Search

Creative services have become an important, but understudied, part of global trade. This paper presents new evidence on the transformation, geography and industrial relatedness of creative service exports in the UK, using the Inquiry in International Trade in Services (ITIS) database. Creative services exports have grown over the past decade, but there are pronounced patterns of geographical specialization in the export of creative and non-creative services. We develop a measure of relatedness between exports of creative and non-creative services and of manufacturing goods. We argue that creative services are economically significant because of their interrelationship with other local sectors.

Does growing up in a high-economic adversity area matter for individual economic, cultural, and political views? Despite a significant focus upon the effect of birthplace on economic outcomes, there is less evidence on how local economic conditions at birth shape individual attitudes over the long-term. This paper links the British Household Panel Survey (BHPS) from English and Welsh respondents with historic localised information on unemployment, our measure of economic adversity. Our results, which control for composition effects, family background, and sorting of people across places, show that being born into a high-unemployment Local Authority has a significant, long-term impact on individuals. Birthplace matters beyond economic outcomes, as being born into a Local Authority of high unemployment makes individuals believe in more government intervention in jobs, less progressive on gender issues, and less likely to support the Conservative Party.

Economic change over the past 20 years has rendered many individuals and territories vulnerable, leading to greater interpersonal and interterritorial inequality. This rising inequality is seen as a root cause of populism. Yet, there is no comparative evidence as to whether this discontent is the consequence of localised interpersonal inequality or stagnant growth in ‘left-behind’ places. This article assesses the association between levels and changes in local GDP per capita and interpersonal inequality, and the rise of far-right populism in Europe and in the USA. The analysis—conducted at small region level for Europe and county level for the USA—shows that there are both similarities and differences in the factors connected to populist voting on both sides of the Atlantic. In the USA, neither interpersonal inequality nor economic decline can explain populist support on their own. However, these factors gain significance when considered together with the racial composition of the area. Counties with a large share of white population where economic growth has been stagnant and where inequalities have increased supported Donald Trump. Meanwhile, counties with a similar economic trajectory but with a higher share of minorities shunned populism. In Europe, the most significant factor behind the rise of far-right populism is economic decline. This effect is particularly large in areas with a high share of immigration.

‘Levelling up’ - a policy agenda focused on reducing regional inequalities - has become the new mantra in British politics. This paper reviews and critiques the agenda from its beginnings in 2019 to the publication of the 2022 Levelling Up White Paper. The agenda is an overdue recognition of gross regional inequality, and the new ‘missions’ which are set out to drive change are welcome. Yet local institutions lack capacity to deliver, there has been little genuine devolution, and the mechanisms through which the ‘missions’ will actually be delivered are unclear. Our analysis of spending commitments shows little new money has been committed, and what has been committed has tended to be through top-down competitive bids. There is a danger that levelling up becomes the latest in a list of politically useful but empty slogans which are used as a substitute for resources and devolution.

The relationship between research and development (R&D) investment and economic development is well established. Yet, at a global scale, the resource-rich countries of the Gulf Cooperation Council are consistent outliers in this relationship, combining rich-world national incomes with R&D expenditure of developing countries. This paper uses a case study on Kuwait to illustrate a particular form of developmental trap, a version of the resource curse, which makes it irrational for private business firms to invest in R&D and innovation. Based on an analysis of the literature and secondary data, focus groups, and an original survey of large manufacturing firms, we argue that a narrow focus on R&D-led diversification of economic activity ignores the systemic problems faced by Kuwait and, particularly, the unsuitable supply of skills and capabilities provided by the national education and training system.

In 2000, Robert Putnam forecast that United States (US) democracy was at risk from the twin challenges of declining civic engagement and rising interpersonal inequality. Sixteen years later, his predictions were vindicated by the election of Donald Trump as president of the US. This paper analyses the extent to which the 2016 election of Donald Trump—and his failed re-election bid in 2020—have been related to levels of social capital and interpersonal inequalities. We posit an alternative: that the rise in votes for Trump has been the result of long-term economic and population decline in areas with strong social capital. This hypothesis is confirmed by the econometric analysis conducted for US counties. Long-term declines in employment and population—rather than in earnings, salaries, or wages—in places with relatively strong social capital propelled Donald Trump to the presidency and almost secured his re-election. By contrast, low social capital and high interpersonal inequality were not connected to a surge in support for Trump. These results are robust to the introduction of control variables and different inequality measures. The analysis also shows that the discontent at the base of the Trump margin is not just a consequence of the 2008 crisis but had been brewing for a long time. Places in the US that remained cohesive but witnessed an enduring decline are no longer bowling alone, they have golfed with Trump and will, in all likelihood, continue to golf with Trumpism or other forms of populism.

