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Research studies

Features, Problems and Trends of British Cities’ Economy Past, Today and Future Challenges

 

Democratic Arab Center 

  • Author’s : Said Amran Sbeit Al-Maamari, Oman
  • Under supervising : AKER, MELEK ŞULE , Eastern Mediterranean University

 

Contents:

  1. Introduction ………………………………………………….……3
  1. Features of British Cities’ Economy Growth………………………5

·         2.1-Features of the Industrialization Stage in 19 Century

·         2.2-Features of Industrial Reorientation Stage in 20th Century (1900-1969)

·         2.3-Features of Industrial Reorientation Stage in 20th Century (1970-2000)

·         2.4-Features of UK economy image, Today

  1. Problems of British cities’ economy…………………………….9
  2. The Economic Trends of British Cities……………………….…10
  • 1-The globalization and technological change effects :
  • 2-The environmental trends,,,
  • 3-Demographic change
  1. Reading in future status of British cities’ economy……………13

6. Conclusion and Suggestions……………………………………16

  1. References………………………………………………………19 
  1. Introduction:

Britain reputation is wide around the world and during the time that its history it was caring to be effective in their relations and cooperation with others countries in domains of trade, economy, and education, politic. The Britain has a memorable memory in my mind due to it is documented in the national curriculums as a friend and partner especially in my country “Oman”. Britain contributed to develop the national economies in Arabian areas, especially in countries of the Arabian Gulf cooperation council ( Saudi Arabia , Oman , United Arab Emirates , Kuwait , Bahrain , Qatar ) .

My brief comment about what my memory knows in regard to Britain is as an introduction that makes me realizing importance of my research as a chance to look at trends and features of British cities ‘economy and its growth and challenges in past, today, future through focusing on their importance to the national economy, the influenced economic trends and their expected future in the global market.

From what is stated above, we can understand that British economy is one of the wide economies that have impact on the global economy in the past, today and future as a result of effectiveness of its cities in the industry domain that started the industrial revolution period through the 18the and 19the centuries and still continue with modern effects related to the globalization trends that the world lives them these days.

If we want to talk in relation to the cities and their relations in the economic life, we should be concerned with signals of their impacts and importance and to estimate what data and statistics we should depend on them that can give us the indicators and determinants of the development in the British cities. The cities importance is represented in a level of the economic life and the cities influence is represented in attractiveness of living, doing business.

And according to a published study, there are “61 % of stuff available in 56 urban cities in Britain and that refer to their importance as suitable places for employment sector and also their outcomes represent 85 % of the economy activities”.  (Government, 2011)

Regarding these considerations, the British cities have some determinants that can influence positively in their attractiveness which are as following:

  • The cities infrastructures are qualified in order to attract the businesses and suppliers, labors with the required services, airports, hospitals and other retail and families facilities. (Government, 2011) . Although, this idea did not indicate to a fact confirmed by another study pertaining to the differentiation policy among cities that make barriers to develop other cities and more details in the trends section in this report.
  • The cities have an effective role in the global economy place for Britain owing to they have competitive advantages in order to provide a high quality of goods and services. (Government, 2011).  In my opinion, that is right but this informed might be overvalued in case we want with a view to be near from future predictions of British cities’ image compared with regard to other advanced cities in the global market and this is made clearer in a part of the British cities’ future interpreted in contents of my report by which the cities’ strength should reflect the national economy power as mentioned in the features analysis of developing  cities later.
  • Although the expensive life in the cities as London, they are more attractive for doing business, studying, living and working for the reason that is compensated by paying high salaries and providing a system of uniform costs.  (Government, 2011).
  1. Features cities’ economy growth and its impact on the Britain place in the global economy

If we want to know why Britain is an advanced country economically in the global industry, we should review the history of starting the trade in the past, and its growth today with future challenges related to globalization , demographic change , environmental trends that will be argued later in this report.

Firstly, the British cities passed in 3 main stages which are “Industrialization in 19 century (1800)”, “Industrial Reorientation in 20th century (1900-1969)” and “Post-Industrialization between 1970 – 2000” in the course of two centuries and I think that should have effects on the Britain place in the global markets, and I will analyze these stages with 3 dimensions which are Major economic development trends , City economies and city growth.

