Manufacturing and economic decline

In a City Lab article Richard Florida reviews research from the United Kingdom on which metropolitan areas are prospering, which aren’t and why. The research was conducted by Centre for Cities. An overview of their report can be found here. Their conclusion:

Growth of Knowledge, not Decline of Manufacturing, Shaped 21st Century City Economies. 100-year study of UK cities finds that the geography of knowledge and a city’s culture of innovation are more important than industrial legacy of manufacturing in determining current economic success.

This is consistent with the conclusion of John Tammy in his Forbes article on Detroit is dying that we explored in our last post. Places that are doing best economically are those who have transitioned away from a factory-based economy to one that is knowledge based. End of story!

As reported by Florida, the Centre for Cities research tracks the growth of jobs by U.K. region from 1911-2013. It divides regions into replicators and reinventors. Florida explains:

Reinventors are described as being like mini-versions of the ever-adating 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 Centre for Cities report concludes:

Over the last 100 years all cities have been buffeted by the winds of economic change. Globalisation and technological and transport developments have meant that they have had to continually adapt to these changes, both to continue to provide jobs and contribute to national economic growth.

These global changes have altered the role that our cities play in the national economy, meaning it is now proximity to knowledge rather than proximity to resources that is the primary driver of city growth.

Those cities that have adapted to this change have reinvented their economies, creating jobs in new, more knowledge-focused industries to offset losses in more traditional industries. These cities, such as Reading and Brighton, have thrived as a result, creating many thousands of jobs in higher-skilled, higher paying occupations.

Those cities that have struggled over the last 100 years have merely replicated their economies. They have replaced jobs in declining industries with lower-skilled, more routinised jobs, swapping cotton mills for call centres and dock yards for distribution sheds. 

… our weakest performing cities have struggled not because of the inevitable decline of manufacturing employment, but because of their inability to support jobs growth in new, more knowledge-focused industries. (Emphasis added.)

This, of course, has been the central Michigan Future theme: Michigan will be prosperous again only by transitioning away from a factory-based to a knowledge-based economy. The Centre for Cities study provides more evidence for that case. As well as encouraging evidence that regions can make that transition and when they do they get back on the path to prosperity.


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