EUKN - European Urban Knowledge Network - OECD Territorial Review

OECD Territorial Review - Newcastle in the North East, UK

Introduction

This Territorial Review by the Organisation for Economic Cooperation and Development (OECD) focuses on the competitiveness of the Newcastle region. The existing economic structure is taken into account, as is the place of Newcastle in the national and international economy. The review comprehensively analyses the challenges and opportunities for Newcastle in transforming its economy to compete in the globalised world. The review gives a clear picture of the factors influencing Newcastle’s economic future, ranging from governance issues, to connectivity, to characteristics of the labour market. The Review is part of a series of territorial reviews by the OECD.

Description

Increasingly integrated into its region, Newcastle functions as the growth centre of the North East of the United Kingdom. However, if compared to other UK regions, it shows limited prosperity and growth in gross value added, productivity and employment. In particular, the low-skilled labour force constitutes an impediment to a rapid transformation of the city region’s economy. The urban core of Newcastle performs relatively well compared to a group of other medium-sized and formerly industrial regions undergoing economic transformation. However, it lags behind its European competitors on a wide range of factors, such as:

GDP per capita
innovation levels
connectivity
social cohesion
quality of life
decision-making capacity
connections with their wider regions

Faced with domestic and international challenges, the city region needs to take a strategic approach in order to build critical mass and to compete. Better integration to build the required critical mass and strengthening the existing concentration of growth factors in the urban core are keys to this process.

Overall, the city region needs to develop a mixed economy. This economy should be based on the continued upgrading of the current industry strengths and technical capabilities in the manufacturing sectors, and the fostering of growth in new knowledge-intensive services sectors.

The weak and fragmented governance structure in the North East is seen as a obstacle. Consolidating governance functions of local authorities and strengthening governance capacity at the city-region level is a good option for improving regional competitiveness.

Background information

The Territorial Review of Newcastle in the North East is part of a series of thematic reviews on metropolitan regions by the OECD Territorial Development Policy Committee. These thematic reviews examine the role of major urban centres in helping to deliver improved economic performance within regions. The aim of the reviews is to draw and disseminate specific and general policy recommendations for governments.

Conclusions

The OECD draws the following conclusions in the Territorial Review. In analysing the economy of the Newcastle region, the conclusions are as follows:

The assessment shows that the Newcastle city region falls behind many other UK regions in absolute terms. The city region needs better integration of the city region in order to build the critical mass and compete both domestically and internationally.
The city region should strengthen the role of the urban core as the growth centre in building the critical mass. Traditionally, the urban core of Newcastle has simply functioned as a service centre. The urban core should further take on the responsibilities for research and development, creativity and innovation.
Future economic growth will depend on continued upgrading and strengthening the current industry strength and technical capability in the manufacturing sectors and fostering the growth of knowledge intensive services sectors.
Networks, physical infrastructure and quality of life must be improved, with particular attention paid to urban and rural linkages. Ensuring access to the urban core is key to enabling all communities in the region to participate in the economy.

On the issue of fostering competitiveness, the OECD concludes:

The region’s economic development strategies need to be strongly grounded in current realities. It is difficult to envisage the city region as a hub of the knowledge economy. The universities present are small universities, with only limited world class strengths. The region’s businesses have showed to have only limited capacity to absorb innovation. There is no critical mass necessary for the commercialisation of the research developed.
It is feasible, however, to see the Newcastle region develop into a ‘mixed economy’. Here, aspects of a low-wage low-skill economy with aspects of a high-wage economy are coupled.

On the issue of governance, the OECD is straight forward in its conclusions:

If the region is to maximise its economic development potential, addressing governance constraints will be a priority, regardless of the economic development strategy adopted.
Currently, there is a regional democratic deficit, and as a consequence weak regional governance institutions with limited legitimacy and support.
There is fragmentation of administrative institutions within the city region area, which results in a mismatch between the existing administrative structures and the boundaries of the city region.
The challenge for the Newcastle region is to build institutions and a sense of identity at the regional level.

Contact info

Newcastle City Council
Mr Kevin Richardson (External Affairs Manager), tel. +44 191 211 5675

Publication date

15/12/2006

Researcher

OECD - Regional Competitiveness and Governance Division

Links

Visit the City of Newcastle website Visit the OECD website Read more information on the OECD Territorial Reviews

Download the Territorial Review Newcastle in the North East (PDF, Eng, 1.2 MB)

Download the Background report for the Territorial Review (PDF, Eng, 2.8 MB)

Download the general policy recommendations for metropolitan areas (PDF, Eng, 1.9 MB)

Document type