In an increasingly globalised world, the importance of place has declined for some. Yet to understand why our towns and cities are what they are today, we must understand their histories and the importance of ‘path dependence’.
Only then can we make a real difference through place-based initiatives to alleviate economic impacts that are bound by history.
We know that some towns and cities do better than others - but why? If we look at recent history, some of the places that are doing well have been doing well for a while.
Towns are cities are consistent in terms of their characteristics such as economic activity, deprivation levels, and relative size. It seems that for many their future performance is determined by their past performance: an idea known as path dependency.
Geography constrains the outcomes of towns and cities more than we might think and we shouldn’t downplay its impact
There is empirical evidence that historical spatial distribution can help explain economic activity.
For example, look at the bombing of Japanese cities during World War II. Even in the face of such catastrophe, in 15 years most cities returned to their relative position in the distribution of city sizes.
The economic performance of some towns and cities persist over time.
For example, East London has been persistently more disadvantaged than the relatively wealthy West London since the late nineteenth century.
London itself is another example - it has been a centre of economic activity since the Roman era and still is an economic powerhouse till this day.
Take Grenfell as a contemporary example. Without going into institutional failures surrounding the tragedy, looking at the recent history of where the Grenfell tower area was bombed helps explain the strong correlation between the relative poverty experienced in that area in the past and today.
Although path dependency is a deep and powerful force, we can’t allow it to make us give up on towns
This doesn’t mean that we should be ‘geographically deterministic’ about what this may mean for the future of our towns and cities and give up on some.
But it does mean we need to be more honest about the impacts of path dependency when designing policies and interventions for sustainable inclusive economic growth.
Only then can we achieve real change when tackling modern problems like economic insecurity.
We need to mitigate the impact of path dependence through good planning and network effects
Good planning that considers the particular challenges of different towns and cities can make sure that towns and cities are not ‘left behind’ by being ignored.
A powerful example of the impacts of good planning are the ‘new towns’ that are doing well because of the legacy of effective post war planning. As part of the 1946 New Towns Act, some towns were built to accommodate the population overspill from London and Glasgow, some were built to provide better quality housing for existing employment such as Aycliffe, and some were built in mining areas such as Glenrothes, which has experienced a decline in the mining industry. This was good planning.
Network effects on the other hand often occur because of chance, but interventions could also enable their creation.
Network effects occur in places when like minded people or businesses are clustered around each other and therefore benefit from the value created when more people collaborate. Probably the most famous example of network effects working well is Silicon Valley, where the area became more and more attractive for tech companies simply because more and more tech companies based themselves there.
Although many networks come about organically, it helps to have a good foundation for them to thrive in. Transport and digital connectivity can help but so can less obvious things like local education, skills, and even welfare systems.
A Basic Income could create a good foundation to enable network effects to thrive
Findings suggest that by giving a regular and unconditional cash payment to every citizen would enable them to make positive changes in their lives by increasing economic security.
That then would allow them to get more involved in their community, which would boost the network effect.
These positive changes should allow breathing space for people to act more entrepreneurially and in the process, be available to contribute more to society through doing better work, being healthier and by strengthening their communities and networks.
Each town and city needs its own solution – not just good headlines
Turning around the fortunes of struggling towns and cities is very difficult.
Each town and city is different, which is why is so important to understand why places are what they are when trying to figure out how to kick start positive place-based change that will actually work - rather than just look good in headlines. Every decision needs to plan for the future while keeping the past in mind in order to drive sustainable and equitable change.
When planning is done right, it can be a powerful way to make a difference and close gaps between the highest and lowest performing cities.