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Metropolitan Brussels 2010 and beyond Brussels Attractiveness Symposium December 9th 2010 Martin Eichler Senior Economist and Member of the Executive Board Content Metro Brussels and the 2008/2009 crisis Metro Brussels structural performance Brussels and demography Brussels’ attractiveness 2 Attractiveness: in the long run a deciding factor for regional success The attractiveness of Brussels revised Regional definitions Norrbotte ns lä n Metro Brussels and the benchmarking regions Vä s te rbotte ns lä n Vä s te rnorrla nds lä n J ä m tla nds lä n Metro Brussels Sample of benchmarking regions Gä v le borgs lä n Da la rna s lä n Upps a la lä n Vä s tm a nla nds lä n Vä rm la nds lä n Stokholm Stoc k holm s lä n Öre bro lä n Söde rm a nla nds lä n Edinburgh Ös te rgötla nds lä n Vä s tra Göta la nds lä n Gotla nds lä n J önk öpings lä n Ka lm a r lä n Halle-Vilvoorde Brussels Capital Region (Brussels C.R.) Ha lla nds lä n Kronobe rgs lä n Ble k inge lä n Sk å ne lä n Randstad London Dublin Berlin Vl aam s G ew est Brabant Walloon Metro Brussels Frankfurt Br ussel - Hoof dst ad Regi on Wal l onne Luxembourg Vienna Paris Zurich Note All regions in this presentation are metropolitan regions if not stated otherwise MEAV: Metropolitan Average (European) Source 3 BAKBASEL Lyon Madrid Milan Metro Brussels and the 2008/2009 crisis How did Brussels perform during the 2008/2009 economic turmoil compared to other metropolitan regions? What are the factors driving this performance? Which conclusions can be drawn for the future? 4 Real GDP growth Different impact of the crises on metropolitan regions 5% 2008 4% 2009 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% Note Source 5 M ila n bl in Du m ol St oc kh nd on t Lo fu r h In % p.a. (at constant prices and PPP), sorted according to growth 2007-2009 BAKBASEL Fr an k ric Zu gh in b ur V Ed M EA na Vi en st ad rid Ra nd M ad Pa ri s bo M ur et g ro Br us se ls lin Lu xe m Be r Ly on -7% Ag ri c u Ex ltur tra e Te ct io xt n ile Pa F & o pe clo od r, th pr in in g t. W & o pu o d bl ish Ot . Fu h. Ru no bb Ch els n- er em m & ic et p al al la M lic st e Co ch m ics in m an er pu i c al te al e M rs ng e El & o ine tal Pr ect ffic eri ec ric e ng isi & eq Tr on ele uip an & c . s p op tro Ot or tic nic he t e al r m qu in s a n i pm . uf e n ac tu t ri U t ng C Tr on ilit ad st ie e ru s an cti d on Re To pair u Co Tr rism a m m ns p un o r ica t Bu t No s in F ion n- e s i na n m s ar se ce ke rv t s ice er s vic es Industries react differently on crisis Slump in economic activities 2009 vs. 2005-2007 0% -5% -10% -15% Note Source 6 Aggregate economy -20% -25% -30% -35% Growth of GVA, in % p.a., 2009 minus average 2005-2007, in Western Europe (WE17) BAKBASEL Different industry structures in regions Regions are differently exposed to the economic downturn 0% 0% Non-market services Metro Brussels -5% Growth of GVA Growth of GVA -10% -15% -10% Stuttgart Trade and repair Construction Finance Business Services Construction -5% Non-market services Business Services Finance -15% -20% -20% Transport equipment Computers & office equip. Computers & office equip. -25% -25% Mechanical Engineering Mechanical Engineering -30% -6% 0% -30% -4% -2% 0% 2% 4% 6% Share of GVA 8% 10% 12% 14% -4% 8% Business Services Finance -10% -15% -20% Transport equipment Transport equipment Computers & office equip. -25% -25% Mechanical Engineering Mechanical Engineering -30% -30% -5% 0% 5% Share of GVA 7 6% London Construction Growth of GVA Growth of GVA Construction Business Services Finance -20% Source 4% -5% Electric & electronic Note 