The Creative Cultural Knowledge CitySome Conditions

Sako Musterd

Department of Geography and PlanningUniversiteit van Amsterdam

Paper presented at the University of Kaiserlautern28-10-2002

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1 Introduction and problematic

“High human capital individuals are the key to success in thisnew era of economic growth”

“Firms in today’s knowledge-based economy are increasinglymaking location decisions based on where the talent pool islocated”

“People in technology business are drawn to places known fordiversity of thought and open-mindedness”

“Diverse, inclusive communities that welcome gays,immigrants, artists, and free thinking ‘bohemians’ are ideal fornurturing creativity and innovation, both keys to success in thenew technology”

Richard Florida & Gary Gates (2001) Technology and Tolerance: theImportance of Diversity to High-Technology Growth. Washington: TheBrookings Institution

The creative, cultural knowledge city has recently got a firm amount of attention, fromthe side of researchers, but also from firms and inhabitants. New challenges, but alsonew problems that are related with the rise of this new type of city, explain thatattention. The quotes shown here, from recent work of Richard Florida and Gary Gatesexpress a significant economic geographic shift as regards the factors, which firms thinkare relevant to make a decision to settle in one particular location and not in another. Aswe will show in section 2 (a short discussion on some relevant literature), thesestatements fit into a wider debate about the significance of place, and the changingweights of factors that are regarded to be important in the decision making processaround the settlement of firms and institutions.If, for the time being, we assume that this shift is one of real importance, this wouldimply that talent, diversity and tolerance would be the new key factors cities must beable to respond to in order to attract new economic activities. Then, several questionsask for an answer. The first one is whether the relation between these new factors(located talent, diversity and tolerance) and local (regional) economic success reallyexists? This question will be answered tentatively in section 3 on the basis of existingknowledge and own research that has recently been carried out in Amsterdam, with aspecial focus upon that city and its region. The second question builds on the answer tothe first question. If there really is a relation between the presence of a talent pool andeconomic success, what kind of talent are we then talking about and what kind ofresidential environments are they oriented upon? What are their lifestyle biotopes?Suddenly, the answer to the question whether there are sufficient residential(environment) supplies in response to the demands of the talented workers becomes animportant economic issue. These issues will be dealt with in section 4, again with afocus on Amsterdam. The existing mismatches and policy challenges will be discussedin section 5.

2 About changing location factors

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Recent economic restructuring processes reveal an ongoing shift in urban economiesfrom a ‘fordist’ situation in which manufacturing industry profiles characterised bystandardised production processes were predominant, towards a ‘post-fordist’ situationin which business and consumer services and communications sectors took the lead andproduction processes became much less standardised and more flexible, towards thecurrent situation in which technology, services and communications are combined withan increase of the knowledge and cultural sectors, with elements that are regarded to berelevant for creativity and innovation. These transformations are strongly connected tothe changes that occur in cities, since cities were and still are regarded to be the enginesof economic growth, and the centres of production, consumption, innovation andaccumulation of wealth. Some cities have made more progress in this transformationprocess than others. Initially, the information, communication and technologyrevolution, and the growing internationalisation led many people to think that firms,people and processes would, as part of the ‘global village’, become footloose.According to Manuel Castells (1989) the world would change in spaces of flows insteadof spaces of places. However, although there was increasing interaction, thesetransformations did not imply the end of places, the end of geography. On the contrary,the (high-tech) ideas did pass the importance of path dependencies and the importanceof ‘embeddedness’ of firms and people (Storper 1992, Kloosterman & Lambregts2001). People and firms do not appear to disconnect themselves from environments theyhave invested in for many years; the local networks they participate in, the ‘industrialcomplexes’, the complicated symbiosis between firms and people, all of these explainwhy place still matters. As a matter of fact, one could also follow an argumentation theother way around: because interconnections have improved substantially, the local,place specific characteristics have gained importance instead of lost. This is not to saythat classic factors (airports, highways, telecom connexions, land prices, available skillsand materials) are not important anymore; they are still necessary conditions. However,they are not sufficient conditions and not very distinguishing anymore.Related to these changes is the fact that today’s production in cities is not so muchrelated to materials anymore; today’s production is in the sphere of services, advises,knowledge, consumption, culture and innovation (Hall 1998, Lambooy 1998, 2002,Creative Cities 2002). Therefore, not material, but (well-skilled) talent is the dominantproduction factor: human capital. Roughly, the idea is that actual economic growth inWestern cities is created by successful innovations in whatever spheres and bycreativity that is required to get to innovations and innovative marketing of newproducts. In addition, cities may grow because they offer good opportunities for thesettlement of those parts of multinational firms that control information flows andeconomic processes. In short, creativity, a good climate for innovation and the presenceof control-functions are crucial factors for urban economic success. The city challengeof today then is to attract the talent pool. This may be done by investments in the urbanclimate and services that are asked for by that talent and by trying to create theconditions for the appropriate social, economic, cultural and physical mix. This has tobe done, and has been done in the past, in certain locations or places. Today, some citiesare able to show (place-specific) characteristics that almost perfectly fit the newdemand; these successful cities, knowledge cities, creative cities, or cities ofconsumption meet a fairly large set of requirements. These include:

