The document discusses the impact of new technologies on jobs and local economies. It notes that while technologies are often touted as improving productivity and living standards, they can also hollow out middle-level jobs, increase income inequality within and between regions, and exacerbate urban-rural and regional divides. Brexit and populist votes in Europe have been influenced by discontent over these geographical economic disparities. The challenges of institutions, governance, and distribution must be addressed for technology to benefit society as a whole.

1. The Impact of New Technologies on Jobs
and their Effects on Local Economies:
Economic and Governance Shocks and
Responses
Philip McCann
1

2. 1. Technology and Productivity
• Why wonder or worry about new information and
communications technologies ICTs?
• Impacts on our future quality of life and the nature of our
future livelihoods
• New technologies – information and communications
technologies ICTs → ‘big data’, electric cars, new battery
technologies, robotics, autonomous vehicles, 3D-printing,
cloud computing, supersonic travel, renewable energy
systems and climate change
• Fears about new technologies and governance challenges →
loss of identity, lack of anonymity, loss of personal or
community control
2

3. 1. Technology and Productivity
• “Productivity isn't everything, but, in the long run, it is almost everything.
A country's ability to improve its standard of living over time depends
almost entirely on its ability to raise its output per worker.” Paul Krugman
(1994) The Age of Diminished Expectations
• 1950s-1980s Traditional notions of disembodied technology
(‘falling out of the sky’) residual over and above capital
(Solow-Swan) → capital intensity and factor mobility
• 1980s spillovers (Romer), embodied human capital (Lucas)
and innovation (Aghion and Howitt)
• Technologies embodied in systems of innovation,
organisations, clusters (Pavitt; Porter) and institutions
(Ostrom, Rodrik → shift towards a societal view of technology
• Examples of railways, electricity, street-lighting, sewerage,
telephones, sanitation, health, air-traffic control → and
competition for technical, legal and social standards 3

4. 1. Technology and Productivity
• 1990s and 2000s impacts of ICTs on the growth in the
‘transatlantic productivity gap’: Silicon Valley effect and the
Walmart Effect
• In global financial markets technology was ahead of a
systemic understanding of governance, institutions and
regulation → 2008 Global Financial Crisis
• 1990s → 2008 Growing global convergence and regional
convergence and divergence; post-2008 growing global and
regional divergence
• Milanovic ‘elephant ’ income distribution curve
• Post 2008 productivity slowdown and stagnant wages in OECD
countries → McKinsey Global Institute: demand contractions,
ageing and lack of digitization and ICT take-up 4

5. 1. Technology and Productivity
• ‘Weightless’ knowledge economy (Quah and Varian)
• Features of the Capitalism without Capital (Haskel and
Westlake 2018)
• 4Ss: Scaleable, Sunk costs, Synergies, Spillovers
• Scalability and sunk costs → concentration in place or context
• Synergies and spillovers → concentration or diffusion
• Centralisation or decentralisation, convergence or divergence
• Measurement problems for knowledge economy? → under-
valuing the weightless economy?
• Robert Solow “You can see the computer age everywhere but
in the productivity statistics.”
5

6. 1. Technology and Productivity
• Impact of new ICTs on cities, regions and local economies?
• Excitement about new technologies in smart cities debates:
traffic management, new urban mobility solutions, energy
control, health management systems → key emphasis on the
functioning and performance of cities
• Global logistics and transportation → but erroneous
optimistic commentaries: end of geography (O’Brien 1992);
death of distance (Cairncross 1997); world is flat (Friedmann
2005); post-geography trading world (Fox 2016)
• Growth of high-technology and high knowledge-workers,
clusters and high-skills concentrations
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7. 1. Technology and Productivity
• ‘Hollowing out’ of middle level jobs and roles → rising job
polarisation and income inequalities within countries (OECD
2018a) and cities (OECD 2018b)
• Urban–v–rural divide in USA, Australia, Canada, NZ, France;
Regional divides in UK, Italy, Germany; Intra-Urban inequality
• Deindustrialisation concerns about out-sourcing and off-
shoring facilitated by internet-based technologies → but 3D-
printing may reduce economies of scale of out-sourcing?
• Rise in ‘gig-economy’ employment → fragile, non-contract
• Political and regulatory pressures
• The new technological possibilities cannot respond to the
productivity-related governance challenges
7

8. 2. The European Urban and Regional Context
8
Labour productivity in PPS in metro regions compared to the rest of their country, 2008
ES DE
UK
IT
NL FR
BEATSE
FI
BG
RO
LT
LV
PL
HU
EE
SK
CZ
MT DK
GRSI
PT
0
40
80
120
160
200
240
280
LabourproductivityinPPS,non-metroregionscombined=100
Capital metro region
Second tier metro region
Smaller metro region
Non-metro regions combined
IE

9. 2. The European Urban and Regional Context
9
Change in labour productivity in pps, 2000-2008
MT
DK
DE
IE
BEFRAT
SE
IT
FI
UK
NL
ES
BG
RO
LV
LT
PL
EE
HU
CZ
PT
SK
SI
-40
-30
-20
-10
0
10
20
30
ChangeinProductivityrelativetothenationallevelinindexpoints
Capital metro region
Second tier metro region
Smaller metro region
Non metro regions combined
60

10. 2. The European Urban and Regional Context
10
Population change in metro regions, 2000-2008
IE
UKNLFR
SK
DK
PLIT
RO
BE
PT
CZ
EE
HU
ES
SILT
DE
BG
SE
AT
MT
LV
GR
FI
-12
-8
-4
0
4
8
12
16
Changeinshareofnationalpopulationin%
Capital metro region
Second tier metro region
Smaller metro region
Non-metro regions combined

