The Economic Performance of UK Cities, 1995-2005: Driven by Knowledge-based Sectors or Consumption-based Sectors?

Within the current discourse on regional economic development, cities have increasingly become conceptualized as "knowledge hubs" and centres of innovative activity. Yet, cities are also centres of consumer spending and are the location for a large number of consumption-based sectors, that is, retail, restaurants and entertainment. This paper examines the contribution of both these sectors to economic development of UK cities using data from the period 1995-2005. The results suggest that the proportion employed in knowledge-based sectors is significantly higher within cities than in the non-city regions, while there are no significant differences in the proportion employed in consumption-based sectors between cities and non-city regions. In addition, despite the fact that employment in the two sectors is broadly similar within cities, higher levels of knowledge-based employment within a city are positively correlated with higher levels of both Gross Value Added (GVA) per capita and the growth rate of overall GVA. However, knowledge-based employment varies widely between cities; therefore, while cities may be viewed as the centres of knowledge-based employment as a whole, not all UK cities can be said to be dominated by knowledge-based employment. Finally, while employment in consumption-based sectors may not be associated with superior growth rates, these sectors still account for a similar proportion of employment within UK cities.