Chapter 11: synthesis

In this comparative research, we have tried to find out how cities are transforming towards the knowledge economy, and to identify some typical elements by charting and analysing the development paths of a number of cities. Moreover, a very important question in this research was: What can the local government do to upgrade the local economy and guide it towards greater knowledge intensity? For each participating city we have investigated what the local government has done in the past few years to raise knowledge intensity, and how the stakeholders have been involved.

The research has been carried out in two stages. Desk research was central to the first stage. Much has already become known about the knowledge economy and the role of cities in it. In an extensive literature study, we described the "state of the art", and derived the building blocks for a theoretical framework.

In the second stage we have probed the subject more deeply in nine European case studies: Amsterdam, Dortmund, Eindhoven, Helsinki, Manchester, Munich, Münster, Rotterdam and Zaragoza. In each city we held some 10 to 12 in-depth interviews with key persons from government and enterprise. For each city we made a generic analysis of the development of its knowledge economy in the last decade. How knowledge-intensive is the local economy? How can that be measured? What are the city’s prominent assets and resources? What does the economic structure look like? What generic economic/spatial policy has been conducted?

Nine cities were involved in the empirical part of this study. The results of this study, however, can be used within much more cities than this sample. To this aim, the research framework has been generalised. In principle, all urban regions are operating within the KE. The global economy has changed into an economy in which knowledge-intensive activities become increasingly important. All urban regions which want to offer a competitive location environment have to adapt to this new economic reality. Thus, no choices can be made whether to be or not to be within the KE. But the starting positions of cities to become successful within this KE are different. Some of the cities (still) have a comfortable position to attract and retain KE companies and –workers; others, contrarily, have a hard job in attracting and retaining them.

We have developed a theoretical framework for the role of cities in the KE and used this framework to assess the situation of nine European cities. The cases also provided feedback to refine the framework. Furthermore, the nine participating cities can draw general and specific lessons from this comparative study. Because of the generalised character of the study, also other cities, which want to become (more) active within the KE can learn from the outcomes of the research.

Typical for European cities is the large involvement of governments. From every hundred euros earned within European countries, about 40 to 50 euros are being spent by governmental institutions. These organisations can therefore have a large influence on the competitiveness of economies. If they operate in a very innovative and efficient way, they will support the economy. Contrarily, if these governments are not innovative and efficient, they may seriously hamper the economy. This will become even more important in a further globalising economy, in which knowledge-intensive activities are looking for the most efficient places to locate.

The most important findings of this comparative urban research are presented in this synthesis. In the next section, we will discuss the findings on the knowledge foundations. Then in Section 11.3 we will go into the knowledge economy strategies. Section 11.4 will present the findings of the knowledge economy activities. Finally, in Section 11.5, concluding remarks and perspectives will be given.

This section deals with the position and development of the knowledge foundations in the nine case cities. We confront the outcomes of the cases with the developments described in the introductory chapter regarding the literature overview and our research framework.

In the first chapter we identified 7 knowledge foundations: knowledge base, economic base, quality of life, accessibility, urban diversity, urban scale and social equity. All these foundations contribute to the overall point of departure for succeeding in the knowledge economy. However, the degree of importance differs: the knowledge base and economic base can be considered as fundamentals, since cities without sound scores in these fields will find it very difficult to successfully build up and maintain a knowledge economy. The other 5 factors can be characterized as supportive: they add extra strength to the fundamentals. Table 11.2.1 below summarises the case study outcomes regarding the knowledge economy foundations.

-- = very weak; - = weak;  = moderate; + = good; ++ = very good

The creation of new knowledge is important for cities. The quality and quantity of knowledge institutes, such as universities, polytechnics, public and private R&D organizations, determine to a large extend the starting position and development of a city in the knowledge economy. Cities with a strong knowledge base have better chances for economic growth than places lacking such a foundation (OECD, 2002; Mathiessen, 2002; Castells and Hall, 1994). One of the indicators contributing to the knowledge base is the number of people with a third level education: see figure 11.2.2.

Source: EU – European Innovation Scoreboard 2003

Our case study research identified the following cities as having a predominantly strong knowledge base: Eindhoven, Helsinki, Manchester, Munich, and Münster. Manchester and Münster have particularly high shares of students per inhabitant: this is the result of the large number of higher education facilities in these cities. Helsinki has by far the highest educated population, which is in line with country comparisons where Finland scores significantly higher than the UK, the Netherlands, Germany and Spain. Cities with relatively many low-educated inhabitants are Dortmund, Rotterdam and Manchester. This education backlog is the result of these cities’ industrial past. In some cases the industrial background can also have advantageous effects on the knowledge base. In Manchester, for instance, specialist courses and research in creative industries take place in the combined field of fashion and textile production. Rotterdam and Dortmund are strengthening their knowledge base regarding electronic logistics to enhance the logistics sector that already makes up a big part of these cities’ economic foundations.

Some cities have a strong focus: Eindhoven is strongly focused on technology (electrical and mechanical engineering, industrial design etc) that is mostly concentrated in private companies, Münster - which has a big generic university - is concentrating on biotech and nanotech (the Münster knowledge base mainly consists of the university and public research institutes), Dortmund focuses on ICT and micro electronic mechanical systems (MEMS) and Rotterdam has clear focal points in medicine and transport & logistics. Other cities have a knowledge base that is more broadly developed: Amsterdam, Manchester, Zaragoza and Munich. Helsinki also has a broad knowledge base, but at the same time it houses the most important technical university of Finland.

The economic base is the second main determinant for the success of a city in the knowledge economy. The economic base depends on the economic sector composition & size and the level of productivity. In the literature review it was stated that cities that used to be specialized in traditional industry and port activities perform less well than cities that have a more diverse economic base.

Manchester, Rotterdam and Dortmund were heavily dependent on industrial and port activities that have seen large employment decreases in previous decades. Today, these cities are still burdened with this legacy: they are confronted with high unemployment levels, a lower educated population (which is an important part of the knowledge base), lower quality of life and housing stock and suffer from a bad image that is heavily based on activities that mostly belong to the cities’ past. Cities that are more diversified (e.g. Amsterdam and Munich) and cities that depend on economic sectors that have not shown major declines (technology in Eindhoven, science, services and administration in Münster) have a more favourable economic base. Also the more diversified cities have certain economic sectors that stand out. Amsterdam has many jobs in financial & business services, port & related industry, airport & related activities and ICT & new media. Munich has much employment in modern industry (Siemens, BMW), banking & insurance and ICT. Helsinki is dominated by (financial & business) services jobs, while also government and ICT provide considerable employment. Compared to the other case cities, Zaragoza has relatively much employment in the manufacturing sector (especially the automotive industry).

