Posts Tagged ‘technology’

Doing broadband better

June 30, 2017

 

A What Works Centre post I thought would be good here too.

 

Our new broadband toolkit takes a look at how policymakers (nationally and locally) can increase broadband takeup.

Why do we care about this? From a social point of view, it’s increasingly clear that decent internet access is a citizen right (especially as many public services are being shifted online). From an economic angle, evidence from our broadband review shows that household broadband takeup can have positive effects on house prices, female labour market participation, employment, firm growth, and economic growth. (Household adoption is also strongly linked to firm adoption.)

With that in mind, the toolkit looks at three different areas where public policy can step into the market.

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The first toolkit looks at direct public and public-private provision. EU State Aid rules limit what member governments can do here, but even so there is room to provide networks in rural areas. And if Brexit means these rules no longer apply, the UK can (potentially) make big investments.

We find that direct public provision raises broadband takeup, even in countries like the US where the private sector is already active. We also found a study of an Italian programme that successfully raises takeup in rural areas. Crucially, though, the US evidence suggests that provision on its own is only half as effective as provision combined with info/education on broadband’s benefits.

Frustratingly, it’s hard for us to say much on cost-effectiveness on the basis of the available evidence; although it’s clear that there are huge variations in programme costs across countries. Some of this reflects physical ruggedness (Norway is tougher to pipe than the Netherlands), but there may also be potential to deliver schemes more smartly than the UK currently does.

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The second toolkit looks at ‘local loop unbundling’ – essentially, opening up the last mile of broadband networks to all-comers. Currently only BT is obliged to do this in the UK, but in theory, national government could bring cable providers into the scope of the legislation. There’s also the question of access fees and other arrangements.

The argument against LLU is a simple one: firm X has invested in a very expensive network, so why should others get the benefit, and why should X invest more in future if they are forced to open up access? (In BT’s case this is complicated by the company’s history as a state monopoly.) The counter-argument is also simple: the wider benefits to society (via higher broadband takeup) outweigh losses to a single firm, which can in any case be compensated through charging for access.

The available evidence shows a pretty clear impact of LLU on household broadband takeup (it’s less clear for firms). Across the EU, between 2000 and 2010, LLU raised household broadband adoption by 15%. Perhaps surprisingly, the majority of studies also find no evidence that LLU crowds out future investment by the network owner, and in one case, may even lead to upgrading. This seems partly explained by relatively high access charges in most countries.

We’d urge some caution here though. For the UK, the positive effects of LLU have decreased over time, as broadband rollout covers more and more of the population. That might change if future technology gets a lot better, but this seems unlikely any time soon. Setting lower access charges would also bump up the adoption effect, but also risks discouraging future investment.

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The third toolkit looks across other tools that Governments have used to nudge providers and users: incentives (loans, subsidies, tax breaks), information campaigns, and demand-side measures such as buying clubs and bulk purchasing.

Sometimes policy works directly with providers (ISPs); at other times the nudges are applied to users (firms and households). Does it matter which? Not from the point of view of take-up: we find evidence that both kinds of measure can be effective. Specifically, we find that loans to ISPs and demand aggregation measures like buying clubs have the effect of raising downstream takeup. For direct-to-user policies, subsidies, training and providing computers are all effective.

For providers, a cross-OECD study finds that a bundle of producer incentives have the effect of raising fibre uptake by 10% (from slower copper networks). On the user side, a US study shows that a partial loans scheme for farms raised broadband takeup by 13-14% points.

Again, it’s not easy to figure out cost-effectiveness, but we estimate that typical household programmes cost £1.1-1.3k per extra connection, with the farms scheme above costing around £3-4k per farm connected.

The UK has strongly pushed programmes like this, notably the last government’s SME broadband voucher scheme. Sadly, this has had no proper evaluation done (something we’d like to see change for future schemes) – although a user survey was published which (perhaps not surprisingly) found that voucher recipients were very happy with £3k off the cost of a fast broadband line …

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Originally posted here on 23 June 2017.

A modern industrial strategy

February 3, 2017

A What Works Centre post I thought would be good here. Written with Henry Overman.

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Much has already been written on the UK Government’s Industrial Strategy Green Paper. This post isn’t intended to provide an overall assessment or spell out our individual views on the approach being set out (they differ, depending on which of us you ask). But there are areas where the proposed strategy will shape the work that we’ll do at the Centre and where we also hope that our work will influence the implementation of the eventual strategy.

[Full disclosure – the Centre is cited in the document as one of the institutions the Government hopes will help improve local economic growth.]