The global financial crisis of just over a decade ago exposed longer-term systemic problems in global capitalism of which two of the most prominent are the slowdown in the underlying trend rate of productivity growth, alongside a rise in economic and spatial inequalities in many advanced economies. The Covid-19 pandemic looks set to further amplify these problems. This Editorial begins by discussing the scale of the productivity slowdown and of the widening inequalities that have emerged, particularly with regard to their spatial dimension: That is how the uneven and slow development of productivity and rise in inequalities have played out across and within regions and cities. It then briefly considers underlying factors that lie behind these trends, including financialisation/financial globalization, the diminishing role of organised labour, segmentation of the labour market favouring workers who play a key role in financialisation, together with the increasing polarisation within societies according to skill and, crucially, the impact of changing industrial composition particularly as it relates to the rise of the high-tech sectors. The Editorial then examines in what ways the slowdown of productivity and widening of economic and spatial inequalities, may be interrelated, and questions the notion of any efficiency-equity trade-off. Lastly, it considers whether the 'inclusive growth' agenda can potentially reconcile the two ambitions of improving productivity performance and lessening inequalities, reflecting on what inclusive growth could mean, and what it could imply in terms of policy. Thus far, it appears that an inclusive growth agenda has only gained some traction at the subnational level, which seems to reflect- A t least in part- A ttempts by cities and regions to address gaps in policy left by national governments. © 2021 Oxford University Press. All rights reserved.

Entrepreneurship is often seen as the cure-all solution for poverty reduction. Proponents argue that it leads to job creation, higher incomes and lower poverty rates in the cities in which it occurs. Others argue that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesize that the impact of entrepreneurship will depend on whether it is in tradeable sectors, so likely to have positive local multiplier effects, or non-tradeable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs, a result we confirm using an instrumental variable approach, taking the inheritance of entrepreneurial traits as the instruments. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty.

In contrast to the conservative values of rural populations, cities are often seen as bulwarks of more tolerant, liberal and progressive values. This urban–rural divide in values has become one of the major fault lines in Western democracies, underpinning major political events of the last decade, not least the election of Donald Trump. Yet, beyond a small number of countries, there is little evidence that cities really are more liberal than rural areas. Evolutionary modernisation theory suggests that socio-economic development may lead to the spread of progressive, self-expression values but provides little guidance on the role of cities in this process. Has an urban–rural split in values developed across the world? And does this gap depend on the economic development of a country? We answer these questions using a large cross-sectional dataset covering 66 countries. Despite the inherent challenges in identifying and operationalising a globally-consistent definition of what is ‘urban’, we show that there are marked and significant urban–rural differences in progressive values, defined as tolerant attitudes to immigration, gender rights and family life. These differences exist even when controlling for observable compositional effects, suggesting that cities do play a role in the spread of progressive values. Yet, these results only apply at higher levels of economic development suggesting that, for cities to leave behind rural areas in terms of liberal values, the satisfying of certain material needs is a prerequisite.

Despite widespread interest in government quality and economic development, the role of sub-national government has been largely overlooked. This represents an omission in Africa, given ongoing processes of devolution in much of the continent. In this article, we consider the impact of sub-national government institutions on economic development in 356 regions across 22 African countries. We create a novel index of sub-national government quality based on large-scale survey data and assess its impact on regional economies using satellite data on night light luminosity. To address causality concerns, we instrument sub-national government quality with data from pre-colonial societies. Our results show a positive and significant relationship between sub-national government quality and regional economic development, even when controlling for the quality of national level institutions. Better sub-national governments are a powerful but often overlooked determinant of development in Africa.