An indicator for the strength of the economic base is the cities’ GDP per capita compared to the national average (see figure 11.2.3). Indeed, the cities of Manchester, Rotterdam and Dortmund show rather low numbers compared to the national GDP per capita figures. Cities with high figures are Munich, Amsterdam, Münster and Helsinki. Figure 11.2.3 should be read with caution: in some cases the regional GDP per capita is considerably higher than the urban figure because the more affluent people live outside the city. This is for instance the case in Eindhoven and Rotterdam.

Source: Office of the UK Deputy Prime Minister, 2004; Zaragoza case study data for 2003

The urban knowledge economy depends on talented people who create and apply new knowledge. A key determinant to attract and retain such people is quality of life (Florida, 2000). Quality of life is a difficult concept, because it has a very subjective element to it: it includes many dimensions and diverse groups of people value such aspects very differently. Knowledge workers (especially the young and the more creative kind) value the presence of cultural activities and amenities highly. Other quality of life dimensions include: quality of the houses, (architectural) attractiveness of the built environment and natural surroundings/parks.

The urban quality of life is judged particularly high in Amsterdam. This city not only has many cultural facilities, but also the vibrant, lively image that reflects such a quality of life. Also, Munich and Helsinki offer a high urban quality of life: compared to Amsterdam, however, they lack the ‘sexy’, vibrant city image. Rotterdam and Manchester both have developed an attractive quality of life in recent years that is accompanied by a rather dynamic, lively city image. Nevertheless, these cities have large dilapidated neighbourhoods and the outward city image is negatively influenced by crime. The quality of life in Dortmund has increased significantly in the previous decades: old industries shut down, resulting in an increasingly green, less polluted city. The supply of cultural facilities and amenities is good but not extraordinary. Dortmund’s main problem concerning quality of life is its lagging image to the outside: many people in other places still think of Dortmund as a grey, dirty industrial place, while this image doesn’t match reality anymore. Quality of life in Münster can be typified as being that of a rather small town. The city is very green and rather quiet. Münster has a varied supply of cultural activities and facilities, but it doesn’t have an extensive, exciting nightlife. It seems that Münster’s quality of life matches its image quite well. Zaragoza has a good urban quality of life: a rich variety of urban amenities, without serious big city problems like traffic congestion, high crime rates and high real estate prices. The city has an image of being a quiet and safe place. Also Eindhoven doesn’t have a metropolitan look and feel, although the city does have various facilities such as a concert hall and an art museum. The number of attractive facilities for young people and knowledge workers (restaurants, pubs etc) is fairly low.

E.g. the less vibrant quality of life in Eindhoven is currently not a main issue, because the city is very much technology oriented. However, this might change in the (near) future if the technological focus of Eindhoven changes.

A general finding from the case studies is the importance of English-language facilities. This part of quality of life has to do with the knowledge activity of attracting and retaining international knowledge workers. Facilities like international schools, but also entertainment in English are key facilities in this respect. Cities like Amsterdam, Helsinki and Manchester are well endowed with English-language facilities.

Innovative activity is highly concentrated in some metropolitan and regional capital cities. Critical factors for international knowledge transfer are international linkages conducted by face-to-face contacts that are facilitated by international hub airports. Cities that are most successful are those that combine rich local knowledge spillovers and international exchange (Simmie, 2002). This implies that both internal and external accessibility are important. In our research we based the cities’ performance mainly on the external accessibility, which is determined by the presence of international airports and to a lesser extent high-speed train (HST) networks.

Case cities that are connected to a HST network are: Amsterdam, Dortmund, Munich, Münster and Rotterdam. Helsinki has plans to build several HST links, including a line to St. Petersburg. This should help Helsinki become a gateway between Europe and Russia. Zaragoza is to be connected to the HST network that is currently being rolled out in Spain. The strategic geographic position of the city between Madrid and Barcelona implies that the HST connection will offer a multitude of development opportunities for Zaragoza. Eindhoven lacks both a big international airport and a HST link.

Besides face-to-face contacts the knowledge economy depends on the exchange of codified knowledge via ICT networks. Several case cities have deployed activities to enhance digital access. Amsterdam and Münster have internet exchanges that facilitate large scale data traffic: being close to such an exchange can lead to cost reductions. Most case cities have good access to broadband internet (xDSL, cable, fibre etc).

Amsterdam is constructing a neighbourhood where all buildings are connected to optic fibre, Manchester has established a wifi (WLAN) network in the deprived district of East-Manchester, Eindhoven runs a project where houses and offices are connected to fibre, Rotterdam is connecting two districts to fibre and also Zaragoza has plans to improve internet access in parts of the city.

Cities with a high urban diversity are better positioned to attract (creative) knowledge workers. Places that have diverse groups of people (by ethnicity, nationality etc) have an environment that is easy to plug into: they attract talented people (Florida, 2000). Furthermore, in the first chapter we stated that diversity fosters innovation in cities (Duranton and Puga, 2000). However, urban diversity also has a downside: several ethnic minorities consist of many low-educated people; unemployment among these groups is relatively high. Also, urban diversity can imply tensions between different groups of people because of differing life styles and their according values. Which case cities are most diverse? The percentage of foreign-origin inhabitants gives a nice indication (see figure 11.2.4).

Note: These figures are only a rough indicator, since measurement techniques among the cities differ. The figures for the Dutch cities would be lower (although still high) if the same definitions were used as in other case cities.

Source: case studies and the MUTEIS Helsinki city portrait

Amsterdam, Rotterdam, Munich and Manchester have the highest figures; this outcome is in line with our evaluation of the overall urban diversity in the case cities.

Besides high numbers of foreigners, these three cities have a rich blend of cultural activities (see quality of life) and residents. Amsterdam, Rotterdam, Manchester and Munich all have a very diversified mix of inhabitants: young urban professionals, dynamic student populations, but also significant groups of deprived people. Although the foreign origin inhabitants add to the cultural diversity (and enhance possibilities for economic development (e.g. through ‘new combinations’), currently, several ethnic groups throughout most of the case studies also pose a problem for these cities. Various foreign-origin inhabitants are relatively poorly educated, which has resulted in weak labour market positions and high unemployment levels. This touches upon the social equity foundation.

In general this involves highly educated people from the EU and western hemisphere countries that go somewhere to get advanced education and/or work in high-grade jobs. Most of these people have a high economic potential. They seek for places where sufficient English-language facilities are offered. Relatively large ‘western’ immigrant communities (the number of western immigrants on the total foreign population) can be found in Amsterdam and Eindhoven. Münster has a rather big, well-educated foreign population consisting of students and researchers originating from Southeast Asia, Eastern Europe and Turkey. Zaragoza is rather special: it has a low number of foreigners, of which most come from Latin America, because of the Spanish language connection. Most of these Zaragoza immigrants are poorly educated.

