GEMACA II
What Is Regional
Competitiveness?
Can places compete? And what’s new about it?
Competing in which games for what prizes?
How do we tell who’s winning?
Who gets to play? Bringing all stake-holders into the game
Can places compete?
a debate
(in paraphrase)
‘Cities don’t compete … only firms do’ (Paul Krugman)
 ‘Internationally successful firms derive key elements of competitive
advantage from the regional environments in which they are based’
(Michael Porter)
‘There is an intellectually respectable case to be made for places to
intervene to boost competitiveness – but most actual cases fail this test,
and are disguised efforts to promote special interests – at the cost of
others’ (Krugman)
 i.e. Collective action could make a real difference to local
productivity and prosperity – but it’s only likely to be positive if
strategies are thought through on an economy-wide basis.
What’s new about this?
Haven’t city-regions always competed?
Yes – but in the modern industrial era what mattered was
location, technology and corporate strength
Now (from 1980s/90s) – location matters less – and placebased (face-to-face) external economies matter more
Especially qualitative assets (to support qualities-based
competition), market intelligence – and rivalry (Porter)
Without these, competition means ‘a race to the bottom’
And territorial agencies can influence the ‘new’ assets more
than old ‘location factors’
Markets that Cities Compete in
PRODUCT MARKETS – for firms based and/or operating from
there (nb Porter’s focus on home bases)
INWARD INVESTMENT
DESIRABLE RESIDENTS – notably mobile highly skilled labour
RECOGNITION / FAVOURS from central / EU authorities
All operate at multiple spatial scales – with local, regional,
national, European, global rivals
And the most important of these
is …?
 Typically - product market competition:
 the major source of overall performance differences
 the game whose prizes are most widely shared within
an area (cf. inward investment)
 the least likely to be zero-sum (or purely wasteful)
 Same location factors don’t apply to all – so
need to make choices
 But in all cases, net gains depend on developing
distinctive strengths / USPs
How do we tell who’s
winning?..
 In product terms COMPETITIVE ADVANTAGE =
‘the capacity to sell your products in contested markets’
 Revealed for geographical areas in higher levels of :
 productivity
 growth
 exports
 All have biases as measures – and reflect patterns of specialisation
etc. – so need to consider together (and allow for assets deployed)
Issues in assessing London’s Performance
Exemplifies key issues in evaluating competitiveness:
extensive use of human capital etc. developed elsewhere – output per
head overstates total factor productivity
 export performance reflects pattern of specialisation (lower because
of limited manufacturing, higher because of City role)
rapid ‘productivity’ growth reflects (to unknown degree) institutional
influences on pay disparities in the UK
effects of constrained / inelastic supply of space – lowering measured
growth and raising measured productivity – especially for core urban
areas – less so for FURs
Places, Interests and
Competition
Going back to Krugman:
 basically competition involves INTERESTS which happen to be
located in places – with positive / negative spillovers around there
 for ‘good’ spatial strategies, need to:
 internalise (and recognise) these spillovers (hence city-regions)
 develop a political / institutional capacity reflecting the whole
range of place-dependent economic interests – not just:
Property / development
 CBD or
Traditional sectors
Depends on recognising and creating vested interests in
interdependence and regional assets of long term value