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The first area relates to what we do and don’t know about policy effectiveness, particularly when it comes to some of the Strategy’s 10 pillars – which are a mix of tech (science, research and innovation) cross-cutting (skills, infrastructure, supporting business growth, procurement, trade and inward investment) and sector (new sector deals, clean energy). Academics would call this a ‘matrix’ approach.

Take, for example, policy to support business to start and grow. We know that there are market failures here – entrepreneurs often make avoidable mistakes, which better information could help fix; many young firms need better access to early stage finance (the Green Paper talks about ‘patient capital’).

The crucial question is: what’s the right policy mix to help address these challenges? Our evidence reviews on business support and on access to finance suggest that around half of schemes have measurable impact against policy objectives but around half don’t. Our reviews and associated toolkits start to identify the elements that might go in to the design of a more effective set of interventions. And we’ll soon be publishing more toolkits on incubators, accelerators and science parks. All this material provides guidance on how we might improve support to businesses but major challenges remain – both in terms of gaps in our understanding and embedding the evidence in policy development.

We are in a similar position when it comes to policy to develop skills. We know quite a lot – see, for example our evidence reviews on employment support and apprenticeships and our toolkit on training (soon to be supplemented by a toolkit on apprenticeships). Changes to policy design can improve effectiveness but, once again, there are gaps in our knowledge and challenges in implementation.

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Things are more complicated when it comes to investing in science and promoting innovation. We can say something about the specific policy tools – e.g. from our evidence reviews we know that both R&D grants and tax credits drive up innovative activity. But it’s not so clear whether increased innovation at the firm level feeds in to improved local economic performance and there are lots of unanswered questions about the appropriate policy mix. That ambiguity is one of the reasons why people advocate such different approaches to strategy.

In the interests of openness – we should note that one of the things our review did find was that grants and loans programmes that target particular production sectors appear to do slightly worse in terms of increasing R&D expenditure and innovation, compared to those that are ‘sector neutral’. So, while it makes sense for government to recognise that different sectors might need different policy responses (e.g. in terms of the institutional structure that supports those sectors) this might increase the challenge of effective policy implementation in some of the other policy areas.

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Questions of infrastructure are similarly challenging. The evidence that we do have on the link from transport to local economic growth raises some questions about the effectiveness of these policies for turning around areas that are struggling. But at the same time, we know that such investments can help drive growth in areas where travel times and congestion are a big issue (and not all of those areas are in London and the South East). Getting the right balance will be crucial.

As with innovation expenditure, people are willing to advocate for very different approaches – particularly when it comes to the overall pattern of expenditure. We’ll continue to make the case that focussing on the overall pattern of expenditure isn’t helpful when it comes to shaping effective policies. What we need is a better understanding of the economic impact of different schemes and improved ways of feeding this information back in to decisions about scheme prioritisation. This will be where our work will focus in the coming years.

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We could make similar points about the other pillars, but in the interest of space, let’s turn instead to a final cross cutting issue – whatever happens we think that to be successful, industrial policy will need to be inherently experimental. How we deliver and develop the policy will matter a lot.

Industrial strategy is always going to involve unknowns. Most fundamentally, because it involves funding basic science (or commercialising new ideas) – not all of which are going to work out, so wouldn’t be delivered by the market. In other cases, investments will trigger spillovers between parts of the economy that are hard to see upfront.

Finally, unknowns crop up because – for a lot of the things Governments want to do as part of industrial strategy – we still have a long way to go in understanding what is an effective policy mix. In addition to the policy areas covered above, at least three of the Pillars – strategic procurement, innovative place strategies, and institutions – are subject to big knowledge gaps in terms of what works. As a result, how we implement future industrial strategy will be crucial.

As you might expect, we will be arguing for an experimental approach. We need to test lots of different ideas, figure out what works, scale up the things that do and drop those that don’t. Many of those calling for a more interventionist policy – such as Harvard’s Dani Rodrik – have consistently emphasised this point. Many people have argued that the Green Paper’s approach isn’t such a fundamental break with the past. But a greater focus on flexibility, on experimentation, and on testing and improving, would help differentiate this from the past and increase the chances of success where so many other strategies have failed.

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Originally posted here on 27 January.

Mapping London tech

October 22, 2015

 

 

Science and tech employment counts, 2013, IDBR

 

The Tech Map London is out, and so is the research that underpins it. It’s an extremely impressive piece of work, and anyone remotely interested in urban tech ecosystems should take a look. Kudos to the GLA for commissioning it, and to Trampoline Systems and SQW who put the thing together. Other city-regions should try and do something similar.

