Urban Regions As Engines of Economic Growth
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URBAN REGIONS AS ENGINES OF ECONOMIC GROWTH What can policy achieve? PBL Urban Regions as Engines of Economic Growth What can policy achieve? Otto Raspe, Martijn van den Berge and Thomas de Graaff Urban Regions as Engines of Economic Growth. What can Infrastructure and the Environment); from the scientific policy achieve? sounding board: Frank van Oort (Erasmus University) and Henri © PBL Netherlands Environmental Assessment Agency De Groot (VU University Amsterdam). The authors also wish to The Hague, 2018 thank Evert-Jan Visser (RVO, Ministry of Economic Affairs) for his PBL publication number: 3296 contribution to the conceptual framework in Chapter 2. Finally, parts of the study were discussed during the workshops ‘PBL Corresponding author Autumn School’ (October 2016) and ‘PBL Spring School’ (May [email protected] 2017), and we greatly appreciate the input of the participants and speakers. Authors Otto Raspe, Martijn van den Berge, Thomas de Graaff Graphics PBL Beeldredactie Acknowledgements The research benefited greatly from input from the participants Layout in various feedback group meetings and bilateral discussions. Xerox/OBT, The Hague For their valuable reactions and comments, we would like to thank, from the policy sounding board: Jan Schuur (Ministry of Production coordination Economic Affairs), Geert de Joode (Ministry of the Interior and PBL Publishers Kingdom Relations) and Vincent van der Gun (former Ministry of This publication can be downloaded from: www.pbl.nl/en. Parts of this publication may be reproduced, providing the source is stated, in the form: Raspe et al. (2018), Urban Regions as Engines of Economic Growth. What can policy achieve? PBL Netherlands Environmental Assessment Agency, The Hague. PBL Netherlands Environmental Assessment Agency is the national institute for strategic policy analysis in the fields of the environ- ment, nature and spatial planning. We contribute to improving the quality of political and administrative decision-making by conducting outlook studies, analyses and evaluations in which an integrated approach is considered paramount. Policy relevance is the prime concern in all of our studies. We conduct solicited and unsolicited research that is both independent and scientifically sound. Contents MAIN FINDINGS SUMMARY 6 URBAN REGIONS AS ENGINES OF ECONOMIC GROWTH 8 Introduction 8 Looking for the regional factors that are robustly connected with growth 8 Policy achievements in successful regions 9 The relationship between robust factors and the six successful regions 14 Discussion 16 Report structure 18 FULL RESULTS 1 INTRODUCTION 22 1.1 Defining the problem and framing the question 22 1.2 Research setup 22 1.3 Report structure 25 2 CITIES AS ENGINES OF THE ECONOMY 26 2.1 Introduction 26 2.2 Agglomeration benefits 26 2.3 Clusters and economic structure 28 2.4 Human capital 30 2.5 Entrepreneurship 31 2.6 Knowledge infrastructure 31 2.7 Physical infrastructure 32 2.8 Financing and capital 33 2.9 The residential environment and the physical environment 34 2.10 Governance 34 2.11 The engine of regional-economic growth in brief 35 2.12 A perspective on growth 35 2.13 A perspective on policy 38 2.14 Another, more prominent role for governments? 40 2.15 Summary 41 3 THE IMPACT OF REGIONAL FACTORS ON GROWTH 43 3.1 Introduction 43 3.2 Searching for robust factors 43 3.3 Heat maps 44 3.4 Does context matter? 51 3.5 Case studies 53 3.6 Summary 55 4 CASE STUDIES 56 4.1 Introduction and chapter structure 56 4.2 Munich 57 4.3 South-east of North Brabant province (Brainport Eindhoven) 71 4.4 Milton Keynes 82 4.5 Dublin 92 4.6 Madrid 101 4.7 Amsterdam 110 4.8 Conclusion: a region-specific policy mix 129 APPENDIX: INDICATORS 136 MAIN FINDINGS MAIN FINDINGS Summary • In new regional economic policies, national and stimulated by factors such as human capital (a very regional agendas are aligned and reinforce each qualified labour force), attractive conditions for living and other. The agendas are based on a joint strategy that working with an interesting range of facilities (quality of combines policy areas; policies aimed at strengthening education, and numerous cultural amenities and the economic structure also encompass plans of action restaurants), and good accessibility in both physical and for human capital, the residential environment, the digital terms. Growth is hampered by a high cost of living, physical environment and infrastructures. polluted air and noise pollution. • Government authorities can make a difference to • Growth is often sector-specific. What works fine for regional economic growth. In economically successful one sector does not necessarily work for another. For regions, government authorities play an active