Creating inclusive growth in cities must involve supporting knowledge-intensive firms to start up and succeed.
Inclusive growth is in the headlines again as the RSA launched its latest Commission, chaired by Stephanie Flanders, to look at how economic growth and economic inclusion can reinforce rather than undermine each other.
The Commission follows on from work undertaken in the UK by, for example, the Joseph Rowntree Foundation (JRF) under the banner of More Jobs, Better Jobs, and in the US by the Brookings Institution through its Metropolitan Policy programme.
The increasing focus on inclusive growth has emerged in part from the growing criticism from many across the political spectrum that capitalism in Western countries isn’t working for middle and lower income people in the way that it once did.
Indeed the issue of who benefits from city growth is a core theme of many of the blogs published on our website over the last month setting out what the next Mayor of London’s priorities should be. Richard Florida refers to this challenge as the ‘new urban crisis’, which he thinks is a result of urban success as much as of urban decline. Robin Hambleton, another contributor to the series, has written a book about what city leaders around the world are doing to address issues of inequality (I interview him about it in our latest City Talks podcast).
While few disagree with the need to ensure that more people benefit from growth, this consensus quickly disappears when the debate turns to questions of definition and implementation – what do we mean by inclusive growth and how can we achieve it?
Adopting a city perspective provides useful a useful way to move the debate on from defining the problem to looking at how to resolve it. The chart below provides a simple way of exploring the inter-relationship between three issues that need to be at the heart of the inclusive growth agenda – wages (as a measure of individual and household income), employment rate (as a measure of people in or looking for work) and jobs in knowledge intensive businesses (as a measure of jobs that are more resilient and offer career progression opportunities).
The chart clearly shows the positive relationship between employment rates and KIBS jobs. It also shows that those cities with more KIBS jobs and higher rates of employment also have higher average wages.
Cities such as Reading, Cambridge, Milton Keynes and Aberdeen are found in the top right of the chart and cities such as Burnley, Hull, Blackburn and Liverpool are found in the bottom left.
And cities that have higher employment rates, high wages and more KIBS jobs also do well on a range of other economic and social indicators covering entrepreneurialism, educational attainment, unemployment and skills. And unfortunately the opposite is also true. Cities with low employment rates, low wages and few KIBS jobs also do less well on the range of indicators.
This perspective suggests that any attempts to achieve more inclusive growth in our cities should include helping more KIBS firms to start and grow and thus create more good jobs, and supporting more people into employment and then helping them progress via upskilling and careers advice.
And if these interventions are complimented by policies that focus on reducing the cost of living in cities – building more homes, providing childcare, improving public transport – then even more people will benefit from the growth that is being driven by cities in the UK and across the globe.
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Michael Edwards
Interesting and to some degree helpful in thinking about policies needed in London (for JustSpace.org.uk) but
(i) Is the “private” really significant? Substantial amount of knowledge-intensive activity in public sector too – universities, health, libraries which I would expect to perform as well or better in generating and sustaining good quality jobs with growth and progression;
(ii) and is the “services” constraint valid? Think of the manufacturing, repair, construction and related sectors which are often very knowledge-intensive….
You may have hit on a correlation which could have negative policy impacts.
Andrew Carter
Cheers Michael. both good points and ones I agree with.
I used KIBs as a proxy (albeit imperfect) measure for ‘good jobs’ – i.e. jobs that pay well, have decent career progression opportunities and (at least for now) are more resilient in the face of on-going globalisation and technological development. undoubtedly there are jobs in the public/voluntary sector and in non-service industries (manufacturing/construction. etc) that also fit this definition.