2% Share of GVA Non-market services Turku -15% -10% 0% 0% Non-market services -5% -10% -2% 10% 15% -10% -5% 0% 5% 10% Share of GVA x-axis: derivation of share of GVA of industry in regions economy from Western Europe share y-axis: Growth of GVA, in % p.a., average 2009/2010 minus average 2005-2007, in Western Europe (WE17) BAKBASEL 15% 20% 25% Real GDP development 2007 to 2009 Metro Brussels did fairly well 110 105 Paris London Berlin Frankfurt Milan Randstad Vienna Dublin Stockholm Lyon Madrid Zurich Edinburgh Luxembourg Metro Brussels MEAV 100 95 Note Source 8 Index 2007=100 based on real GDP (at constant prices and exchange rates, PPP corrected) BAKBASEL 20 09 20 08 20 07 90 Forecasts for growth of real GDP Perspectives for Metro Brussels in the coming years are good 2010 2011 2012-2016 7% 6% 5% 4% 3% 2% 1% 0% -1% Note Source 9 In % p.a. BAKBASEL, Oxford Economics M ila n lin Be r rid M ad t fu r n Fr an k Ly o h ric Zü Pa ri s na Vi en st ad Ra nd gh ur Ed in b ss el s Br u g bo ur M et ro lm xe m ho Lu St ok bl in Du Lo nd on -2% Metro Brussels structural performance Metro Brussels performance during 2008/2009: Coping with the crises due to structural strength? Is Metro Brussels keeping up with other metropolitan regions in economic advancement in the middle term? Which role plays the internal structure of the Metro Brussels region? 10 GDP per capita 2009 Metro Brussels amongst the most productive regions in Europe 100 90 80 70 60 50 40 30 20 10 0 m xe u L g ur o b Note Source 11 on d n Lo ls se s u Br ich r Zu ris Pa a nn e Vi oc St m ol kh lin b Du n Ra d ta s d In 1'000 US$ (at constant prices and exchange rates, PPP corrected) BAKBASEL Ly rt fu k an on Fr M V EA M n ila id M r ad E h rg u nb di n rli e B Real GDP growth trends since 1990 In the longer run Metro Brussels growth is less impressive 280 260 240 220 200 180 Paris London Berlin Milan Frankfurt Randstad Vienna Dublin Stockholm Madrid Lyon Zurich Edinburgh Metro Brussels Luxembourg MEAV 160 140 120 100 Note: Source: 12 Index 1990=100 based on real GDP (at constant prices and exchange rates, PPP corrected) BAKBASEL 20 09 20 08 20 07 20 06 20 05 20 04 20 03 20 02 20 01 20 00 19 99 19 98 19 97 19 96 19 95 19 94 19 93 19 92 19 91 19 90 80 Sources of growth 2000-2009 Participation is a key challenge for Metro Brussels 6% GDP hourly productivity hours worked per person population participation 5% 4% 3% 2% 1% 0% -1% -2% Note Source 13 In % p.a. (at constant prices and exchange rates, PPP corrected) BAKBASEL M ila n lin Be r nk fu rt Fr a Zu ric h nn a Vi e Ra nd st ad Pa ris M EA V Br us se ls ol m M et ro St oc kh Ly on Ed in bu rg h Lo nd on M ad rid lin Du b Lu xe m bo ur g -3% Growth of real GDP, employment and population, 2000 to 2009 Different patterns in the different parts of Metro Brussels 120 Real GDP 118 Employment 116 Population Brussels Capital Region 114 112 110 108 106 104 102 20 07 20 08 20 09 20 07 20 08 20 09 20 06 20 05 20 04 20 03 20 02 20 01 20 00 100 130 Real GDP 125 120 Brabant Walloon and Halle-Vilvoorde Employment Population 115 110 105 Note Source 14 20 06 20 05 20 04 20 03 20 02 20 01 20 00 100 Index, 1990=100, based on real GDP (GDP at constant prices and exchange rates, PPP corrected) BAKBASEL Share of industries, 1980 to 2009 Strong structural change in Metro Brussels … Metro Brussels 9.0% 3.3% 4.0% 0.1% 2.2% 0.8% 3.8% 8.7% 0.1% 6.7% 1.9% 3.7% 9.5% 5.8% 2.6% 4.8% 5.2% 0.7% 2.8% 8.3% 1.8% 5.9% 2.7% 5.1% 12.4% 10.6% 13.9% 12.7% Metropolitan Regions Average 8.0% 11.0% 9.1% 14.0% 2.9% 2009 2.8% 8.9% 12.8% 4.8% 4.4% 5.3% 1990 17.6% 15 12.7% 17.9% 11.8% 5.0% in %, based on USD at current prices and exchange rates BAKBASEL 