Competitiveness and the knowledge economy - where do we stand? Prof David Charles University of Newcastle upon Tyne

Knowledge and the Economy Knowledge (as human capital) is increasing in importance as a factor of production Output and employment growth globally is fastest in knowledge intensive sectors Investment in knowledge creation and formal learning are increasing (over 17% of GDP in some cases) Skilled and knowledge workers are in increasing demand Core regions are massively specialised in knowledge intensive activities

External Drivers for Change Combination of three main processes –Globalisation will continue to weaken demand for low skilled workers in all OECD countries –Technological change will reduce demand for traditional and low skilled jobs –Shift to new flexible firm organisation requires a more autonomous, creative, cosmopolitan and ultimately more self- reliant workforce Demand for unskilled workers will continue to fall, growth in demand for personal services will only increase in the context of wealth creation

What is needed for a city or region to be creative, economically successful and have a good quality of life in a post industrial and highly globalised world?

Competitiveness and city-region challenges Key interlinked urban development processes and policy arenas underpinning competitiveness Knowledge and economic competitiveness Cosmopolitanism and image Reducing social polarisation Environmental sustainability Effective governance

Knowledge and city competitiveness A central role for cities in the knowledge economy Virtuous cycles of knowledge creation and application Innovation and creativity Knowledge as a strategic resource Place specific tacit knowledge and localisation Knowledge clusters and cluster knowledge Emergence of new geographies of services Building strengths in R&D and HE to underpin clusters

Cosmopolitanism culture and image The city as crossroad and place of interchange of ideas Fashion, diversity, hybridisation, innovation, creativity Combination of social classes and ethnic groups Elite culture and innovation in popular culture Stimulus to innovation in new forms of work and services Cultural strategies –Realisation of role as a production base – –Re-branding the city - diversity and tensions –Ripples and spillovers - diffusion of ideas

Creativity – talent, technology and tolerance Cluster success requires and encourages flow of talented individuals Especially important in new economy, multimedia, creative industries etc Work in the US on the geography of talent focuses on role of urban amenities Association between creative employment and open, vibrant communities Interactions among the three Ts – technology talent and tolerance

Criticisms of the Florida thesis Directions of causality Assumptions about ease of migration Innovation associated with both shared beliefs and with difference But there are important points to consider –Argument concerning US advantage in talent attraction in the past - Other places now catching up –International student market and retention of PhDs –Global mobility of engineers – Finland and Bangalore

Growth of services

Implications for the regions Regional competitiveness is being defined by success in high GVA knowledge based services This is dependent on growing levels of graduate skills UK productivity as a whole depends on raising the performance of the regions How can regional skills partnerships support a knowledge based regional economic strategy?

The graduate labour market process Students domiciled in the region Regional HEIs Regional employers Students studying in other regions New migrants Students from elsewhere Employers in other regions Non-local graduates Local graduates Local and non-local graduates

Key questions How should regional partners intervene in graduate labour markets? What kinds of skills policies can help to develop new high value added industries? How does the regional skills strategy link together lower level and high level skills development?

An aside on learning regions (and cities) Innovation systems or training strategies? Both are very partial readings of learning and the extent to which it is characteristic of place Individualised and social forms of learning We need to be promoting learning within policy arenas as well as for individuals and amongst organisations of all kinds