The main policy point concerning urban diversity for most case cities is to improve the labour market position of several ethnical minorities. This will enhance the knowledge base and economic position of the cities and will strengthen the social equity dimension.

The knowledge economy is a network economy: rapid developments in knowledge make that no single person or company can master all disciplines or even monitor all the latest developments; this also applies to cities. Cities –especially those that have a smaller urban scale- need to engage in strategic networks to be able to timely respond to rapidly changing markets and technologies. Every city in the network needs to develop its own specialisation (Castells, 2000). In the knowledge economy, to a large extend, big is beautiful. For companies it is easier to find specialised staff in larger cities and for citizens big cities are attractive because of the large variety of jobs (Glaeser, 2000). The scale of large cities offers scope for bigger airports and rather specialised facilities such as international schools.

Rotterdam and Dortmund are medium-sized cities from a European perspective: their current urban scale is not remarkably large, but they have many opportunities for increasing the scale by improving cooperation with nearby cities since such linkages are currently quite limited. Rotterdam is part of the dense urban Randstad region (7m inhabitants) which also includes The Hague, Utrecht and Amsterdam. Dortmund is part of the industrial Ruhr region (5.4m inhabitants) which includes cities like Essen and Duisburg. Münster and Eindhoven have a smaller urban size and are not particularly close to other big cities: their possibilities for increasing the urban scale by enhancing interurban cooperation are more limited. Finally, Zaragoza itself is a medium-sized city (bigger than Münster and Eindhoven), but it is not part of a larger urban conurbation: the city is located in the middle of a sparsely populated area. Table 11.2.5 gives an indication of the case cities’ urban scale.

Source: case studies

Most case cities are aware of the importance of urban scale. In several ways they try to strengthen their position concerning this knowledge foundation. In Manchester two universities have merged to attract more and better professionals and students. In the Randstad region, currently most interaction takes place within the northern (Amsterdam) wing and southern (Rotterdam) wing: activities including both wings are limited. The construction of the new HST rail links currently underway is expected to significantly reduce travel times between the two cities and increase interaction and cooperation. Helsinki tries to extend its urban scale by looking abroad: cooperation with Tallinn is set up and interaction with St. Petersburg is expected to improve when a new HST train connection is in place. Eindhoven acknowledges that its limited size implies a relatively low degree of influence on national government decisions. Therefore it cooperates with some other cities in the province to increase their political influence. Eindhoven also is involved in cross-border cooperation: it works together with Aachen and Leuven to jointly become a top technology region. Münster is involved in international cooperation as well: these efforts mainly run through the university and polytechnics that participate in EU projects. Cooperation between cities in the Ruhr region (including Dortmund) is limited and up till now not many activities have been deployed to increase such linkages. For Zaragoza, the urban scale is expected to increase when the HST train connection is finished.

In the knowledge economy a two-way relationship exists between economic performance and social equity. On the one hand growth of knowledge intensive sectors increases the number of jobs in personal services, hotel and catering industry and retail: such jobs often require low levels of education. On the other hand, reducing poverty and inequality can stimulate economic growth by increasing (the perception of) safety (Hall and Pfeiffer, 2000) and by enhancing the purchasing power, which will strengthen the demand side of the economy. To give an indication of the social equity in the case cities, the unemployment figures are shown in figure 11.2.6: within their national contexts Munich, Münster, Eindhoven, Helsinki and Zaragoza perform well. These cities do not have significant social equity problems.

Source: Office of the UK Deputy Prime Minister, 2004; case studies; Statistics Finland web

The former industrial cities Manchester, Dortmund and Rotterdam are performing rather poorly. Also Amsterdam has a high unemployment figure. When comparing the nine case cities with each other, it is interesting to see that the unemployment level in Rotterdam (which is perceived as high in the Netherlands) is a lower than in Münster (where social equity is not considered problematic). Among the cases, Eindhoven has the lowest unemployment figure.

As we already identified in the urban diversity section, a significant part of the unemployment problems especially applies to ethnic minorities. These communities started their formation decades ago with the large inflow of migrant workers that came to among others Dutch and German cities to fulfil low-skill, low paid jobs. Today, cities like Dortmund, Rotterdam and Amsterdam have large groups of foreign origin inhabitants from countries like Turkey and Morocco. The social problems are mostly concentrated in certain urban districts.

In Manchester not only renovation of houses takes place, but also the university is involved in solving the problems: a university institute is located in the neighbourhood and several academic fields (e.g. urban development and education) try to apply their knowledge to improve East-Manchester. Amsterdam wants to increase social inclusion by improving the quality of education. In Eindhoven specific education programmes are aimed at unemployed people who lost their job in the economic downturn: they can now strengthen their knowledge and skills to obtain a stronger position in the market position once economic circumstances improve.

More explicit knowledge economy strategies by other government levels could be found in Germany, Spain, the Netherlands and Finland. Within Europe, Finland was one of the first countries to develop explicit "knowledge economy strategies". The national government of Finland was already halfway during the 1980s active in the transition process towards the knowledge economy. The STPC - the national council for the knowledge economy - was set up in 1985, and Tekes – the investment fund, in 1983. Furthermore, there is a national Centres of Expertise programme, aiming to support dedicated knowledge economy clusters within Finnish regions, which can operate in a international competitive way. Thus, the strategy has a regional component. In Germany, the regions (Länder) are quite active regarding these strategies, as we found for the regions of Bavaria and North-Rhine Westphalia. The Länder are largely responsible for R&D policy and education policy, and they have a large influence on some economic sectors, such as the media sector and the health and biotechnology sector. In Spain, the autonomous region of Aragon appears to play a similar role as the German regions in supporting education and innovation policies. The national government of the Netherlands has set up an innovation platform that has to develop national strategies to improve the Dutch performance within the knowledge economy.

Halfway the 1990s, a number of cities participating in this study developed early knowledge economy strategies. In 1993, Eindhoven started the Stimulus programme. In 1994, Manchester published its City Pride prospectus, and renewed it in 1997. In 1999, Helsinki initiated a strategy to enhance knowledge and business development.

At the start of the new millennium, more cities came up with KE strategies. Dortmund started the its Dortmund project by 2000. In 2003, Rotterdam, Münster and Zaragoza published their latest strategies. Obviously, because of the newness of these strategies, their results could not be studied within this research project.