11.2% 2009 0.6% Pharmaceuticals and chemicals Hotels, restaurants, etc (a55+a92) Banking and insurance Business Services excl. Real Estate (a71-a74) Health and social services Other prim. and sec. sector Trade and repair Public administration and other tert. sector Note Source 4.8% 10.3% 1.2% 1.2% 5.3% 9.8% 6.4% 4.7% 1990 0.6% 5.3% 15.0% 10.8% 4.6% Precision and optical equipment, watches Logistics Real estate Education and research (a73+a80) Interest groups and other associations Construction Postal service and telecommunications 10.1% Share of industries, 1980 to 2009 … with the parts of MB developing quite differently Brussels Capital Region 1.1% 0.1% 1.1% 10.5% 0.9% 4.2% 11.9% 4.4% 0.1% 5.6% 4.5% 5.0% 4.3% 19.4% 5.5% 13.4% 2.3% 2.2% 0.1% 7.9% 8.2% 10.2% 2.4% 2009 5.4% 1.6% 8.1% 15.7% 16.6% 1990 7.8% 5.0% 5.0% 16 4.0% 3.5% 1.5% 8.6% 4.3% Pharmaceuticals and chemicals Hotels, restaurants, etc Business Services excl. Real Estate Interest groups and other associations Health and social services Other prim. and sec. sector Trade and repair Public administration and other tert. sector Note Source 13.8% 18.2% 2.4% 11.2% Walloon Brabant and Halle-Vilvoorde 21.1% 16.3% 11.1% 5.1% 5.2% 1.2% 4.7% 0.1% in %, based on USD at current prices and exchange rates BAKBASEL 15.8% 2009 5.0% 10.5% 2.3% 4.4% 13.6% 1990 2.1% 4.6% 5.1% 0.3% 13.2% Precision and optical equipment, watches Logistics Education and research Real estate Banking and insurance Construction Postal service and telecommunications 0.3% Brussels demography Exceptional population growth in Brussels? Is it a source for economic growth? 17 Growth of Population, 1990 to 2009 Population growth in Metro Brussels strong but not exceptional 2.0% 90-00 00-09 1.5% 1.0% 0.5% 0.0% M Note Source 18 In % p.a. BAKBASEL Fr an kf ur t Be rli n Ra nd st ad Pa ris rg h Ed in bu Lo nd on on Ly EA V M ila n M ho lm el s St oc k Br us s et ro Vi en na ich Zu r Du bl in Lu xe m bo ur g M ad rid -0.5% Population forecasts, 2000-2060 Strong population growth in Brussels due to external migration Brussels Capital Region Population level Population change (per year) 1'400'000 Population change 40'000 Net external migration 1'200'000 Net internal migration 30'000 1'000'000 Natural change 20'000 800'000 10'000 600'000 0 400'000 -10'000 200'000 -20'000 0 2000 Note Source 19 2010 2020 2030 2040 2050 In persons Bruessel Studies (Bureau du Plan, 17. mars 2009) 2060 2000 2010 2020 2030 2040 2050 2060 Brussels populations growth Sources? Students Investors / Entrepreneurs Refugees Highly qualified migrants low qualified migrants Tourists Less qualified migrants Retirees 20 Family members of migrants The attractiveness of regions Does it matter? What is “attractiveness” of regions? Which kind of attractiveness is relevant for metropolitan regions in Western Europe? 21 Why attractiveness and openness matters? Cities in the Western hemisphere can only maintain their lead in economic welfare when they manage to keep ahead in productivity This requires permanent innovation … … which, in turn, requires the best people (talents, creative class, highly qualified) The demand for talents is increasing and talents are increasingly mobile Cities and regions compete in attracting and retaining human capital from all over the world =>Policy makers need indicators to evaluate differences in both quality of life performance and openness among regions and to better design and assess regional policies! 