The Changing Economic Structure of Metropolitan Regions: A Preliminary Comparative Analysis

PRELIMIEIARY DRAFT

NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

THE CHANGING ECONOMIC STRUCTURE O F METROPOLITAN R E G I O N S : A P R E L I M I N A R Y COMPARATIVE A N A L Y S I S *

D a v i d F. B a t t e n * *

N o v e m b e r 1 9 8 4 C P - 8 4-:5:0

Contribution to the Metropolitan Study: 15

* P a p e r p r e s e n t e d a t t h e I I A S A Workshop on

" T h e D y n a m i c s of M e t r o p o l i t a n A r e a s " ,

. R o t t e r d a m , N e t h e r l a n d s

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* * C S I R O , ~ l v i s i o n of B u i l d i n g R e s e a r c h P . O . B o x 5 6 ( G r a h a m R o a d )

H i g h e t t , V i c t o r i a A U S T R A L I A

P h o n e : ( 0 3 ) 555 0333 T e l e x : AA 3 3 7 6 6

C o l l a b o r a t i v e P a p e r s report work which has not been performed solely at the International Institute for Applied Systems Analysis and which has received only limited review. Views or opinions expressed herein do not necessarily represent those of the Institute, its National-Member Organizations, or other organi- zations supporting the work.

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS A-236 1 Laxenburg, Austria

CONTRIBUTIONS TO THE METROPOLITAN STUDY:

1. Anas, A. a n d L.S. Duann ( 1 9 8 3 ) Dynamic F o r e c a s t i n g o f T r a v e l Demand. C o l l a b o r a t i v e P a p e r , CP-83-45.

I n t e r n a t i o n a l I n s t i t u t e f o r A p p l i e d S y s t e m s A n a l y s i s ( I I A S A ) , A - 2 3 6 1 L a x e n b u r g , A u s t r i a .

2. C a s t i , J . ( 1 9 8 3 ) E m e r g e n t N o v e l t y a n d t h e M o d e l i ng o f S p a t i a l P r o c e s s e s . R e s e a r c h R e p o r t , RR-83-27. I I A S A , L a x e n b u r g , A u s t r i a.

3. L e s s e , P.F. ( 1 9 8 3 ) The S t a t i s t i c a l D y n a m i c s o f

S o c i o - E c o n o m i c S y s t e m s . C o l l a b o r a t i v e P a p e r , CP-83-51.

I I A S A , L a x e n b u r g , A u s t r i a .

4. Haag, 6 . a n d W . W e i d l i c h ( 1 9 8 3 ) An E v a l u a b l e T h e o r y o f a C l a s s o f M i g r a t i o n P r o b l e m s . C o l l a b o r a t i v e P a p e r , CP-83-58. I I A S A , L a x e n b u r g , A u s t r i a .

5. N i j k a m p , P . a n d U . S c h u b e r t ( 1 9 8 3 ) S t r u c t u r a l Change i n U r b a n S y s t e m s . C o l l a b o r a t i v e P a p e r , CP-83-57.

I I A S A , L a x e n b u r g , A u s t r i a .

6. L e o n a r d i , 6 . ( 1 9 8 3 ) T r a n s i e n t a n d A s y m p t o t i c B e h a v i o r o f a R a n d o m - U t i l i t y B a s e d S t o c h a s t i c S e a r c h P r o c e s s i n C o n t i n o u s Space a n d Time. W o r k i n g P a p e r , UP-83-108.

I I A S A , L a x e n b u r g , A u s t r i a.

7 . F u j i t a , M. ( 1 9 8 4 ) The S p a t i a l G r o w t h o f T o k y o M e t r o p o l i t a n A r e a . C o l l a b o r a t i v e P a p e r , CP-84-03.

I I A S A , L a x e n b u r g , A u s t r i a .

8 . A n d e r s s o n , A.E. a n d B. J o h a n s s o n ( 1 9 8 4 ) K n o w l e d g e I n t e n s i t y a n d P r o d u c t C y c l e s i n M e t r o p o l i t a n R e g i o n s . W o r k i n g P a p e r , WP-84-13. I I A S A , L a x e n b u r g , A u s t r i a . 9 . J o h a n s s o n , B. a n d P . N i j k a m p ( 1 9 8 4 ) A n a l y s i s o f

E p i s o d e s i n U r b a n E v e n t H i s t o r i e s . W o r k i n g P a p e r , WP-84-75. I IASA, L a x e n b u r g , A u s t r i a.

