Second State of European Cities Report

1. Second State of European Cities Report Report prepared for the European Commission, Directorate-General for Regional Policy under a contract following a call for tenders �Urban Audit Analysis II� by RWI (Rheinisch-Westf�lisches Institut f�r Wirtschaftsforschung) Difu (German Institute for Urban Affairs) PRAC (Policy Research and Consultancy) NEA Transport Research and Training Essen, Berlin, Bad Soden, Zoetermeer, November 2010

2.  Introduction: Issues and approach City typology Urban Trends Results/Policy Implications 2

3. Issues of the report providing up-to-date policy-relevant information on urban characteristics and urban dynamics in Europe discussion of intermediate results with DG Regio, Eurostat, a panel of experts and a panel of representatives from all EU countries The key issues arise from the literature on urbanisation, economic change and its impact on social cohesion, the emergence of a knowledge economy, governance of cities and regions. These issues correspond with the priorities for a reformed cohesion policy: innovation, climate change, migration, children, skills, ageing (Barca 2009) Introduction 3 Particularly, the Barca (2009) report argues that a place-based development strategy aimed at both core economic and social objectives is required to achieve EU policy goals. Policy measures focussing on place-specific potentials and obstacles require a sound characterisation of place-specific development conditions. Barca, F. (2009), An agenda for a reformed cohesion policy. A place-based approach to meeting European Union challenges and expectations. Independent Report prepared at the request of Danuta H�bner, Comissioner for Regional Policy. Particularly, the Barca (2009) report argues that a place-based development strategy aimed at both core economic and social objectives is required to achieve EU policy goals. Policy measures focussing on place-specific potentials and obstacles require a sound characterisation of place-specific development conditions. Barca, F. (2009), An agenda for a reformed cohesion policy. A place-based approach to meeting European Union challenges and expectations. Independent Report prepared at the request of Danuta H�bner, Comissioner for Regional Policy.

4. 4 Introduction Results from Urban Audit City Panel Workshop with 30 city representatives in Berlin, March 2009

5. City Typology

6. City typology Comparison of cities with similar basic characteristics Based on the Urban Audit 2004 - update and revision of typology from first State of European Cities Report Statistical classification using a step-wise strategy of �information compaction� 6 City typology

7. City typology � Indicators by UA Domain 7 City typology

8. City types 8 City typology A Principal Metropolises: 52 large and capital cities (>1 mill. inh. in core city on av.) B Regional Centres: 151 prosperous cities from Western Europe (~290,000 inh. on average) C Smaller Centres: 44 cities, mainly from Western Europe; high proportion of highly qualified residents and ICT services; population growth; 140,000 inh. on average D Towns and Cities of the Lagging Regions: 82 Cities in Central and Southern Europe, high unemployment, relatively low wealth, 160,000 inh. on av. A Principal Metropolises: 52 large and capital cities (>1 mill. inh. in core city on av.) B Regional Centres: 151 prosperous cities from Western Europe (~290,000 inh. on average) C Smaller Centres: 44 cities, mainly from Western Europe; high proportion of highly qualified residents and ICT services; population growth; 140,000 inh. on average D Towns and Cities of the Lagging Regions: 82 Cities in Central and Southern Europe, high unemployment, relatively low wealth, 160,000 inh. on av.

9. City types 9 City typology

10. Urban Trends

11. Population � picture of urban growth in Europe is diverse. � urban population in Europe grew from 2001 to 2004. �fastest growth in largest and most prosperous urban regions. In Principal Metro- polises, growth was high in the outer urban zones. Cities in lagging regions have not yet managed to �catch up�. Urban Trends: Population 11

12. Population Urban Trends: Population 12 At the national level population grew in Northern, Western and Southern Europe, Central Europe experienced decline or, at most, stagnation. In Northern Europe, population growth in most urban areas (core cities and LUZ) was higher than in the countries as a whole. Among the large Western European countries, population increased in cities and LUZ in France and in most LUZ in the UK. German cities report a wider range of growth and decline. In Southern Europe, there is a wide spectrum of population growth and decline in core cities and LUZ. At the national level population grew in Northern, Western and Southern Europe, Central Europe experienced decline or, at most, stagnation. In Northern Europe, population growth in most urban areas (core cities and LUZ) was higher than in the countries as a whole. Among the large Western European countries, population increased in cities and LUZ in France and in most LUZ in the UK. German cities report a wider range of growth and decline. In Southern Europe, there is a wide spectrum of population growth and decline in core cities and LUZ.