And the next details give us a clear image on the order of what stated above regarding the historical stages of developing the UK economy, which are condensed in the following points.

2.1-Features of the Industrialization Stage in 19 Century

As a result of the industrial revolution that emerged in Britain through the 18 century, British cities had absolute advantages in 3 main production sectors which are Textile, coal and shipbuilding and these led exports of Britain to the world in that time .In addition, British cities were a leader in the technological industry as producing steam switched by coal and electricity and railways development. And these made Britain through its cities activities to climb the global competition at the end of this stage and with free trade policy.  The Successful Signals of the cities industries that led to these advances were represented in emerging manufacture networks linked between the  specialized towns in various regions around the country toward the exports merchandises as textile , raw materials as coal and iron , transportation means as ships and railways.   (Foresight, 2014)

We can inference that Networks of British cities on the economical level contributed to raising the reputation of Britain in the world as open economy for serving the world in which outcomes of the trade constituted “50% “of its total national income. Furthermore, Britain was a primary exporter of textile, shipping and iron as a consequence of its specialization in these industries. What is more, It had nearly “50% “of the global foreign direct invest with receiving highest rate of the world migrations. Also it was taken into consideration as a leading country to drive the concept of free trade and international investments.  (C.B.I, 2013)

2.2-Features of Industrial Reorientation Stage in 20th Century (1900-1969)

Recent industries appeared to serve the public as consumer commodities, automobiles and chemicals manufactures and this stage witnessed improvements in technological industries as leading  in production of electricity burning engines, and electronics but they could not climb globally as a consequence of starting the ww1. The period among two world wars problems influenced the economic activity in the northern cities as London, so most of consumers industries concentrated in cities of South East and Midlands. And this development made shifting population from northern  to  southern cities and at the end of this stage , there was decreasing the population size  in large proportion of urban communities  especially London. This depression reflected a decline in the national income that was coming from exports and that continued from the launching the First World War to 1970s.  (Foresight, 2014)

2.3-Features of Post-Industrialization (1970 – 2000)

This stage of the British cities history was reactivating the life to economic activity, and some economic developments happened as quick growing for business services with clear effects for the globalization and finance on the economy through technological changes as a result of inventing micro-electronics, computers and emergence of internet and World Wide Web technologies. The major development was focused on London that played a key task among cities as national and financial center for the domestic economy and that led to returning growth of the population again that was declined in the last stage and the majority of large and small cities became congested.  (Foresight, 2014) .

The last part of the 20 the century, the prosperity in the British cities made Britain openness launching again to the world economy as leading exporter and as a major recipient of FDI.  (C.B.I, 2013)

In the following sections I will explain what happened at the beginning of 21th century until today for the national economy and its roles in the global markets and what the challenges that may confront them in the future as a result of globalization and advanced technologies trends.

2.4-Features of UK economy image, Today

Today, Britain live with openness in both ways of trade export and import, and investment regulatory and the British cities are uniform as one group bearing the name of UK economy that is concentrated with trends of competitions toward establishing investment in infrastructure, education and attracting migration and capital follows and as a result in the first decade of the 21th century, the UK became the third largest recipient in flows of FDI globally after U.S and China and in 2012. The published reports denoted that UK’s economy is classified as sixth largest economy worldwide and the next table depicts gains of Britain from the famous exported trade sectors.  (C.B.I, 2013)

Industry Global Sales Profits of Export
Media , Tecnology , Telcoms £65 billion
Pharmaceutical andchemicals £53 billion
Automobiles £31 billion
Financial Services £61 billion
Aircarafts £20 billion
Total £230 billion

In my analysis to statistics I noticed that the main sectors feeding the British economy, with total profits estimated to £230 billion in 2012, are industries of media, technology and telecoms of 28%, Pharmaceutical and chemicals by 23%, Automobiles with 13%, Financial Services at 27% and Aircrafts of 9% .

