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Rebuilding the city: a focus for European industrial policy?

2011; Taylor & Francis; Volume: 32; Issue: 4 Linguagem: Inglês

10.1080/01442872.2011.571851

1470-1006

David Bailey, Keith Cowling,

Regional resilience and development

Abstract While the city offers the potential of dynamic agglomeration economies which can spur the achievement of economic growth and act as an engine that powers the economy, it often appears as a centre of crisis in mature ‘developed’ regions and countries, even before the most recent economic downturn. This paper attempts to reconcile these two seemingly paradoxical observations by bringing in a strategic choice perspective to explain how concentrated strategic decision-making in the corporate entities that dominate our cities has diminished the very diversity that Jacobs identified as being essential for cities to flourish and develop. The industrial policy implications for cities are subsequently explored in terms of building new industrial districts, developing high skill ecosystems, and fostering multinational webs of cities, all with the aim of ensuring the conditions exist in cities for creativity and development to flourish, notably a diverse and democratic economic system. Keywords: citiesindustrial policytransnationalsstrategic choicegovernanceeconomic development Acknowledgements Thanks to Kurt Rothschild and Roger Sugden for significant comments on earlier versions of this paper, and to participants at various presentations, most recently the Regional Studies Association Annual Policy Conference, Coventry, 2009. Notes 1. Global urban population growth has been estimated at some 2% per annum over 2005–2010, but this figure conceals a sharp contrast between growth rates in Western Europe and Japan (0.4%), the United States (1.3%) and Australia (1.2%) on the one hand, and China (2.7%) and India (2.3%) on the other (UN Population Fund, 2007, pp. 90–93). 2. A ‘related variety’ argument; see Boschma, 2005; Boschma and Frenken, 2006. 3. Whereas Detroit and Birmingham have not received the core investment in the industry necessary to secure its long term dynamism, German and French auto firms – with government support – have essentially maintained this. While they have moved some assembly activity offshore, they have maintained a strong engineering, research and development, design and marketing base in their home cities of Stuttgart, Munich and Paris, and such countries and regions have also attracted high-level activities from foreign auto transnationals in search of highly skilled workforces; e.g. the Korean auto firm Kia locating a design and development base in Frankfurt. 4. Glazyrina (2000) notes that Krasnoiarsk-26 had a golden age from 1958 to the early 1980s as a centre for Soviet nuclear weapons production, but could ‘not adapt to changed circumstances and operate in conditions of a market economy’ (ibid., p. 200). It is seen as a ‘City without a Future’, despite possessing ‘significant scientific potential’. 5. On vulnerable capitalism see Bailey and Cowling (2006). 6. Recent empirical work showing proximity to higher-tiered urban centres is an important determinant of job growth is supportive of this conclusion, see Partridge (2008). 7. Of course this observation may fit the argument of the previous footnote: it is exactly where we have diffuse developments like Silicon Valley that proximity is seen to be essential. 8. Rothschild (2005) provides a succinct account of this new world and explains why it creates the need for a new approach by policy-makers. 9. For a recent survey of the literature see Branston et al. (2006), Tirole (2001), and Bailey and de Ruyter (2007). 10. Although even this is not guaranteed given the highly active market for corporate control especially in co-called ‘Anglo-Saxon’ economies; witness the Kraft takeover of Cadbury noted above and subsequent head office shift out of the UK. See also GM's recent active consideration of shifting its headquarters from Detroit (The Guardian 2010). 11. Hymer (1972) made the critical connection between the structure and organisation of giant transnational firms and the structure and organisation of the broader international economy resulting from their pre-eminence. In his law of uneven development, low-level day-to-day activities (level III) are spread in search of low costs and market access, the coordination of such activities (level II) is more geographically concentrated given the need for skilled workers and communication/information systems, and top-level management responsible for goal determination and planning (level I) is concentrated in major cities. The latter become the ‘major centers of high-level strategic planning’ (Hymer 1972, p. 115) whilst lesser cities would be organised on a hierarchical basis ranging from bases for regional headquarters down to sites dealing with merely day-to-day operations. 12. Sassen (2006) defines global cities as ‘strategic sites for the management of the global economy and the production of the most advanced services and financial operations’ – Level I activities in Hymer's classification. 13. Dell's assembly operations in (or rather now out of) Limerick is a recent example. See Lenihan and Bailey (2009). 14. Occasionally we see small firms succeeding but they are typically acquired by their larger rivals and become, often unsuccessful, divisions of these corporate giants; see Ravenscraft and Scherer (1989). 15. Whether this survives the financial crisis, is an open question. It raises the question of London's possible over-specialisation on financial services which is now being raised. 16. In line with Sen's (1999) concept of substantive freedom which embodies ‘the freedom to participate in the social, political and economic life of the community’.