10. W i l s o n , A.G. ( 1 9 8 4 ) T r a n s p o r t a n d t h e E v o l u t i o n o f U r b a n S p a t i a l S t r u c t u r e . C o l l a b o r a t i v e P a p e r ,

CP-84-41. I I A S A , L a x e n b u r g , A u s t r i a .

11. Anas, A. ( 1 9 8 4 ) The Combined E q u i l i b r i u m o f T r a v e l N e t w o r k s a n d R e s i d e n t i a l L o c a t i o n M a r k e t s .

C o l l a b o r a t i v e P a p e r , CP-84-42. I I A S A , L a x e n b u r g , A u s t r i a.

12. B a t t e n , D., P . N e w t o n a n d J. Roy ( 1 9 8 4 ) N e s t e d Dynamics o f M e t r o p o l i t a n P r o c e s s e s a n d P o l i c i e s

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M e l b o u r n e . C o l l a b o r a t i v e P a p e r , CP-84-47. I I A S A , L a x e n b u r g , A u s t r i a.

1 3 . Macke tt, R.L. ( 1 9 8 4 ) N e s t e d D y n a m i c s o f M e t r o p o l i t a n P r o c e s s e s a n d P o l i c i e s

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FOREWORD

C o n t r i b u t i o n t o t h e M e t r o p o l i t a n S t u d y : 1 5

The p r o j e c t " N e s t e d Dynamics o f M e t r o p o l i t a n P r o c e s s e s and P o l i c i e s " was i n i t i a t e d by t h e R e g i o n a l a n d Urban Development Group i n 1982, a n d work on t h i s c o l l a b o r a t i v e s t u d y s t a r t e d i n

1983. T h i s s e r i e s o f c o n t r i b u t i o n s t o t h e s t u d y i s a means o f c o n v e y i n g i n f o r m a t i o n between t h e c o l l a b o r a t o r s i n t h e n e t w o r k of t h e p r o j e c t .

The f o u n d a t i o n of t h e p r o j e c t i s a s y s t e m a t i c c o m p a r i s o n of dynamic phenomena i n a set of r e l a t i v e l y advanced m e t r o p o l i - t a n r e g i o n s . T h i s c o m p a r i s o n i s i n t e n d e d t o i d e n t i f y key

f a c t o r s a n d o b s e r v a b l e development p a t h s which a r e s h a r e d by a l l r e g i o n s , o r a t l e a s t by c e r t a i n s u b g r o u p s of r e g i o n s .

I n t h i s p a p e r , w e t h e r e f o r e b e g i n t o a s s e s s t h e r e l a t i v e s t a g e a n d s p e e d o f economic s t r u c t u r a l development i n a g i v e n s e t o f s u c h r e g i o s . A methodology b a s e d o n c h a n g i n g employment s h a r e s i s d e v e l o p e d t o examine i n d u s t r i a l s u b s t i t u t i o n ( t h a t i s , a g g r e g a t e t e c h n o l o g i c a l c h a n g e ) t h r o u g h t i m e a n d o v e r metropo- l i t a n s p a c e . The r e l o c a t i o n a n d r e s t r u c t u r i n g o f j o b o p p o r t u n i - t i e s w i t h i n o r o u t s i d e a m e t r o p o l i t a n r e g i o n c a n be i n t e r p r e t e d i n terms o f i n d u s t r i a l i n n o v a t i o n a n d p r o d u c t c y c l e t h e o r y . I n t h i s way, i t i s p o s s i b l e t o i d e n t i f y t h e t r a j e c t o r y o f a g l o b a l c y c l e o f economic development i n t e r m s o f e a c h c i t y ' s c u r r e n t economic and s p a t i a l s t r u c t u r e a n d i t s r e l a t i v e s p e e d o f t e c h n o - l o g i c a l c h a n g e .