Here’s some notes I made. It gets a bit geeky in places.

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1/ Patterns – one widely-reported headline is that London has a whole bunch of technology hotspots, not just one. That makes sense, and chimes with other recent analysis. And as some colleagues and I explore in a forthcoming paper, even pre-2010 Silicon Roundabout was linked into a much larger system.

Another is that the tech sector is ‘shunning’ the Old St area. That’s harder to see, as there’s no time dimension in the data, but it’s clear that as that neighbourhood’s technology scene grows, and the area gets pricier, things will tend to spread out. This is what I found recently in some work for Centre for London.

2/ Definitions – The definition of ‘tech’ is important, and this NESTA piece makes clear, there’s a bunch of competing definitions in play. The project team base their work on the recent ONS science and technology categories, though they tell me they tweaked these a bit. This feels sensible, and has the advantage of allowing them to consider (say) medicine and life sciences alongside ICT.

3/ Data – the report uses high quality IDBR data for some of the analysis, but relies on Companies House data for the actual mapping, which identifies tech firms using self-reported industry codes. This isn’t great, as the authors acknowledge: a non-trivial share of firms don’t report anything, others put down non-informative codes (say, ‘other business services’), and SIC codes often don’t tell us much about products/services. Companies House data on employment and revenues is also quite gappy, and comes off of a selected subsample. Use those numbers with caution.

Anna Rosso  and I have used a big data-driven approach [unlocked version] to try and get around some of these issues, though this isn’t perfect either. We’re now testing a combination of administrative and modelled info which should plug a lot more of the holes.

4/ Location – I’m still scratching my head a bit on this. Companies House data gives the address of a registered office, not the trading address. The two could be quite different, and in extremis, not even in the same city. The project team did a survey to explore these issues, finding that for most SMEs, the two addresses are the same, so developed the map on that basis. It’s obviously critical that the survey is robust for us to believe the map.

I couldn’t find that much detail in the report, but assuming the survey is sound, this is a pretty helpful finding for me and others working with company data. Meanwhile, we can get a rough sense of the correspondence by comparing the map at the top of the page with this one.

 

Digital technologies employment counts, 2013, Companies House

 

The first uses IDBR employment data from actual plant locations, the second uses Companies House registered addresses. For some reason, the first map covers the whole of science and tech, while the second only looks at digital technologies (around 18% of all science and tech jobs in 2013) and is in logs, not raw counts. The two line up *fairly* well, but really we need to see a like-for-like comparison using plants/enterprises, not jobs. Note: I’d be very happy to update this material if the team can furnish me with more detail.

 

New essay on London’s digital industries

June 27, 2015

I’ve written a piece for the new issue of London Essays, the beautifully-designed journal published by Centre for London.

Having covered soft power, the latest issue looks at technology. It launches on 1 July, but you can read my article early here: I take a look at London’s digital industries and their contribution to the city’s economic future, crunch some new numbers and try not to make too many jokes about artisanal products.

Hope you enjoy reading it!

Writing it has been good preparation for the LSE lecture I’m chairing on 7 July, where Gerard Grech, CEO of Tech City UK will be setting out his thoughts on London’s digital future, and the prospects for the tech sector across the country. If you can make it, please come say hello.

 

 

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!

New big data paper

November 27, 2014

(c) 2014 NIESR / GI

Anna Rosso and I have just published the next phase of our big data project. Kindly funded by NESTA, this builds on the work we did with Google last year. As before we’re working with Growth Intelligence, who’ve developed the very nice multi-layer dataset we use. We’ll be publishing a further paper sometime in the New Year.

You can download the full NIESR working paper here or a summary here. A version of the paper will also be coming out in Research Policy shortly.

The abstract is below. Or take a look at this writeup in the FT.

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Governments around the world want to develop their ICT and digital industries. Policymakers thus need a clear sense of the size and characteristics of digital businesses, but this is hard to do with conventional datasets and industry codes. This paper uses innovative ‘big data’ resources to perform an alternative analysis at company level, focusing on ICT-producing firms in the UK (which the UK government refers to as the ‘information economy’). Exploiting a combination of public, observed and modelled variables, we develop a novel ‘sector-product’ approach and use text mining to provide further detail on the activities of key sector-product cells. On our preferred estimates, we find that counts of information economy firms are 42% larger than SIC-based estimates, with at least 70,000 more companies. We also find ICT employment shares over double the conventional estimates, although this result is more speculative. Our findings are robust to various scope, selection and sample construction challenges. We use our experiences to reflect on the broader pros and cons of frontier data use.

