Mobile Edition
Print
Get the Mag
Weekly UpdatesINTRODUCTION
After a long period of urban decline, the end of the 1980s marked the beginning of a remarkable revival of urban areas in western countries, notably in Europe and the US. This process is often ascribed to the structural move towards a 'knowledge based economy'.
The urban revival is not visible everywhere, however: the outcomes are uneven. Some cities--national capitals, global cities, international service hubs--have grown very fast, acting as magnets for talent and investments, whereas others, especially small cities in rural areas and cities with an outdated economic specialisation, have lost out in relative terms. These face severe difficulties in retaining knowledge workers and knowledge-intensive companies.
It is tempting to say that the uneven spatial outcome of structural change is a given. In other words; the 'winners' simply were lucky: they inherited a bundle of strong 'assets', especially universities, international airports and a highly educated population that helped them thrive in the knowledge economy. However, this view largely ignores the importance and significance of local agency and governance. Cities are not passive 'receivers' of global trends: they can take action to make themselves 'fit' for the knowledge economy through initiatives of local leaders or coalitions. Concerted action in the form of co-operations between municipal authorities, companies, and local knowledge institutions in the city can be effective, if designed properly and realistically given the assets and opportunities of the city. Cities all over the world are experimenting with new types of concerted action of this kind.
Urban governance is not a matter of urban actors only. Increasingly, it is becoming clear that regional and national policies (innovation policy, R&D policy, university policy) have a deep impact on the urban level and a number of initiatives have been launched to improve the alignment of national 'knowledge economy' policies with urban and regional ones. Some national governments have recognized that cities are engines of national economic growth and innovation, and look for new ways to empower them.
In this paper, we consider the governance of cities in the knowledge economy as a form of concerted action by a number of actors that takes place in a dynamic context that can only be partially influenced by policy. We focus on three main aspects. First, we discuss the unequal urban impacts of the structural move towards a knowledge economy, arguing that different types of cities have different chances and opportunities because of their structural characteristics. Second, we focus on the issue of urban governance and discuss a number of successful interventions within cities via the concerted action of a number of key actors in the urban region. Third, we consider the role of national policy and describe a number of initiatives to improve the strategic alignment between national policy and urban policy. Finally, we define some key policy challenges for various city types and for national governments.
This paper is mainly based on an update of two comparative studies on the governance of cities in the knowledge economy conducted by the author in 2003 and 2004 (Van Winden 2004; Van Winden et al. 2007).
Cities in the knowledge economy
Classical economists considered labour as the most important production factor. Later, in the area of industrialization, the emphasis was put on physical capital. Labour was considered a 'necessary evil' to enable the functioning of capital goods. In recent decades, knowledge has become recognized as a key production factor and a driving force of productivity growth (Lambooy 2007). Analytically, knowledge is often sub-divided into three categories: information (databases), codified knowledge (books, patents) and tacit knowledge, embedded in people. This last category is considered a key driver of economic growth, especially for cities (Fu 2007).
The creation of new knowledge mainly takes place in cities, and cities with a strong knowledge base seem to gain in the knowledge economy. Sometimes universities and science are the key. In Finland, for example, Helsinki and other university cities were the main drivers of economic growth during the second half of the 1990s (OECD 2002). Mathiessen et al. (2002) analyze the scientific output of 40 cities in Europe. They find that a solid knowledge base is reflected in the economic life of a city and that it is, therefore, of increasing importance for urban economic growth and change.
Moreover, urban regions attract talent. The urban knowledge economy thrives on talented people who create new knowledge and ideas. From this perspective, Florida (2000) studies the location behaviour of 'talent'. Among other things, he finds that quality of life in a place is a key determinant in attracting and retaining these people since 'Talented people do not simply select a place to work based on the highest salary, they are typically concerned with a whole series of place-based characteristics' (2000:25). Florida (2000) also found that cultural activities and amenities are increasingly central determinants of urban competitiveness. Talented people are attracted by places where they can enjoy life (Castells 2000). There is also a cumulative effect since talent tends to attract talent. Many empirical studies confirm the link between human capital and urban economic growth (see notably Glaeser, Sheinkman & Sheifer 1995; Simon 1998). Results of the Urban Audit (a collection of comparable data for over 300 European cities, conducted by the European Commission) convincingly demonstrate the preference for urban living of the higher-educated (Dijkstra 2004).
It is often argued, following Jane Jacobs, that the economic and cultural diversity of cities is an economic asset, mainly because urban diversity promotes creativity. The scale of cities and their diversity of inhabitants create the interactions that generate new ideas. Diversity is a measure of the degree of system openness. The places that attract diverse groups of people (by ethnicity, nationality, gender and sexual orientation) can be said to have an environment that is easy to plug into; such places can be said to have low entry barriers for talent (Florida 2000). Economic diversity relates to the variety of industries in a city. Diversity and scale reinforce each other: from a critical threshold value, a cumulative process of growth and variation is set in motion, through which the structure of the urban economy may change (Batty 2005; Currid 2006).
In the evolving knowledge economy, the size of the city also matters as an attraction factor for both companies and knowledge workers. For companies, in a larger city is it easier to find specialized staff. Glaeser (2000) found that it is the need to access common pools of labour rather than access to suppliers and customers that drives the tendency of firms to cluster together in cities. For knowledge workers, being in a large metropolitan area increases the variety of jobs available. This is especially relevant for households with two knowledge workers. Larger cities tend to have bigger airports through which more destinations can be reached, and many of them are nodes on a high-speed rail network; larger metropolitan areas are relatively attractive for foreign direct investment as well. Their scale offers scope for international subcultures and amenities such as international schools.
In sum, the evolving knowledge economy is associated with a reinforced role of cities as 'economic engines'. Cities can be regarded as the focal points of the knowledge economy because it is mainly in cities that knowledge is produced, processed, exchanged and marketed. Cities are best endowed with knowledge infrastructure (universities, other educational institutes, etc.); they tend to have higher than average shares of well-educated people; they are best endowed with electronic infrastructure; they are well connected to the global economy through airports; they function as a place where knowledge is exchanged and as a breeding nest for talent and new combinations.
Differing city trajectories
Do we see remarkable growth differences between city types? Henderson (1997) empirically finds that until 1990, in advanced economies, the size distribution of cities is very stable over time. In the US, for instance, the size distribution in 1990 was almost identical to that in 1970.
Although no sound empirical analysis is available, there is some evidence that large and diversified urban areas have grown relatively faster since that period.
More recent European data suggest that large cities outperform the national economy by a substantial degree. Data on employment growth, gross value added (GVA) growth and population growth in the 45 largest cities for the period 1995-2002 show that on average in that period population grew faster in urban regions (0.45% p.a.) than in the 27 countries (0.3% p.a.), although in some regions, population declined (Berlin, Budapest, Prague which were subject to a different regime). Employment and GVA also increased faster in the cities than the 27 country average, with some cities (most of them capitals) showing very high GVA growth compared to their national average. In terms of value added per capita, most cities outperformed the national growth rate in the period 1995-2001.
How can this tendency be explained? First, major sectoral shifts may play a role again like that in the early days of modern urban growth. Large and diversified metropolitan areas have an overrepresentation of sectors that grew strongly during the late 1990s. Media, publishing, financial and commercial services, creative industries, and especially the ICT sector are all concentrated in these cities (van Winden, van der Meer & van den Berg 2004).
FEED