Quite explicit and comprehensive strategies could be found in the cities of Manchester, Rotterdam, Dortmund, Zaragoza and Eindhoven. The other four participating cities, Amsterdam, Munich, Münster and Helsinki, have less explicit strategies.

The focus of Dortmund and Rotterdam is to diversify the urban economy. In Zaragoza, the key ambition is to develop the service sector and benefit more form the HST connection. Eindhoven’s strategy aims to strengthen its technological profile in many respects. Manchester has developed a vision on its role in the knowledge economy as a secondary city within Great Britain: "Manchester Knowledge Capital". An important question in this respect was: what can be the role of Manchester in the global knowledge economy in relation to the dominating London region. In this vision, it is expressed that Manchester wants to better utilize its strengths (a.o. four universities, international airport, Metrolink system and growing industry clusters) to attract and retain KE activities. Another important element of the strategy is improving the urban equity (by supporting disadvantaged people). This is considered essential to achieve a sustainable regional economic growth.

For some cities, an economic crisis was the key catalyst for the development of a knowledge strategy. For the city of Eindhoven, for example, the economic crisis in the early 1990s has been an important catalyst for setting up the economic stimulation programme "Stimulus". This programme has contributed to better cooperation between firms and education institutes and to attract research institutes. The desire to further strengthen the structure of the regional economy has been a catalyst for a new programme, "Horizon", which includes a number of projects supporting KE activities, such as stimulating the flow of students from lower via intermediary to higher education, increasing the number of start-up companies and setting up a High-Tech campus. For Helsinki, the economic crises of the early 1980s, and the collapse of the Soviet Union in the early 1990s (before that moment the most important trade partner of Finland), were major incentives to take adequate steps to strengthen the local economy. This led amongst others to an internationalisation strategy (f.i. by cooperating with cities outside Finland), and in particular to much more attention for education, science and research. With respect to the latter elements, the national government played a very active and stimulating role. Furthermore, for the city of Helsinki, cultural and environmental factors were considered to be important to improve its role in the KE. Representatives of cultural organisations are even involved in initiatives to strengthen the regional economy.

For Rotterdam and Dortmund, the steady decline of the economic base was a key reason to design a knowledge economy strategy. Desired structural economic changes have stimulated them to come up with active strategies. In 2003, the Development Corporation Rotterdam came up with a Programme Knowledge Economy. Within this programme, three tracks to support the regional KE are identified: developing the regional labour potential, reinforcing the innovation power and improving knowledge infrastructure and facilities. Also for Dortmund, the perceived need for regional economic structural changes was the catalyst to develop a strategy. It was set up by the City of Dortmund in close cooperation with private business companies. This "Dortmund Project" has a number of goals: a.o. stimulating new specific KE clusters (ICT, E-logistics, Micro Electronic Mechanical Systems), strengthening local companies, improving education institutes, upgrading the urban quality of life and better administrative services. Besides this public-private partnership, also the help of the regional government (North-Rhine Westphalia, see below) and the EU (Urban 2) are considered important.

For Zaragoza, the connection to the HST was a key catalyst to think about the future of the city. "Zaragoza towards the knowledge society" is the name of the KE strategy presented in 2003 by the City of Zaragoza. Major elements of the strategy are economic diversification and better utilisation of the existing knowledge base. The strategy includes a large number of projects that contribute to these aims, but got a clear focus in and around the station areas of the High-Speed Train. In these areas, the "Digital Mile" project is envisaged: the creation of a highly innovative urban environment, which should become a laboratory of new ways of living, learning and working. It is hoped to attract knowledge intensive activities within these areas, with major spread effects on the surrounding regional economy.

But in all cases, they are very active in separate fields of knowledge economy policy. The City of Amsterdam had few codified policies on the knowledge economy. Within the city, there is however a Knowledge Network, in which the city, universities and companies are involved. Until recently, this network has focused on networking and information exchange. It is expected, however, that it will get a more proactive character in bringing relevant actors together to create and apply relevant knowledge. Within the urban region of Amsterdam, there is a wide variety of knowledge institutes and knowledge-intensive business companies. There is however internally as well as externally insufficient awareness of the existence of these knowledge elements. In order to change this, the City of Amsterdam supports better city-marketing strategies.

The City of Munich does not have a comprehensive strategy, but it undertakes a number of activities that promote the regional knowledge economy, such as promoting promising economic sectors, promoting innovation, helping SMEs in innovation and supporting starters. Besides, the Freestate of Bavaria has a very active role in stimulating the knowledge economy.

The City of Münster does not have an explicit and comprehensive knowledge strategy, but has developed several related policies. The two most important aims of these policies are to increase interaction between regional education institutes and companies and to better promote the knowledge activities of the city. The first aim is considered important because the education institutes are still operating too much as islands. More interaction is expected to lead to more applied knowledge creation. Because the knowledge activities of the city of Münster are not very well known, within as well as outside the city, also promotion activities are considered important in order to create more awareness of the strengths and attractiveness of the urban region.

In the knowledge economy, administrative boundaries matter less. Some cities realise this and develop their strategies accordingly. Rotterdam, for instance, wants to improve the cooperation with the Technical University and relating business activities of the neighbouring city of Delft. Both cities are located so close to each other, that it can be argued that they form one coherent economic region. Manchester and Eindhoven came up with clear comprehensive regional strategies. Other cities even look beyond the direct urban region and engage in partnerships with cities in other regions. Examples are Münster (that is part of the Scientific Region together with Enschede (NL), and Osnabrück) and Eindhoven (that links up with Aachen and Leuven. It most be noted, however, that it is not always clear how the "strategic" co-operations work out in practise.

We found that the stronger the KE foundations are, the less explicit the KE strategies are (see figure 11.3.1). This was particularly noticeable in the urban regions of Amsterdam, Munich and Helsinki. All three cities have relatively strong knowledge economy foundations (see former section). Because of these strong foundations, they will attract more easily knowledge-intensive activities than regions with weaker foundations. They thus have fewer incentives to develop explicit policies to strengthen these foundations and/or to have adequate knowledge economy activities (see next section). Besides, in the case of Helsinki, we could see that the national government plays an active role in stimulating the knowledge economy; in the case of Munich, the regional government of Bavaria played such a role. It can be argued, that the more active other governmental levels are, the less necessary an active local authority will be. In the case of Amsterdam, however, other governmental levels are not yet really active in stimulating the knowledge economy. For this urban region, therefore, a more active public involvement in stimulating the knowledge economy is considered to be necessary in order to improve and guarantee Amsterdam’s role in the knowledge economy for the long term.