• A suitable basis for the economic restructuring that is going on. This includesthe availability of a flexible and dynamic labour force; it includes the presenceof a varied population of workers with the right skills and talents.

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• An economic structure that already has the characteristics that fit the growthsectors of the current economy (services, culture, consumption, high-tech firms,media)

• The ability to attract new and creative talent for the growth sectors of the urbaneconomy; it is said that tolerance, an innovative climate and diversity are key-conditions to reach that objective

• An urban atmosphere that allows for the social construction of specific placeidentities that attract the talented young population that is required for urbaneconomic growth.

• A historically grown urban structure that fits the varied consumption behaviours,which are associated with many of today’s economic activities (interestingarchitecture, historic places and public spaces, leisure facilities, etcetera).

• A historically grown social structure that is regarded to be attractive for bothpeople and firms and is important for economic urban growth. These citiesshould experience pressure on attractive parts of their territory. Usually,gentrification processes will continue to occur.

• A relatively safe environment with moderate crime, moderate social polarisationand moderate poverty.

Since several conditions that were mentioned are historically grown it is extremelydifficult to copy them. The current economic and physical profile of Amsterdam, forexample, is rooted in the 17th century or before. By implication cities that currently havethe right mix of properties have enormous comparative advantages in economic terms.These advantages cannot be copied easily (as opposed to the classic location factorssuch as infrastructure and communications, which can be copied).

3 Talent, diversity, tolerance and economic success: some evidence

New firms increasingly ask for a creative climate in which innovations may develop. Itis assumed that tolerance and openness are also required to reach those goals. Largecities in particular would be able to fulfil these conditions. I already referred to researchthat was carried out by Florida & Gates (2001). They have shown empirically that, inthe US, urban milieus with an international climate, which stimulate creativity, aretolerant and characterised by ethnic and social diversity, are the fastest growing cities ineconomic terms. The researchers assume that this is linked to their ability to attracttalent. Indicative for their openness and tolerance was the high share of homosexuals,the share of bohemians, the share of immigrants and ‘diversity’ in general; not just‘top’, but also ‘bottom’. In the US cities such as San Francisco, Boston and New Yorkshow the required profiles.Sharon Zukin (1995) has provided additional support for the transformations that aregoing on. She claims that many cities have become the centres for the symboliceconomy. Culture and creativity have themselves become the prime spheres of urbaninvestment in these cities. To be able to maintain a ‘global’ position in that respect,international embeddedness is required. This can be reached via large financialinstitutions, international consultancy firms, international advertising and media firms,and via international migration.In Europe, Amsterdam seems to be a good example of a city which scores high on thetalent, diversity and tolerance criteria and also shows fast growth in the service and

