Posts Tagged ‘Auckland’
Auckland recovery goes backwards on Brookings Institution and LSE metro monitor
Large cities play a leading role in a nation’s economic development, particularly as incubators and friendly hosts of innovation.
Get it wrong and these cities will drag an economy down.
As has been mentioned before, there’s a heap of evidence that Auckland needs to pull its finger out.
Anyway, here’s further evidence that Auckland is not pulling its weight and in fact has been going backwards compared to other large cities of the world.
The Brookings Institution and the London School of Economics produce a Global MetroMonitor which examines data on economic output and employment in 150 of the world’s largest metropolitan economies.
Auckland is the only NZ city to feature. For comparison sake I have added the Australian cities that appear.
| Pre-recession 1993-2007 | Recession 2007-10 (yr of min. growth) | Recovery 2009-10 | |
|---|---|---|---|
| Auckland | 55 of 150 countries | 55th | 91st |
| Brisbane | 27 | 23 | 64 |
| Melbourne | 47 | 22 | 14 |
| Sydney | 76 | 30 | 45 |
The income and employment figures behind these placings are below.
The monitor includes some pretty diverse cities – per capita measures of Gross Value Added (GVA) range from under US$1000 in Hyderabad and Kolkata, India, to roughly $70,000 in San Jose, in the US and Zurich, Switzerland.
The monitor comments: “What is consistent about these metropolitan areas, however, is their function as locations for high-value economic activity in their respective nations and world regions.
“Nearly four in five boast average incomes (as proxied by per capita GVA) that exceed averages for their nations. This is particularly true in rapidly emerging areas of Eastern Europe and Asia, where major metro incomes exceed those for nations by average margins of at least 90 percent.
“As a result, these metro areas punch above their weight in national and global economic output. In 2007, they accounted for just under 12 percent of global population, but generated approximately 46 percent of world GDP.”
The monitor is further compelling evidence of a fundamental shakeup of the world’s economic geography.
In fact the global downturn and recovery have only served to accelerate the shift in economic growth toward lower-income metropolitan areas in Asia and Latin America.
Chinese cities were strong performers throughout the three periods examined. Indian cities also feature strongly.
DETAILS
1993 – 2007
Auckland (55th of 150 cities)
• income: 1.6% annual change
• employment: 2.7% annual change
Brisbane (27th)
• income: 2.7%
• employment: 3.3%
Melbourne (47th)
• income: 2.7%
• employment: 2.3%
Sydney (76th)
• income: 2.3%
• employment: 1.7%
Recession period
Auckland (55th)
• income: -2.6% annual change
• employment: -1.9% annual change
Brisbane (23rd)
• income: -0.2%
• employment: 0.9%
Melbourne (22nd)
• income: 1.4%
• employment: 0.0%
Sydney (30th)
• income: 0.6%
• employment: -0.4%
Post recession
Auckland (91st)
• income: -1.0% annual change
• employment: 0.6% annual change
Brisbane (64th)
• income: -0.2%
• employment: 2.0%
Melbourne (14th)
• income: 4.8%
• employment: 3.8%
Sydney (45th)
• income: 1.3%
• employment: -2.2%
Andy Hamilton’s unusual prescription to stop Auckland becoming a city of porters and peasants
Basically if NZ is to outperform economies that we like to think we can get the better of, then Auckland’s got to shake a leg.
I’ve posted before on how NZ’s leading city, really ain’t. It’s not super either.
So how do you turn Auckland into a world-leading city? One that (in Ganesh Nana’s words) is no longer a “property and consumer-oriented economy operating as a transport hub for New Zealand”, but one that “truly lead(s) by providing that point of difference for NZ Inc to leverage”.
Icehouse’s Andy Hamilton has an interesting prescription in his latest blog – “Are we happy to become porters and farm peasants in Auckland?”
It’s one that eschews the usual ‘hard’ fixes (less tax, less regulation, more infrastructure) for ‘soft’ investment in our minds and culture.
Hamilton says it’s all about business growth. “…yes we need infrastructure but that is not going to be the driver of economic wealth we need from Auckland to help our country catchup to the rest of the leaders in the world like Australia.”
So here are his ideas for change:
No1: Global Mindset: to succeed we must establish a mindset of being global, exporting is over, being global is what it is all about. From our schools to our Universities to our firms and communities, we must recognise that to ‘win’ our firms will need to win away from Auckland – in Shanghai, Singapore, San Francisco and Sydney. That means we need to always have ‘them’ in our mind, we need to play the game by their rules and win by their rules.
