History Matters: Path dependence and innovation in British city ...

Executive summary
History matters: A city-region’s past
determines what is possible while the
present controls what possibilities are
explored
Local economies’ capacity to absorb new
knowledge, grow and regenerate is developed
over time. Industrial growth, decline and
renewal results from historic combinations of
knowledge assets and innovation. In turn, the
sectoral and structural pathways followed by
cities and regions determine their long-term
success or failure.
The ‘lagging’ cities in our study – where
economic development trails the national
average (Middlesbrough, Newport, Norwich,
Swansea and Wakefield) – are all characterised
by weaknesses derived from their specific
industrial histories. Conversely, ‘leading’ cities
such as Aldershot, Cambridge, Northampton,
Oxford, Reading and Warrington are all
characterised by their lack of industrial
heritage.
City-regional economies are interactive
systems composed of four main strands
1. Sectoral development pathways. The
economic, social and institutional histories
of city economies that have brought them
to where they are in the present. Sometimes
these can be traced back for decades if not
centuries.
2. Knowledge assets. These assets – which
include universities and expenditure on
research and development – have become
increasingly significant as the role of
knowledge in contemporary economic
performance has increased.
3. Local innovation systems. The dynamic use
of knowledge to create new products and
services. Here the local innovation system
plays a critical role in combining local and
external knowledge to inject varying degrees
of novelty into local economic activities.
4. New path creation. More radical
innovations arising from the local
innovation system sometimes generate new
development pathways – when cities branch
into new industrial or economic sectors.
New ideas and new development pathways
appear more often in cities without long
industrial histories
We investigated five different possibilities for
the creation of new development pathways.
1. Indigenous (local). These included the
actions of ‘individual stars’ such as those
who formed Cambridge Consultants in
1960 and the contemporary Vice Chancellor
of Swansea University who inspired the
Technium Programme launched in 2001.
We expected to find that new firm creation
played a vital role in the creation of new
pathways. But new firm formation declined
nationally through the 1990s and was often
lowest in some of the more innovative
cities. We also found that the direct role of
local universities as institutions (as opposed
to a few star individuals emanating from
them) in new path creation appeared to be
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