Contrarily, we found that the cities with weaker foundations are quite active in developing explicit and comprehensive strategies. Because of their weaker starting position they have to be proactive to catch up with their competitors. For these cities, several catalysts could be noticed for formulating explicit and comprehensive strategies to strengthen the regional economy. For some cities, this catalyst was a serious regional-economic crisis, for instance for Eindhoven.

What can cities do to become stronger in the knowledge economy? This was one of the key questions in this research project. In chapter one, we make a distinction between four types of "knowledge activities":

• Creating new knowledge. This can be pure scientific knowledge, but also other types of knowledge

• Applying new knowledge. For this category, we analysed how scientific knowledge is transferred into business, and, more in general, how the knowledge infrastructure and the business sector co-operate

• Attracting knowledge workers. Here, we looked at the cities’ ability to attract and retain highly educated people, students, but also workers in the creative industries

• Developing new growth clusters. For each city, we have described and analysed how it tries to strengthen the knowledge foundations by developing new growth clusters.

Before treating the different activities individually, it is important to see their interrelations, and the link with the foundations of the knowledge economy. In figure 11.4.1, these relations are schematically represented.

In the picture, the knowledge activities are linked to the two key economic foundations: knowledge activities change the knowledge base and the economic base of a city. In the last section, we have already argued that cities with relatively weak initial foundations have the highest incentive to change their knowledge and economic base.

The four knowledge activities are in the centre of the picture, in the grey box. After analysing the nine cases, we conclude that the activities are mutually related: the last category –creating new growth clusters- is a function of the others. For the creation and development of a growth cluster, all the other activities are relevant.

Patent data should be interpreted with great caution. First, the patent data refer to the location where the patent has been registered; this is not necessarily the location where the invention was done. This may overestimate the innovativeness of Munich, with its headquarters of BMW and Siemens. Furthermore, innovations in services (which make up over 70% of the economy) are normally not patented, although they make a major contribution to productivity and quality improvements. Third, it is not the number of patents registered which is important for the economic development and innovative character of a city, it is the number of patents which are transcribed in production or new processes. This is the important difference between invention and innovation.

Another indicator for new knowledge creation is R&D expenditures (by firms and governments). Finland is the leading country here (and much of it is spent in Helsinki), followed by Germany (with Munich as a focal point) and then the Netherlands. The UK and Spain score much lower.

High-tech indices (R&D expenditures, patents etc.) are often regarded as measure for a region’s innovativeness and its strength in the knowledge economy. Many types of policies, national, local and European, also heavily focus on high-tech companies and promote technological innovation. This underestimates the importance of innovations in services, concepts, design and other areas that are crucial activities in the knowledge economy. Cities such as Amsterdam (financial and business services) and Manchester (creative industries) create a lot of new knowledge of this type but nevertheless get a low score in the common rankings of innovative regions (for instance the EU’s Top 50 European Innovation Index). In a recent article, Den Hartog, Broersma and van Ark (2003) confirm this point.

The creation of new knowledge takes place in universities, research institutes and private companies. In theory, it would be beneficial for the city if the knowledge infrastructure and the business sector would be complementary to one another. However in practise, local governments have very little direct influence on this. Universities are relatively autonomous, and decide about their own research and education priorities. University policy is designed on the national level (Netherlands, Finland, UK) or regional level (Germany, Spain); Most science funds also operate on a national or regional level. In many cases, we found that governments face a trade-off between equity and equality. In Finland, where most of the national research funds end up in the capital city Helsinki, a debate is going on whether these resources should be spread more equally over the country. The Freestate of Bavaria, where Munich is a natural "magnet" for these funds, has an explicit policy to spread research and education spending equally over all Bavarian cities. Nevertheless, Munich has benefited strongly from the relatively high investments of the Freestate of Bavaria in knowledge, science and education in the last decades.

Cities can do something to improve their knowledge base. One option is to lure research institutes. Eindhoven for instance managed to attract a highly innovative research institute (TNO Industry) to the city, offering support of € 7m.

The direct competences of local governments to steer the local knowledge creation are limited: they cannot do it alone.

We found several good examples of cities that use their organising capacity to influence knowledge creation.

• Develop research institutes. The city of Münster invested € 2.3m in a centre for nanotechnology that offers optimal conditions for research in this field, in a strategic co-operation with the university and a local bank.

• Promote co-operation between universities. For cities with several universities, it is a challenge how to make them co-operate. Manchester has ambitions to co-ordinate the activities of the four universities in its region: two universities have already decided to merge, with the aim to become stronger vis-à-vis top science cities in the UK (London, Cambridge and Oxford). The city invests substantially in the campus. Rotterdam promotes the co-operation of higher education institutes in the fields of media and transport & logistics.

• Establish chairs/professorships. Rotterdam also has concrete plans to establish professorships in fields that it considers important for the local economy: logistics/ICT, process chemistry, architecture, and life sciences.

• Promote and support co-operation with universities in other regions. In particular the smaller cities (Eindhoven, Münster) see this as a viable option. Eindhoven has started to co-operate with the cities of Aachen (Germany) and Leuven (Belgium). The regions share a strong R&D profile, and want to fine-tune their specialisations. Interestingly, it was Philips, the electronics company, that initiated this co-operation: the company has important research institutes in each of the three cities. Münster works with Osnabrück and Enschede/Hengelo to create a "knowledge region" to strengthen the networks between the research centres in those cities.

How is knowledge translated into business, and how can this be improved? These are crucial questions for urban policymakers in all our case cities. In our study therefore, applying knowledge is the second type of knowledge activity. Under this heading, we described and analysed university-business co-operations and activities to improve this, as well as the promotion of start-ups. What have we learnt from the cases?

In general, we found that many policy initiatives (on local, regional and national levels) aim to improve the co-operation between firms and universities, in order to make more out of the regional knowledge base. Universities and companies too often are two worlds apart: they have different drivers (academic prestige vs. profit making), they have different time horizons, different work attitudes, and in practise, find it difficult to co-operate. However, there are many potential synergies and interdependencies: some knowledge developed at universities is commercially very valuable, or may become so in the longer run; university students and researchers are potential entrepreneurs; universities are the source of new staff for companies; university labs may be used by start-ups; universities may benefit from applied research assignment from the industry, and vice versa.

It is a general trend in Europe that universities are urged to co-operate more with businesses: they get less direct funding, and have to increase their earnings from co-operations with the industry. This may improve the collaboration. In Münster, there is an extra reason: the polytechnic school there obtains less structural funding from the region of North Rhine Westphalia, but its gets more when it is more successful in attracting financial means from the industry. This example shows how regional governments can create incentives to improve business-university collaboration.

