Patently obvious: Which European cities are the most inventive?

Regensburg, Germany – Pretty, inventive, and pretty inventive. Image: Wikimedia Commons.

The latest instalment of our weekly series, in which we use the Centre for Cities’ data to crunch some of the numbers on Europe’s cities.

Europe is quite a nice place. Though Nigel Farage, the Conservative Party, and anyone who’s noticed that the second syllable of Remain sounds a bit like moan will tell you otherwise, there’s some pretty nice stuff there.

The continent is host to three of the world’s richest countries in absolute terms – France, Germany, and Italy. And if you look at the top twenty countries in terms of national wealth per person – aka GDP per capita – then Europe fills more than half the spots, with twelve entries from Luxembourg in pole position to Belgium in 20th place.  Poland was one of the fastest-growing countries in the world last year. Good for you, Poland.

Croissants are tasty, Belgian beer is part of the Intangible Cultural Heritage of Humanity (apparently), and obscenely beautiful cathedrals are dotted around all over the place. In the extremely dubious language of good old-fashioned colonialism, Europe is the Old World – cultural crucible of the planet, Michelangelo, 1066 and all that.

But you probably don't think of Europe as the great 21st century hive of ingenuity, invention, and world-leading technology. Your mind might instead wander to the sprawling Californian campuses of Facebook and Google; the crammed and jostling skyscraper-shrunken streets of Hong Kong, Jakarta, and Shanghai; the ghostly-white-walled robot laboratories of Japan.

While you’re not wrong on that, you’re not necessarily right either – and looking at the numbers of patent applications to the European Patent Office will tell you that Europe remains a hub of inventive activity.

The first thing you’ll notice is that Eindhoven, in the Netherlands, is really really really inventive.

Eindhoven in Bavaria wait no that's a café the Netherlands. Image: Wikimedia Commons.

The data comes rom 2011, when there were roughly 250 patent applications per 100,000 people. That might not sound like a lot, so imagine that number differently. If you were at a very hypothetically statistically perfect school in Eindhoven with 1,000 people (discounting obvious contributory factors like post-education migration), there would be at least two people with EPO patents. Or perhaps just one very inventive person. Either way – think back to your real secondary school. How many patents have its alumni been granted? Yeah. Didn’t think so.

Eindhoven is so far out of the other cities’ league that it’s actually worth discounting it from the data to make the other figures easier to see.

Regensburg, a city with a similar population to Oxford just down the road from Nuremburg in Germany’s Bavaria, comes in second, with 83.8 applications per 100,000 people. Aachen, up near Germany’s northwestern border with the Netherlands and Belgium, follows close behind, and the prestigious university town of Heidelberg – just south of Frankfurt – narrowly takes fourth place.

This is mostly an excuse for pictures of pretty cities like Aachen. Image: Wikimedia Commons

Grenoble is the first non-Germanic entrant. The city in France’s south-east clocks 80 applications per 100,000, before the Germanic cities storm back in with Darmstadt, Zurich, and Basel in quick succession.

Grenoble, land of flying globules and mountains. Image: Wikimedia Commons.

To take a generalisation further, what’s extraordinary is that of the top 20 of these most inventive cities, only four are in countries or areas that do not speak a Germanic language. For our purposes here, I’m excluding the UK (and the English language) from that definition; Grenoble, Cambridge, Lausanne, and St Quentin en Yvelines are the only cities in the top 20 that aren’t in German, Dutch, or Swedish-speaking places.

And if you do include English as a Germanic language – which you probably should – then you’re down to Lausanne and St Quentin en Yvelines as lonely French outposts in the Germanic land of invention. Nobody wants to veer into linguistic-group stereotyping, but there’s something very Vorsprung Durch Technik going on here.

Get rid of all the Germanic-language-speaking nations included in the data (by my count: Great Britain, Germany, Germanic Switzerland, Flemish Belgium, Denmark, the Netherlands) and it’s a very different picture.

France entirely dominates, taking up the first 12 entries prior to a guest appearance from Parma in Italy. Geneva slips in behind, and the Italians romp through with Bologna, Modena, and Ferrara all in the non-Germanic top ten. Weird, huh?

And for the cruel-spirited amongst you, the least inventive cities included in the data were Almería and Jerez de la Frontera in southern Spain, Taranto, Reggio di Calabria, and Palermo in southern Italy, and Czestochowa in southern Poland. Pesky southerners.

