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Competitive Scottish Cities?
Placing Scotland's cities in the UK and European context

Chapter 3. How do Scottish Cities match up to European Competitors?

3.1 The quantitative analysis in this section of the report focuses on a variety of indicators identified as potentially important to competitive cities. It reviews the evidence on the key characteristics of competitiveness identified in the Competitiveness European Cities study (Parkinson et al 2004): productivity; innovation; connectivity and a skilled workforce. It also provides evidence about social cohesion and the private sector's views of the relative attractiveness of different European cities.

3.2 This remains a complex and rather messy area; experts disagree about the relative merits of indicators, very little comparative data is available on a trans-national basis, and boundaries are not consistent. This section makes best use of the data available. There is never a perfect indicator, instead we have collected and used the most robust available evidence from the most reliable sources. And where urban data was not available we have used data for the wider region.

3.3 Wherever possible data for the six Scottish cities has been added to the data for 15 continental and the eight English Core Cities included in the original study. Unfortunately many of the data sources have limited coverage of Scotland and often data for only Glasgow and/or Edinburgh is available. In repeating the data collection exercise statistics have been updated where possible and in some cases improved sources have been found.

3.4 For further details on the selection of indicators of competitiveness, the challenges faced during data collection and the solutions adopted see the technical annex.

Productivity

3.5 Capital cities tend to be at the top of the league table for GDP. Large cities tend to do well. German cities, despite the country's current economic difficulties, perform very well. Edinburgh and Glasgow perform better than any of the English Core Cities, which do not perform as strongly.

Figure 3.1: GDP per capita: A sample of European cities 2001

Source: Barclays Private Clients 2003

Table 3.1: GDP per capita - for 61 leading European Cities 2001

Source: Barclays Private Clients 2003
Note: The European Competitive Cities, English Core Cities and Scottish cities are shaded

3.6 Business Strategies Limited used three measures of regional prosperity in their report 'What makes Euro Regions Prosper?':

• GDP per head of working age population adjusted for commuting
• employment rates - FTE divided by working age population adjusted for commuting)
• productivity - GDP per head of working age population adjusted for commuting divided by FTE employment at purchasing power standard

3.7 Their analysis shows that, as expected, those regional cities with high levels of productivity tend to have high GDP. Many of the Scottish cities perform better than their English counterparts. North East Scotland (which includes Aberdeen) with its high employment rate and GDP per capita performs particularly well. Eastern Scotland (Edinburgh, Dundee and Stirling) performs better than the English Core Cities, but behind many other European cities.

Table 3.2: Measures of regional prosperity 2001

Source: Business Strategies Ltd. (2001) What makes Euro regions prosper? London: BSL

3.8 Figure 3.2 develops the productivity analysis and provides data about a smaller sample of cities. It shows productivity in terms of GDP per head of working age population adjusted for commuting divided by FTE employment at purchasing power standard. The Scottish regions perform ahead of the English regions but behind many European cities.

Figure 3.2: Productivity 2001 ('000 Euros per head)

Source: Business Strategies Ltd.

How innovative are Scottish Cities

3.9 The European Innovation Scoreboard ⁶ uses measures of a number of factors that contribute to innovation to generate a score at regional level. The 2003 scoreboard incorporates a number of new measures from the Community Innovation Survey; due to small sample numbers the index is calculated at NUTS2 level. The Scoreboard now has 13 measures:

• Population with tertiary education
• Participation in lifelong learning
• Employment in medium/high-tech manufacturing
• Employment in high-tech services
• Public R&D expenditure
• Business R&D expenditure
• European Patent Office (EPO) High-tech patent applications
• All EPO applications
• Plus five measures from unpublished Community Innovation Survey 2 data.

3.10 These are used to generate a Revealed Regional Summary Innovation Index, which can be used to compare the performance of European regions. This shows that Scotland performs ahead of many of the other UK regions, but behind the leading European regions and the South West (Bristol). Scotland's well-educated workforce contributes to its placing in the innovation index.

Figure 3.3: European Innovation Scoreboard 2003 Revealed Regional Summary Innovation Index (RRSII)

Source: 2003 European Innovation Scoreboard. Technical paper No. 3. EU Regions

3.11 UK cities have relatively low levels of employment in high tech manufacturing sectors. None of the Scottish cites have employment in these sectors ahead of the UK average. The German and Italian study cities perform particularly well in this area.

Figure 3.4: Percentage of employees in High-Tech manufacturing sectors 2001

Source: Eurostat: Region: Statistical Yearbook 2003. Data for NE Scotland (Aberdeen) not available

3.12 Employment in the high-tech service sectors in UK cities is comparable with many of the European cities. However in the Scottish and English Core Cities employment in this sector is below the national average suggesting that these jobs are concentrated in London and the South East.

Figure 3.5: Percentage of employees working in High-Tech service sectors 2001

Source: Eurostat: Region: Statistical Yearbook 2003

3.13 In terms of the proportion of employees working in knowledge intensive sectors the UK performs well, with Eastern Scotland (Edinburgh, Dundee and Stirling) the strongest performing of the Scottish regions.

Figure 3.6: Percentage of employees working in Knowledge Intensive sectors 2001

Source: Eurostat: Region: Statistical Yearbook 2003

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