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The role of cities in industrial strategy

August 16, 2017

The Centre for Cities organizes a series of lectures on how cities can move themselves forward. The latest, on July 20th, featured Professor Diane Coyle, visiting professor at the University of Manchester and Director of Enlightenment Economics, on the role of cities as part of a modern industrial strategy. The podcast of her talk is here.

The Warwick Business School played host to the talk – with spectacular views of the City from its 18th floor position in the Shard.

Cities photo

Prof Coyle began by addressing the central economic challenges the UK faces today. Innovation is behind the rest of the G7, labour productivity is poor, the number of people over-qualified for their jobs is at an all-time high (implying low investment in advanced systems), the trade deficit is unsustainable and the UK is the most regionally unequal in the G20, due to its over-reliance on London. (All these assertions backed up with commendable statistics and graphs).

There are bright spots – pharmaceuticals, media/creative industries, the City, and some localised, specialist manufacture (eg F1).

She argued that government should look beyond the traditional sectors and aim to develop a multi-sector supply chain and encourage new entrants.

Interventionist industrial strategy has a bad reputation, from the days when “picking the winners” led to failure. But Prof Coyle suggested that good industrial strategy could act as a co-ordinating force (encouraging skills development), pooling risk and creating new markets, and support public goods, managing externalities. The US industrial strategy is the Department of Defense!

The talk then turned to the role of cities. Typically, regional policy is seen as “jam-spreading”, with the assumption of it being a zero-sum game. Prof Coyle argued that “agglomeration” effects, where a critical mass of related skills and supply chains came together, could lead to higher growth and development. As an example, she suggested that if C4 is to be moved out of London, it should go to Salford where it would build upon the BBC initiative. (Typically, in a zero-sum view, one questioner wanted it moved to Birmingham instead).

Summing up, the priorities for government intervention were seen as:

  • de-carbonisation
  • infrastructure renewal – how did the Victorians build infrastructure for 150 years capacity?
  • Health and social care
  • Incentives for long-term investment.

The talk was very well-attended – well over 100 I should think – with a wide range of age groups from early twenties to the retired. The event rounded off with drinks and canapes – a very pleasant venue indeed!

Written by Huw Williams, SAMI Principal.

The views expressed are those of the author and not necessarily of SAMI Consulting.

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