Transcript Bridget Rosewell: The logic of concentration

The Logic of
Concentration
Bridget Rosewell
Consultant Chief Economist
GLA Economics
London’s working age population is
growing faster than England and Wales
Change in the working age population from 2001
London
Eng & Wales
2016
11.8%
6.4%
2026
14.4%
6.8%
Source: GLA
Indeed, we forecast that financial and
business services will dominate London’s
employment growth in future
Employment in London in Manufacturing and Finance & Business
Services (Actual 1971-2003, Projection 2004-2026)
1,750
1,500
1,250
1,000
750
500
250
0
Employment growth by sector 2002 - 2016
Past economic growth has been
concentrated in the centre
Change in total employees 1989 – 1999
80% of future employment growth will be
concentrated in and around central
London…
25%:
Growth
rate
20%
15%
10%
5
%
0%
City, Westminster
Camden, T.Hamlts.
S.wark, Islngtn, K&C,
Lambth, Ham & Fulham
Rest of London
Detailed projections…
Agglomeration




Advantages of market size
Effectiveness of competition
Benefits in acquiring knowledge
Ability to find suppliers/customers and to
occupy niche markets
 Achieving a critical mass to exploit
economies of scale
Conceptual Distance from UK average
Distance from UK average,1983
against 2001
0.4
(Straight line indicates equality between 1983 and 2001. Blue circles = outer London boroughs, red
squares = central London boroughs)
Hillingdon
0.2
Barrow in Furness
Bolsover
0.1
Easington
East Cambridgeshire
0.0
Distance '01
0.3
City of London
0.0
0.1
0.2
Distance '83
0.3
0.4
Percentage change in distance from UK average distribution of
employment between 1983 and 2001
Agglomeration has persisted and
intensified
 Inner London becoming more different
 City of London becoming, if possible, more
unique
 Most places becoming more like the
average, though this partly reflects the
industrial classification we use
200
100
0
earnings differential
300
Earnings differential and employment density, 2001
0
200
400
600
employment density
800
1000
Importance of getting together!
100
0
earn01
200
300
Earnings differential and log of employment density, 2001
-2
0
2
log(emp01)
4
6
Another persistent effect
50
0
earn89
100
Earnings differential and log of employment density, 1989
-2
0
2
log(emp89)
4
6
Improving earnings go with density
150
100
50
0
-50
-100
Change in earnings differential
200
Changes in earnings differential and log of employment density
1989-2001
-6
-4
-2
0
Change in log of employment density
2
4
Central London has the most
productive economy in the UK
GVA per head, £
40,000
£35,724
35,000
30,000
25,000
20,000
15,000
UK Average: £14,852
10,000
5,000
rce: Office for National Statistics: Sub-Regional Gross Value Added: Methods and Background, 2003. Figures provided are for 2001.
Outer
London
Inner
London
London
Nothern
Ireland
Scotland
Wales
South West
South East
East of
England
West
Midlands
East
Midlands
Yorkshire &
the Humber
North West
North East
0
The services industries show the biggest
productivity rise from agglomeration
Average elasticity of output with respect to city size, by industry sector*
0.5
Industrial sectors
0.4
0.35
Services sectors
0.3
0.25
0.3
0.2
0.2
0.15
0.1
0.1
0.05
0
Fo
od
-0.2
&b
-0.1
-0.3
Wh
ol e
sa
Ho
le
t el
&r
s&
re s et ail
tua
r an
ts
Po
Tra
st
n
sp
&t
ort
ele
Fi n
co
an
mm
cia
ls
s
e rv
ice
Re
s
al
Bu
es
s in
t
at e
es
Ar
s&
ch
it e
m
ctu
an
IT
ag
re
em
&e
e
ng
nt
i ne
er i
ng
La
Ad
bo
ve
ur
rtis
rec
i ng
rui
tm
Pu
en
bli
t
ca
dm
in
Me
di a
Pri
ma
ry
ev
era
ge
s
Te
xt i
les
W
Pri
Pu
oo
nt i
l
ng p & p d
&p
a
Ch
ub per
em
lish
ica
in
lp
Ru
r od g
bb
uc
er
pro ts
du
ct s
Off
Me
ic e
ta l
ma
s
c
h
Ra
dio inery
Me
di c
TV
al &
,e
tc.
pre
Ele
Mo
cis
tor
io
ctr
ici
veh n
ty,
ic
ga
s & les
wa
Co
te
ns
tru r
cti
on
0
-0.05
* Orange bars show elasticities that are statistically significant
Source: Dan J Graham, Wider economic benefits of transport improvements: link between agglomeration and productivity. Stage 2 DRAFT Report. Imperial College, London
London makes a significant net
contribution to the rest of the UK
 Globalisation means that London’s economic gains
and losses tend to be national ones, as London
competes in the international economy more than
the national one.
– It is the location for 1/3rd of the European HQs of
the world’s largest 500 companies. Other UK
cities less likely to compete than Paris, Frankfurt
e.t.c.