ISSUES FOR NEW ZEALAND CITIES David Maré Adjunct Professor, Department of Economics, Waikato University Senior Fellow, Motu Economic and Public Policy Research Trust NIDEA Launch Symposium November 24 th 2010

Concentration – of population; of production Connections – Within cities; Between cities Composition – Demographic Change; Industrial structure Cities & the tides of economic and demographic change

Geographic Concentration is growing – Internationally, growth in city-regions – In NZ, Auckland Urban Area’s population share is c. 30% (and growing) Concentration improves outcomes –... and inequality Concentration

Density and firm performance are positively related – 10% higher density => 0.7% higher productivity (mfp) 6% - 9% Auckland Region premium relative to Cant, Wgtn, Waikato – Innovative firms are located disproportionately in cities Auckland wages and productivity – Auckland firms have 25% higher (labour) productivity Higher premium for industries that are over-represented in Auckland and concentrated within Auckland – Auckland wages are 7% higher Much larger premium at the top of the distribution Concentration – New Zealand

Connections within cities – Beneficial interactions at small spatial scale – The paradox of ‘placeless’ technology Its use complements face-to-face contact Cities (and regions) depend on each other – Connectedness more costly in a long thin country Global connectedness – Flows of goods, ideas, people, money Connections

International Connectedness – Dairy products Source: Blayney & Gehlar (2005)

International Connectedness – Passenger links London New York Sydney Source: Derudder & Witlox (2005)

Changing economic composition – Large cities gain from specialisation and diversity Cities favour firms that benefit most from these – Smaller cities specialise in industries Changing demographic composition – Geographic dimensions of population ageing Cities are younger and more skilled – City growth through entrants (Immigrants) Composition

Congestion Coordination Cultural change Climate pressures – Sprawl v intensification Competitive advantage Challenges

Research Directions Concentration Concentration and firm productivity – For which firms? – Price effects Concentration and skills Optimal Size & Urban Form Connections The Interdependence of NZ system of cities/ regions – Transport & Services links – Value chains NZ cities within Australasia Global flows Composition Functional specialisation and competitive advantage Regional cascade of demographic change −Ageing; −Migration

Thank you