role by example, clustering and specialisation in technology and facilitating growth processes and investing in them. materials are important for growth in industrial The role of regional authorities to formulate a joint companies, whereas the growth in knowledge-intensive strategy (all involved are of like mind) and to develop services is mainly linked to the quality of human capital. alliances between public and private parties and with national and provincial authorities. This is done by • Growth is often context-specific. In regions with high streamlining generic policies towards regional tasks. population density, the impact of knowledge and culture on In successful regions, policies focus on factors that are economic growth is particularly strong. Density brings critical for growth and innovation, and on creating agglomeration benefits and is in itself robustly linked to places that are attractive to live and work in. This usually growth, but in combination with knowledge and culture, involves establishing a coherent mix of policy areas, for its effect is reinforced. The impact of density is also example by coordinating programmes for clusters, more marked in cities with good international connectivity. entrepreneurship, the labour market, knowledge, accessibility and the physical and residential • It is a matter of having a policy mix aimed at a total environments. innovation system. The qualitative analyses in this study reveal that in economically successful cities, • There is no such thing as a uniform path to economic government authorities have made express efforts to success. Regional economic developments vary widely anticipate, facilitate and invest. In these places, there and are context-specific. Moreover, economic growth is has been a shift in recent decades from policies with a path-dependent; historical structures and past events physical orientation, focusing on spatial planning and determine the course of subsequent developments. infrastructure, to policies aimed at establishing an The challenge is to find a suitable policy mix around a overall innovation system. Programmes for common goal that is in line with the economic structure entrepreneurship, clusters, knowledge and innovation and dynamism of the region. The core concept is have become important elements of a policy mix whose innovation and diversification, building on existing specific details are worked out according to the regional structures. Regional economic policies therefore context. Thanks to this policy mix, regional authorities combine present-day strengths, but also focus on the have contributed to ensuring that economic renewal could transformation to new activities and technologies. take place in a bottom-up process in a timely fashion. They achieved this by creating critical mass around the • There are, however, robust factors that stimulate new and promising economic activities that were economic growth, or, conversely, obstruct it. It proves emerging in the region. But, they also stimulated beneficial to focus policies on a number of robust innovation in sectors that had a strong presence in the factors that are positively or negatively linked to growth region and were in danger of entering a phase of in both employment and productivity. The quantitative decline. analyses in this study show that economic growth is 6 | Urban Regions as Engines of Economic Growth • Backing challengers is a priority in policy. Policies are • Growth can be based on unplanned events. Many not aimed at ‘picking winners’, an approach that growth processes are therefore path-dependent. In the involves opting for certain sectors. Nor are they aimed at initial phase, when it is not clear whether growth will ‘backing losers’, in efforts to maintain sectors that are actually take place, steering the process is a far more performing badly. They are best characterised as uncertain exercise than facilitating and promoting ‘backing challengers’; they stimulate both innovation innovation from existing growth paths. within the existing structure and the challengers of the established order. By making this concrete in the form • Both the national and the regional level. National of a policy mix, promising new activities, which are in governments can also play an important role in regional line with the economic activities, technologies, themes economic developments. National policies have effects or challenges in the region, are able to prosper. at the regional level and, if they are customised, they could effectively fit in with regional contexts and • Policies make choices. While urban planning aimed at regional policy initiatives. In addition, there are several creating attractive cities with a high quality of life can matters that can be dealt with more readily by national be beneficial to entire