13. Population The first component of city growth is migration. Northern Europe: city growth corresponds with net migration Central Europe: cities lose population due to out-migration Western and Southern Europe: diverse picture The second component is natural population change. low urban birth rates in Northern, Western and Southern Europe, high urban birth rates in Central Europe city growth due to birth surpluses in peripheral regions cities of Western/Southern Europe and large cities of Central Europe: growth depends on attracting migrants, because there is a surplus of deaths over births. Urban Trends: Population 13

14. Urban Trends: Economy 14 GDP per head (in PPS) In most European countries there is an above-average agglomeration of wealth in cities and an exceptional agglomeration in the capital city. In Principal Metropolises (City Type A), there is a high concentration of wealth: economic prosperity, measured in GDP per head, is above the national average. In Regional Centres (Type B), there is a more balanced distribution of above- and below-average urban GDP per head. In almost all Smaller Centres (Type C) and in lagging regions (Type D), economic output per resident is below the national average. In most European countries there is an above-average agglomeration of wealth in cities and an exceptional agglomeration in the capital city. In Principal Metropolises (City Type A), there is a high concentration of wealth: economic prosperity, measured in GDP per head, is above the national average. In Regional Centres (Type B), there is a more balanced distribution of above- and below-average urban GDP per head. In almost all Smaller Centres (Type C) and in lagging regions (Type D), economic output per resident is below the national average.

15. Urban Trends: Economy 15 Multi-modal accessibility High accessibility is common to the most important cities of Europe. When comparing macro-regions, Western European countries are most accessible. In Southern European countries, there are a range of cities with varying accessibility. In countries from Central and Northern Europe, there is usually only one (capital) city, which is highly accessible (well above the EU 27 average). High accessibility is common to the most important cities of Europe. When comparing macro-regions, Western European countries are most accessible. In Southern European countries, there are a range of cities with varying accessibility. In countries from Central and Northern Europe, there is usually only one (capital) city, which is highly accessible (well above the EU 27 average).

16. Urban Trends: Economy 16 Tertiarisation Service activities concentrate in cities, particularly those requiring a highly skilled professional background. In Denmark, Germany, the Netherlands, Switzerland and the UK, a number of cities are now almost entirely service economies. The smaller cities in peripheral and in lagging regions are less tertiarised. In most Type C cities the share of service sector employees is under 80%; in most Type D cities, it is under 70%. Service activities concentrate in cities, particularly those requiring a highly skilled professional background. In Denmark, Germany, the Netherlands, Switzerland and the UK, a number of cities are now almost entirely service economies. The smaller cities in peripheral and in lagging regions are less tertiarised. In most Type C cities the share of service sector employees is under 80%; in most Type D cities, it is under 70%.

17. 17 Urban Trends: Economy Innovation and entrepreneurship are the key sources of regional competitiveness. Although a certain amount of care should be taken when interpreting statistics on patents, they provide a unique possibility for comparing innovation activities in European cities. Patent intensity among Urban Audit cities was analysed using data from the �EPO Worldwide Patent Statistical Database� (PATSTAT) compiled by the European Patent Office (EPO). Cities with a high regional GDP and a large concentration of service activities are also those with a particularly high patent intensity. The Barca (2009) report suggests that the existing diversity of industrial agglomerations and networks should be supported by cohesion policy, in order for them to arrive at a �smart specialisation� . A number of relatively innovative locations within Central Europe indicate that there is scope for Central European regions to find economic specialisations, which can be based on intra-regional technological innovation. In many Central European cities, the number of university students in relation to the total population is also high. In the long term, Central European cities will benefit from engagement in higher education, if they can encourage students to stay in the region after graduation. Innovation and entrepreneurship are the key sources of regional competitiveness. Although a certain amount of care should be taken when interpreting statistics on patents, they provide a unique possibility for comparing innovation activities in European cities. Patent intensity among Urban Audit cities was analysed using data from the �EPO Worldwide Patent Statistical Database� (PATSTAT) compiled by the European Patent Office (EPO). Cities with a high regional GDP and a large concentration of service activities are also those with a particularly high patent intensity. The Barca (2009) report suggests that the existing diversity of industrial agglomerations and networks should be supported by cohesion policy, in order for them to arrive at a �smart specialisation� . A number of relatively innovative locations within Central Europe indicate that there is scope for Central European regions to find economic specialisations, which can be based on intra-regional technological innovation. In many Central European cities, the number of university students in relation to the total population is also high. In the long term, Central European cities will benefit from engagement in higher education, if they can encourage students to stay in the region after graduation.

18. 18 Urban Trends: Cultural Diversity According to the Perception Survey on quality of life in European cities (2006) around half of the population in all city types think that foreigners are well integrated. In the Towns & Cities of the Lagging Regions, opinions about integration problems are strong, i.e. higher shares (21%) strongly agree that foreigners are well-integrated (12-14% in other types), but higher shares (39%, in other types 13-23%) also disagree.According to the Perception Survey on quality of life in European cities (2006) around half of the population in all city types think that foreigners are well integrated. In the Towns & Cities of the Lagging Regions, opinions about integration problems are strong, i.e. higher shares (21%) strongly agree that foreigners are well-integrated (12-14% in other types), but higher shares (39%, in other types 13-23%) also disagree.