Despite the trend of decreased funding, working with the industry is still considered inferior by many (top) researchers. In the current situation, in all our case studies researchers are mainly judged according to their scientific publications. Their careers depend on it, and the allocation of research grants and funds is also based on the publication track record of researchers. This reduces their willingness to work with the industry. If the aim is to promote university-business co-operation, this incentive structure needs to change. This is something that cannot be achieved by local governments, but they may join forces and lobby to modify the policies of national governments and research funds.

In our case cities, we found that larger and innovative firms are more willing to co-operate with universities than others. This is an advantage for cities with a diverse and innovative economic structure, such as Munich and Helsinki, and also Eindhoven: They form a very "natural" environment for co-operation. In some other cities (i.e. Münster, Zaragoza), the economic structure is much less favourable. Münster has a lack of business activity: top research teams in the Münster university see this as a disadvantage, because if they want to work with the industry, they have to travel to other cities. Münster tries to attract knowledge-intensive business with its excellent knowledge infrastructure. In Zaragoza, the business sector is dominated by medium-tech SMEs that are less inclined to work with the university. We conclude that cities with both a strong knowledge base and a strong economic base have the best perspectives for fruitful university-business interaction.

In our case cities, a lot of policies are directed to improve university-business interaction. In such policies, cities have to work together with universities and companies. Here again, the degree of organising capacity is crucial: the success of policy depends heavily on the quality of the local networks and the ability of the partners to work together and arrive at concrete results.

There are many instruments to improve university-business co-operations, and for each instrument, there can be a different role of the city. For some activities, cities can take the lead. In others, leadership is more natural in the hands of the other partners, and cities can play a more supportive or enabling role. Below, we list some of the policy options.

• Cities can create networks by providing financial rewards for co-operation. In Eindhoven, the Stimulus project financially rewarded innovative co-operations between business and knowledge institutes.
• Cities may co-invest in joint facilities and technology centres where firms and research institutes can co-operate. German cities are very active in this respect. One example is CeNTech in Münster, a centre for nano technology research. It provides high-level facilities to university research groups, and encourages the creation of new business out of that research. Similar centres are to be found in Dortmund and Munich.
• Cities may create technology parks: special zones dedicated to high-tech business. Several cities have created technology parks near university establishments. The largest we found in Dortmund, where in 1985, the city created a technology park together with the Fraunhofer Institute, the Chamber of Commerce and a bank. By 2004, it has 200 companies, most in high tech industries. They contribute substantially to the Dortmund economy.
• Cities can involve the university in urban projects. In Zaragoza, the city deeply involves the university in the design of its largest urban project, the "digital mile" near the central station area. Here, the local government takes the role as third-party funder.

• Set up of transfer agencies. In most of our case cities, higher education institutes have transfer agencies that create links with business and help administrative and contractual issues.
• Pro-actively approach companies and invite them to participate in projects. In Zaragoza, the polytechnic no longer waits for companies that ask for their help, but rather markets its offer to the companies in the region.
• Enable firms to use university facilities. In Munich, for instance, young firms are allowed to use laboratories of the Technical University, and may use the university as their address.

In general, larger firms are more likely to co-operate with the local knowledge infrastructure than small ones. It is a trend that companies become more open to the outside world and engage in activities that they did not do before. Philips, in Eindhoven, has initiated the co-operation between Eindhoven, Leuven and Aachen (see previous section) to fine-tune knowledge activities and strategies. Also, it is building a technology campus in the city. Siemens (in Munich) plans to construct a campus in the city centre, and become more open to the city than it is now.

Although cities have some instruments to contribute to improve interaction, they depend on others in many instances. Much depends on the administrative organisation of the country. In the federal countries (Germany and Spain) the regions are the most important; in the others, it is the national government. In Germany, the regions (Länder) are the main actors to promote university-business co-operation. Bavaria deploys an impressive variety of policies. One example is the provision of financial incentives for projects in which the university co-operates with a company. The so-called Bonus Programme (a programme encouraging research financed by sponsors from commerce and industry) pays financial rewards for the acquisition of funds from third parties for carrying out specific applied research assignments. In Spain, the regions are also important players in innovation policies. In Finland, there are strong financial incentives from the national government to make universities and business co-operate. Tekes, the national technology agency, funds co-operative R&D projects of universities and businesses.

In many countries, there is a gap between national innovation policies, that are very general, and local competences and ambitions, that are more specific and concrete. Too often, national innovation policy is non-spatial, i.e. it does not take regional differences in economic and knowledge specialisations into account (although it must be stressed that this holds less for regional policies in Bavaria and North Rhine Westphalia). With this in mind, Finland has designed its national Centre of Expertise Programme, launched in 1994. The idea is to focus local, regional and national resources on the development of internationally competitive fields of know-how in specific places. The programme pays special attention to SMEs to develop selected internationally competitive fields of expertise, and stimulate technology transfer from universities to firms. The programme covers the whole country and it is carried out in regional Centres of Expertise, appointed by the Council of State, that work closely with universities and companies in their respective sectors. The Netherlands recently set up a national innovation platform, chaired by the prime minister, to promote the knowledge economy. However, there is little explicit recognition and attention for the regional dimension of the knowledge economy.

In Germany, the national government (and sometimes the regions) organises national competitions, in which cities or regions can win financial support. By doing this, cities are encouraged to develop innovative strategies in certain fields. For instance, cities could apply for a subsidy to create a Biotech region. Another example is the "city of Science" competition where cities can submit plans to strengthen the link between their university and other urban actors. Often, the city benefits even when it does not win the competition: actors have co-operated to draft the proposal and have developed ideas that they want to implement anyway. Also in The Netherlands, this "competition approach" is frequently used, for instance in the Twinning initiative.

Cities are highly aware of the importance of entrepreneurship for their economic future. Every city in our study has invested in starters centres, where start-up companies can obtain cheap business space and administrative support. In many cases, the centres organise meetings where the companies can meet potential new clients, partners or experts, visits to trade fairs etc. It is a trend to have specialised starters centres rather than generic ones: Munich has five starters centres, more or less specialised in specific branches; Zaragoza’s centre focuses on industrial companies; Münster’s centre focuses on ICT and life sciences; Eindhoven’s Twinning centre is dedicated to ICT. Typically, starters centres are set up jointly by the city, the university, the region and the Chamber of Commerce.

Another instrument is the business plan competition, which is common in German cities. The entrepreneur that submits the best business plan wins financial and other support. Dortmund probably has the most aggressive programme: starters from all over Germany can participate in the business plan competition and win the money even if they don’t locate in Dortmund. But if they do locate in that city, they can even win more.