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communication industries. The city is divers in ethnic and social terms, is regardedfairly tolerant for a wide variety of lifestyles, including bohemians and homosexuals,and provides many institutions for higher education. The city also attracts largenumbers of western and non-western immigrants as well as young and smallhouseholds. A combination of these characteristics seems to offer the right mix forknowledge intensive firms such as Shell lab, Phillips and Cisco, but also for numeroussmall innovative firms. Apparently, the city has the right qualifications to attract bothfirms and talent. Some recent figures illustrate its position. Between 1994 and 1999 thelabour market participation rate increased from 63% till 69%; the unemploymentfigures have dropped accordingly, in 2000, for example with 11%, in 2001 with 7%. Infact, employment opportunities have increased over the past 15 years with an average of2% per year. Since Amsterdam is doing much better than Rotterdam, the figures cannotbe explained by simple conjunctural factors. It seems as if the historically growneconomic structure of Amsterdam better fits the recent structural changes in the worldeconomy.In fact, the city also has good qualifications compared to Barcelona, Geneva, Milan,London, Paris and Munich (Arnoldus & Musterd 2002a and b). We organised a closerlook at the cities of Munich and Barcelona. Munich comes close to Amsterdam in termsof its profile. The economic structure is highly service-oriented, the internationalposition is strong, small households are predominant, the knowledge sectors are highlypresent and culture plays a major role (media in Munich; a cultural mix of museums,music (new and old), arts, etceteras in Amsterdam). Amsterdam and the urban regionare clearly more advanced in terms of the economic structure; the share ofmanufacturing industries is very low compared to other cities, including Munich.Barcelona has the ambition to be a knowledge city, but still has a profile that is markedby a large share of economic activities in manufacturing industries; the city has hardlyany ict industries and relatively few immigrants from western countries, bothindications of a somewhat weaker position as an international knowledge city. Yet, bothcities and Amsterdam are making fast progress to develop the urban climate that isregarded to be attractive for talent to settle within its boundaries.

4 What talent? What kind of environment does that talent require?

But what exactly is the new talent? According to the literature (and empirical support)the new economic activities ask for highly educated workers, for diversity in terms ofskills; for manifold flexibility, for creativity, for internationally oriented people, and forambitious workers. Amsterdam seems to be able to offer much of that. The city showsrecent growth of five categories of urban oriented households:

- small, economic active households with a high level of labour marketparticipation, and a high level of bargaining power; 76% of all households isnow consisting of one or two persons; between 1989 and 1994, the disposableincome rose with 10 per cent; between 1994 and 1996 with another 10 per cent;

- new professionals, which are clearly linked to the new economies ( such asbusiness services (an employment increase between 2000 and 2001 with 10%)and communications (an increase with 11%);

- immigrants from non-industrialised countries (36% of the population);- immigrants from industrialised countries (10% of the population);- large numbers of potential knowledge workers (students in higher education,

approximately 10 per cent of the population).

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Together, these households make a household composition of the city, which isincomparable with the composition of the city as it was say four decades ago. Thepopulation composition has not much to do with manufacturing industries and neitherwith uniform family cycles; today’s composition is related to the post-Fordist or evenculture and knowledge driven urban economies. These economies and populationsrequire a totally different urban environment.According to the literature, the vast majority of the new household categories will behighly urban oriented. They will ask for urban facilities such as café’s, restaurants,cultural facilities, and services for recreation. Most of these services tend to be providedby private firms and – in a city like Amsterdam – few complaints are heard about thematching between demand and supply in this regard. A different story has to be told asfar as the residential situation is concerned. There, a serious mismatch is reported. Thestock of dwellings would not match the household demands anymore. Approximately60 per cent of the Amsterdam housing stock is available for the so-called ‘targethouseholds’; these are households with a low income, who are regarded to be in need ofsupport to get housed properly. However, recent calculations have shown that of thecurrent Amsterdam households less than 35 per cent might belong to the ‘targethouseholds’. This points at a mismatch of some 100,000-150,000 dwellings. On its turn,this triggers several other negative processes (these will be discussed in section 5).