22 A basic model for discussion The way to long-term economic performance The ultimate goal is welfare. Its indicator is long-term economic performance. Attractiveness people Potential resources structures Openness people Long-term economic performance (welfare) Source 23 BAKBASEL companies companies A basic model for discussion Determination factors Potential: What is the economic foundation of the regional economy (today)? Resources: Availability of productive manpower and capital Structures: Portfolio of industry sectors, manpower and capital Attractiveness: How attractive is it to go to a city/region (and stay there for some time)? People‘s climate: Quality of life for talents, workers, students and retirees Business climate: Framework conditions for companies Openness: Is there access, or how easy is access to all relevant goods? 24 for people: absence of barriers for entry and staying (and leaving) for business: absence of barriers for starting and conducting (and closing) a company Talents and economic development How to solve the «hen and egg» problem? People follow jobs versus Jobs follow people One empirical result 25 In the short run: people follow jobs In the long run: jobs follow people Note Granger-Causality test: employment and population, 40 metropolitan regions in Europe and the US, 26 years (1980 – 2006) Source BAKBASEL The attractiveness of Brussels Is there a concept to measure the relevant attractiveness? What can we say about Brussels? How can Brussels further assess and exploit its attractiveness? 26 Economic attractiveness – Quality of life – Openness Overlapping concepts for measurement Attractiveness is a multi-dimensional issue Not one but numerous indicators and measurement concepts available Summarized as indices BAK Attractiveness Index These indices are predominantly based on quantitatively measurable indicators Alternative: subjective questionnaires 27 BAK Quality of Life Index Index of Openness BAK Attractiveness Index Brussels faces some disadvantages vis-à-vis its competitors 120 115 110 105 100 Note Source 28 Index, WE17 = 100, 2009, no data available for MEAV and Luxembourg BAKBASEL on Ly rid M ad pe Eu ro n M ila n W es te r lin Be r na St oc kh ol m Ed in bu rg h Br us se ls Vi en Pa ri s bl in Du t fu r Fr an k nd on Lo st ad Ra nd Zu ric h 95 Brussels: Attractiveness profile “Belgium” factors create a disadvantage for Brussels 25% 50% Taxation (Companies) Accessibility Taxation (Manpower) Accessibility (Global) Regulation Taxation -- Regulation (Product Market) Accessibility (Continental) Regulation (Labour Market) Innovation Universities quality: TS per 100'000 inhabitants Patent density Publication density Expenditures on research and development Brussels Note Source 29 Position of Brussels within the benchmarking sample (for each indicator, percentiles) Higher values indicate a better performance; IBD 2010 BAKBASEL 75% ++ Company taxation and taxation of highly qualified* manpower, 2009 60% Brussels taxation of manpower 55% Milan Stockholm 50% Paris 45% Dublin 40% MEAV Randstad Vienna Lyon Frankfurt Berlin 35% Luxembourg Madrid London, Edinburgh Zurich 30% 25% 10% Note Source 30 15% 20% 25% taxation of companies Effective average tax rates (EATR) in %, *disposable income of EUR 100‘000/single person BAKBASEL, ZEW 30% 35% Attractiveness of a region A broad approach is necessary People can not be forced but must be attracted! Concepts Richard Florida the creative class Edward Glaeser identifies factors to attract highly qualified people like: High incomes, rich variety of services and goods, aesthetics and physical setting, good public services, speed (commuting time), … Florida and Glaeser measure different aspects of quality of life They should be used combined 31 BAK–Qality of Life–Index Construction Income and Consumption Housing Market Labour Market