The Competitive Economic Performance of English Cities

The Competitive Economic Performance of English Cities5.2.2 Within the context of an evolutionary approach we argue that those localeconomies that start with more of the most desirable factors of production arelikely to accumulate more of them as the economic forces of Kaldoriancumulative causation work themselves out. The result is divergence rather thanconvergence towards a neo-classical equilibrium position. This is primarilybecause labour and businesses do not tend to migrate from high to lower costsareas in order to remain employed or to stay in business. If anything the reverseis the case with a continual drift of younger and better educated workers tohigh wage and high employment areas and the closure rather than migration ofuncompetitive businesses there. The data that we have on economicperformance and competitiveness do indicate some divergence between theeconomies of the 56 cities studied over the 1990s and early 2000s. Thus GDHI,GVA per capita, visible exports, productivity and average earnings all divergedover the periods for which we have time series data. This suggests that the PSAconvergence target for English regions will require some rather more dramaticlocal urban economic policies if real and measurable progress in that directionis to be made before 2010.5.2.3 One of the biggest problems confronting individual urban economies is thatthey are subject to major external sources of change over which they have littleor no control. These external sources include major economic cycles andshocks, changes in markets and competitive environments, changes intechnology and changes in policy regime. Urban economies react differently tothese external sources of change according to their individual economicstructures, how far these are directly affected by the specifics of external shocksand how developed their learning and adaptive capacities are. Thus, forexample, 9/11 was a major shock to the civil aero-engine speciality of the Derbyeconomy but not to most other urban economies in our study. The institutionalresponse in Derby was also uniquely tailored to the needs of that localeconomy. In the case of English cities the business cycle upturn since 1991 isresponsible for much of the growth experienced locally. When this turns downwe may expect further divergence between the competitive economicperformance of English regions and cities.5.2.4 Technological change is an important external source of both opportunities andthreats to urban economies. Major new technological paradigms and trajectorieshave spatial implications. One of the most significant of these has been theintroduction, integration and development of computers and informationtechnologies. Most of the best economic performances among English duringthe 1990s were associated with either the development or use of ICT. There isnow a major club of better overall performing urban economies located aroundthe GSE almost all of which increased their employment in and uses of ICTduring the 1990s. From a policy perspective it is therefore essential that localeconomies are enabled to participate effectively not only in the newtechnologies associated with ICT but also in the technologies emerging in theirmain sectoral specialisations whatever they may be.5.2.5 We examined the overall economic performance of the 56 cities in terms ofgrowth in GVA per capita between 1995 and 2002. This showed that there werenine TTWAs where growth led that for England as a whole by 10 per cent or224