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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America's cities can't police their way out of this crisis

Police deployed tear gas during anti-racism demonstrations in Los Angeles over the weekend. (Mario Tama/Getty Images)

As protesters took to the streets across the United States over the weekend to express their anger at police killings of unarmed black Americans, it was hard to miss the hypocrisy coming from local authorities – including the otherwise progressive, left-leaning officials who are in power in most major American cities. 

Many US mayors and their police chiefs had issued public statements over the past week that seemed – only briefly, as it turned out – to signal a meaningful shift in the extent to which the Black Lives Matters movement is being taken seriously by those who are in a position to enact reforms. 

The sheer depravity of the most recent high-profile killing had left little room for equivocation. George Floyd, 46, died last Monday under the knee of white Minneapolis police officer Derek Chauvin, while three additional officers helped to hold Floyd down, doing nothing to aid him as he begged for them to stop and eventually lost consciousness. The officers had been attempting to arrest Floyd on suspicion of having used a counterfeit $20 bill at a deli. All four have since been fired, and Chauvin was arrested Friday on charges of third-degree murder and second-degree manslaughter. 

“The lack of compassion, use of excessive force, or going beyond the scope of the law, doesn’t just tarnish our badge—it tears at the very fabric of race relations in this country,” Los Angeles Police Chief Michel Moore told the Washington Post in response to the Floyd case. Meanwhile Moore’s boss, Los Angeles Mayor Eric Garcetti, on Friday claimed that he understood why his city, which is no stranger to police brutality, was protesting. “We absolutely need as a nation, certainly as a city, to voice our outrage, it’s our patriotic duty to not only stand up for George Floyd but for everybody who has been killed unnecessarily, who’s been murdered for the structural racism that we have in our country,” Garcetti said. 

Normally, US police chiefs and mayors tend to ask citizens to withhold judgment on these types of cases until full investigations can be completed. But a 10-minute video recording of Floyd’s killing had made what happened plain. Police chiefs across the country – and even the nation’s largest police union, which is notorious for defending officer abuses – similarly condemned the actions of the Minneapolis officers, in a rare show of moral clarity that, combined with the arrest of Chauvin, offered at least a glimmer of hope that this time things might be different. 

As the events of the weekend have since shown, that glimmer was all too fleeting. 

In city after city over the past three days, US mayors and their police chiefs made a series of the same decisions – starting with the deployment of large, heavily armed riot units – that ultimately escalated violent confrontations between officers and protesters. Images widely shared on social media Saturday and Sunday nights made it clear that members of law enforcement were often initiating the worst of the violence, and appeared to treat protesters as enemy combatants, rather than citizens they were sworn to protect. 


In New York City, two police SUVs were seen plowing into a crowd of protesters, while elsewhere an officer was recorded pulling down a young protester’s coronavirus mask in order to pepper spray his face

In Louisville, the city where Breonna Taylor, a 26-year-old black woman was fatally shot by police on 13 March, state police in riot gear were captured confiscating and destroying protesters’ supplies

In Minneapolis, forces opened fire with nonlethal rounds on residential streets, much to the shock of homeowners standing on their own front porches. 

Images of police pushing or shoving peaceful protesters were almost too numerous to count, including, in Salt Lake City, an elderly man with a cane

In many places, police also targeted journalists who were covering the protests, firing at clearly identifiable media crews with rubber bullets, injuring and even arresting reporters

Some protesters did commit acts of vandalism and looting, and the leaders of cities where that happened generally responded in the same ways. 

First, they blamed “outside agitators” for the worst protester behaviour, a claim that harkens all the way back to the civil rights era and for which the evidence is murky at best

Next, they enacted sudden curfews with little to no warning, which gave law enforcement an excuse to make mass arrests, in some cases violently. 

In a pair of widely criticized moves, Garcetti of Los Angeles closed the city’s Covid-19 testing centers and suspended the entire mass transit system Saturday evening, stranding essential workers on their way home from daytime shifts. Late Sunday night in Chicago, the city’s public school system halted its free meal distribution service for low-income children, citing “the evolving nature of activity across the city”.  

Governors in at least 12 US states, in coordination with city leaders, have since called in National Guard troops to “help”. 

At this point it’s clear that the leaders of America’s cities are in desperate need of a radically different playbook to respond to these protests. A heavily armed, militarised response to long-simmering anger toward the heavily armed, militarised approach to American policing is more than ironic – it’s ineffective. Granting police officers wider latitude to make arrests via curfews also seems destined to increase the chances of precisely the tragic, racially biased outcomes to which the protesters are reacting. 

There are other options. In places such as Flint, Michigan, and Camden, New Jersey – both poor cities home to large black populations – local law enforcement officials chose to put down their weapons and march alongside protesters, rather than face off against them. In the case of Camden, that the city was able to avoid violent clashes is in no small part related to the fact that it took the drastic step of disbanding its former police department altogether several years ago, replacing it with an entirely new structure. 

America’s cities are in crisis, in more ways than one. It’s not a coincidence that the country has tipped into chaos following months of emotionally draining stay-at-home orders and job losses that now top 40 million. Low-income Americans of colour have borne a disproportionate share of the pandemic’s ravages, and public health officials are already worried about the potential for protests to become Covid-19 super-spreading events.

All of this has of course been spurred on by the US president, who in addition to calling Sunday for mayors and governors to “get tough” on protesters, has made emboldening white nationalists his signature. Notably, Trump didn’t call on officials to get tough on the heavily armed white protesters who stormed the Michigan Capitol building over coronavirus stay-at-home orders just a few weeks ago. 

US mayors and their police chiefs have publicly claimed that they do understand – agree with, even – the anger currently spilling out onto their streets. But as long as they continue to respond to that anger by deploying large numbers of armed and armored law enforcement personnel who do not actually live in the cities they serve, who appear to be more outraged by property damage and verbal insults than by the killings of black Americans at the hands of their peers, and who are enmeshed in a dangerously violent and racist policing culture that perceives itself to be the real victim, it is hard to see how this crisis will improve anytime soon. 

Sommer Mathis is the editor of CityMetric.