Access to Markets Safety Economic Conditions Health Quality of Life Index Societal Conditions Education Environmental Conditions Culture and Amenities Climate Pollution A total of 28 indicators is used 32 Traffic Quality-of-Life Index Again, Brussels at the lower part of the ranking 70 60 Economy 50 Society Environment 40 30 20 10 M ila no ar t ut tg St Pa ris an kf ur t Br ux el le s Fr eb or g n Gö t do Lo n nk i lsi He m oc kh ol se l St Ba na rc el o n W ie Ba Kø be nh av Am n st er da m 0 Quelle: BAK Basel Economics Note Source 33 Weighted ranking points, 2007; some data preliminary (including some data for Brussels) BAKBASEL Quality-of-Life Index: Societal conditions 50 Safety Education 40 Health Leisure 30 20 10 St ut tg ar t M ila no kf ur t Fr an se l n ie W Ba öt eb or g Ba rc el on a s G le Br ux el Lo nd on is St oc kh ol m Am Pa r ki st er da m sin el H Kø be nh av n 0 Quelle: BAK Basel Economics Note Source 34 Weighted ranking points, 2007; some data preliminary (including some data for Brussels) BAKBASEL Brussels: Quality of Life index Economic Market Access and Property Markets are at competitive level … … but Labour Markets and Income limit the achievements of Brussels in this field Society Strongest area for Brussels Safety is the only limiting factor compared to the competitors … … while Education, Health and Leisure all contribute positively Environment Climate and Location build a disadvantage for Brussels Infrastructure available for traffic is fairly good, Pollution is about average Note: Results are partly based on preliminary data, which is also true for Brussels, particularly for the data used in the Environment section of the index 35 Brussels’ position in other rankings Liveability Quality of Living survey by Mercer Consulting: Brussels is ranked 15th from 221 cities compared. Similarly to the BAK QoL-Index Brussels is behind Copenhagen, Amsterdam, Vienna, Stockholm, Frankfurt and Munich, but before Stuttgart, Milano and Paris. European Cities Monitor (Cushman & Wakefield): Brussels is ranked 4th in “best cities to locate a business today”. But in terms of “quality of life for employees” Brussels is outside the top 10; it is ranked 16th from 35 cities behind Copenhagen, Barcelona, Madrid, Munich, Stockholm and Vienna. 36 Brussels’ position in other rankings Global city GaWC studies (Globalisation and World Cities Research Network): Cities ranked from Alpha++ world cities (New York, London), Alpha+ world cities (e.g. Hong Kong, Paris, Singapore, Tokyo) to Gamma- world cities. Brussels is a Alpha world cities together with Madrid, Moscow, Seoul, Toronto etc. Global Cities Index (Foreign Policy et al) “the world biggest, most interconnected cities help to set global agendas…” Brussels is ranked 11th. It reaches the third place among the European cities, behind London and Paris. Global Power City Index (consultant firm Knight Frank LLP and Citibank) rank “the world most influential cities according to economic activity, political power, knowledge and influence as well as quality of life”. Brussels reaches place 6 behind New York, London, Paris, Tokyo, Los Angeles. 