The question then is, what is really needed. To get an answer to that question, weinvestigated the urban orientation of households, which are regarded to be related to thegrowth sectors of the economy. The leading question was: what are the ‘biotopes’ fornew talent; what types of milieus are they oriented upon? On a wider scale factors suchas the availability of jobs is important, and also the wider infrastructure: social security,connections, health care systems; but perhaps also a varied environment with manyservices and cultural facilities. On a smaller scale the orientations between variouscategories of talent may differ substantially, due to differences in terms of lifestyles.Therefore, we looked at the spatial orientation of workers who were active in varioussectors. Address information was collected for workers in science, arts and design; forworkers in the business services, financial sector and information and communication;for those who are active in advertising and the media; and for knowledge workers whoserve the local government1. Table 1 shows some results of the orientations of variousworkers in the growth sectors of the economy.The results allow for a grouping of the sectors in a few logical classes: first, peopleworking in the creative sector, in local government and in higher education in socialsciences, law and humanities; secondly those who are working in higher education inmedicine, sciences or economics; thirdly the business services sector (finance,accountants, bank employees, ict-workers).

Table 1 Percentage of knowledge workers working in Amsterdam who also live inAmsterdam, 2002

1 We tried to collect work and home addresses at the six-digit postcode level; in some sectors this was nota big problem (architects, accountants, higher education), since registers could be used; sometimes thework address was unknown (artists); high level of education was used in large firms to select knowledgeworkers; the categories which are shown are a selection of all categories available and thus haveindicative value only.

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Category %Architects 71Local government 60Advertising 52Higher education social sciences 52Higher education humanities 50Media 48Higher education law 47Higher education medical sciences 37Higher education sciences 35Higher education economicsciences

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Accountants 19Financial sector (bank) 19ICT 17Bron: ABF Strategie 2002; Musterd 2002

In Figure 1 the picture that was already drawn in table 1 has been made more specific inspatial terms. Overrepresentation relative to the population 20-65 years old has beenshown applying location quotients2.It will be clear that workers in the creative sector (architects, advertising, media) andworkers in higher education who are active in cultural and social sciences are more thanproportionally living in Amsterdam and within Amsterdam in the most urbanised partsof the city (mainly the central areas and adjacent south-west sector); those whorepresent the financial sector (accountants, bank employees), and those who are activein information, communication and technology, tend to be oriented on suburbanlocations.Workers in the creative sector, in social and cultural sciences, arts and design areoriented on the most urban residential environments. Perhaps these environmentsprovide the inspiration they require to do their jobs properly (also Helbrecht 1998).It is interesting to see that the potential knowledge workers show similar spatialorientations compared to the real knowledge workers. Students in the spheres of mediaand creative professions, social sciences and arts and culture show a much more urbanorientation compared to students in the sciences and economics.

5 Residential mismatches and policy challenges

Today’s cities that aim to be ‘knowledge city’ clearly face the need to fulfil a number ofconditions. They have to be able to attract the talent pool to be attractive to economicactivities in today’s growth sectors of the economy. They are in need of young, creative,ambitious, open minded, innovative people. Offering centres for higher education onlycannot satisfy that need. An urban climate should be present, including universities, avariety of firms, institutions and people, services of all kinds, and the proper residentialstock. In this section I will give special attention to the residential dimension, becausein that sphere problems may arise fairly easily. Housing is inflexible since usually thelife of a dwelling is long; society, however, is much more dynamic; by implication 2 The location quotient is the quotient of the percentage of a population category living in an area (herefour digit postcode) and the percentage of the control category in that area (here the 20-65 year old).