Ake 0 E. _Andersson L e a d e r

~ e ~ i o n a l I s s u e s P r o j e c t November 1 9 8 4

ACKNOWLEDGEMENTS

The author is very grateful for the various suggestions made by Ake E. Andersson, ~ o r j e Johansson and Michael Wiseman during the preparation of this paper. Furthermore, sincere gratitude is expressed to all members of the project's inter- tional network who have generously provided the background information on which most of this report is based.

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TABLE O F CONTENTS

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2 . 1 C h a n g i n g E c o n o m i c S t r u c t u r e as a Process of

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2 . 2 T h e C y c l e of T e c h n o l o g i c a l D e v e l o p m e n t

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ECONOMIC DEVELOPMENT

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REFERENCES

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APPENDIX: F u t u r e P r o j e c t P l a n s and D a t a b a s e s

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1. INTRODUCTION

The world economy has in recent years been subject to certain major shocks and structural changes. Some well-known examples are

(a) the combination of two-digit inflation rates and increasing levels of unemployment, (b) substantial reductions in investment demand and construction activity, (c) excess capacity in steel and transportation equipment industries, and (d) widespread reversals of the urbanization trends in many developed countries.') That the initial effects of many of these shocks are being felt in metro- politan areas is now painfully clear.

A large share of the world's metropolitan regions are conseq- uently experiencing relatively severe processes of decline and obsolescence. Yet revitalization of these regions is fundamental since they largely constitute the environments in which new indus- tries, new technologies and new jobs must be introduced and

developed. It can be argued that metropolitan regions are basically the "driving entities" for nations. In this respect, the leading metropolitan r e g i o ~ s in the world constitute a scale of enquiry at least as important as nations or even clusters of nations in any comparative study of contemporary economic development processes.

On the other hand, all cities cannot be as innovative as others.

Global developments have quite a different impact on each metropolis owing to the geographical, social, technological and financial

diversity which exists both within and between nations. Some regions are more industrious, more advanced technologically; others are at a disadvantage and are destined to lag behind. At any single point in time, each metropolitan region of the world occupies a unique place relative to all others in 'terms of economic development. It is with the measurement of this comparative position, together with the

relative speed of the economic change process, that this paper is principally concerned.

The foundation of the IIASA project on metropolitan dynamics is a systematic comparison of dynamic phenomena in a set of relatively advanced metropolitan regions. This comparison is intended to

identify key factors and observable development paths which are shared by all regions, or at least by certain subgroups of regions.

In this paper, we therefore begin to assess the relative stage and speed of economic structural development in a given set of such regions. A methodology based on changing employment shares is developed to examine industrial substitution (that is, aggregate

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technological change) through time and over metropolitan space.

The relocation and restructuring of job opportunities within or outside a metropolitan region can be interpreted in terms of industrial innovation and product cycle theory. In this way, it is possible to identify the trajectory of a global cycle of economic development in terms of each city's current economic and spatial structure and its relative speed of technological change.

One significant finding can be mentioned in advance. Although the processes of economic development and spatial dispersal of

employment within different cities are rarely identical and tend to proceed at a wide range of speeds, in almost every instance the pace of economic restructuring is remarkably steady. This suggests that caution should be exercised by those who insist that the speed of technological change has increased dramatically within the last two decades.

2. MODELLING ECONOMIC CHANGE IN A METROPOLITAN REGION

Even the broad economic evolution of any metropolitan region cannot be understood meaningfully in terms of simple lifecycle concepts such as urbanization, suburbanization or deurbanization.

These motive terms may certainly suffice for an analysis of spatial shifts in population and employment opportunities, but unfortunately they say nothing about changes in technology and industrial or

occupational structure. However, if the stage, speed and type of structural economic development occurring within each region could be quantified analytically, some meaningful comparisons might

eventuate.

For the purpose of such comparisons, we shall explore the

usefulness of a simple logistic substitution model developed origin- ally for the micro-analysis of market penetration and technological change (see, for example, Fisher and Pry, 1971; Peterka, 1977;

Batten and Johansson, 1984a). This particular model turns out to be a pragmatic simplification of a more general evolutionary model of industrial dynamics in an economic system which may be self- organizing (Batten, 1982). It may therefore be linked to cycles of innovation and the learning process (Marchetti, 1981). We shall restrict our discussion to a market share version for the analysis of economic structural change, and later develop a general framework for analysing job and household dispersal as processes of

substitution over metropolitan space.