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The Decline of Great Industrial Cities

9/16/2013
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Many cities with a visible imprint of a formerly flourishing heavy industry are tending to see their economies grow at a slower pace than their respective countries. There are a few common factors which have led to the decline of cities which were once icons of economic progress. The following cases also raise concerns about the sustainability of the particularly rapid urbanisation of emerging markets.

Income and Population Changes in Detroit, Bochum, Belfast and Their Respective Countries, 2005-2012

 

Income and Population Changes in Detroit, Bochum, Belfast and Their Respective Countries, 2005-2012

Source: Euromonitor International

Note: Charts feature data for Detroit and the US, Bochum and Germany, Belfast and the UK. Growth indexes (2005=100) are provided for population and total annual disposable income in constant 2012 prices.

Troubled cities of North America and Europe

Examples of urban decay in the 20th century primarily include the early industrialised cities of North America and Europe, such as Detroit (US), Bochum (Germany) and Belfast (UK). Generally, these formerly great industrial cities have all registered negative growth over the last few decades.

Over 2005-2012, Detroit, Bochum and Belfast saw their populations shrink by 4-5%, while their respective countries experienced the opposite development. The populations in the US and the UK expanded by 6% and 5%, respectively, while Germany registered a modest decline of less than 1%. Similarly, real total annual disposable income contracted by 5-11% in those cities over 2005-2012. At the same time, their respective countries saw a rise in income of between 2-9%. In per capita terms, income decline in Detroit, Bochum and Belfast was less sharp, but still fell by 1-6%.

Failure to compete in post-industrial world

The historic dominance of heavy industry in Detroit, Bochum and Belfast has been a major reason behind their decline. Detroit was one of the US’s fastest growing cities until the 1970s, primarily due to the automotive industry. Bochum, which was once renowned for its coal and steel industry, used to be home to manufacturing facilities for Nokia and Opel, while Belfast was an important centre of shipbuilding and engineering until World War II. Relatively high wages for low-skilled jobs and job security ensured by large unionised factories previously encouraged population growth in these cities, but at the same time discouraged many from both seeking a better education or starting their own businesses.

Hence, after the dissipation of their key industries in an increasingly global market, these cities found it difficult to move from heavy industry to a knowledge economy and entered a slow and long-term decline. Failing to reinvent their economic role, Detroit, Bochum and Belfast did not experience urban regeneration or the rise of creative industries and did not attract a new class of white-collar workers. With talented people fleeing these cities in search of better economic opportunities, today Detroit, Bochum and Belfast have been left with a poorly qualified workforce and a lack of job opportunities. This, in turn, has made their switch to new, highly productive sectors even more difficult.

Potential future threats

Today, more than 50% of the world’s population live in cities and this percentage is growing as emerging markets become increasingly urbanised. This indicates the importance of sustainable urban development mechanisms. Probably the least sustainable development can be observed in fast growing emerging cities with a narrow industrial focus. For example, mid-sized industrial cities in China are receiving huge amounts of rural immigrants, mostly low-skilled industrial workers searching for a better life and economic opportunities. In 2012, three out of top five cities in terms of share of employment in manufacturing among 120 of the world’s major cities were located in China. If China happens to lose its position in the large-scale manufacturing sector, this would mean a definite downturn for such industry-dependent cities as their transition to a service-oriented economy would be a massive challenge

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