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Industry benefits from locating in city regions

19 Apr 2011

A detailed study across six countries – including the UK – has found evidence to suggest that industry benefits from locating in densely populated city regions.

The study led by economist Dr Marianne Sensier from The University of Manchester finds that over recent years, both industry and service sectors have increased productivity in city regions, where they benefit from the growing demand that a relatively affluent daytime population brings.
The long term decline in traditional manufacturing, caused by increased competition in the global market place, also means industries are less likely to cluster together.
However, the financial services sector benefits from locating near companies in the same sector, she says.
The Research Fellow at the University’s Institute for Political and Economic Governance said: “Knowledge-intensive companies  are much more likely to locate near to firms such as IT, employment agencies, financial services, retail, leisure, entertainment and tourism for the services they provide.
“It’s all part of the mix that has seen  industry and service sectors increasing their productivity in city regions.”
The team studied data from 172 city regions and 122 larger regions across the UK, France, Germany, Italy, Ireland and Spain.
They compared the 1980s, 1990s and the most recent decade and found that concentrations of employment increased for services in city regions, but fell for industry.
For some countries, productivity fell for particular sectors between decades but the overall effect was an increase.
In one example, Manchester’s financial and professional services and creative, digital and new media have seen major growth in the city centre and Trafford Park between 2003 to 2008.
During the same period, traditional engineering declined -  though there has been some high tech growth around the periphery – particularly near the airport and M6 corridor.