Business angels (BAs) - high net worth individuals who provide informal risk capital to firms - are seen as important providers of entrepreneurial finance. Theory and conventional wisdom suggest that the need for face-to-face interaction will ensure angels will have a strong predilection for local investments. We empirically test this assumption using a large representative survey of UK BAs. Our results show local bias is less common than previously thought with only one quarter of total investments made locally. However, we also show pronounced regional disparities, with investment activity dominated by BAs in London and Southern England. In these locations there is a stronger propensity for localised investment patterns mediated by the “thick” nature of the informal risk capital market. Together these trends further reinforce and exacerbate the disparities evident in the UK’s financial system. The findings make an important contribution to the literature and public policy debates on the uneven nature of financial markets for sources of entrepreneurial finance. Publisher PDF

Events such as Brexit and the Gilet Jaunes protests have highlighted the spatial nature of populism. In particular, there has been increasing political divergence between urban and rural areas, with rural areas apparently having lost faith in national governments. We investigate this divergence using data on over 125,000 EU citizens from the European Social Survey from 2008 to 2018. We show that people in rural areas have lower political trust than urban or peri-urban residents, with this difference clear for six different forms of political institutions, including politicians, political parties, and national parliaments. There has been divergence of political trust between urban and rural Europe since 2008, although this is primarily driven by Southern Europe. While these results can partly be explained by demographic differences between cities and the countryside, divergent economic experiences, differences in values, and perceptions that public services are less effective outside of urban areas, there is a residual ‘rural effect’ beyond this. We argue that the polarisation of urban-rural political trust has important implications for the functioning of European democracies.

Access to inexpensive short-term credit from banks is vital for many small and medium enterprises (SMEs), which face liquidity problems because of an imbalance between cash outflows and receipt of ...

There is increasing interest in the potential of artificial intelligence and Big Data (e.g., generated via social media) to help understand economic outcomes. But can artificial intelligence models based on publicly available Big Data identify geographical differences in entrepreneurial personality or culture? We use a machine learning model based on 1.5 billion tweets by 5.25 million users to estimate the Big Five personality traits and an entrepreneurial personality profile for 1,772 U.S. counties. The Twitter-based personality estimates show substantial relationships to county-level entrepreneurship activity, accounting for 20% (entrepreneurial personality profile) and 32% (Big Five traits) of the variance in local entrepreneurship, even when controlling for other factors that affect entrepreneurship. Whereas more research is clearly needed, our findings have initial implications for research and practice concerned with entrepreneurial regions and eco-systems, and regional economic outcomes interacting with local culture. The results suggest, for example, that social media datasets and artificial intelligence methods have the potential to deliver comparable information on the personality and culture of regions than studies based on millions of questionnaire-based personality tests.

This paper examines the role of accelerator programmes in promoting transnational entrepreneurship. Designed to assist the growth of start-ups by providing seed finance and structured entrepreneurship support, these programmes are now a prominent feature in many entrepreneurial ecosystems around the world. Drawing on in-depth qualitative evidence focused on one particular programme, the paper shows accelerators play an important intermediary or “brokerage mechanism” providing start-ups with enhanced relational connections and networks. Transnational entrepreneurs attracted to these programmes are highly focused on exploiting these networks whilst maintaining multiple levels of embeddedness in various contexts to maximise the opportunities afforded by accelerators. While many governments are attempting to replicate accelerators programmes within the public sector, the paper concludes that such attempts may prove problematic within weaker entrepreneurial ecosystems. Postprint

Innovation in cities is increasingly regarded as an outcome of two potential inputs: scientific activity and creativity. Recent firm level research has suggested that what really matters for innovation is the combination of these two inputs, rather than the mere presence of workers representing each group. Yet there is little evidence on whether this relationship holds at the city level. This paper investigates this gap in our knowledge by examining how the simultaneous presence of STEM (geeks) and creative workers (hipsters) in 290 US Metropolitan Statistical Areas during the period between 2005 and 2015 has contributed to determine city level innovation. The results indicate that, although at first sight the presence of STEM workers is a more important driver of innovation than that of creative ones, it is the combination of both factors that maximizes innovation in US cities. The most innovative cities are precisely those that are more successful at combining the two. Hence, current policies which tend to focus mainly on either STEM or creativity may be better targeted at ensuring both are present.

Two recent electoral results—Donald Trump’s election as U.S. president and the UK’s Brexit vote—have reignited debate on the psychological factors underlying voting behavior. Both campaigns promoted themes of fear, lost pride, and loss aversion, which are relevant to the personality dimension of neuroticism, a construct previously not associated with voting behavior. To that end, we investigate whether regional prevalence of neurotic personality traits (neuroticism, anxiety, and depression) predicted voting behavior in the United States ( N = 3,167,041) and the United Kingdom ( N = 417,217), comparing these effects with previous models, which have emphasized the roles of openness and conscientiousness. Neurotic traits positively predicted share of Brexit and Trump votes, and Trump gains from Romney. Many of these effects persisted in additional robustness tests controlling for regional industrial heritage, political attitude, and socioeconomic features, particularly in the United States. The “sleeper effect” of neurotic traits may profoundly impact the geopolitical landscape.

