UNIVERSITY OF THESSALYDepartment of Planning and Regional Development

Department of Economics

Module: Economics of Culture and Tourism

Dr. Theodore MetaxasAssistant Professor of Economic Development,

Department of Economics, University of Thessaly

AGGLOMERATION, URBAN DIPOLES AND ECONOMIC DEVELOPMENT

Contents• 1. Τhe New Internationalised Environment• 2. World and European Cities• 3. Urban hierarchical systems (rankings)• 4. Local Economic Development and Firms• 5. Firms competitiveness• 6. Firms competitiveness and urban advantages• Conclusions

1. Agglomeration Economies

• Agglomeration Economies and Access to European Markets [Factors: Proximity to customers/ suppliers – Market size – Availability of supporting services - Accessibility to national and European markets (North-West and South-East) - Presence of foreign enterprises, etc.]

2. Agglomeration impacts?

• Whether agglomeration creates further opportunities to build niche businesses, exploit knowledge transfer and foster innovation

• •Whether the existing labour market is sufficiently dense enough to offer choice to both workers and employers

• •Whether businesses and industry sectors benefit from the spill-over effects generated by proximity

3. Agglomeration, crossborder, infrastructure,and regional inequalities

• A recent literature on agglomeration and trade tries to explain broad patterns of agglomeration extending across substantial parts of a region or crossing regional boundaries.

• Strong emphasis on transport costs and how they affect regional inequalities in production, employment, and income.

• It builds on two basic elements:

– Large markets are disproportionately attractive for firms producing differentiated products under scale economies

– Large markets are large partly because many firms and consumers choose to locate in them. The combination of market access and mobility creates a ‘snowball’ effect.

4. Attractiveness of a region

• The attractiveness of a region for firms is then a combination of three elements (Behrens, Lamorgese, Ottaviano, and Tabuchi, 2004):

• – market size (attracting firms towards high expenditure countries),

• – accessibility (attracting firms towards countries that are centrally located or have good transport connections),

• – and competition (driving firms away from markets easily served by many competitors).

5. Transport and the evolution of regional inequalities

• One must not forget that roads and rail lines have lanes and tracks going both ways (Puga, 2002):

• – crossborder infrastructure projects connecting lagging regions with key markets make it easier for firms in lagging regions to reach new customers,

• – but also make firms in lagging regions subject to stronger competition from firms in more developed areas.

• • Improvements in transport infrastructure connecting regions are more likely to increase than to decrease regional inequalities (Puga, 1999)

• – when there is strong labour mobility (as in the United States),• – when there is weak mobility and limited wage differentials

across regions within each country (as in Europe).• Despite this they have an important role in facilitating increased

efficiency and growth and wider gains from trade.

6. Agglomeration in smaller geographical scales• We now turn to agglomerations at smaller geographical

levels than regions and countries, particularly at the level of cities.

• Firms and workers are much more productive in large cities than in other locations: a doubling of city size increases productivity by between 3 and 8 percent for a large range of city sizes (Rosenthal and Strange, 2004).

• 3 types of explanations (Duranton and Puga, 2004): – A larger market allows for a more efficient sharing of

indivisible facilities (e.g., local infrastructure), a variety of intermediate input suppliers, or a pool of workers with similar skills.

– A larger market also allows for a better matching between employers and employees, buyers and suppliers, or business partners.

• – A larger market can also facilitate learning (e.g., promoting the development and widespread adoption of new technologies and business practices).

7. The role of highways in cities• However, interregional transport infrastructure also

plays an important role (the first 15 or 20 km at either end of a highway connecting two cities is often used mostly for local commuting).

– Highways, by facilitating commuting, affect the housing choices of people living in a city.

• * An additional highway crossing an average us city doubles the number of people relocating from the central city to the suburbs (BaumSnow, 2007).

– Highways, by reducing commuting costs, also make a city more attractive relative to other locations and lead to population and employment growth.

8. City networking process • City Networking, which has appeared in the last 10-15

years, due to globalization (Beriatos, 2005), constitutes a main principle of urban systems analysis and refers to the fundamental characteristic of cities and towns;

• that is, they do not constitute isolated and autonomous points of concentration of population and activities in the space, but they generate and attract flows, which are orientated to other cities or the country-side (Tsakiris and Lalenis, 2006:6).

• Urban network – urban system or, according to other authors urban grid (Derruau, 2001), is defined as the total of the cities along with their interactions, which faces cities as points of the system (Economou, 2005).

• The development of urban networks has been used as a policy instrument to built alliances, exchange knowledge and save resources, take advantage of scale economies, develop common markets, and exploit complementarities, which are all part of the new trend of internationalised policies (Pyrgiotis, 1991; Economou and Vrassida, 2005).

• On European level, co-operation networks were able to develop thanks to the promotion of programs funded by the European Commission.

• CultMark project • the ECOS-OUVERTURE • IBA project

9. Polycentricity • The concept of polycentricity is not at all

new, but it has been applied for a long time in the analysis of urban areas and systems, mainly on intra-urban and intra-regional scales.

• Yet, polycentricity is proposed as a strategic policy tool, whilst this concept has traditionally been used in explaining the changing spatial structures of cities and city systems (Eskelinen and Fritsch, 2007).

10.Urban Dipoles, Tripoles• The concept of urban dipoles fit in the tradition of

networking, comprising elements both from the classic hierarchical urban systems and the recent networks of peer towns.