In more detail, Sectors of technology and media are ordered as the largest creative and computing sectors in EU and the second largest telecoms sector subsequent to Germany in EU.  And it is ranked as the second largest exporter of pharmaceutical and chemicals product in the world with a share of 10%. In additions, more than 80% of size of produced automobiles in UK was exported over the world with profits estimated by 31 billion EUR in 2012. Moreover, Britain competes in the recent aircrafts industry internationally, in which 75% of UK ‘civil aerospace gross output is exported globally and the estimates of the world demands on the British planes will reach “27,000” and “40,000 helicopters”.  (C.B.I, 2013)

From these signals, we can say that Britain cities are still competitive nations in trade and that encouraged the international labor to be interested in migration to Britain.

From the standpoint of my evaluation to British cities performance in the past, today, I can summarize , in the 19th century , the British was active in the dominant industries , but this power  declined  with great depression in the national production in the northern cities and the overall exports due to effects of  the First  and Second world wars and that extended until 1969 and then the cities worked together and specified the London as financial center for their economic activities and these attempts succeeded at the end of the 20TH century to recover  the national economy again.

  1. Problems of British cities’ economy

As the world followed through media devices, during 2015, Britain witnessed two significant events that have broadcast globally in the context of news of the Scotland’s desire to separate from UK and desire of UK to leave the EU,   and also its participation in a cap of climate change that was held in France and I viewed to consider incentives of the two desires as problems that perhaps make the British cities suffering  and I attempted to link them by ascertaining their relations to economic trends that I will discuss them in sections of this report.

The last vote held in Scotland was a trial for the independence from Britain, and we heard in the media that the most important reason for this step is spreading poverty and feeling inequality although their place contains a huge stock in the north see that surround it. personally , I was surprised about these statements ,  and I did not expect  that the poverty could be spread in place like United Kingdom that attract money from all direction of the world ,  and I tried to search  relative to any facts confirms from reliable sources and I found the next certainty :

According to the Institute for Fiscal Studies, the median incomes” declined 6% during 2013 and 2014 than 2007-2008 and that was due to the inflation represented in declining the mortgage interest and increasing prices of energy and food and this position resulted in spreading the poverty widely. (Allister, 2014)

A concentration of banking  system in London since 1980s make differentiating  among cities  by focusing in subsidizing and  improving the more prosperous locations as London and the south east spaces  with excluding the domestic needs in rest areas that grow slightly than London . One example of the financial exclusion policies followed by the bank system in Britain is the lending policy for  mortgages , small business or personal loans is more biased in subsidizing facilities to London and south-east sites   than the northern and that led to create” a deep gap” in development between the cities.( Justin,2015)

  1. The Economic Trends of British Cities

The world challenges toward specialization in industries are more efficient to enhance the national economy. And they can be linked to the global market as consequences of trends of globalization and technology, migrants skills resulted from demographic change, and the life quality related to the environmental scales that motivate the local and foreign entrepreneurs trust for investment and doing businesses in the British regions.

3.1-The globalization and technological change effects:

Claims of pro for independence of Scotland in view of the inequality policy followed by the government mismanagement are proved through my analysis for an effect of globalization and technology change trend on the British cities and that can be speculated by the next fact:

  • There are variances among cities in presence of IT connectivity in which the northern British cities have 26.1 broadband lines per 100 habitants, whereas in the southern regions there are 32.9 broadband lines per 100 residents.(Government, 2011)

Experts view that the current concentration with establishing private sectors and promoting its growth with lacking details and information at activities of trade, foreign investment, and broadband by city restrain the clear analysis for the real influence of globalization and the technological advances on cities economies. (Government, 2011)

3.2-The environmental trends

Britain as other advanced countries faces environmental problems due to its industrial activities and we followed the climate change meeting that was held in France that debated the global warming of carbon emissions case.

Through my hearing to speech of the General Secretary of the United Nation during the course of this meeting regarding threats of occurring disasters of  floods , dryness , fires , and disappearance of islands and number of species on the basis of the carbon emission responsible in relation to the climate change that can result to increasing the temperature and rising  see levels as a results of melting ice caps , I realized importance of accelerating to find solution to this problem by mending economic economies and interesting searching in regard to new techniques basing renewable power resources to avoid these probable disasters that are produced by the human activity that also can threat the human health owing to these emissions pollute the atmosphere.

I think these environmental risks can influence the traders in selecting the proper locations for their business and to understand this effect the next lines about the environmental trend effect on the British cities can clarify us more relative to this issue.