No2: Firms: the New Zealand Institute says to catch Australia we need to create in NZ, approximately 5,000 global firms. We currently have around 1,000 half of which are in Auckland. As a city we need to embrace the 500 and give them whatever help is needed for them to grow, while also creating another 3,000 global firms – that is a huge effort, but it can be done.
No3:Talent: we need to build the supply of talented leaders, managers and directors to help our firms succeed. If there was ‘one silver bullet’ it is the capability of our people. I would like to see our best corporate leaders in our biggest firms agree to join the Boards of our emerging global firms like exist in the ICEHOUSE, this will send a clear message that they are part of the entrepreneurial ecosystem and they care and they are prepared to invest in our future community.
No4:Capital: Establish a branch of the Singapore-ASX exchange in Auckland to provide opportunities for Auckland firms to get access to funding and exposure into the key Asian markets, do this with or without NZX. Rein in the Super Fund – we have around 100 emerging global firms dieing in Auckland because of the shortage of expansion capital, the Super Fund need to be told, they are part of New Zealand, their future is part of New Zealand and they could solve the $200m capital gap with a brush of a pen. Enough excuses and PR management from the Super Fund.
No5:Networks: we need to leverage all of the great things we have as a region and country through global networks, the Kea group is a strategic asset which should be leveraged so much more by helping to create Kiwi Colonies in all of the major markets around the world.
No6:A Global Market Validation Market: establish a Global Test Market Centre at The ICEHOUSE in Auckland for international start-ups to move their start-up to Auckland for validation of the concept, development and initial testing prior to a global launch. We could become known as the ‘best place to start your global company’.
No7:White Horse Syndrome: our Council Members & Staff don’t have fairy wands. They are the facilitators of the show, not the drivers, our firms create the wealth. So lets hope these people in their new roles of responsibility recognise that and put the firms and our people at the centre of their universe not themselves. Interestingly, there is already duplication of resource between Central and Local Government – this is not good enough.
No8:New Zealand: Auckland is a part of New Zealand, not the other way around. Most people outside Auckland think we are a funny lot, and we are. Auckland will not succeed without the regions, we need to change the conversation and create real partnerships and move away from the current position of the regions feeling threatened by the Super City.
Why size matters – big cities patently better
More evidence that being big makes a difference.
According to MacDiarmid Institute deputy director Shaun Hendy, the difference between Australia and New Zealand patenting rates (we’re 40% below Australia’s) is down to the relative size of the two countries’ cities.
Specifically we can’t match the grunt of Sydney (population 4.5 million) and Melbourne (4m plus). Bigger cities generate higher rates of patenting.
Where our cities are of a comparable size – Auckland and Adelaide – patent rates are much the same.
Compared with the OECD average, we’re very poor at generating triadic (filed in US, Europe and Japan) patents. The latest World Intellectual Property Office stats I can find (till 2007) show the number of NZ patent applications increasing over the 10-year period, though with a substantial drop in 2006-07.
The number of NZ patent granted has pretty much flatlined, apart from a spike in 2003.
I’ve blogged before on how our littleness holds our economy back. Economist Paul McCann says being small and far from markets is the worst position to be in.
In Australia’s case, size can help overcome the limitations of isolation.
McCann talks about “global regionalism”, fed by the rise of huge trade blocs, investment and taxation treaties, and world-changing stuff like computers, the internet, modern transport, communications technologies and off-shoring.
Global regionalism, he says has favours big urban centres.
One of McCann’s ideas to combat this is to increase the size of the Auckland-Hamilton-Tauranga triangle. The easiest way of doing this, he says is to increase immigration to the region.
MacDiarmid Institute’s Hendy, as reported in today’s Herald, has a bigger plan.
He says New Zealanders need to act like they live in a city of four million.
The city size-patenting rate relationship is about the size of businesses in cities of certain mass, he says. Larger cities were more collaborative and the larger the city the more collaboration went on.
“When you have … high degrees of specialisation, people really need to collaborate to have an impact,” he says. “It’s larger cities enabling these larger collaborations or teams of researchers that can make progress.”
So, New Zealand needed to think and act like a city of four million people.
“We need to look at putting together multi-disciplinary, multi-institutional collaborative research networks, whether they’re in business or academia.”