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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Academics are mapping the legacy of slavery in Britain’s cities

A detail of the Legacies of British Slave-ownership map showing central Bristol. Image: LBS/UCL.

For 125 years, a statue of the 17th century slave-trader Edward Colston stood in the centre of Bristol, ostensibly to commemorate the philanthropy he’d used his blood money to fund. Then, on 7 June, Black Lives Matter protesters pulled it down and threw it into the harbour

The incident has served to shine a light on the benefits Bristol and other British cities reaped from the Atlantic slave trade. Grand houses and public buildings in London, Liverpool, Glasgow and beyond were also funded by the profits made from ferrying enslaved Africans across the ocean. But because the horrors of that trade happened elsewhere, the role it played in building modern Britain is not something we tend to discuss.

Now a team at University College London is trying to change that. The Legacies of British Slave-Ownership project is mapping every British address linked to a slave-owner. In all, its database contains 5,229 addresses, linked to 5,586 individuals (some addresses are linked to more than one slave owner; some slave owners had more than one home). 

The map is not exact. Streets have often been renumbered; for some individuals, only a city is known, not necessarily an address; and at time of writing, only around 60% of known addresses (3,294 out of 5,229) have been added to the map. But by showing how many addresses it has recorded in each area, it gives some sense of which bits of the UK benefited most from the slave trade; the blue pins, meanwhile, reflect individual addresses, which you can click for more details.

The map shows, for example, that although it’s Glasgow that’s been noisily grappling with this history of late, there were probably actually more slave owners in neighbouring Edinburgh, the centre of Scottish political and financial power.

Liverpool, as an Atlantic port, benefited far more from the trade than any other northern English city.

But the numbers were higher in Bristol and Bath; and much, much higher in and around London.

 

Other major UK cities – Birmingham, Manchester, Leeds, Newcastle – barely appear. Which is not to say they didn’t also benefit from the Triangular Trade (with its iron and weaponry industries, Professor David Dabydeen of Warwick University said in 2007, “Birmingham armed the slave trade”) – merely that they benefited in a less direct way.

The LBS map, researcher Rachel Lang explained via email, is “a never-ending task – we’re always adding new people to the database and finding out more about them”. Nonetheless, “The map shows broadly what we expected to find... We haven’t focused on specific areas of Britain so I think the addresses we’ve mapped so far are broadly representative.” 

The large number in London, she says, reflect its importance as a financial centre. Where more specific addresses are available, “you can see patterns that reflect the broader social geography”. The high numbers of slave-owners in Bloomsbury, for example, reflects merchants’ desire for property convenient to the City of London in the late 18th and early 19th centuries, when the district was being developed. Meanwhile, “there are widows and spinsters with slave property living in suburbs and outlying villages such as Chelsea and Hampstead. Country villas surround London.” 


“What we perhaps didn’t expect to see was that no areas are entirely without slave owners,” Lang adds. “They are everywhere from the Orkney Islands to Penzance. It also revealed clusters in unexpected places – around Inverness and Cromarty, for example, and the Isle of Wight.” No area of Britain was entirely free of links to the slave trade.

 You can explore the map here.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

All images courtesy of LBS/UCL