-centric milieu of Hackney Wick which sits just over the canal.

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I was happy to see that Bonus Levels has also engaged with this territory. ‘Delirious New Wick’ is a hysterical rebuild of E9 and the Olympic Park, in which the Games’ iconic structures float above the park and are accessed through teleporters. A gorgeous Burial soundtrack runs in the background as we float high above the city, before descending onto the ruins of the Westfield mall, now partially submerged in an Arthurian Lake. It is heady, brilliant stuff.

Future chat

May 20, 2015

(c) 2015 Max Nathan

I’ve been busy working on a bunch of projects recently, but will be escaping the office to do a couple of talks over the summer. Each very different …

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On 7 July I’m chairing an LSE lecture by Gerard Grech, CEO of Tech City UK. We’ll be talking about the extraordinary growth of London’s digital economy, and where these sectors could take us next.

I’ve just completed a long piece on London’s digital evolutions for the Centre for London think tank’s new London Essays imprint, so I’m looking forward to this one. Emma and I met Gerard recently and were impressed by his openness. It should be a great session. Details are here.

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On 23 July I’m in New Zealand at the ‘Pathways, Circuits and Crossroads’ conference on the economics of immigration and diversity, which is organised by the University of Waikato, Massey University and Motu. I’m very grateful to Jacques Poot and Dave Maré for inviting me over. They’re just beginning a major programme of work on immigration and diversity in NZ, and I’m hoping we can kick off some interesting collaborations when I’m in town. More details of that event when I have them.

If you’re around for either of these, come and say hello!

The world according to Brûlé, part 2

June 18, 2013

(c) Fischli & Weiss

Tyler Brûlé is in trouble again. Monocle have published their annual ‘global quality of life’ index, and as editor he has received a good deal of flak from FT readers for his latest column. Some people dislike his choices; others his methodology; others his attitude. That’s understandable: ‘For readers in Chicago, yet again your appalling homicide rate knocked you out of the running’, says Tyler at one point.

I’ve got some sympathy with attempts to rank cities against each other – after all, everyone loves a league table. But it’s very hard to do this in a way that has much general meaning – especially if, like Tyler, you’re a high-maintenance frequent flyer who rarely seems to be anywhere for more than a few days.

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Here’s what I said a while back:

First, let’s remember what we’re trying to do with city rankings. All of this is – very loosely – trying to achieve what urban economists call ‘spatial equilibrium’. This is where people and firms sort themselves across space, trading off economic, social and environmental pros and cons so that everyone finds their best place to be.

… Indexes are usually commercial products aimed at specific users. In Monocle’s case it’s globe-trotting cosmocrats  with Japanese friends; for Cushman Wakefield’s Cities Monitor it’s developers and property investors; for the Economist and Mercer, CEOs. So policymakers – who have to think beyond single interest groups – should approach with caution.

Second, actually measuring the ‘real cost of living’ is very hard to do. No-one has the definitive answer. I’ve been helping on a SERC project looking at these issues – the best work is from the US, where government economists have access to price data on thousands of items at very local level (like this paper by Bettina Aten). But even here, the researchers don’t go near the kind of soft measures Monocle is using.

Third, we need to remember that this is all about tradeoffs. In spatial equilibrium, actors are balancing economic, social and physical welfare. The main sources of urban growth and vitality – critical mass, big labour markets and ideas flow – tend to have a flipside, namely congestion, pollution and expense.

For that reason, the most liveable cities – where people might want to be – aren’t necessarily the ones where people need to be. This is why it feels odd that places like London, NYC, Hong Kong and Los Angeles don’t rank higher on the liveability rankings. In these global cities the pull of place is very strong. As Jared Diamond points out, in many ways cities like LA are terrible places to live, but millions of people still choose to be there.

Monocle readers may well live in one place and work in another – so this matters less to them. Tellingly, Brûlé eventually reveals that having tried Zurich for a few months, he moved back to much less ‘liveable’ London. His compromise is to be based in the UK and flit between Zurich (winter), Copenhagen (summer) and Tokyo (business trips). Nice work if you can get it!

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‘Poor Tyler Brûlé, condemned to orbit the earth like some kind of 21st century Flying Dutchman‘, says one FT detractor . Ouch! I guess he can take some comfort from being the star of his own, uncannily accurate parody site. And, of course, persuading people to keep paying for his business class chat.

