Location location – assessing the impact of creative industries on city economies

This blog was originally posted on the website of the ESRC-funded What Works Centre for Local Economic Growth and draws on their research on the drivers of prosperity in cities. This post explores the difficulties of assessing the true impact of particular urban policies, with particular reference to the relocation of creative cities to Manchester and other northern cities.

Henry Overman

One of the tricky things about evaluating the impact of local economic growth policies is that interventions of interest may be focused on a very small number of areas. Take, for example, the BBC’s move to Manchester. Aside from the direct impact of moving BBC jobs it’s interesting to know how much this benefited other related activities in the creative industries.

One way to do this is to look at changes in Manchester in creative industry employment and compare to changes in other areas. One of the problems with this approach is the absence of a natural comparator. Comparisons matter because Manchester already had the second biggest concentration of creative industries after London. If creative industries are clustered, and clusters are growing faster (as seems likely from NESTA’s latest report) then we need to pull out that existing trend in order to be confident that the BBC changed much.

Social scientists have been developing a new tool to try to help make such comparisons. The underlying idea is quite simple. Instead of comparing to other areas one at a time, how about comparing to data from several areas suitably weighted to try to mimic what was going on in Manchester pre-BBC? A simple analogy might help. Imagine you had an area whose industrial structure comprised ½ creative industries and ½ manufacturing. But every other area was either 100% creative or 100% manufacturing. Neither creative areas nor manufacturing areas would seem to provide a good comparison for our diversified area. But, perhaps an average of those two different types of area would do better? The actual implementation is, as usual, a little trickier than that but this simple analogy captures the basic idea.

If you’re interested in reading more, one of our sister What Works Centres has a useful explanatory guide.

Of course, this approach doesn’t fix everything. What happens, for example, if some other area specific economic shock also hit Manchester at the same time as the BBC move? There are also other ways to think about making the comparison (e.g. to look at what happens in Salford compared to other parts of Manchester). And it doesn’t get round the problem of data if we want to look at, say, the productivity impact rather than just the employment effects (for example, the data suggest that one of our fall back proxies for productivity – turnover per employee – might not be very helpful in this instance). But it does provide a way of making some progress on a tricky analytical issue.

Such questions aren’t just of academic interest. Decisions on Channel 4’s relocation will be better informed if we have available careful analysis that helps us understand what happened as a result of the BBC’s move to Manchester. It’s one of a number of issues we’ll be trying to look at further in our research.