Yesterday we explored a possible widening of devolution in England beyond the 10 deals in place. These deals cover 16.1 million people mostly in larger urban areas. The highest profile devolution has been within the so-called Northern Powerhouse, with Manchester as its unofficial capital. The relative leadership strength of Manchester and history of close cooperation between its constituent local authorities has allowed it to forge a path that others outside London will struggle to emulate. The driving concept behind the Northern Powerhouse is agglomeration. Devolution without agglomeration is certainly possible, but the sum-greater-than-the-parts benefits that arise from close proximity of workers, firms and education bodies mean truly effective devolution must be underpinned by agglomeration. Think of it as Devolution + Agglomeration Economics = Growth and a Knowledge-Based Economy. The two highest profile agglomeration projects in England - the Northern Powerhouse and the Midlands Engine - have 50 universities between them. Higher education, as a knowledge industry, contributes to the agglomeration economies that drive city growth. This is evident in London, with over 40 higher education institutions. Other areas in line for devolution deals will often have at least one university on their patch. Here are four ways universities can help.
If devolved areas are to be functional economic actors, there will need to be effective coordination between the different towns, cities and local authorities within the area. Universities can help. They have long-standing networks between and within regions. Universities have a long history of supporting local areas with analysis of needs and assets, and providing of evidence and policy insight. This will continue with Science and Innovation Audits that will help to map local research, innovation and infrastructure strengths and uncover opportunities for businesses.
Locally-built international links will be important. Universities can draw on their global alumni and international research networks. Universities attract overseas students but also foreign direct investment. When considering regional investment in the UK, the skills of the local workforce and transport infrastructure are the key factors that influence decisions.
Agglomeration economics can be seen in practice within universities. Many university campuses are public spaces, providing community services and cultural events, and the line between the public realm and the university estate is softening. Universities are ideal hosts for the human face-to-face connections that spread new ideas and knowledge. They often house incubation centres for startups and social enterprises, work with SMEs, and generate cutting edge research.
Universities can meet local skills needs. There is a strong correlation between cities with more skills and higher levels of human capital, and local employment growth.1 The majority of future growth and the rebalancing of the economy will rely on knowledge based industries which are dependent on high level skills.
Recognising that devolution is a journey rather than a destination, universities should provide a long-term vision and help local partners to overcome the challenges and recognise the opportunities that come with devolved powers.
This blog is in three parts. Previously we looked at the future of the Northern Powerhouse. Next we’ll look at an international example of agglomeration economics in action.
- Shapiro, J., Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital, NBER Working Paper No. 11615, p.2; Glaeser, E. and Resseger, M., The Complementarity between Cities and Skills, NBER Working Paper No. 15103, p.17 ↩