Why have some European cities weathered the global financial crisis better than others? The answers might surprise you.
The year 2008 marked a global annus horribilis for many developed nations with the collapse of financial markets worldwide.
Triggered by the bursting of the US housing bubble, the so-called subprime mortgage crisis led to a chain of events, including plummeting real estate prices and the subsequent damage to financial institutions.
The worst financial crisis since the Great Depression resulted in governments bailing out their national banks, stock markets taking a nose dive and businesses folding, sending millions of employees out onto the street.
European cities reacted differently to the crisis. Some – like cities in Greece, Portugal, Spain and Italy – remain mired in deep recession while others – such as Poland’s – have hit no more than a speed bump.
What lessons can we learn from this? According to researchers from LSE Cities, there are no hard and fast rules when it comes to European economic resilience.
Using an interactive mapping tool – the European Metromonitor – to visualise the varying fortunes of over 150 of the continent’s largest metropolitan areas has thrown up some interesting findings for LSE researchers.
The most populous cities in Europe have weathered the crisis better than most, but there is no evidence to suggest that capital city status confers any particular economic advantage over regional areas.
Dr Antoine Paccoud, a research officer in LSE Cities, says analysis of the data shows manufacturing and construction both account for an important share of the variation.
“Cities which boosted their manufacturing output in the years preceding the crisis outperformed those in which the share of manufacturing decreased,” he says.
“What is also striking is that regardless of what happened to their manufacturing sector, cities which focused heavily on construction had, on average, lower annual growth rates for 2007-2013 than cities in which the share of the construction sector dropped.
“On average, the most resilient cities are those that developed their industrial sector from a low base while de-emphasising construction, while those that turned their back on their strong manufacturing base and focused on construction fared the worst.”
The European Metromonitor visualises the employment and economic output growth of more than 150 of the continent’s largest metropolitan regions and provides interactive charts on the relation between city and national context, urban typologies and resilience.
This interactive mapping tool is being used by international policy makers to study the economic health of different cities since the advent of the global financial crisis, and draw lessons from it.
Dr Andrea Colantonio, project co-ordinator of the European Metromonitor project, says that it is very difficult to find distinct patterns or simple classifications that show why some cities have fared better than others since the global financial crisis.
In general, cities are constrained by how well their national economy is doing but there is still a good degree of variance within the national context, researchers have found.
Toulouse, for example, in the south of France, and Aberdeen, in the north-east of Scotland, stand out from the crowd for different reasons. In Toulouse’s case, the presence of key military and aerospace industries has strengthened its economic fortunes. Similarly, Aberdeen’s thriving petroleum industry has almost made it immune to the economic gloom which pervades much of Europe.
“A lot of different factors need to be taken into account, but manufacturing does seem to be a common thread,” Dr Colantonio says.
The Metromonitor project, funded by HEIF 5, is a two-year study which concludes in 2014.
For more information about the European Metromonitor interactive mapping project go to: http://labs.lsecities.net/eumm/home/
LSE Cities is an international centre at the London School of Economics and Political Science that carries out research, education and outreach activities in London and abroad. Its mission is to study how people and cities interact in a rapidly urbanising world, focussing on how the design of cities impacts on society, culture and the environment.
Dr Andrea Colantonio is an urban geographer and economist who specialises in the investigation of the complex linkages between urban growth, sustainability and the geographies of development in both developing and developed countries.
Dr Antoine Paccoud works on the global comparison of metropolitan regions and the extent to which they depart from national conditions. His focus is on methods that ensure spatial and data comparability as well as a geographically representative sample.
Posted August 2013