© The Author(s) (2018). Published by Oxford University Press. There is mounting evidence in the developed world to suggest that there is geographical variation in access to finance. At the same time, there is a growing interest in the advantages of major cities in emerging economies in providing better access to services. Yet there is little evidence on spatial variation in access to finance in the developing world. In this article, we address this gap. We propose that one important function of big cities is to provide better credit markets, but that-as countries develop-this 'big city bias' is likely to decline. We test these hypotheses using data on over 80,000 firms in 97 countries and provide new evidence that firms in large cities-with more than 1 million inhabitants-are less likely to perceive access to capital as a constraint. However, this big-city bias in access to finance declines as countries develop.

Do external shocks affect local government quality and, consequently, long-term economic development? The collapse in 1911 of the Qing Dynasty in China was one of the greatest institutional shocks in world history, marking the end of more than 2,000 years of imperial rule. We exploit this shock to examine the impact of changes in historic local government quality on economic development today. By measuring variations in governance quality across 1,664 Chinese counties and examining their impact on long-term economic development, we show that historical differences in local governance quality are strong predictors of current geographical differences in economic development. This positive relationship is robust to a rich gamut of controls and checks. To further address causality issues, we instrument historical government quality with the location of military towns in the preceding Ming dynasty. The analysis shows that history has left a deep legacy on governance differences across China that determine, to a considerable extent, current Chinese regional inequalities.

Structural changes in the labour markets of developed economies, and changes in their institutional characteristics, have led to growing unease about the nature of low-paid employment. Related concerns have been expressed about the persistence of low pay, the fragmentation of work and the growth of under-employment. While all these factors have potential implications for individuals’ earnings, less is known about the connection between labour market change, patterns of sectoral growth and decline, and household poverty outcomes. This article shows distinct patterns of poverty outcomes by sector of employment, after controlling for other factors. However, household characteristics, in particular the presence of a second earner, do strongly mitigate the poverty risk. Overall, the findings demonstrate that policymakers need to develop a coherent policy towards poverty that recognises the nature of jobs growth and the distribution of ‘good jobs’ across households.

Purpose The creation and distribution of human capital, often termed talent, has been recognised in economic geography as an important factor in the locational decisions of firms (Florida, 2002), and at a more general level as a key driver of economic growth (Romer, 1990). The purpose of this paper is to consider how talent is created and distributed across the cities of the UK and the key factors which are driving this spatial distribution. They also consider what the economic outcomes of these disparities are for cities. Design/methodology/approach The multivariate models can estimate the dynamic inter-relationships between human capital (talent), innovative capacity, and economic value added. These can be estimated, using talent as an example, in the form: human capital measurei =α0i+α1i innovative capacity +α2i quality of life + α3i labour market indicators + α4i economic indicators + α5i HEI indicators + β6i population demographics + β7i population + υi. Findings The first finding is that talent is unequally distributed across cities, with some having three times more highly educated workers than others. Talent concentration at the city level is associated with entrepreneurial activity, culture, the presence of a university, and to a lesser degree the housing market. This feeds into more knowledge-based industry, which is associated with higher gross value added. Research limitations/implications The research is limited in a practical sense by the fact that UK data at this level have only become available quite recently. Thus, it is only possible to capture talent flows and city growth in a relatively small window. But the prospects going forward will allow more detailed analysis at the city level of the relationship between talent flows and local economic growth. And additional insights could be considered relating to the on-going changes in the UK university system. Practical implications The question of whether universities are simply producers of talent or play a much broader and deeper role in the socio-economic landscape and outcomes of cities is an open one. This research has identified what the key drivers of city level economic growth and knowledge creation are, and sought to explain why some cities are capable of attracting and harnessing three times more talent than other cities. This has significant implications for the future development of UK cities and for those seeking to address these imbalances. Social implications Universities are a major economic agent in their own right, but they are increasingly being asked to play a wider role in local economic development. The authors’ evidence suggests that universities do play a wider role in the growth and development of cities, but that there are large discrepancies in the subsequent spatial distribution of the talent they create. And this has significant implications for those seeking to address these imbalances and promote a broader and less unequal economic landscape. Originality/value The authors explore how cities create economic value via a process whereby talent is attracted and then this stimulates knowledge-based industry activity. The originality relates to several key aspects of the work. First, the authors look at the stock of talent, and then the authors explore how “new” talent from universities is attracted by looking at graduate flows around the cities of the UK, differentiating between top-level graduates and less talented graduates. The authors then allow a wide variety of economic, cultural, and population factors to influence the locational decision of talented people. The results highlight the complexity of this decision.