Bigger, more urban, more diverse

December 12, 2012

(c) Andy Gilmore

The latest Census data confirms three things we already knew. First, Britain is becoming a bigger and more culturally diverse society. Second, net migration is one of the main drivers. Third, this diversity is largely urbanised – especially in London.

Beneath these headlines are many complications. Diversity is shifting across a number of dimensions at once – country of birth, ethnicity, religion and language. Official ethnic groupings are increasingly inadequate to capture what’s going on: see the huge growth in ‘other white’ and other ‘other’ categories.

Many of these trends will continue, with Leeds University researchers projecting a 20% minority ethnic population by 2051. But there is no obvious evidence that diversity is eroding national identity – 91% of residents identify with at least one UK national identity.

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These demographic changes are among the most profound of our lifetimes. So what are the economic and social impacts of these shifts?

My research is taking first steps towards answering the economic questions. European Urban and Regional Studies have just published this piece, which gives you a nice overview.

There is more detail in these working papers on the economics of super-diversity, the long term impacts of migration in cities, ethnic inventors, and diversity, entrepreneurship and innovation in London firms. This last piece, joint with Neil Lee, is coming out shortly in Economic Geography.

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We’re only beginning to understand some of these long term, dynamic channels. So it’s an exciting – and important – time to be working in the field.

Many of the key people will be in the UK in April for the 2013 NORFACE Conference. If you’re around, I’d encourage you to join us.

Is long term growth really ‘over’?

September 26, 2012

Robert Gordon’s new NBER paper, ‘Is US Economic Growth Over?’ has been making waves in the past few weeks. Here are a few thoughts on it.

A short version of Gordon’s argument is here. His provocative topline is:

The paper … suggests not just that economic growth was a one-time thing centred on 1750-2050, but also that because there was no growth before 1750, there might conceivably be no growth after 2050 or 2100. The process of innovation may be battering its head against the wall of diminishing returns. Indeed, this is already evident in much of the innovation sector …

Much of this is familiar from Tyler Cowen’s book ‘The Great Stagnation’, which kicked up a similar dustcloud in 2011. Gordon goes on to identify six ‘headwinds’ that may push back innovation in the States. These are: an ageing population, low skills and poor state education systems, inequality, globalisation and outsourcing, environmental constraints and government/consumer debt overhangs.

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Gordon is very clear that the analysis applies only to the US, but is also keen for researchers in other countries to pitch in. So, in no particular order:

1/ Many of the six ‘headwinds’ are much stronger in the US than elsewhere (a weak public education system in particular). As Gordon says, ‘my guess is that a Canadian or Swedish economist looking at the past and future of his or her country would not be nearly so alarmed’. (p23)

2/ Equally, some of these headwinds might reverse direction. For example, climate change may create new economic opportunities, not just constraints.

3/ This is very long wave analysis, and frankly it’s too early to tell if Internet-based innovation – Gordon’s ‘third industrial revolution’ – has really come to an end. That data only runs from 1960-2007; but previous revolutions took at least 100 years to fully diffuse. It feels premature to say that ‘the productivity impact of IR3 evaporated after only 8 years.’ (p13)

4/ There’s also something slightly odd about the historical treatment – which is done in terms of the country at the technology frontier. Gordon looks at the UK from 1300-1906, then the US til the present day. But it’s not obvious the underlying country drivers of growth are the same. And as Gordon acknowledges (p6), the future frontier country might not be the US.

5/ The analysis overlooks the dynamic nature of some innovations. Gordon suggests that urbanisation ‘only happens once’ – true, but its effects are persistent. Agglomeration economies can trigger virtuous cycles of urban development, raising growth over very long periods.

6/ Similarly, innovations like ‘travel speed’ haven’t changed much (p2) but their diffusion has been massive – e.g. far more people have access to plane travel than in 1958. This must have some impact on economic welfare through market size, if not on productivity.

7/ Gordon is perhaps a bit unfair on internet innovations. As he rightly points out, for most people running water and central heating are more ‘important’ than broadband. But he doesn’t really consider the internet as a general purpose technology with multiple affordances – many of which we’ve only just started to grasp. Equally, he doesn’t really consider big data, mobile, cloud or social technologies.

