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From stupid to smart - international lessons for local growth

13 November 2013

Stupid growthEconomic Growth

The long economic crisis has focused thinking across Europe on how to foster local growth. The EU's strategy for recovery from the crisis calls for Smart, Sustainable and Inclusive Growth. What does this mean? What are the current ideas about how places can foster growth?

Stupid GrowthFailings can be identified in past EU attempts to create growth. The Lisbon Strategy was adopted in 2000. It set targets aimed at increasing EU global competitiveness. However, it did not address the spatial aspects. It was a top down approach, whereas growth is created in different places with different characteristics.

The European Regional Development Fund is one of the instruments that the EU can use to promote growth. However, too often ‘stupid growth’ has been pursued. As those with working experience of ERDF know only too well, spending the money in the planned time periods, to avoid de-commitment of funds, can become the priority. Too little attention has been given to the actual outcomes and impacts of projects.

A lot of money earmarked for “innovation” went into new infrastructure, with insufficient integration with the “soft” drivers of growth such as entrepreneurialism and skills. Science parks and new roads rolled off the drawing boards – standard solutions for different places. Everyone wanted a bio-tech cluster, even if they had no existing strengths in that field. It was easy to get architects to design stylish new buildings, but less easy to be sure that there would be a market demand from occupants and consequent revenue stream.

Learning from this experience, the emphasis for the 2014-2020 European Structural and Investment Funds (ESIF) is on an integrated approach and “smart specialisation”. In other words, each place should play to its own distinctive strengths – local growth that goes with the flow of the regional SME economy. ESPON research has shown that there are different types of innovation in different places.

As innovation is widely recognised as the key to growth, the challenge to spatial planners is to connect their traditional skills to an understanding of the dynamics of their regional innovation system.

Working together to create innovation

In the 1990s it became common to point to a “triple helix” as the basis for an innovation system. The three parts of the system were universities, businesses and government. If they could work together, then innovation would follow. Translated into action on the ground, this typically meant building science parks where university researchers, spin-off companies and other research-oriented businesses sat side by side. Governments did their bit by investing in infrastructure such as transport connections and providing or grant-aiding the science park itself.

Underlying the idea was the belief that proximity would help make universities more business-aware, and would give companies quick access to the latest research. Links would grow, people would move between academia and firms, blue-sky thinking would be translated into products for sale.

Did it work?

I was always a bit sceptical. I have visited science parks that seem to consist of free-standing buildings separated by extensive areas of car parking or landscaping: how can encounters spawn new ideas if everyone drives to work in their own car, then works in separate buildings?

However, there is basic sense in the model. There are examples on a regional scale of innovation systems that recognisably reflect this model. The region centred on Munich is very prosperous, innovative and has a long tradition of business-university-government co-operation. Governments – regional and local – have invested in infrastructure: the airport, road and rail, leisure and business parks, higher education, as well as research and development and technology transfer.

Some universities in other urban centres in Bavaria such as Ingolstadt, Passau, Bayreuth and Augsberg have affiliations with the two main universities in Munich.  Some manufacturers based in the Munich region, such as BMW, have established production plants in Eastern Europe but have retained key functions such as research and development and administrative headquarters within Munich.

Engage with civil society

Critics now argue that this model is old fashioned and too top-down for today’s world. A provocative and persuasive short article by Ernest J. Wilson III argues that four different sectors need to be linked together. He adds civil society, in the form of not-for-profit organisations to the usual three.

His reasoning is that NGOs are best at knowing conditions in local communities. He also points to the important role played by NGOs in many developing countries – a theme that my co-authors and I developed in our book 'Regional and Local Economic Development'. Furthermore, he observes “As the financial crisis continues, NGOs are picking up some formerly commercial functions, such as retail banking and publishing.” He might also have noted that involving civil society more might have constrained the bland enthusiasm of governments and business that created property bubbles instead of smart growth.

Another author, Christer Asplund has taken the argument a step further. He suggests that to bring Wilson’s “quads” together, so that they really interact intensively, you need another ingredient, which he calls context management. This means somebody outside any of the established institutions who animates the connections.

Such ideas underpinned the experiment by Germany’s Federal Ministry of Transport, Building and Urban Development which has sought to create growth and innovation through urban-rural partnerships. Modellvorhaben der Raumordnung, or spatial planning pilot projects in English, is an action research programme that uses federal money to pump, prime and monitor innovative actions that emphasise networking and “joint responsibility” in seven regions.

Bringing civil society partners in was seen as a crucial step. Just as important was that the projects worked across traditional administrative (and in some cases national boundaries), while also seeking to develop a sense of shared identity, in an attempt to build long-term strategic networks.

Planning for local growth

This implies that plans need to be innovative, both in their preparation and content. If statutory development plans are resistant to innovation, because of risks of legal challenge, then other types of plan need to be invented. The ESPON RISE project points to the value of building visions with other stakeholders. It also stresses the need to establish the role and position of the place in its national and international context.

Planners should stress the need to integrate the sustainable dimension into local growth. Re-use of brownfield land remains an important goal. We still need ways of shifting urban transport towards more environmentally sustainable forms. Renewable energy and green technologies can be supported through plans.

Some planners have become attracted to the idea of “place-making” as a way of redefining the profession and aligning it with “urbanism”. This has a part to play and is valuable in forcing us to think about how planning relates to design and to property economics. However, it is not a sufficient recipe for creating local growth. We need “place management”: place-making is just one part of this. The challenge is to combine the analytical skills that come from regional science with the soft, the creative skills to imagine futures and the managerial skills to build consensus and commitment to implementation. It’s a tall order, but we should be nurturing it through the equivalent of an MBA programme.

About Cliff Hague

Cliff Hague leads the RTPI team that provides the UK ESPON Contact Point. He co-authored the 2010 ESPON Synthesis Report. His latest book, 'Regional and Local Economic Development', was published by Palgrave earlier this year. He is Emeritus Professor at Heriot-Watt University, and works as a freelance consultant and author. He has worked on several EU projects in programmes such as INTERREG and INTERACT. He blogs on the Planning Resource website and on www.innovationcircle.net. He is a Past President of the RTPI and of the Commonwealth Association of Planners.