Can ‘Tech North’ take off?

October 27, 2014

Rory Cellan-Jones has a nice article on the BBC website on the prospects for the Government’s ‘Tech North’ initiative, building extensively from my work with Emma Vandore on Tech City in London. Here’s some further thoughts.

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Tech North was launched by Nick Clegg last week: it’s one of the products of the DPM’s recent Northern Futures initiative. The idea is to promote tech clusters in Liverpool, Manchester, Sheffield, Leeds and Newcastle: Clegg has put £2m/year on the table to support local firms, and to attract FDI to the area.

Politically this is a no brainer. It meshes with the government’s ‘rebalancing’ rhetoric. And it fits the new mission of TechCity UK, which has expanded its remit from just East London to cover the whole country. TCUK is publishing work next month looking at digital clusters, which will put some new numbers behind the policy.

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So will it work? Rory is fairly sceptical in his piece. I’m still unclear what the programme will actually do: so here are five issues policymakers should be thinking about.

1/ Real geographies – Tech North connects five big cities with over 150 miles between them. In the real world, urban tech is in very tight microclusters: neighbourhood scale scenes which allow for lots of face to face contact. In Liverpool, for example, a lot of the action is in Ropewalks or the Baltic Triangle.

In London, Ministers originally hoped to ‘connect’ the Shoreditch cluster to the Olympic Park a few miles away. That hasn’t proved possible, not least because Old Street firms didn’t want to move there and saw no connection between the two.

So the chances of creating a single super hub across the Pennines are slim at best. There are worrying echoes of the Thames Gateway here: a planning concept, not a real place. On the other hand, as we found in London, the area branding might prove a helpful way to raise the profile of these local scenes.

2/ Who’s in and who’s out? The DPM seems to have focused his attention on the five Northern core cities. Fair enough, in that these are the economic powerhouses of their wider regions. But the real geography of tech activity is a little different. But cities like York and Sunderland also have quite a lot of tech firms. So why aren’t they included?

3/ FDI versus growing our own – firms cluster because co-location makes sense: they can tap into new ideas and pools of skilled workers and can share useful inputs (like fast broadband or VC investors). On the other hand, clusters have tensions built in. As more firms enter, pressures on space build up, so rents rise. And competition rises, for staff and for market share.

Given all this, it’s risky to base cluster development policies on foreign investment. If FDI simply brings in big multinationals, these might displace smaller, younger UK businesses. I doubt that’s what Government or cities want. Agencies like UKTI typically try and maximise the count and size of foreign investments. A different approach is needed here, which is to focus on the type of foreign inputs.

4/ Infrastructure – FDI programmes should try and enrich the rest of the ecosystem, especially specialist services tech firms need: finance, lawyers, accountants and workspaces. This stuff is only just starting to appear in London at scale, and is likely to be a priority for other UK cities. Certainly, the UK’s VC scene is pretty weak outside the capital.

Equally, fast internet (and fast connection to it) is a basic need. For me, this is now a public utility, so it’s disappointing that the Superconnected Cities scheme has retreated from rolling out faster systems to everyone, to simply providing vouchers to SMEs. The CORE programme in York, Peterborough and Derby is an interesting exception (thanks to Tom Forth for the link).

5/ Policy architecture (and whether it really matters) – cluster policy advocates like Michael Porter assume that cluster development has to be local, since clusters are local phenomena. But this doesn’t follow.

First, Tech North has little cash on the table: its five-city budget is about the same as the original budget for Shoreditch. Second, a lot of the relevant policy levers are held at national level: tax breaks for investors, crowdfunding regulation, immigration and skills. That still leaves some local levers: branding, networking, planning and any local investment pots. But it’s limited stuff.

Arguably some of these national levers should be devolved: that’s started to happen through City Deals and Local Growth Deals. But we’re at the very start of this process, and though the post-Scotland moment may yet shake things up further, what Ministers are handing over in powers they’re currently taking away in cuts.

But perhaps that’s too pessimistic. As Emma and I found in the East London research, the Old St scene grew quietly for years without policymakers really noticing. That could well be the likely trajectory for the many clusters under the Tech North umbrella.

Do inventors talk to strangers?

January 15, 2014

Not such a productive meeting, (c) wikimedia

I’ve a new working paper out, written with my LSE colleagues Riccardo Crescenzi and Andrés Rodríguez-Pose. It’s available in three flavours, CEPR [£], IZA and SERC.