8/ The paper doesn’t really explore reasons why ‘IR3’ technologies haven’t fed through into labour productivity stats. There’s now a massive organisational literature which provides some answers. Work by Erik Brynjolfsson tells us that to make the most of ICTs, firms need to do substantial complementary investment in management and organisational structures. Research by John Van Reenen, Nick Bloom and others also highlights the importance of good management in triggering productivity gains for firms.

Some sectors have understood this better than others – such as ICT, retail and financial services, which have seen substantial technology-related productivity jumps.

In other words, just ‘putting a computer on the desk’ isn’t going to have much effect. And looking at average productivity changes hides some big sectoral differences. But this is how Gordon’s paper is thinking about it. A closer, finer-grained analysis might turn up some different answers.

Manufacturing hipsters

June 19, 2012

I’ve just finished Enrico Moretti’s terrific new book, The New Geography of Jobs. Moretti is an annoyingly young and brilliant economist at UC Berkeley who made his name with seminal papers on agglomeration, knowledge spillovers and multiplier effects. He’s now following Ed Glaeser and Paul Krugman out of the seminar room into the mainstream.

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Moretti’s argument is in three parts. First, globalisation has made the knowledge economy increasingly important as a source of productivity and wealth in countries like the US (and the UK). Each ‘innovation economy’ job supports five others, two in other professions and three in local services.

Second, these big shifts have very uneven impacts. Cities concentrate economic activity. Places’ initial advantages matter. People’s ability and willingness to move is limited. So social and spatial disparities tend to grow – even though higher living costs in richer cities partly cancel out higher wages.

Third, our policy responses need to change. Unlike Glaeser, Moretti likes some area-based initiatives. But he also pushes strongly for public science, better public education and raising high-skill immigration.

So far, so familiar – see Glaeser’s The Triumph of the City, or Richard Florida’s The Great Reset. But Moretti arguing that it’s precisely these long term trends and their implications that need to be deeply understood. (Meanwhile, Glaeser gets one mention in the index – the same as Marlene Dietrich – and Florida gets a discreet knife in the ribs in Chapter 5.)

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The book also has great range. Moretti combines serious urban economics and economic geography with a number of excursions – on the historical origins of Hollywood, Berlin and culture-led regeneration, the dynamics of shared workspaces, cleantech investment, gentrification and ethnic inventors.  In many pop academic books these passages feel bolted on – a break from the high-level narrative. In this case they’re actually doing some intellectual work.

One of the richest passages comes early on. In the most successful cities, Moretti suggests, the innovation economy is supporting the return of urban manufacturing. He visits the site of the old Levi’s factory in San Francisco to find ‘dozens of workshops offering hand-crafted products’ – such as bespoke clothing line Cut Loose and the DODOCase iPad case factory.

Across town on Pier 17, Tcho has taken over an old warehouse and converted it into a craft chocolate factory, importing vintage German machinery and high-tech computerised gear. (The chocolate is absolutely amazing.) In London, S.E.H. Kelly (limited-run menswear), The Kernel (craft beer) and Berg’s Little Printer are riding the same wave.

The growth of high-end manufacturing in cities seems rich with possibilities. But Moretti convincingly shows that it’s fundamentally a niche phenomenon. First, this kind of manufacturing is essentially the result of wealth created elsewhere in the city. Although these firms can trade globally, their key market remains local – in that sense, they’re a form of high-end local service.

Second, an important part of these products’ appeal is that they’re unusual, or unique. Both the thing – and the experience of buying it – are positional goods. That business model then allows firms to cover high manufacturing costs. Scaling up would involve either jacking up prices even higher, or moving production to lower-cost locations – precisely what such firms are reacting against.

The most extreme example of this is also the best known. American Apparel gear sells precisely because it’s made in LA (and because of its softcore ads, of course). If Moretti is right, it literally couldn’t be made anywhere else.

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A more profound transformation, which the book doesn’t touch on, is the emergence of small-scale digital manufacturing. With 3D printers,economies of scale matter much less: there’s no need to retool a production line, and almost infinite customisation should be possible. The technology is already good enough to make specialised car parts, and some nice art objects.

Micro-manufacturing is deeply disruptive – especially when combined with zero-cost marketing and sales online.  Craft manufacturers will adopt it. But it’ll be the technology, as much as the brand positioning, that’s doing the hard work.

London’s economics of diversity

March 10, 2012

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.

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