Many cities hope to increase the number of spin-out companies from universities (successful researchers that develop a product or idea that is commercially viable). Some cities support chairs in entrepreneurship (Münster, for instance). In Munich, researchers can get support if they want to register a patent (which can be quite complicated). Some cities have agencies to spot commercially viable ideas in the university.

In general, since the bust of the dotcom boom, it is a lot more difficult for companies to get venture capital, as venture capital providers have become much more cautious. However, there are spatial variations. Venture capital providers (official VC companies or private investors) tend to locate where the number of investment projects is the highest: the larger cities. For the smaller cities, this can be a problem. In Münster, for example there is no venture capital company active. This makes it more difficult for start-ups or SMEs to get finance compared to firms in Munich, where the offer is large.

To increase the supply of VC, many local and regional governments in our case cities have public or semi-public venture capital funds. One example is the Stimulus Venture Capital Fund in Eindhoven that provides VC for high-tech SMEs for a period of 5-7 years. The Freestate of Bavaria also has numerous VC provisions, most of them in the role as "accelerator funds": it is easier to get more capital if you already have one investor.

In our framework we have argued that the knowledge economy hinges on the availability of qualified staff. As a general trend, the demand for workers with tertiary education is rising. One of the key questions for cities is therefore: how can these people be attracted to the city, or how can they be retained. In this respect, it is important to make a distinction between different types of knowledge workers, for instance between top scientists, engineers, managerial staff, people in the creative industries (artists, architects etc), or specialists in the service sector. Another category is the students. All of these groups have different location preferences.

In all our case countries, the capital regions worked as a magnet for the higher educated, since the mid 1990s. In Finland, Helsinki is the focal city for the highly skilled: by 2004, 50% of Finland’s academics live in the Helsinki region and there is still an upward tendency. In the UK, London is still a strong magnet for talent from other cities. In The Netherlands, Amsterdam has a high percentage of academics and knowledge workers in recent years. In Spain, Madrid and Barcelona attract a disproportionately big part of the highly educated. In Germany, Munich (not a national capital but the important regional capital of Bavaria, which has over 10m inhabitants) is in a strong position, albeit it is much less dominant than Helsinki or London.

The reasons for this tendency are manifold. One key factor is that large cities offer more job opportunities than small ones. This makes it easy to change a job (many knowledge workers are relatively mobile), but also for the partner of the knowledge worker to find a job. Second, these cities are well connected internationally (through airports and HST lines), a factor that has become more important with internationalisation of the economy; third, these cities offer an international infrastructure (schools, social life) that makes it more easy to attract talent from other countries. This is a key asset given the increased international labour mobility in high-skilled jobs. Fourth, these cities are natural "cultural capitals", with subsequently strong cultural and creative industries. Their cosmopolitan feel attracts creative people.

In Munich, for instance, costs of living are so high that many students choose to live outside the city, or decide to study in smaller towns. Also, there is a lack of affordable space available for artistic/creative people that are not (yet) commercially successful. The same problem goes for Amsterdam. Furthermore, for some categories of workers such as teachers, nurses or policemen, these cities are relatively expensive places as their salaries are determined on a national level. Those cities may need specific policies to keep these vital workers in the city: they could consider to subsidize student housing, create specific housing projects for public servants, or subsidize locations for artists.

Smaller cities tend to more quiet, more green, and have less congestion and crime, and some of them have specific strengths. Eindhoven, notwithstanding its small size, manages to attract top engineers and many foreign workers. They appreciate the green surroundings and the quietness of the city. The strong technology-oriented economic base of the city generates interesting jobs for these people. Münster (also a quiet and green city) attracts top scientists because of the good reputation of its university. Both cities have a relatively high share of western immigrants. Zaragoza currently has problems to retain its highly educated workforce, and many students move out after graduation. When the city is connected to the HST, it may become a commuting town for Barcelona and Madrid and capitalise on its high quality of life. More in general, the lack of international accessibility may hamper the ability of some smaller cities to attract talent. This is a problem for Eindhoven that will not be connected to the HST networks and will experience a relative loss of accessibility.

Overall, smaller cities have to compensate for some disadvantages they have. There are several options for this:

• Generic city marketing strategies: increase the visibility and profile of the city. This can be achieved by organising events etc.
• Targeted city marketing actions: make sure the city is part of the "mental map" of the target group. This should be done in co-operation with local business leaders and research institutes.
• Investment in short-stay accommodation; this helps to attract temporary "expats"
• Development of active supportive policies to help foreign workers, for instance to find housing, or a job for the partner.
• Setting up or subsidizing international schools, perhaps in co-operation with neighbouring cities.
• Engagement in strategic partnerships with other cities (Münster and Eindhoven do this).

Again, organising capacity is crucial: these cities do not get the fruits of the knowledge society automatically, so they have to be pro-active.

Some of these cities have an image problem that makes it more difficult to attract highly educated knowledge workers. This is a particular problem for Dortmund: although this city is no longer dominated by smokestacks and heavy industries, many people in Germany and abroad still perceive it as such. Changing the image is therefore a key priority for Dortmund. Second, given their sector structure, these cities offer fewer jobs for which high skills are needed. Rotterdam has a relatively poor housing stock: there is a lack of housing for middle class families. Therefore, upgrading the housing stock is a key priority for that city.

This class of cities not only has drawbacks, but also specific opportunities. One is the abundance of (cheap) space, which can be a factor to attract creative talent and provides room for experimentation. Many cities are converting their industrial heritage in order to develop creative industries. In the last years, Manchester and Rotterdam have built up a young and hip image in certain subcultures, which may offer promising economic perspectives.

Recent studies show that Europe loses many scientists to the US, where several top universities attract the brightest people from all over the world. In Europe, only the UK has some universities that play in that league. But there are several activities in our case cities to change this. Some of our case cities try to build up strong competence centres. Manchester for instance wants to become at par with Oxford and Cambridge by promoting a merger between its universities. In Germany, the Max Planck institutes are setting up top-level international research schools together with local universities (one is in Munich), to attract top talent. This is an important trend, because top universities/research groups may attract and generate private research activity. Cambridge in the UK is an outstanding example of a city which excellent knowledge base has attracted many high-level private research institutes (Microsoft, for instance).

The last knowledge activity is the promotion of cluster development. As outlined above, this is a crucial policy to influence and modify the economy and knowledge base of a city, and it involves all the other knowledge activities as well. What can we conclude, based on our case studies?

We must make a distinction between growth clusters and spearhead clusters: growth clusters are activities that grow in the local economy regardless whether they are the specific target of policies or not. Spearhead clusters are activities that receive special policy attention.

Table 11.4.2 shows the list of sectors/clusters that receive policy attention in our case cities. It is quite striking that many cities choose the same spearheads: ICT and biotechnology, with some variations, appear in almost every city; nanotechnology is becoming popular as well.

