An office building goes up in Reading, a British city that has seen great growth in knowledge economy jobs since 1911. Flickr/Tristram Brelstaff

An intriguing new report looks at long-term economic trends in metros across Britain.

Why do some cities thrive and grow while others stagger into prolonged decline? How do some cities continuously reinvent, shifting into entirely new fields and establishing entirely new industries, while others remain locked in the strictures of the past?

These are of the big questions that have vexed urban theorists and city builders for decades.

A new report [PDF] from the London-based think tank the Centre for Cities sheds intriguing new light on this subject. It takes a detailed look at the abilities of cities in the United Kingdom to adapt to the shift from the industrial to the post-industrial economy over the course of the last century.

British cities’ performances in this new economy is decidedly mixed, the report finds. The once-powerful manufacturing metros of the North, Midlands and Wales have fallen further and further behind, while those in the South have adapted, achieving much higher rates of growth. As the report notes, every job created in the less successful regions since 1911 has equaled 2.3 jobs in the more prosperous South.

The map below shows this divided geographic pattern of economic growth. The metros with the largest and greenest circles—which indicate the most positive job growth—are concentrated below the mid-island city of Peterborough. The red circles shows metros in decline.

(Centre Cities)

But why do some cities adapt while others do not? The report’s authors classify cities and metro areas into two broad categories: “reinventors” and “replicators.”  Reinventors are described as being like mini-versions of the ever-adapting Silicon Valley, with the ability to incubate and take on whole new fields of technology. These metros have shifted their economies to knowledge industries like information technology, biotech and digital media. Replicators, by contrast, are defined as having remained tied into their once-powerful manufacturing economies by investing in low-skill, more routinized industries, and have been far less able to shift their economies into the knowledge age.

The matrix below, from the report, charts the job growth success of British cities along a two metrics. The X-axis arrays cities by the share of jobs in knowledge-intensive business services (or KIBS) as of 2013. The Y-axis arrays them by the share of jobs in manufacturing, construction, extraction and related fields back in 1911.

(Centre Cities)

The chart divides neatly into four quadrants. Replicator cities in Quadrant A, in the top left, are those that had high shares of jobs in low-knowledge industries in 1911 and low shares of jobs in knowledge industries in 2013. These cities have fared the worst, with metros like Burnley and Wigan actually losing jobs since 1911 despite the country-wide population explosion since World War II. Other metros in this quadrant have been more successful. Leicester, for example, has significantly more jobs than it did in 1911, but these are mostly in lower-skilled industries rather than in knowledge economy sectors.

The cities in Quadrant B, in the lower left-hand corner, are those that had smaller shares of low-knowledge positions in 1911, but have also struggled to create knowledge economy positions. Nearly all of these cities, the report points out, are or were ports or seaside resorts. This is interesting, as research by economist Jeffery Sachs has found coastal cities to be some of the largest and most adaptive on the planet. But these British ports in decline are mainly smaller port and resort cities, not the large coastal cities Sachs writes about.

Reinventor cities occupy Quadrant C, in the top right corner. These are the cities that have successfully shifted from industrial to post-industrial economies. Some of these metros, the report points out, are still in the midst of the reinvention process. Manchester, for example, has created many jobs in new industries, but they are not yet plentiful enough to offset declines in manufacturing sectors, which is why the city is still shown in red.

Lastly, cities in Quadrant D, in the lower right corner, are those like London, whose economies have long been more knowledge based.

As the chart below shows, cities in quadrants C and especially D have been most successful, with higher wages, higher productivity (measured by gross value added per worker), more new business startups, and higher levels of human capital. Cities in quadrants A and B, by contrast, have more workers with low qualifications and higher shares of working age residents who are dependent on the U.K.’s welfare program benefit (DWP).

(Centre Cities)

*****

The report offers three broad recommendations for how metros—and in particular older, struggling industrial metros—can better adapt to the post-industrial knowledge economy.

Invest in talent and skills

The report highlights the central role played by talent, human capital and skills. The knowledge economy is powered not just by the clustering of firms per se, but by the clustering of talented, highly-skilled workers. This is key to business location and development. Businesses make location decisions less based on labor costs and more on “the ease with which they can recruit [high-skill] workers,” as the report points out.  Cities, then, should step up their education efforts, from jobs training programs to elementary schools to secondary education.

Build networks of knowledge and innovation

The post-industrial economy revolves around networks between and connections across companies, a sharp contrast to the large, vertically integrated industries of the industrial age. Cities, the report notes, need to be able to foster innovation by creating knowledge networks that will increase their productivity in the long run.

Encourage density and achieve a more compact footprint

Success in the knowledge economy is increasingly place-bound, a function of density and the close clustering and mixing of talent and businesses. The footprint of the knowledge economy is much more compact than its manufacturing predecessor, requiring less space and leaving large swaths of land—once filled with factories—completely empty. At the same time, large factory and warehouse buildings are favored by knowledge workers and knowledge industries. But cities must reuse them in ways that achieve clustering and density, especially when they are located in or around the urban core.

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