• It presupposes, in the first place, two centres which belong to the same urban system, and have a similar order in the system, serving equivalent hinterlands. As a consequence, the two cities are playing similar roles regarding the central place functions.

11.Central place functions• The urban functions which are the main motors of the above

scheme are the so-called “central place functions” or “central functions”. These functions tend, by nature, to be distributed in space according to hierarchical ranks and, correspondingly, hierarchically ranked hinterlands (service areas), in whose centre they are located (Tsakiris and Lalenis, 2006:6).

• Typical functions of this type are commerce, the social services and administration. The central-place functions lead to the creation of urban systems, whose nodes (that is cities and towns) tendespecially when the wider territory is a flat uniform plain (isotropic) to be spatially distributed with a geometrical regularity. Cities of the same rank normally have the same distance between them, and serve hinterlands of the same range which are not overlapped.

Two neighbour cities which belong to the same rank of a classic urban system: same central place functions, similarity of roles, equal but distinct hinterlands

Two neighbour cities which belong to the same rank of a classic urban system, but develop special functions: same central place functions, similarity of roles, but overlapping hinterlands as far as the special functions are concerned

Δύο όμορες πόλεις που ανήκουν στην ίδια βαθμίδα κλασικού αστικού συστήματος, αλά διαθέτουν και ειδικές λειτουργίες: ίδιες λειτουργίες κεντρικών τόπων, παρόμοιοι ρόλοι, ίσες αλλά επικαλυπτόμενες ενδοχώρες

Two neighbour cities which form a dipole: the dipole is situated on a higher rank in the urban system, and has a semi-unified hinterland as far as the higher functions (both central and special) are concerned.

• Administrative functions: possibility of localization of higher level activities, when the scale of the dipole result at its transfer on a higher rank of the urban system (public sector)

• (Higher) education and research: facilitation of the existence / creation of research centres, as well as of the increase of the size of the universities (public sector, possibility of private participation).

• Health: contribution to the viability of large integrated hospitals, which necessitate a big internal market, but from the moment that they exist they can also provide services to external markets. (public and / or private sector)

• Culture: (opera houses, big museums, great concert halls etc.), especially when this activities dispose also of a high architectural quality building. Such equipment can be a major component (“flagship” of a city-marketing strategy. (public sector, possibility of private participation)

• Transport, telecommunication and energy: contribution of the dipole to the economic viability of large infrastructure. Especially: (i) frequent rail connection (intra-dipole and external), (ii) regular air-flights (external connections), (iii) inter-modal transport systems, (iv) regarding energy, the contribution of the dipole concerns mainly the distribution networks and cost. (public and / or private sector)

• Organized areas (parks) for manufacturing industry, logistics etc. (private sector)

• Commerce: rare retail establishment (private sector)• Special forms of tourism which need a metropolitan or a least fairly urban

environment (congress tourism, urban tourism, golf resorts…)(private sector)• Business services of high level (financial, consulting…)(private sector)

13. Larissa-Volos Dipole

TRIKALA

KARDITSA

LARISSA

B

THE CAPITAL CITIES OF THESSALY REGION

STRATEGIC DEVELOPMENT PLAN OF LARISSA ( Master Plan )

The position of the cities of Larissa and Volos in Regional level MAP 2 Supervisor : Georg Petrakos

Scientific team : Angelos Kotios Alex Defner Ioannis Psycharis Angela Veneti Theodor Metaxas Maria Nikolaidou Nikos Christodoulos

Department of Planning and Regional Development

University of Thessaly Scholl of Engineering

September 2002

VOLOS

Municipality of Larissa

Dipole-Geographical position-Access to national and European markets-High level of Urban Infrastructure-Market size in local and regional level-R/D pole-FDI existence-Multisectoral business centre-Government centre

City Urban Characteristics

Larissa Big urban centreGovernment centre in Regional and Prefecture level Communications coreAgriculture supporting service centreCommercial and manufacturing centre specialized on agricultural productsHealth supporting service centre (University Hospital)

Volos Big urban centreGovernment Prefecture centre Port-Communications/ transportationsTraditional Industrial CentreTourism-Cultural CentreHeadquarters of University of Thessaly – R/D Centre and facilities

Table 3: Larissa- Volos dipôle

Larissa- Volos dipôle Sum: 4+5 (%

ratio)Middle: 3 (%

ratio) Sum: 1+2 (%

ratio) Total (%

ratio)

The two cities development in common 68 20 12 100

The economic development of one city to cause economic hysterisis of the other 12 16 72 100

Regional competitiveness through the cooperation of the two cities 68 20 12 100

Each city to become an ’attraction pole’ 52 28 20 100

Each city to operate beneficially to the other 64 24 12 100

The two cities distinctive characteristics to operate beneficially to the cities’ dipole and to the region in general 88 8 4 100

The existence of Larissa-Volos dipole to operate competitively against the big urban centres (Athens, Thessalonica) 44 20 36 100

Source: Metaxas and Kallioras (2007)

Conclusions

• Agglomeration are important for territorial development

• Polycentricity in Europe – Functional Urban Areas

• Networking as tool for territorial competitiveness

• Urban dipoles/ tripoles – main aim cooperation

• Larissa-Volos – one of the most dinstictive case in Europe