It is noticed  that there are attempts in improving the green technologies sectors in British cities but the development is stepping slowly by which  “London and the south east regions are interested highly with regard of employing in the green sector , while the south east region  are concentrated with introducing renewable energy”. (Government, 2011)

The experts see that there are no adequate evidences refer to extending the green sector and its jobs in the cities to make sure advances of the cities tendency to the transition to a low carbon economy which is stressed by the Coalition Agreement. (Government, 2011)

3.3-Demographic change:

It is also of importance that, as we followed the renewed and hot statements of British prime minister across media until these days that are pertaining to desire his country to separate from the EU on account of increasing the European migration to the British work market and invite the EU to mend agreement of the freedom movement in terms of individuals among the member countries. According to statements of desire of Britain for withdrawing of the European Union has dimensions related to the demographic change due to the increased migration and that constitute a burden on the country budget from the standpoint of his statements in which those migrants benefits of social subsidies regime and this case with the increased refugees who are coming to UK in high percentages.

So, unorganized demographic change represents one of trends that can affect the economic life and activity in the British cities and its reality is explained in the next explanation.

Indicators of differences among the British cities’ growth and prosperity with jobs, healthcare, and quality of life can make habitants preferences in the case of their suitable residential locations for living and that can result in shaping internal migration forming demographic shifts. On the other hand, the international migration to the British cities is another components leading to demographic change and 77% of migrants come to settle in urban places in which London has the highest fraction of the foreign workers of 4.9% and followed by other cities as Peterborough and Cambridge in attracting huge number of them. The experts analyze that there are no sufficient  evidences denote to effects of migration on the cities for the reason of data shortage related to migrants and just by providing these date we can judge and measure how the cities can respond to their flows to use their skills effectively in the economy. (Government, 2011)

  1. Reading in future status of British cities’ economy

Notice: This section is based on self-inferences extracted from numbers published on study related to future of 750 cities around the world, depend on my self-analysis.  (Oxford, 2012)

The promising future for strong economy requires more diverse economic actions, and that is observed in the developing cities more than the developed cities in terms of the capital, technological   knowledge, investment and careers chances.

 Diversity in resource endowments, institutional infrastructure and the skill levels of citizens are standardized indicators for distinguishing the future trend, market growth and the variance among countries and cities globally. In addition , there is a relation between the consumer  spending and the household income in that the UN placed a specific classification measuring the individual consumption in cities as signals to compare city consumer spending shapes ,determining consumer “hotspots” and the largest markets for individual consumer products and services as “food and non-alcoholic beverages , clothing and footwear , housing related , health and education , transport and communications ,alcoholic beverages and tobacco ,  Recreation, restaurants and hotels” and so on.   (Oxford, 2012)

London’s market competes lonely globally; that is found out in a published report in the context of “the future of 750 cities” around the world and I tried to extract the data related to British cities to make inferences about its future globally.

It is noted from the published figures that it is expected for London to rank 39 of the top 750 world cities in probabilities of population change by 2.3 million through the period from 2013 to 2013 and it is predicted to be the eighth center in GDP change in the same interval reaches to 477 US$ bn1. Furthermore, London will shift from the order 4 in 2013 to 3 in 2030 in the level of high – income households and from the rank 14, 2013 to 28, 2030 in level of middle-income households. What is more ,  it is inferred that the US and Asian cities will rank the top 10 for the highest rise in urban income and consumer in 2030 and London is coming in the sixth order globally.  Among the top 50 cities, the consumer spending in London is the fifth with 221 US$ bn1 , while in the biggest consumer markets for clothing, it is predicted that its order will be converted from the third in 2013 to the first in 20130 , and from the fifth to sixth in car markets in the same period. Also, London is expected to change from the fifth rank to the third by 2030 in classifications of financial global centers.

 Furthermore , It is also denoted  that  the employment sector in London is more centralized in public services of 22% , industry of 10% , consumer service of 26 , transport , storage and information and technology of12% and   financial and business services of 29%.  (Oxford, 2012)

From the published study  , I  noticed  that future of  British cities is predicted to be late behind the US and China cities and the other Asian developing cities  in which just London’s economy  is able to compete globally.  And just the city of Birmingham – Metro appeared among the biggest 50 cities in sector of global clothing market and is expected to shift from rank of” 36, 2013 to 31 in 2030”.