19. 19 Urban Trends: Social cohesion Employment represents participation in society and promotes peaceful social relations. In Northern Europe, unemployment rates are low (around 5%). In Central Europe, unemployment is relatively low (below 10%) in some countries (Czech Republic, Hungary, Romania, Slovenia) and very high (around 19%) in others (Poland, Slovakia). National averages also vary in Western and Southern Europe (around 5-11%). As expected, among basic city types, unemployment is highest in Towns and Cities of the Lagging Regions, but decreased considerably there between 2001 and 2004. A direct measure of income disparity, which is provided by the Urban Audit, the ratio between the top and bottom quintile of disposable annual household income, was not the main focus since only 73 cities reported on this indicator in both 2001 and 2004. In these cities on average, in 2001 the top quintile of household income was 2.9 times as high as the bottom quintile; in 2004 it was 2.5 times as high, i.e. the disparity decreased. Employment represents participation in society and promotes peaceful social relations. In Northern Europe, unemployment rates are low (around 5%). In Central Europe, unemployment is relatively low (below 10%) in some countries (Czech Republic, Hungary, Romania, Slovenia) and very high (around 19%) in others (Poland, Slovakia). National averages also vary in Western and Southern Europe (around 5-11%). As expected, among basic city types, unemployment is highest in Towns and Cities of the Lagging Regions, but decreased considerably there between 2001 and 2004. A direct measure of income disparity, which is provided by the Urban Audit, the ratio between the top and bottom quintile of disposable annual household income, was not the main focus since only 73 cities reported on this indicator in both 2001 and 2004. In these cities on average, in 2001 the top quintile of household income was 2.9 times as high as the bottom quintile; in 2004 it was 2.5 times as high, i.e. the disparity decreased.

20. 20 Urban Trends: Social cohesion

21. 21 Governance The term �governance� is widely used to refer to matters of both public administration and civic involvement. As an instrument to measure the capacity of municipal administration, the index of �city powers� as elaborated by the first State of European Cities report has been revised in this section. Cities with relatively large administrative �powers� draw their overall scope more from political autonomy than from sheer size or �weight� within countries. The proportion of municipal authority income derived from local taxation is therefore a highly relevant indicator of the scope of municipal authorities to engage in local �governance� processes. Urban Trends: Governance

22. 22 Urban Trends: Environment Analysis of the environmental situation is based on the Urban Audit indicators of land use, population density and air pollution; environmental treatment is measured on the basis of modes of waste treatment and transport. As air quality and recycling rates are high in some of the most prosperous large cities of Northern and Western Europe, there is obviously no conflict between economic prosperity and environmental protection. Analysis of the environmental situation is based on the Urban Audit indicators of land use, population density and air pollution; environmental treatment is measured on the basis of modes of waste treatment and transport. As air quality and recycling rates are high in some of the most prosperous large cities of Northern and Western Europe, there is obviously no conflict between economic prosperity and environmental protection.

23.  �diverse picture of population growth and decline European cities. Depending on fertility rates and migration flows, cities face challenges such as a shrinking and ageing population. �high concentration of economic prosperity in parts of Northern and Western Europe and in capital cities of most countries. The potential for growth exists across all types of territories. Cities are focal points of regional innovation networks. European policy can support favourable conditions for education, research and exchange particularly in cities. �urban paradox persists: jobs concentrate in cities, but many city residents do not participate in the labour market. Social inclusion is therefore a key priority of the urban dimension of cohesion policy. Results/Conclusions 23

24. Policy Implications �task of EU policy to support regions and cities in improving the conditions of life and work in densely populated areas. �support of cities in matching the supply of skills with labour market demands. �support of economic performance in smaller cities and more remote regions of Central Europe, so qualified people can find adequate job opportunities there. �support of �smart specialisation�, which seeks to identify and support the economic core activities of a region, i.e. focusing on endogenous potentials. �monitoring of the environmental situation in cities and support of cities/regions to overcome the �paradox of affluence�, i.e. the environmental impact of production. 24 Results/Conclusions

25.  European policy must be built on sound information about territorial diversity. Success of European policy depends on measures with an urban focus. Continuing efforts to improve knowledge about urban characteristics and trends are required. annual UA with reduced indicator set complete UA in three-year steps Large City Audit: reduced indicator set for all ~250 non-UA cities Urban Atlas, CARP 25 Results/Conclusions

26. Full report available at: http://ec.europa.eu/regional_policy/themes/urban/audit/index_en.htm Executive summary available in three languages DE, EN, FR