How Regions React to Recessions: Resilience, Recovery, and Long-Run Impacts
Lead Research Organisation:
University of Cambridge
Department Name: Geography
Abstract
Abstracts are not currently available in GtR for all funded research. This is normally because the abstract was not required at the time of proposal submission, but may be because it included sensitive information such as personal details.
Organisations
Publications
Clarke G
(2016)
Divergent cities? Unequal urban growth and development
in Cambridge Journal of Regions, Economy and Society
Tyler, P.
(2018)
Local Long-Run Growth Evolutions across Britain: Some Exploratory Empirics
in Environment and Planning A
Fingleton B
(2015)
Shocking aspects of monetary union: the vulnerability of regions in Euroland
in Journal of Economic Geography
Martin R
(2015)
On the notion of regional economic resilience: conceptualization and explanation
in Journal of Economic Geography
Gardiner B
(2013)
Spatially unbalanced growth in the British economy
in Journal of Economic Geography
Fingleton B
(2012)
RECESSIONARY SHOCKS AND REGIONAL EMPLOYMENT: EVIDENCE ON THE RESILIENCE OF U.K. REGIONS*
in Journal of Regional Science
Martin R
(2016)
How Regions React to Recessions: Resilience and the Role of Economic Structure
in Regional Studies
Martin, R.L.
(2017)
New Oxford Handbook of Economic Geography
Martin R. L.
(2018)
New Handbook of Economic Geography
Martin, R.L.
(2013)
The Planning Imagination
| Description | (a) Understanding local economic resilience The project has examined the conceptual debates surrounding economic resilience. Existing approaches to economic resilience have been found wanting in the sense that they tend to assume stability and a return to a pre-shock growth trend or a full capacity growth ceiling. There are two related problems with these views. The first is the neglect that responses to recession often involve significant changes in the structure, functions and identity of regional and local economies. The second is that they overlook the possibility of hysteretic outcomes in which the underlying rate of growth is itself may be permanently altered by a recession. Part of the research aims to investigate the extent of these hysteretic shifts using growth models that estimate counterfactual trends. In response to these limitations, the project has developed an approach that decomposes the analysis of economic resilience into three main elements: resistance, robustness and recovery. Resistance refers to the vulnerability or sensitivity of a particular spatial economy to a recessionary shock. Robustness describes the ability of an economy to maintain specific functions and operations in the face of perturbations. Importantly, it often involves changes in the structure, components and modes of operation of an economic system. Recovery highlights the rate and degree of an economy's return to growth based either on the pre-existing developmental trajectory or a renewed path. The project has approached economic robustness in terms of four key determinants: the diversity or variety of a particular economy; its degree of redundancy, that is the substitutability of components and functions; its modularity, or the degree to which parts of the economy are separable, and the nature of their connections; and its regulatory governance and institutional mechanisms that help to buffer shocks and aid adaptation. The project is using this broad conceptual framework to examine the different dynamics and causes of resilience in different regional and local economies across the UK. (b) Spatially unbalanced growth and regional dynamics The project's empirical analysis began with a comprehensive analysis of regional growth in output and employment from the early 1970s and the degree of cumulative divergence between regional economies. This documented the increasing spatial imbalance between Southern and Northern regions, and its reinforcement by London's transformation in the 1990s from a relative low growth city to a high performing one. This analysis also examined the causes of this growth performance and found that regional specific factors have been more important than the broad industry mix. On this basis, the project has examined resistance to, and recovery from, the last three major recessions in the UK for the standard regions, in terms of both employment and output. It has found that both resistance to and recovery from recessions vary across different cycles and recessions, depending on the origin and nature of the recessionary shock. However, there are also patterns and consistent differences that run across the three most recent recessions which show that economic resilience varies significantly across space. The South East and Eastern regions have shown both higher resistance than the national average to two recessions, and faster than average recoveries. Other regions including the East Midlands, North West and Scotland have tended to show higher than national average resistance but relatively slow recoveries. Wales, Yorkshire Humberside, and the South West have shown lower rates of resistance but higher than average rates of recovery. The North East, on the other hand, has shown both low resistance and low recovery. The duration of shocks and speed or recovery are strongly varied, for example, in employment terms the South East had returned to the level of its 1990 peak by 1997, whereas the West Midlands did not regain its 1990 employment total until 2006. Recoveries in business stock are similar although less attenuated. The project is examining the key causes of these differences and the reasons why relationships between resistance and recovery are varied. It is also exploring how these past performances compare to rates of recovery from the 2008-2012 recession. (c) Regional industrial diversity and economic resilience The project is exploring two contrasting perspectives on the relationship between economic specialisation and regional economic resilience. The first is the widely-held view that structural or