37 The complementary concept of «Openness» What is openness? Openness is the quality and sum of local conditions to attract and retain international populations (Towards OPENCities 2008) Places are open to new people and ideas if they have “low barriers of entry” (Florida 2004) Thus cities have to be attractive, so that people want to go and stay there open, so that people can go and stay there Openness is equivalent to low barriers of entry for international populations easy integration and participation for international populations 38 The complementary concept of «Openness» Open for whom? Students Investors / Entrepreneurs Refugees Highly qualified migrants low qualified migrants Tourists Less qualified migrants Retirees 39 Family members of migrants How can openness be measured? Openness is a multidimensional and complex phenomenon It can be measured by a large number of indicators which measure different aspects of openness The indicators can be grouped thematically (e.g. into areas) Each of these key factors represents one of the various dimensions of the quality of life of all inhabitants. Special attention is paid to the international populations which are important for the attractiveness and openness of the city 40 Indicators grouped systematically 54 internationally comparable indicators, aggregated to 11 areas: Migration Freedom Barriers of entry Quality of living Intern. presence Education International flows Intrastructure International events Standard of living Diversity Actions or 3 policy themes: Internationalisation Leadership & Governance Managing diversity 41 42 43 Summing up Economic performance of Brussels Was good during crisis … … but limited in a broader view There are challenges ahead Attractiveness of the Brussels region … … is high – clearly a world city … often good in perceptions … but not confirmed by quantitative indicators Options 44 Awareness of the importance of high potentials Better understanding and monitoring of attractiveness Thank you for your attention! Contact BAK Basel Economics AG Gueterstrasse 82 CH-4052 Basel Switzerland Tel + 41 61 279 97 14 Fax + 41 61 279 97 28 [email protected] www.bakbasel.com Martin Eichler Senior Economist & Executive Board 45 Definition Benchmarking Regions Region IBC notation Country IB Key Type Delimitation Brussels Greater Brussels BEL BELMB IBMember Metropolitan Region Paris Ile de France FK FK11 NUTS ZEAT London Greater London UK UKI NUTS Region of England Berlin Berlin DE BN NUTS Bundesland Frankfurt FrankfurtRheinMain DE RM BAKBASEL IB-Aggregat Milan Milano IT IT205 NUTS Provincie Randstad Randstad NL RD BAKBASEL Metropolitan Region Vienna Wien AT AT13 NUTS Bundesland Dublin Greater Dublin Area IR IRGD BAKBASEL Metropolitan Region Stockholm Stockholm SE SE01 NUTS Riksområden Lyon Rhône FK FK716 NUTS Département Madrid Comunidad de Madrid ES ES3 NUTS Agrupación de CCAA Zurich Zürich CH ZH NUTS Kanton, BFS-Grossreg. Edinburgh Metropolitan Edinburgh UK UKME BAKBASEL Metropolitan Region Luxembourg LUXEMBOURG LUX LUX NUTS National Level MEAV Metropolitan Regions Average MEAV BAKBASEL Average of the group of Metropolitan Regions Note: 46 All regions are either official statistical regions (NUTS-classification) or an aggregate thereof Sources All data in this Chart-Set are from the «International Benchmarking Database» by BAKBASEL. For the BAKBASEL list of data within the International Benchmarking Programme please consult the «International Benchmarking Report». © Copyright for data and figures BAK Basel Economics AG. The data included herein are taken or derived from various data sources, among them particularly: - National and regional statistical offices, EUROSTAT - International Comparisons of Output and Productivity (ICOP), University of Groningen - Thomson Scientific Ltd. (TS), London, UK, © Copyright Thomson Scientific 2006 - Shanghai Jiao Tong University - Organisation for Economic Cooperation and Development, Paris (OECD) - Centre for European Economic Research, Mannheim (ZEW) - Institute for traffic planning and transportation systems, Zürich (IVT) For further Information please contact: Marc Bros de Puechredon [email protected] 47