The authors wish to thank the Institute for Chartered Accountants Scotland (ICAS) and the Scottish Accountancy Trust for Education and Research (SATER), now known as the ICAS Foundation (charity registered in Scotland SCO34836) for funding the research reported in this paper. While high growth firms (HGFs) are crucial drivers of economic growth, to date there has been a dearth of research examining their funding requirements. Drawing on a survey of over 8,000 UK Small and Medium Sized Enterprises (SMEs), this paper investigates the capital structure and access to credit in high growth SMEs in the period following the global financial crisis. The findings challenge conventional wisdom about high growth SMEs in certain respects. They find it no harder than non-high growth SMEs to access external finance. The vast majority of high growth SMEs rely strongly on debt-based finance for their funding, not equity finance. High growth SMEs are much less likely to seek finance for working capital purposes but are no more likely to seek finance to invest in R&D than less rapidly growing SMEs. The findings suggest little justification for government intervention aimed at increasing credit availability for HGFs as currently espoused by the UK government. Postprint

This editorial introduces the papers addressing regional and spatial aspects relating to the demand for, and the supply of, finance for small and medium-sized enterprises (SMEs) and start-ups. Reflecting the breadth of financial instruments that are potentially available to SMEs and new ventures (e.g., business angel, bank credit and credit card financing), this special issue offers a combination of up-to-date studies that integrate the regional and spatial perspectives into the debate on SMEs and start-up financing. Overall, the papers contribute to an understanding of the mechanisms by which geography shapes access to finance for SMEs and new ventures, and the implications for local economic activity.

Intangibles, such as tolerance, creativity and trust, are increasingly seen as important for the geography of innovation. Yet these factors have often been poorly approximated in empirical research that has used generalized proxy measures to account for subtle personal differences. This article argues that the psychological literature on personality traits can help address this issue and provide important insights into the socioinstitutional determinants of innovation. It uses a unique, large-scale psychological survey to investigate the relationship between the Big Five personality traits commonly used in psychology—openness to experience, neuroticism, extraversion, agreeableness, and conscientiousness—and patenting in travel-to-work areas in England and Wales. The main personality trait associated with innovation is conscientiousness, a trait defined by organization, hard work, and task completion. Instrumental variable analysis using religious observance in 1851 suggests that this is a causal relationship. Research on the role of intangibles in innovation has been preoccupied by factors, such as creativity and trust, but the results of this article suggest that a new focus—on hard work and organizational ability—is needed.

Natural killer (NK) cells play a key role in the elimination of microbial pathogens and cancer cells. NK cells rapidly respond to stressed cells that are infected or bear tumorigenic mutations that reduce “self” markers of MHC class 1 and/or display increased presentation of activating ligands. These signals prompt NK cells to form an immunological synapse with an infected or tumor cell and discharge lytic granules containing cytotoxic proteins such as IFNγ, perforin and granzyme B leading to target cell destruction. Because of their natural ability to recognize and kill cancer cells, a plethora of preclinical studies and clinical trials have shown that NK cell therapies offer a potentially powerful weapon to fight both advanced-stage blood cancers and solid tumors. Given the great potential of NK cell therapies, we developed clinically relevant serum- and xeno-free methods for human NK cell expansion. Using optimized media and cytokines, either with anti-NKp46 coated tissue culture dishes or Cloudz™ CD2/NKp46 microspheres we have greatly expanded highly purified NK cells from human peripheral blood mononuclear cells (PBMCs) that are capable of potent cytolytic activity, as indicated with a novel flow cytometry-based NK cytotoxicity assay. Using this NK expansion methodology, we performed high-throughput screening methods to identify novel agents that enhance NK cell killing activity as assessed by IFNγ and Granzyme B quantikine ELISA assays which were then confirmed with NK cytotoxicity assays. The methods established here provide a novel workflow for generating highly purified NK cells that are applicable to clinical translation. Furthermore, the agents identified in this work provide insight for augmenting NK killing potential.