industrial diversity increases resilience to a shock. The second is the view that the specialisation of local and regional economies in particular tradable and export sectors determines their resilience. This is the economic equivalent of an ecological 'rivet' hypothesis. To date, our analysis has focused on the first hypothesis concerning industrial diversity. Using standard measures of diversity we have found that there are no straightforward and consistent relationships between the degree of diversity of a regional or local economy and its response to recessions. The project has also used a dynamic shift-share type of analysis, known as multi-factor partitioning, in order to decompose changes in regional employment in three recessions and two recoveries into a national effect, a region-specific effect (regional 'competitiveness'), a structural effect (the mix of industries in a region), and a region-industry interaction effect. Using a 33 economic sector disaggregation, the results indicate that while many Northern and Midlands regions have suffered from a negative industrial structure these effects are, in fact, smaller than the regional competitiveness effects, and indeed the structural effects are decreasing in importance through time. There are two main reasons for this. First, with the notable exception of London's specialisation in financial services, most of the British regions have converged in terms of their industrial structures as they have moved towards service dominated economies. Wales and the North East are somewhat slower in the rate of shift. Second, the broad industry categories contain within them industries and sub-sectors that are actually performing differently in different places. Part of this appears to be the result of a finer spatial division within industries so that different types of activity may be allocated to different areas, and partly it stems from regional and local externalities that affect productivity trends. The next stages of the project aim to explore the causes and determinants of these regional competitiveness effects that strongly influence resilience. They will be approached via the three other determinants of robustness outlined above; namely the extent of modularity and connectedness in a regional economy; the degree of redundancy and substitutability; and finally regulatory effects and institutional resources. (d) The uneven growth and recovery of Local Economic Partnerships (LEPs) The project has collated and calculated data on employment, output and productivity for the LEP areas in England and NUTS3 local areas in Scotland and Wales between 1981 and 2010. Analysis is underway on the relationships between local term growth and the impacts of recessions on these local areas, focusing on how changes in firm populations are related to the duration of shock and speed of recovery. At this smaller scale variations in growth and resilience are, of course, much more pronounced than they are at a regional scale. There are also significant variations in economic trajectories within the five types of areas used to categorise the LEPs (Coastal and Countryside, Industrial Hinterlands, Regional Centres, Prospering Smaller Towns, and Prospering Southern England). This indicates that the causes or resilience cannot be explained in terms of the basic economic characteristics of the LEPs, and these causes will be the focus of the project's case study research. |
| Exploitation Route | The project is engaging with colleagues from academia, business, local and central government. A key feature of the engagement with academics is to develop theoretical and empirical work on regional economic resilience. Engagement with local, central government and Local enterprise Partnerships (LEPs) is helping to develop policies to increase the long-term growth potential of sub-regional economies. Guidance to business is designed to help them understand more about how the economy at national and local scales responds to shocks and to appreciate the implications for firm-based resilience strategies. A project initiation group meeting was held on the 2nd April 2012 and the first Steering Group meeting on the 2nd July 2012 which was attended by representatives from the Greater Cambridge Greater Peterborough Enterprise Partnership, BIS, the GLA, Birmingham City Council, the CBI, the Local Government Association and academics from the Cardiff, Glasgow and Groningen universities. We are currently organizing a conference in Cambridge on the 10-12th July that is focusing on Local economic growth: recession, resilience and recovery and we are seeking to attract delegates from LEPs, LA, business and academia. A project website has been established at http://www.geog.cam.ac.uk/research/projects/cger/ (e) Exploitation and Use of Results A major conference has been organized for early July (in Cambridge) at which the results of the research will be [resented and publicized. The conference will be attended by both other academics, and by interested relevant policy-makers, from BIS and DCL, the LEPs, and Local Authorities. It is hoped that representatives from the European Commission (DGRegio) and the OECD will be present. In order to compare our research and findings with those of other academics, both in the UK and elsewhere, academics from mainland Europe and the USA have also been invited to attend the conference. Similar concerns over how local econimies react to and recover |
| Sectors | Communities and Social Services/Policy,Education,Government, Democracy and Justice |
| URL | http://www.geog.cam.ac.uk/research/projects/cger/howregionsreact.html |
| Description | Invitation to European Commission Joint Research Centre Ispra Italy |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Invitation to give specialist presentation on Resilience to JRC staff, followed by request for academic and scientific advice in the JRC's preparation of policy document on Resilience and Regional Policy for European Commission |
| Year(s) Of Engagement Activity | 2016 |