My view of the expected weakness for the British cities performance compared to other advanced cities it might be attributed to that the British cities in the current time  miss for the cooperation networks among cities in production specialization that were formed in the 19th century in which the Britain was successful globally in that time  . It is also of importance in my opinion that the cities miss the independent validities in making their plan for future to face the probable challenges. And according to my simple analysis ,  I see this may be associated to policies of the differentiation , inequality  among cities followed by the central government in managing the united kingdom affairs , and these policies were as one of main reasons that motivated Scotland to separate from the British union and also was inequality in distribution the kingdom incomes in domains of infrastructure investment as inequality in the IT services among the northern and southern cities , as we know the IT is of great importance  to develop the economy and encourage the investment that can lead to improvement of the local infrastructure in cities that can encourage the investors for doing business there  and increasing the future wages for labor. I can inference that British cities need to reform the trust, renew networks of commerce and trade transactions and benefit from each other as shifting some investments from urban cities to less developed or rural areas to assist them in retrieving its lost economic life on the grounds of the government ignorance. What is more, the British cities are required to subsidize small businesses to grow to assist in raising the economic activity step by step. In this way, I believe that kingdom cities need create strong ties between them to exchange commodities and experiences.

Therefore, these indicators relevant to British cities positions reflect on the Britain economy’s image generally by which the Britain economy was ranked in the eighth order in 2011 and this arrangement is expected to be 13 as a dominated economy globally, and I can make clearer  by representing the figures as seen in the next graph. 

  1. Conclusion and Suggestions

After giving the general image relevant to features and trends the British  cities’ economy in the past , today and future , I think in my opinion , there is  a specific group affect the political and economic decisions, especially in size of financial supply provided to the various cities throughout the kingdom , and I expect that it is represented in attempts trying to demonstrate London’s image and other few cities around it as typical samples for Britain modernization for life quality and doing business globally  on the account of ignoring other significant cities that are not in interest of these probable lobbying groups . I build this opinion according to a behavior of the banking system that biases in lending policy and indicators of increasing percentage of poverty level confirmed by the Institute for Fiscal Studies.

 So, the tackling must be coming from British government to mend the economic system with corrective actions as imposing balanced or equal financial distribution policies to fund the infrastructure in all cities without exceptions and promoting much of cities to the world and  that will be the corrective actions to recover the Britain cities their natural position at the top among the advanced and developing  cities in the world because Britain is considered as a historical heritage for the world  trading system since the industrialization revolution , so not healthy to see its cities late behind emerging and US cities in future.

I strived to find suggestions from the standpoint of my views for repairing the economic system that should begin from the government to do the following:

  • It should make a general evaluation in cities factors related infrastructure and skilled labor to discover what are the variances among cities in terms of domestic demands and domestic rivalry to estimate the suitable budget required for each city to mend its problems relevant to technology systems operated in business and production , and that can encourage both national and foreign direct investment in all cities not just in London and also of importance that this plan can enhance the home demand for services and products among cities and then the competitive advantages can be promoted to the world markets under supervising the government.
  • I view the national economy involves supporting owners of small business projects available in all cities by subsidizing them either with cash grant from the national income or by low interest loans temporarily until these projects can grow to meet the national competition,
  • I advise UK to step in forming independent governments in each city that can assist it to manage its economy and promote its production globally and each city must provide annual returns from its profits to the great central government for the U.K and that is seen in seven governments that form the country of United Arab Emirates.
  • In my evaluation, the history of British cities indicates to differences in their capabilities to produce goods that refer to their specialization basing on variances of their labor productivity, so government should rediscover these capabilities in the missed cities to return them to the economic life by seeking on the order of the possible emerging industries that can be subsidized.
  • I see that the government must monitor the behaviors of interest groups that try to exploit their political position to direct the supply for specific or less efficient cities in account of more efficient areas.
  • I invite the government to help cities to limit the internal migration by establishing promising firms or opening new branches for their competitive industries from the main cities of the activity  that are able to provide the good wages for workers.
  1. References:

Site : http://www.cityam.com/article/1391132117/growth-back-here-are-five-challenges-still-facing-uk

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