Resilient cities: the economic strength of cities

Urban Europe
Frank van Oort, Professor of regional and urban economics at Erasmus School of Economics
Frank van Oort, Professor of Urban and Regional Economics

Researchers from Utrecht University, Lund University and Erasmus University Rotterdam examined the state of the economic resilience in cities over the last four years: how quickly are they recovering from a shock or crisis, and which cities can accommodate economic structural changes best? In an article from Urban Europe, Frank van Oort, leader of the project called ‘Resilient Cities’ and Professor of Urban and Regional Economics at Erasmus School of Economics, tells us more about the research.

Economic structural change is taking place in many areas. Services are becoming dominant, where previously production, trade and agriculture were of greater importance. Sectors are, to different extents, sensitive to automation. In a city or region with a resilient sectoral and occupational structure, the demand for labour is spread across sectors in such a way that the sectors together ensure growth and innovation. Unemployment is also counteracted because changes in one sector have little influence on other sectors, explains Professor Frank van Oort.

According to van Oort, their research is embedded in the growing discipline of ‘evolutionary economic geography’. This discipline deals with the relationships between the economic growth paths of cities and the strengths the region has originally known. Furthermore, it deals with diversification towards new technologies, the growth opportunities that cooperation between sectors can provide and the extent to which the economy is robust to shocks.

The research focuses on different cities in Europe and the United States. Part of the project concerns the conceptualisation of resilient cities and another part concerns the role of institutions in the process of structural change and diversification in cities and regions in Europe. ‘It was already known that the presence or absence of corruption and the legislation and regulations provide a basis for economic development. It is interesting to note that, for the first time, informal institutions have also been measured in European regions. These include membership of churches, sports clubs or trade unions, voluntary work, and trust in politicians and government bodies. Our studies show that in regions where formal institutions are weakly developed, such as in Eastern or Southern Europe, the informal institutions can take over the leading role in economic structural change. This is interesting for European policymakers.’

The research also looks at social and socio-economic resilience in European cities and regions. Through the measurement of happiness (subjective well-being) and the use of so-called broad welfare indicators, the economic and social resilience in Greece before, during and after the EU's recovery operation is analysed. ‘Greece is already doing reasonably well economically, but it has not yet recovered in the perception of happiness. And in Europe there is a great difference in social resilience in cities and regions.’ van Oort says.

Another part of the project focuses on economic networks and agglomeration power as sources of regional economic resilience. 'European job creation in cities is strongly dependent on the positions taken by cities in networks of trade, knowledge and foreign investment. The experience gained during this study has recently been applied to calculate a possible hard Brexit on the resilience of all European regions in a project financed by the English Economic and Social Science Council. No one benefits from a hard Brexit, but UK cities and regions have more to lose than those on the European mainland. In Europe, there are more substitution opportunities for products that will become more expensive as a result of the tariffs that will be introduced. The automotive industry is already under pressure in the UK, while Brexit is not even there yet. However, mechanical engineering, the computer industry and the service industry can also come under strong pressure in cities such as Birmingham, Newcastle and Manchester. Although local policymakers there do focus on skills, structural change and regional specialisations - the ingredients of our Resilient Cities project - the lack of free movement of goods, capital and people with the largest sales and supply market will soon be a major drain that cannot be easily offset.', van Oort explains.

Professor
More information

The full article from Urban Europe, 3 July 2019, can be found here (in Dutch).