As stated in our theoretical introduction, the knowledge economy affects every economic sector. Also "traditional" sectors are part of the trend. From this perspective, we found interesting examples of cities that design policies to upgrade traditional sectors and make them more knowledge intensive, or add new knowledge-intensive activities. Rotterdam wants to improve its knowledge base in the field of transport and logistics. To that end, it invests in an Academic Centre for Trade, Transport and Logistics, which is a co-operation of two universities and the port community. Zaragoza is developing a logistics park, but at the same time it has attracted a subsidiary of MIT (Massachusetts Institute of Technology, from Boston) that will conduct research and offer top-level education in the field of logistics.

It is easy to state that a cluster should be developed or promoted: it is less easy to really make it happen. Many factors play a role in cluster development, and market forces are very strong. The direct influence of policy is limited. However, based on what we have seen in our case cities, we may draw some conclusions. Policymakers should be aware of the market potential for the cluster in their specific city: in the end, market forces strongly dominate corporate location decisions and future developments of sectors, and policy can only support and encourage certain developments. A careful analysis of current strengths and weaknesses is therefore crucial.

Cluster policy can be built on several types of strengths:

• Academic strengths in the city (Münster, Rotterdam, Helsinki). Münster’s nanotechnology cluster policy, for instance, is built around the strength of a very specific research group in the university. Other good examples are Rotterdam (the medical cluster policy is built on strong academic competence in the medical school) and Helsinki.
• Economic strengths. Eindhoven’s choice for mechatronics is based on its strong business profile in this sector; the same holds for Manchester’s choice for finance and business services.
• Cultural strengths. This holds most for Manchester’s choice for the creative industries as growth sector, but also Amsterdam’s potential in the new media sector.
• Strengths in Accessibility. Zaragoza’s ambition to develop a logistics clusters and a business services hub near the new station is directly related to the connection of the city to Europe’s high-speed train network.

The chances for a target cluster to flourish are the highest when the cluster is based on several strengths of the city. One good example is Munich’s biotechnology cluster: it is linked to academic strengths (several university departments have a good reputation in biotech research), and to economic strengths: the city already had a cluster of pharmaceutical companies and related business.

Promoting a growth cluster is a complex challenge. Therefore, many partners should be involved, and it should combine a number of policy instruments. Ideally, promoting a growth cluster includes all the knowledge activities in our study:

• Starters policy: specific starters facilities and support for start-up firms in that specific sector
• Knowledge creation policy: Cities should try to influence the research infrastructure in a way that it supports the targeted growth cluster
• Knowledge transfer policy: make sure that universities and the firms in the target cluster co-operate
• Location policy: for some clusters, where face-to-face interaction is crucial, it can be wise to co-locate the various cluster actors in one building or in a technology/business park
• Policy to attract talent. Clusters need qualified staff, and sometimes, targeted actions are needed to ensure that such staff becomes available.

Cities cannot design and implement cluster policies on their own: All the relevant actors should be involved. Coalitions are needed that include the private sector, the university, and the relevant public actors. Rotterdam is a nice example of how cluster policy can be structured. That city has established an economic development board, whose members are high-level local actors from the private, semiprivate and public sector. Each member is responsible for one target cluster, and develops the policy with all the stakeholders involved.

In their cluster policies, cities hardly look beyond their administrative borders. However, cluster actors (firms, universities, workers) rather operate on a different scale level and don’t mind administrative borders. With improving transportation systems (the high-speed train network is particularly important), functional regions are still growing: commuting distances will increase, and the relevant region for clusters will continue to grow accordingly. This is not reflected in policies, however. We found that neighbouring cities often develop identical clusters and compete instead of co-operate. In the Randstad for instance (of which Rotterdam and Amsterdam are part), there are at least three cities that want to develop a health/biotech cluster. Similar situations prevail in the Ruhr area (where Dortmund is situated). Eindhoven is a rather positive exception: this city defines and promotes its clusters on the regional level, and also seeks to co-ordinate its efforts with other cities (Leuven and Aachen). And Rotterdam has recently included the technical university of the neighbouring city of Delft in its cluster policy.

It would be more efficient if cluster policies would be designed at least on the level of functional urban regions (commuting regions) or even higher spatial levels. To achieve this, different incentives are needed. Regional and national governments should obtain a stronger co-ordinating role in order to prevent the current fragmentation and create bigger and stronger clusters in specific places. This is particularly relevant for clusters where "critical mass" is an important growth condition, as is the case in biotechnology clusters. This is not only important for the cities but for the economic competitiveness of Europe as a whole. More research is needed into the societal costs of the current cluster fragmentation, and to develop efficient policy frameworks to mend it.

This highly ambitious study, hopefully, sheds more light on the development and policy options of cities in the knowledge economy. It has demonstrated that the knowledge economy is a trend that affects every city, but in different ways depending on the specific local situation. Therefore, there is no single set of policy options that applies to all cities. Rather, cities should carefully analyse their strengths and weaknesses and define their policies accordingly. Our frame of analysis can be of help in this respect. We have described a number of policy options that can improve cities’ positions in this new environment.

A key conclusion for all cities is that sitting back and wait is not an option. Even cities that currently do very well and seemingly have all the ingredients to thrive in the knowledge economy face longer-term threats that require an answer. History has shown that success is temporary, and the winners of today can be the losers of tomorrow.

Another key conclusion is that whatever the situation of the city, organising capacity is crucial to develop and implement appropriate strategies. Key drivers behind this are the increasingly networked character of the knowledge economy, and the increased interactions between actors that used to live in separate worlds. Therefore, the current society asks for joint-up policymaking, which implies the involvement of the relevant actors, from public to private. This asks for new governance structures, and changes the role of local governments. They should break out of their ivory tower and become part of the urban network, as network leaders, supporters, orchestrators or initiators, depending on the situation. This puts high demands on the abilities of the local management. In fact, in the knowledge economy, urban management itself becomes more knowledge intensive!

Our study shows that the knowledge economy is global, but also highly localised. Urban regions are the focal points of the knowledge economy, and they have their specific strengths and weaknesses. From this perspective, we conclude that many national and EU policies are not sufficiently adapted to this reality. One of the key bottlenecks is the a-spatial character of national and European innovation and R&D policies. In order to make Europe the most competitive economy in the world (an ambition formulated in the EU Lisbon Challenge), this should change. Policies should take into account the power and potential of local clustering, and capitalise on agglomeration economies. New policy frameworks are needed that create incentives for scale enlargement of local clusters, and to fight the current fragmentation of efforts among cities and nations.