Low pay is a significant and growing issue in many developed economies. Sectoral approaches are often used in both economic development and labour market policy, yet there is little evidence on how low pay and earnings mobility vary by sector. This article investigates this issue in the UK. It shows pronounced sectoral variations in low pay and earnings mobility. It highlights the policy implications of growth in large, low paying sectors. While policymakers have focused on high-wage, high-skill sectors, efforts to improve productivity in low-wage sectors could improve living standards and the UK’s economic performance.

The concept of ‘Inclusive Growth’ – a concern with the pace and pattern of growth – has become a new mantra in local economic development. Despite enthusiasm from some policy-makers, others argue it is a buzzword which is changing little. This paper summarizes and critiques this agenda. There are important unresolved issues with the concept of Inclusive Growth, which is conceptually fuzzy and operationally problematic, has only a limited evidence base, and reflects an overconfidence in local government’s ability to create or shape growth. Yet, while imperfect, an Inclusive Growth model is better than one which simply ignores distributional concerns.

Published: 04 January 2018 Popular explanations of the Brexit vote have centred on the division between cosmopolitan internationalists who voted Remain and geographically rooted individuals who voted Leave. In this article, we conduct the first empirical test of whether residential immobility-the concept underpinning this distinction-was an important variable in the Brexit vote. We find that locally rooted individuals-defined as those living in their county of birth-were 7% more likely to support Leave. However, the impact of immobility was filtered by local circumstances: immobility only mattered for respondents in areas experiencing relative economic decline or increases in migrant populations.

High-technology firms per se are perceived to be more risky than other, more conventional, firms. It follows that financial institutions will take this into account when designing loan contracts, and that this will manifest itself in more costly debt. In this paper we empirically test whether the provision of a government loan guarantee fundamentally changes the way lenders price debt to high-tech firms. Further, we also examine whether there are differential loan price effects of a public guarantee depending on the nature of the firms themselves and the nature of the economic and innovation environment that surrounds them. Using a large UK dataset of 29,266 guarantee backed loans we find that there is a high-tech risk premium which is justified by higher default, but, in general, that this premium is altered significantly when a public guarantee is provided for all firms. Further, all these loan price effects differ on precise spatial economic and innovation attributes.

In the wake of the 2008 financial crisis, there has been increased focus on access to finance for small and medium sized firms. Some evidence from before the crisis suggested that it was harder for innovative firms to access finance. Yet no research has considered the differential effect of the crisis on innovative firms. This paper addresses this gap using a dataset of over 10,000 UK SME employers. We find that innovative firms are more likely to be turned down for finance than other firms, and this worsened significantly in the crisis. However, regressions controlling for a host of firm characteristics show that the worsening in general credit conditions has been more pronounced for non-innovative firms with the exception of absolute credit rationing which still remains more severe for innovative firms. The results suggest that there are two issues in the financial system. First, we find evidence of a structural problem which restricts access to finance for innovative firms. Second, we show a cyclical problem has been caused by the financial crisis and impacted relatively more severely on non-innovative firms.

The growing cultural diversity caused by immigration is seen as important for innovation. Research has focused on two potential mechanisms: a firm effect, with diversity at the firm level improving knowledge sourcing or ideas generation, and a city effect, where diverse cities help firms innovate. This article uses a dataset of over 2000 UK small- and medium-sized enterprises to test between these two. Controlling for firm characteristics, city characteristics and firm and city diversity, there is strong evidence for the firm effect. Firms with a greater share of migrant owners or partners are more likely to introduce new products and processes. This effect has diminishing returns, suggesting that it is a ‘diversity’ effect rather than simply the benefits of migrant run firms. However, there is no relationship between the share of foreign workers in a local labour market or fractionalization by country of birth and firm level innovation, nor do migrant-run firms in diverse cities appear particularly innovative. But urban context does matter and firms in London with more migrant owners and partners are more innovative than others. Firms in cities with high levels of human capital are also more innovative.

Do residents benefit from the growth of high-technology industries in their local economy? Policymakers invest considerable resources in attracting and developing innovative, high-tech industries, but there is relatively little evidence on this question. This paper investigates the labour market impact of high-tech growth on low and mid-skilled workers, using data on UK local labour markets from 2009-2015. It shows that high-tech industries – either traditional ‘high-tech’ or the digital economy – have a positive jobs multiplier, with each high-tech job creating around 0.9 local nontradeable service jobs, around 0.6 of which go to low-skilled residents. Employment rates for midskilled workers do not increase, but they benefit from higher wages. Yet the benefits for low-skilled workers come with a catch: they gain from increased employment rates, but lose as new jobs are poorly paid service work so lower average wages.

