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Economic Research

Dynamic smaller towns: identification of critical success factors

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  • Release date: 24 May 2006
The objective of this research was to identify those factors that have played a causal role in the success of prospering smaller towns and to assess the scope for policies to replicate that success elsewhere.

Methodology

Desk research, comprising a literature review and statistical analysis based on existing data sources, and case studies based on matched sets of towns with differential performance.


Economic Research Unit's main conclusions

  • The definition of "success" can itself be rather controversial. In this summary the term is used in a rather narrow economic sense - as proxied by measurable factors such as growth in employment.
  • The performance of smaller towns varies greatly. A wide range of factors can help promote success, and there is no single necessary factor. For example, while peripherality can be a handicap, there are examples of more remote and less well-connected towns that are performing successfully, and vice versa.
  • The study has confirmed the importance of a range of "tangible" factors traditionally identified in the literature:
    - location
    - infrastructure
    - availability of land
    - housing
    - labour quantity and quality
    - industrial and business structure (at least over the shorter term).
  • A number of less tangible factors can also be important, notably quality of life, especially physical attractiveness. Aspects of community and culture may also play a role.
  • History matter, both in terms of physical attractiveness, and, crucially, in the nature of the housing market.
  • The housing market can play a crucial role in attracting or trapping certain types of disadvantaged household in some towns, and this is associated with poor economic performance.
  • The quality of the workforce is an increasingly significant factor in economic success. Attracting, and retaining, well-qualified labour is therefore important. There are some indications that pay and employment opportunities for less well-qualified people are enhanced by the presence of the better qualified. And there is some indication (so far mainly anecdotal) that in-migrants are likely to be more entrepreneurial. But there are also obvious issues here related to culture and the wishes of the indigenous population.
  • There is evidence that the physical attractiveness of towns and their locales can be crucial in attracting the skilled and affluent - as well as in promoting their functions as local service centres and tourist destinations.
  • The performance of towns and their surroundings is interlinked. Economically successful towns tend to be located within broader areas experiencing population growth.
  • Although highlighted in some earlier studies, the operation of local institutions (such as networks) was not found to be particularly important in practice.
  • In terms of the factors upon which action can be taken in the shorter terms, steps to improve physical attractiveness and local accessibility would seem to offer opportunities. Even modest steps can achieve results if well designed. Such policies might target:
    - physical fabric;
    - traffic management and parking;
    - improving the retail offer to promote the service centre function.
  • Over the longer term, the results suggest it may be appropriate to direct attention to housing market processes, and in particular to the creation of opportunities to attract more affluent and / or well qualified residents where such people are under-represented.
  • Smaller towns will benefit if similar steps are taken to in their surrounding areas.
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