Why don’t high exports always lead to economic success?

Some exports, being exported. Image: Getty.

While trade and exports are usually talked about in the national context only, the reality is that the UK’s exports are sent from places up and down the country. But as the Centre for Cities’ recent Cities Outlook 2017 report shows, some places are much more successful at exporting than others – and this has big implications for the UK’s productivity gap and the government’s industrial strategy.

In total, cities accounted for 62 per cent of Britain’s total exports in 2014. The dominance of cities was particularly marked for services: they accounted for 51 per cent of goods exports, but 74 per cent of services exports.

Of course, there was much variation between them. Sunderland was Britain’s top exporting city, sending £40,650 of goods and services overseas for every job in the city. This is one third higher than second-placed Worthing (£29,640) and 11 times higher than bottom-placed York.

Curiously though, the varying export performance of cities doesn’t necessarily go hand-in-hand with its wider economic performance. Comparing exports with productivity at the city level shows only a weak relationship between the two: Sunderland in particular stands out for having relatively low productivity despite its strong export performance.

Splitting exports out into goods and services offers a clue as to why this might be the case (see the charts below). While there is a reasonable positive correlation between services exports per job and productivity, there is no relationship between goods exports per job and output per worker.

This may be a result of where the “value-add” of an export takes place: the disaggregated nature of manufacturing means that design and engineering don’t necessarily take place in the same place as assembly. For example, in Nissan’s case, its Qashqai model was designed in Paddington, engineered in Cranfield but built in Sunderland. So while the sale of the car is allocated to Sunderland, little of the higher value input to the product takes place there.

Increasing trade and exports was one of the ten pillars that the government set out in its recent Industrial Strategy green paper. What this data shows is that boosting exports won’t necessarily improve productivity across the country: what’s important is the type of exporting activity. As the example of Nissan suggests, it is knowledge-intensive exporting activity in particular which will have the biggest impact in driving up productivity – both in terms of firms that export services and those in advanced manufacturing.

And this has implications for the approaches taken to improve exports across the country. The standard approach, and the one emphasised again in the government’s green paper, is to focus on export credit schemes and trade missions. Such schemes will no doubt have a positive impact in the cities that already have a number of exporting businesses (such as those cities in quadrant A in the chart above). But it will do very little for the worryingly large number of cities – 37 out of 62 – that are in Quadrant C.  Their poor exporting and productivity performance suggests that it is their lack of exporting businesses full stop, rather than any reluctance of their businesses to export, that is the problem.


This means that, as any industrial strategy that is place-based needs to do by definition, a very different approach will be needed in these places to both boost productivity and exports.

The number one objective will be to improve skills. Knowledge-based businesses, be they in manufacturing or services, require high-skilled workers. But those cities in Quadrants B and C tend to have fewer degree-educated people living in their cities and higher shares of people with no formal qualifications relative to their more successful counterparts.

To do this will require prioritising both improving performance within schools and an improvement of the skills of the existing workforce, with a particular focus on numeracy and literacy in both cases. This should be a key priority for both local and national leaders, particularly in the Industrial Strategy, if they are to succeed in extending job opportunities and increasing wages for people in cities across the country.

Paul Swinney is senior economist at the Centre for Cities, on whose blog this article was first published.

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Seville has built its entire public transport system in 10 years. How has it done?

Just another sunny day in Seville. Image: Claude Lynch.

Seville, the fourth largest urban centre in Spain, was recently voted Lonely Planet’s number one city to visit in 2018. The award made a point of mentioning Seville’s impressive network of bicycles and trams, but it neglected to mention that it’s actually their ten year anniversary. The city’s metro opened just two years later.

This makes now an excellent time to look back on Seville’s public transport network – especially because almost all of it was completed in the middle of the global financial crisis. So, is it a good model for modern public transport? Let’s find out.

Cycle Hire

Seville, like any good metropolis, features a cycle hire scheme: Sevici, which is a clever portmanteau of the words ‘Seville’ and ‘bici’, short for bicicleta, the Spanish for, you guessed it, bicycle.

The service, launched in 2007, is run as a public-private partnership. Users can pay a flat weekly fee of €13.33 (£11.81) for unlimited rentals, as long as all the journeys last 30 minutes or less. For the fanatics, there’s a year-long subscription for €33. This makes Sevici cheaper than the London equivalent (£90) but slightly more than that of Paris (€29).

However, the reason why the bike hire scheme has gained particular praise in recent years is down to Seville’s network of cycle paths, snaking around the town centre and into the suburbs. The sheer scale of the scheme, 75 miles of track in total, has prompted comparisons to Amsterdam.

But there is a meaningful distinction between the two cases. First, cycling culture is such a big deal for the Amsterdammers that it has its own Wikipedia page. In Seville, cycling culture is a growing trend, but one that faces an uphill struggle, despite the city’s flatness. Around half of the cycle paths are on a pavement shared by pedestrians; pedestrians often ignore that the space is designed specifically for cycles.

A Sevici station in the town centre. Image: Claude Lynch.

Surprisingly, cyclists will also find exactly the opposite problem: the fact that bicycles enjoy the privilege of so many segregated spaces mean that, if they dare enter the road, motorists are not obliged to show them the same level of respect – because why would they need to enter the road in the first place?