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High streets and shopping malls face a ‘domino effect’ from major store closures

Another one bites the dust: House of Fraser plans to close the majority of its stores. Image: Getty.

Traditional retail is in the centre of a storm – and British department store chain House of Fraser is the latest to succumb to the tempest. The company plans to close 31 of its 59 shops – including its flagship store in Oxford Street, London – by the beginning of 2019. The closures come as part of a company voluntary arrangement, which is an insolvency deal designed to keep the chain running while it renegotiates terms with landlords. The deal will be voted on by creditors within the month.

Meanwhile in the US, the world’s largest retail market, Sears has just announced that it will be closing more than 70 of its stores in the near future.

This trend of major retailers closing multiple outlets exists in several Western countries – and its magnitude seems to be unrelated to the fundamentals of the economy. The US, for example, has recently experienced a clear decoupling of store closures from overall economic growth. While the US economy grew a healthy 2.3 per cent in 2017, the year ended with a record number of store closings, nearly 9,000 while 50 major chains filed for bankruptcy.

Most analysts and industry experts agree that this is largely due to the growth of e-commerce – and this is not expected to diminish anytime soon. A further 12,000 stores are expected to close in the US before the end of 2018. Similar trends are being seen in markets such as the UK and Canada.

Pushing down profits

Perhaps the most obvious impact of store closures is on the revenues and profitability of established brick-and-mortar retailers, with bankruptcies in the US up by nearly a third in 2017. The cost to investors in the retail sector has been severe – stocks of firms such as Sears have lost upwards of 90 per cent of their market value in the last ten years. By contrast, Amazon’s stock price is up over 2,000 per cent in the same period – more than 49,000 per cent when considering the last 20 years. This is a trend that the market does not expect to change, as the ratio of price to earnings for Amazon stands at ten times that of the best brick-and-mortar retailers.

Although unemployment levels reached a 17-year low in 2017, the retail sector in the US shed a net 66,500 jobs. Landlords are losing longstanding tenants. The expectation is that roughly 25 per cent of shopping malls in the US are at high risk of closing one of their anchor tenants such as a Macy’s, which could set off a series of store closures and challenge the very viability of the mall. One out of every five malls is expected to close by 2022 – a prospect which has put downward pressure on retail real estate prices and on the finances of the firms that own and manage these venues.

In the UK, high streets are struggling through similar issues. And given that high streets have historically been the heart of any UK town or city, there appears to be a fundamental need for businesses and local councils to adapt to the radical changes affecting the retail sector to preserve their high streets’ vitality and financial viability.


The costs to society

While attention is focused on the direct impacts on company finances, employment and landlord rents, store closures can set off a “domino effect” on local governments and businesses, which come at a significant cost to society. For instance, closures can have a knock-on effect for nearby businesses – when large stores close, the foot traffic to neighbouring establishments is also reduced, which endangers the viability of other local businesses. For instance, Starbucks has recently announced plans to close all its 379 Teavana stores. Primarily located inside shopping malls, they have harshly suffered from declining mall traffic in recent years.

Store closures can also spell trouble for local authorities. When retailers and neighbouring businesses close, they reduce the taxable revenue base that many municipalities depend on in order to fund local services. Add to this the reduction in property taxes stemming from bankrupt landlords and the effect on municipal funding can be substantial. Unfortunately, until e-commerce tax laws are adapted, municipalities will continue to face financial challenges as more and more stores close.

It’s not just local councils, but local development which suffers when stores close. For decades, many cities in the US and the UK, for exmaple Detroit and Liverpool, have heavily invested in efforts to rejuvenate their urban cores after years of decay in the 1970s and 1980s. Bringing shops, bars and other businesses back to once derelict areas has been key to this redevelopment. But today, with businesses closing, cities could once again face the prospect of seeing their efforts unravel as their key urban areas become less attractive and populations move elsewhere.

Commercial ecosystems featuring everything from large chain stores to small independent businesses are fragile and sensitive to change. When a store closes it doesn’t just affect employees or shareholders – it can have widespread and lasting impacts on the local community, and beyond. Controlling this “domino effect” is going to be a major challenge for local governments and businesses for years to come.

Omar Toulan, Professor in Strategy and International Management, IMD Business School and Niccolò Pisani, Assistant Professor of International Management, University of Amsterdam.

This article was originally published on The Conversation. Read the original article.