Knowledge Intensive Services in Cities: Reflections on Current British Experience

Abstract

The knowledge intensive financial, professional and business services (KIBS) are, together, the most important commercial agencies (re)producing and circulating independent expertise in the modern economy. Their activities are tailored to the needs of clients, and the particular geographical settings where such exchange takes place. Their innovativeness is also sensitive to such settings, generally favouring urban agglomeration. Before the financial crisis of 2007-08, KIBS were attracting widespread urban policy attention in the UK because of their growing economic significance for its major cities. The need to promote services was also becoming more prominent in debates on national innovation policy. Unfortunately, no connections seem to be made between these developments, even though national KIBS innovativeness and London’s growing economic prominence were inseparably linked. It was becoming clear that, without effective measures to promote competitive KIBS in other cities, national policies towards service innovation would simply reinforce London’s dominance. Unfortunately, the KIBS-related policy proposals given priority in most recent Development Programmes for England’s ‘Core Cities’ seem to show limited and patchy understanding of their regional economic role as sources of expertise, especially how, directly or indirectly, they might enhance the status of their cities in international networks of exchange. They also neglect the differences between KIBS, particularly the financial and non-financial services, in their complex relationships with regional demand and the nature of competition from London-based services. The recssion has made such issues even more pressing. National priorities are likely to focus even more on London’s international financial position, while the crisis will probably have a greater impact on KIBS in other UK city regions. What, therefore, are the prospects for a KIBS-based urban revival now‘

Keywords: Knowledge intensive services, innovation, London, Core Cities, recession, urban economic policy

JEL Classification: R12, R50, R58. R59