This problem is only compounded by the Mediterranean driving style, one that takes a more cavalier attitude to objects in the road than that of the northern Europeans. While none of this makes cycling in Seville a write-off – it remains the cycling capital of Spain – budding tourists should bear in mind that the cycle paths do not extend far into the old town proper, making them a utility, for the most part, for budding commuters.

Metro

The metro system in Seville consists of a single metro line that travels from Ciudad Expo in the west to Olivar de Quintos in the east. It has three zones, which create a simple and straightforward fare system, based on the number of journeys and number of “saltos” (jumps) between zones, and nothing more.

The need-to-know for tourists, however, is that only three of the metro stations realistically serve areas with attractions: Plaza de Cuba, Puerta de Jerez, and Prado de San Sebastian. Given that a walk between these is only a few minutes slower than by metro, it shows the metro service for what it is: a service for commuters coming from the west or east of town into the city centre.

Some of the behaviour on the network is worth noting, too. Manspreading is still dangerously common. There are no signs telling you to “stand on the right”, so people queue in a huff instead. Additionally, there is no etiquette when it comes to letting passengers debark before you get on, which makes things precarious in rush hour – or if you dare bring your bike on with you.

On the plus side, that’s something you can do; all trains have spaces reserved for bikes and prams (and they’re far more sophisticated than the kind you see on London buses). Trains are also now fitted with USB charging ports for your phone. This comes in addition to platform edge doors, total wheelchair access, and smart cards as standard. Snazzy, then – but still not much good for tourists.

Platform edge doors at Puerta Jerez. Image: Claude Lynch.

The original plan for Seville’s metro, launched in the 70s, would have had far more stations running through the city centre; it’s just that the ambitious plans were never launched, due in equal measure to a series of sinkholes and financial crises. The same kind of problems led to Seville’s metro network being opened far behind schedule, with expansion far down the list of priorities.

Still, the project, for which Sevillanos waited 40 years, is impressive – but it doesn’t feel like the best way to cater to an east-west slice of Seville’s comparatively small urban population of 1m. Tyne and Wear, one of the few British cities comparable in terms terms of size and ambition, used former railways lines for much of its metro network, and gets far more users as a result. Seville doesn’t have that luxury; or where it does, it refuses to use it in tandem.

You only need to look east, to Valencia, to see a much larger metro in practice; indeed, perhaps Seville’s metro wouldn’t look much different today if it had started at the same time as Valencia, like they wanted to. As a result, Seville´s metro ends up on the smaller side, outclassed on this fantastic list by the likes of Warsaw, Nizhny Novgorod, and, inexplicably, Pyongyang.

Seville: a less impressive metro than Pyongyang. Intriguing. Image: Neil Freeman.

Tramway

The tram travels from the high rise suburb-cum-transport hub of San Bernardo to the Plaza Nueva, in the south of the Seville’s old town. This route runs through a further metro station and narrowly avoids a third before snaking up past the Cathedral.

This seems like a nice idea in principle, but the problem is that it’s only really functional for tourists, as tram services are rare and slow to a crawl into the town centre, anticipating pedestrians, single tracks, and other obstacles (such as horse-drawn carriages; seriously). While it benefits from segregated lanes for most of the route, it lacks the raison d'être of the metro due to the fact that it only has a meagre 2km of track.

The tram travelling down a pedestrianised street with a bicycle path to the right. Image: Claude Lynch.

However, staring at a map long enough offers signs as to why the tram exists as it does. There’s no history of trams in Seville; the tracks were dug specifically for the new line. A little digging reveals that it’s again tied into the first plans for Seville’s metro, which aspired to run through the old town. Part of the reason the scheme was shelved was the immense cost brought about by having to dig through centuries-old foundations.

The solution, then, was to avoid digging altogether. However, because this means the tram is just doing the job the metro couldn’t be bothered to do, it makes it a far less useful service; one that could easily be replaced by a greater number of bike locks and, maybe, just maybe, additional horses.


So what has changed since Seville’s transport revolution?

For one thing, traffic from motor vehicles in Seville peaked in 2007 and has decreased every year since, at least until 2016. What is more promising is that the areas with the best public transport coverage have seen continued decreases in traffic on their roads, which implies that something is working.

Seville’s public transport network is less than 15 years old. The fact that the network was built from scratch, in a city with no heritage of cycling, tunnels, or tramways, meant that it could (or rather, had to) be built to spec. This is where comparisons to Amsterdam, Tyne and Wear, or any other city realistically fall out of favour; the case of Seville is special, because it’s all absolutely brand new.

As a result, it’s not unbecoming to claim that each mode of transport was built with a specific purpose. The metro, designed for the commuter; the tramway, for tourists; and cycling, a mix of the two. In a city with neither a cultural nor a physical precedent of any kind for such radical urban transportation, the outcome was surprisingly positive – the rarely realised “build it, and they will come”.

However, it bears mentioning that the ambitious nature of all three schemes has led to scaling back and curtailment in the wake of the economic crisis. This bodes poorly for the future, given that the Sevici bikes are already nearing the end of their lifetime, the cycle lanes are rapidly losing sheen, and upgrades to the tramway are downright necessary to spare it from obsolescence.

The conclusion we can draw from all this, then, appears to be a double-edged one. Ambition is not necessarily limited by a lack of resources, as alternatives may well present themselves. And yet, as is so often the case, when the money stops, so do the tracks.

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