Here’s the abstract:

This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identification strategy, this paper systematically explores the net effects of all these ‘proximities’ on co-patenting. The regression analysis allows us to identify the full effects of each proximity, both on choice of collaborator and on the underlying decision to collaborate. The results show that physical proximity is an important influence on collaboration, but is mediated by organisational and ethnic factors. Over time, physical proximity increases in salience. For multiple inventors, geographic proximity is, however, much less important than organisational, social, and ethnic links. For inventors as a whole, proximities are fundamentally complementary, while for multiple inventors they are substitutes.

In other words, we find that physical proximity is critical to break the ice in a research collaboration; once the relationship has been established, however, other forms of proximity become more important. Crucially, for multiple inventors we find that co-location basically disappears as a driver of collaboration.

Obvious, you might think. But I’d argue that the multiple inventor group finding is pretty counter-intuitive. Our results also imply that the gains from incubators and research labs are strong for young researchers, but may fall off quite quickly. And our numbers chime with the ‘nursery cities’ hypothesis – basically, big cities are better for small young firms than older, larger ones.

UPDATE: an improved version of the paper is forthcoming in Research Policy. Read it here.

Big data and digital firms

July 23, 2013

(C) 2013 niesr and growth intelligence

I’ve just published some new analysis of the UK’s digital economy, joint with Anna Rosso and Growth Intelligence, and funded by Google. We had a launch session yesterday with Vince Cable – see here for a good write-up by the Guardian.

We’ve done pretty well for media so far: see coverage from the BBC, FT [£], Sky, Telegraph, Independent, Scotsman and Guardian (again) among others, and a nice blog post from Google’s Hal Varian.

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This is the first phase of a research programme with roots in the resurgence of industrial policy around the world. Like many others, the UK government wants to promote ICT and digital content activities – in the global North at least, this is generally high value activity, with spillover effects to the rest of economy.

A big problem is that we have little idea of the true size and nature of these digital companies. That’s because official definitions use SIC codes, which don’t work well for companies doing innovative, high-tech stuff.

To try and fix this, we use big data provided by Growth Intelligence. GI pull in data from the web, social media, news feeds, patents and a range of other sources, and layer this on top of public data from Companies House. That gives a much richer picture of who’s out there, their characteristics and their performance.

Crucially, GI’s data buys us a lot more precision than SIC-based analysis. We can look at industries and at products, services, clients and distribution platforms.  For increasingly tech-powered sectors like architecture, that allows us to distinguish ‘digital’ companies producing (say) CAD specialist software from ‘non-digital’ ones making buildings.

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Overall, we find over 40% more digital companies than official estimates suggest. We also find that digital companies who report revenue or employment are pretty resilient, with faster revenue growth and higher average employment than non-digital companies.

And contrary to the popular sense that it’s all about London start-ups, we find hotspots of digital activity across the country, including some perhaps surprising places like Aberdeen, Middlesbrough and Blackpool.

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Okay, this is all fascinating stuff for researchers. But what should Government do differently? First, the big data field is still in its early days, and we’d encourage officials to explore how it can complement conventional statistics. Second, better data should lead to better-designed industrial policies. Finding the optimal policy mix, however, is a separate and much harder question to answer.

BIS’ information economy strategy is rightly cautious about hands-on intervention. This NBER paper by Aaron Chatterji, Ed Glaeser and Bill Kerr is a good overview of the wider evidence. Henry Overman and I will be publishing a piece in the Oxford Review of Economic Policy soon too, which puts the case for a more agglomeration-focused approach.

We’ll also be continuing the data analysis, thanks to further support from NESTA. Look out for further mapping and econometric work in the months ahead.

That’s not my name

January 30, 2013

(c) wired / architecture 00

Last week I was at LSE for a seminar on place and neighbourhood branding, ably organised by CityDiplo. Also on the panel were Suzi Hall (LSE Cities) and Ian Stephens (Saffron). It was a great evening, with a sharp and highly engaged audience.

I ran through some new work on the politics of naming in East London’s digital economy, and how the competing brands of Silicon Roundabout and Tech City are playing out on the ground (which I’m writing with Emma Vandore and Georgina Voss).

Suzi gave a great run-down of her work on ordinary streets and vernacular spaces in South London, and Ian delivered a nice overview of official branding strategies for Nine Elms.

The CityDiplo team have now put up a podcast of the session. Presentations should follow shortly.

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