Territorial Review Copenhagen - Region Hovedstaden

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The industries in a given region must be checked for their sensitivity to
transportation costs. For many sectors, the contribution of transport costs to
overall value-added is not only very low but is also falling. Although several
authors have proclaimed the death of distance, in many circumstances, faceto-face
contact and the use of telecommunications may act as complements
rather than as substitutes for each other. An increase in the quantity, variety
and complexity of information produced itself increases the costs associated
with transmitting this information across space. Much of the information
will be of a non-standardised tacit nature, and the transmission of this type
of information essentially requires face-to-face contact.
Reductions in transport costs can have ambiguous effects on urban
areas. High transport costs lead to decentralised production. The elimination
of all transport costs may lead to production being moved from locations
with high production costs and concentrated in locations with low
production costs, i.e. peripheral locations. However, a partial reduction in
transport costs may lead to increasing concentration in a core location, since
the larger-scale economies outweigh lower transport costs.
Firms‘ performances are affected by the level of housing and
commuting costs, which can be called urban costs. High urban costs render
firms less competitive on local and foreign markets. Increasing urban costs
could shift employment from large monocentric cities either to their suburbs
or to distant and smaller cities, where these costs are lower, at least once
trade costs have sufficiently declined to permit large-scale exports to distant
markets. Economic integration could thus well challenge the supremacy of
large cities in favour of small cities (Cavailhès et al., 2007). The emergence
of sub-centres within cities is a powerful strategy for large cities to maintain
their attractiveness. The creation of sub-centres within a city, i.e. the
formation of a polycentric city, appears to be a natural way to alleviate the
burden of urban costs. However, for this to happen, firms set up in the
secondary centres must maintain a very good access to the main urban
centre, which requires low communication costs.
Governance
Institutional and governance arrangements create the conditions for
economic activity to thrive. Close interaction among local political actors,
the presence of a well-functioning civil society, regional administrations,
and employers‘ organisations and trade unions favour economic
development. Conversely, the absence of poles of collective action often
leads to the formation of vicious circles of low growth. The lack or relative
unimportance of collective organisations, and the presence of clientilistic
practices facilitate migration and discourage economic activity. Different