Now that the immediate crisis in the financial sector has been stabilised it is time to address long-term growth. However, the crisis is affecting different regions in different ways, so regions need to be involved in planning the way forward. These messages were given by Marcos Bonturi, Head of Regional Competitiveness and Governance at the OECD in his address to the ESPON seminar in Prague.

Mr. Bonturi told the audience of over 250 researchers and government officials that economic free-fall has been avoided. “The finance markets have been stabilised and the banking system has been saved,” he said, while hastening to add that there are still dangers in the world economy. Unemployment is a lagged indicator, so the worst is yet to come on that front, though the rate at which employment drops is reducing. Therefore, he called on policy makers to seize the opportunities that this latest phase of creative destruction will offer. In particular there needs to be broad-based innovation policies that target both existing firms and also new potential innovators. However, it is important to recognise that innovation is not purely laboratory based – it arises out of networks, diverse expertise, small firms, and in the service sector. Public-private partnerships are needed at all levels, said Mr. Bonturi: local knowledge is important.

Old Town Hall's Astronomical Clock in Prague. Photo by Cliff Hague

The crisis and the regions

He stressed that the crisis has not hit everybody in the same way. In the UK, for example, the signs are that the North East of England, Wales and the West Midlands have suffered more severely than other regions. Across Europe the pattern seems to be that export-oriented regions have been badly affected by the drop in world trade. Regions dependent on car manufacture had seen sharp cut-backs linked to problems of credit. However, Mr. Bonturi argued against governments giving large subsidies to enterprises – regional policy is a better way to address the problem.

Dirk Ahner, Director General of DG Regio, struck a similar chord. He argued that the key issue now is how to invest public resources so as to achieve long-term impacts. He argued for smart investment in the activities needed to drive a knowledge-based, low-carbon European economy. Public investments needs to back the endogenous capacity of regions. 

What about the agglomerations?

Alan Harding from the University of Manchester, who is leading the ESPON project on agglomeration economies, showed how even countries such as Germany, which are politically decentralised, nevertheless demonstrate strong agglomeration effects economically. The knowledge economy favours big cities and the high level jobs concentrate there. Turning specifically to the UK, Professor Harding argued that there had been a significant regional shift in public expenditure on infrastructure – in favour of London and its region. This was not the outcome of an urban policy as such, but rather the incremental implication of the government response to the need to manage growth. The type of projects that are driving this London-oriented regionalism are the Olympics, Crossrail, the Third Runway at Heathrow and the Channel Rail Link.

Much of the discussion in Prague emphasised the need to look beyond Europe to the ways that global relationships are changing. Although he was unable to attend in person, the presentation on behalf of Simon Evans from Creative Clusters made this point strongly. His view was that the economic crisis is part of a shift in wealth and power from west to east, but that this opens significant opportunities to European business if they can deliver the products and services that the expanding and aspirational middle classes of China and India want. Indeed the challenge is to sell them things that they don’t yet know they want!

Mr. Evans’ presentation focused on the creative industries. He identified four types of creative business: creative consumer goods, like CDs or media players; creative platforms and distributors, like publishers and TV networks; creative service providers, e.g. advertising agencies; and creative content producers such as musicians and designers. The essence of the creative industries is that they are high risk, and so outsourcing to small companies is the norm. This is why clustering becomes so important for ideas and product development: wherever the big producers locate they attract creative talent. As a cluster grows its reputation spreads to encompass even new arrivals – “I’m going to work in Hollywood”.

Evans says that governments cannot create clusters, but place is a crucial part of the clustering process. The liberal values of Europe provide the milieu within which creative innovation can flourish. This echoes the regular references during the seminar to the Barca Report and its advocacy of place-based development strategies.

Several of the presentations at the seminar are available on the ESPON web site at www.espon.eu under the “Events 2009” section of the ESPON 2013 pages.

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Author:

ESPON UK Contact Point

Publisher:

The Royal Town Planning Institute

Date:

17-Jun-09

Categories:

Espon 

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