Do low-skilled workers benefit from the growth of high-technology industries in their local economy? Policymakers invest considerable resources in attracting and developing innovative, high-tech industries, but there is relatively little evidence on the distribution of the benefits. This paper investigates the labour market impact of high-tech growth on low and mid-skilled workers, using data on UK local labour markets from 2009–2015. It shows that high-tech industries – either STEM-intensive ‘high-tech’ or digital economy – have a positive jobs multiplier, with each 10 new high-tech jobs creating around 7 local non-tradeable service jobs, around 6 of which go to low-skilled workers. Employment rates for mid-skilled workers do not increase, but they benefit from higher wages. Yet while low-skilled workers gain from higher employment rates, the jobs are often poorly paid service work, so average wages fall, particularly when increased housing costs are considered.

Innovation and creativity are seen as important drivers of urban or regional economic growth. Yet, there is now increasing concern about the consequences of innovation in a city or region. The chapter considers these issues and the potential impact of innovation on inequality. It first considers the link between innovation, creativity and inequality within cities and regions and the evidence on the extent to which the benefits of innovation-led growth are evenly shared. Next, it considers the current academic and policy agendas around creativity and the challenges faced in cities pursuing strategies based on creativity. It argues that while the consequences of innovation may be difficult, the consequences of too little innovation may be worse: this is a classic case of the dilemma between equity versus efficiency.

There is growing concern in many developed economies that the benefits of economic growth are not shared equitably. This is particularly the case in the UK, where economic growth has been geographically uneven and often biased towards already affluent cities. Yet there is relatively little evidence on the relationship between growth and poverty in the UK. This article addresses this gap with an analysis of the links between economic growth and poverty in British cities between 2000 and 2008. We find little evidence that output growth reduced poverty. While growth was associated with wage increases at the top of the distribution, it was not associated with wage growth below the median. And there was no relationship between economic growth and the low skilled employment rate. These results suggest that growth in this period was far from inclusive.

This paper considers geographical variations in the demand and supply of bank finance for innovative firms in the UK. It uses a detailed survey on the finances of almost 40,000 UK Small and Medium Sized Enterprises for 2011–2013 to investigate both the extent and type of applications for bank finance by innovative firms in peripheral regions, whether funders accept their applications and whether acceptance rates reflect objective criteria, such as credit scores, or their location. The paper finds evidence of higher demand for bank finance for innovative firms in peripheral areas, but that these firms are more likely to be discouraged from applying. However, there is strong evidence that innovative firms in peripheral regions are more likely to have their applications for finance rejected, even when controlling for factors such as credit score. The findings suggest that geography matters in the financing of innovative firms and firms in peripheral areas may suffer a “liability of distance” which potentially reinforces regional disparities. The implications of these findings for public policy are outlined. Postprint

High-technology industries are seen as important in helping urban economies thrive, but at the same time they are often considered potential drivers of relative poverty and social exclusion. Little research, however, has assessed how high-tech affects urban poverty and the wages of workers with little formal education. This article addresses this gap in the literature and investigates the relationships among employment in high-tech industries, poverty, and the labor market for non-degree-educated workers using a panel of 295 Metropolitan Statistical Areas (MSAs) in the United States between 2005 and 2011. The results show no real impact of the presence of high-technology industries on poverty and, especially, extreme poverty. Yet there is strong evidence that tech employment increases wages for non-degree-educated workers and, to a lesser extent, employment for those without degrees. These findings suggest that although tech employment has some role in improving welfare for non-degree-educated workers, tech employment alone is not enough to reduce poverty.

Lee N., Sissons P. and Jones K. The geography of wage inequality in British cities, Regional Studies. There is widespread concern about the scale and implications of urban inequality in Great Britain, but little evidence about which cities are the most unequal and why. This paper investigates patterns of wage inequality in 60 British cities. It has two principal goals: (1) to describe which cities are most unequal; and (2) to assess the important determinants of inequality. The results show a distinct geography of wage inequality: the most unequal cities tend to be affluent and located in parts of the Greater South East of England. A central determinant of these patterns is the geography of highly skilled workers. Because of this, the geography of urban wage inequality reflects the geography of affluence more generally.