11. 11
OECD Extended Regional Typology of European Regions: Two Year Moving Average
Growth Rates in GDP among TL3 regions, 1995-2011
-3%
-2%
-1%
0%
1%
2%
3%
4%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PU IN PRC PRR

12. 12
OECD Extended Regional Typology of European Regions: Two Year Moving Average
Growth Rates in GDP per Capita among OECD TL3 regions, 1995-2011

13. 13
Effects of the crisis in OECD TL3 European Regions (Extended OECD Regional
Typology) by Period

14. 2. The European Urban and Regional Context
• In the post 2008-crisis period across European both cities and
regions have suffered
• The EU experience is very different to US stories of city
prosperity - Triumph of the City etc
• Cities exacerbate national post-crisis trends → growing
countries are driven by growing cities and declining countries
are weighed down by declining cities
• Urban advantages relating to employment and productivity
post-crisis are oriented towards EU13 economies while EU15
face severe urban disadvantages
• Convergence → divergence. Greater emphasis on the
challenges facing lagging regions (World Bank 2018)
14

15. 15

16. 3. Regional Reasons for the Brexit Vote
UK Interregional problem is
the worst in the OECD relative
to national growth and
development
UK is diverging, dislocating and
decoupling into 3 different
economies
- London + SE, E, SW
- Scotland
- WM, EM, NW, YH, NE, W, NI
London and hinterland is
decoupling from the rest
of UK
16

17. 3. Regional Reasons for the Brexit Vote
• Impacts of globalisation are totally different across the UK
Brexit votes → age, education, skills and occupation, social
attitudes, local economic conditions
• Metropolitan elites argument for Brexit
• The Geography of Discontent → a worldwide phenomenon?
• Geography of 23rd June Referendum votes reflects the internal
decoupling of the UK
• Economic geography overlays all other characteristics 17

18. 18

19. 19

20. 20

21. 21

22. 22

23. 23

24. 24

25. 4. Regional Impacts of the Brexit Vote
• UK Brexit risk exposure = 12.2% of UK GDP
• EU Brexit risk exposure = 2.64% of UK GDP
• UK regions →10%-17% of regional GDP
• Irish regions → 10% of regional GDP
• German regions → 4.5%-6.4% of regional GDP
• Netherlands regions → 3.5%-5% of regional GDP
• Belgian regions → 2.8%-4% of regional GDP
• French regions → 1.8%-2.7% of regional GDP
• Italy, Spain, Greece → < 1% of GDP
• UK Brexit exposure risk is 4.6 times higher than the EU
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26. 5. Geography of Discontent
26

27. 5. Geography of Discontent
27

28. 5. Geography of Discontent
City Van der Bellen Hofer
Graz 64.4 35.6
Vienna 63.6 36.4
Linz 63.4 36.6
Innsbruck 62.2 37.8
Dornbirn 61.4 38.6
Salzburg 60.0 40.0
Sankt Pölten 57.0 43.0
Wels 55.0 45.0
Klagenfurt 53.5 46.5
AUSTRIA 51.7 48.3
Villach 46.6 53.4
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29. 5. Geography of Discontent
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Source: http://www.repubblica.it/
2016 Italy’s referendum by province

30. 5. Geography of Discontent
City Yes No
Italians abroad 64.7 35.3
Florence 56.3 43.7
Modena 55.8 44.2
Bologna 52.2 47.8
Milan 51.1 48.9
Brescia 48.4 51.6
Rimini 47.2 52.8
Turin 46.4 53.6
Genoa 41.0 59.0
Venice 40.9 59.1
ITALY 40.9 59.1
Rome 40.6 59.4
Naples 31.7 68.3
Bari 31.6 68.3
Palermo 27.7 72.3
Catania 25.3 74.7
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31. 6. Conclusions
• Impacts of technology on cities and regions cannot be
understood ex ante
• Caution regarding techno-optimism → advocated by the tech
world
• Technology solves problems but also creates new ones
• Both productivity growth and income convergence are
essential for democracy
• The real challenges relate to institutions and governance and
(income, service and wellbeing) distributional impacts
• These real discussions are largely absent in the technology
literature which still treats technology as exogenous
• Need to focus on societal engagement and participation – can
be facilitated by place-based development policy advocated
for more than a decade by EU and OECD 31

32. References
• L. Dijkstra, E. Garcilazo, and P. McCann, 2013, “The Economic Performance of European
Cities and City-Regions: Myths and Realities”, European Planning Studies, 21.3, 334-354
• L. Dijkstra, E. Garcilazo, and P. McCann, 2015, “The Effects of the Global Financial Crisis
on European Regions and Cities”, Journal of Economic Geography, 15.5, 935-949
• B. Los, J. Springford and M. Thissen, 2017, “The Mismatch between Local Voting and the
Local Economic Consequences of Brexit”, Regional Studies, 51.5, 786-799
• Chen, W., Los, B., McCann, P., Ortega-Argilés, R., Thissen, M., and van Oort, F., 2018,
“The Continental Divide? Economic Exposure to Brexit in Regions and Countries on Both
Sides of the Channel”, Papers in Regional Science, 97.1, 25-54
• Haskell, J., and Westlake, S., 2018, Capitalism Without Capital: The Rise of the Intangible
Economy, Princeton University Press, Princeton
• OECD, 2018a, Productivity and Jobs: (How) Can All Regions Benefit?, Paris
• OECD, 2018b, Divided Cities,: Understanding Intra-Urban Inequalities, Paris
• World Bank, 2018, Rethinking Lagging Regions: Using Cohesion Policy to Deliver on the
Potential of Europe’s Regions, Washington DC
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