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mismatches between demand and supply may develop. This will occur in all cities,including Amsterdam. For that latter city I will sketch the implications of a largemismatch, which was referred to before. First of all the new urban households appear tohave a profile (young, small, labour-active, with higher income households that arepredominantly outdoor oriented) which is much more urban than the predominantlyfamily oriented households who lived in the cities some four decades ago. This willresult in increasing pressure on cities for the places and spaces that fit today’shousehold’s wishes. That in its turn will result in rapidly increasing prices, in a increaseof the phenomenon of subletting social rented dwellings at a rent which is much higherthan the rent people pay themselves; long waiting lists will develop; it will also result ina reduction of residential mobility, which has severe implications for the number ofhouseholds which can adjust their household to their dwelling3; that will also result in agrowing number of inexpensive social rented dwellings that are inhabited byhouseholds with a relatively high income; and finally some invasion and successionprocesses will develop that are regarded unwanted by most local governments. Thestrongest households will push weaker households aside, as can be shown for theimmigrants from western countries (figure 2). These households tend to have higherincomes, are higher educated and are able to buy or rent in the most wanted areas. In theinner city areas of Amsterdam western immigrants now make up a quarter of thepopulation (while only 10 per cent of the city population is from western origin). So,quite a number of negative processes are related to the fact there is a mismatch betweenwhat today’s households want and what can be offered.

That requires policy response. Clearly what is required is a rigorous change of thehousing stock directed at the fast increase of more urban oriented households. The bestthing to do is to transform the areas with family oriented dwellings, which are most nearto the most urbanised parts of the city. The transformation should satisfy the needs ofthe more urban households This may be more easily reached in cities such as Munichand Barcelona than in Amsterdam due to a smaller role of the government in housing inthe first two cities and due to the fact that the private sector has a larger say in thehousing markets of these cities and a much smaller say in Amsterdam. In Amsterdam, in2001, 54 per cent of all dwellings was social rented, 32% was private rent (partlycontrolled by the local government) and 14% owner occupied. In addition, inAmsterdam, the municipality owns the land. In Munich, as well as in Paris, for example,private sector intervention has resulted in the establishment of a large number of smallapartments, sometimes just ‘pieds à terres’. Today 34% of the Paris stock is a studiowith an average size of 26 m2. In some districts the average rent is 20 €/m2. In Paris 60%of all dwellings has only one or two rooms; in Amsterdam 34 per cent of the dwellingsis of that size. The Dutch capital might consider similar policies.

Amsterdam fits the label creative, cultural knowledge city, perhaps more than any of theother cities. The city has a good climate that seems to suit the current growth sectors ofthe economy. This gives the city a special niche. This may be translated in extraattention for creativity and culture. One important issue is the preservation of thevulnerable social mixture in the city. There is continuous pressure from stronghouseholds to push weaker households aside. Key-question is at which level the mixtureshould be aimed at.

3 Each percentage point reudction of the mobility rate implies that 4,000 households per year are unableto adjust their demand to the supply that is available.

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Another issue is international migration. It is quite clear that this migration is essentialto the creative, cultural knowledge city and has to be facilitated: a new core housingstock is required for them as well.

So far policy attention in Amsterdam, and other large European cities, has focused itsattention on the bottom end of the housing market. There may be good social reasons todo so, but the impression is that policy ideas have got stuck in traditional ways ofthinking. The economic structure has changed significantly, manufacturing industrieshave been replaced by service industries, media and culture; the importance of culture,knowledge and consumption has increased rapidly; yet, Amsterdam is still, just as otherlocal governments in European cities, focusing on the lower end of the housing market.The city has fantastic conditions to profit from the characteristics it currently has. Theprofile of the city fits the requirements of current economic growth sectors. Amsterdamwould to a wise thing to adjust to the promising circumstance, just as it did in the 17th

century; a new Golden Age may have started.

Literatuur

ABF Strategie (2002) Woonpatronen van Amsterdamse Kenniswerkers. Delft.

Arnoldus, Martijn & Sako Musterd (2002a) Wonen in de Ambitieuze Stad; StedelijkeLeefstijlen en Woonmilieus in Internationaal Perspectief. Amsterdam: AME.

Arnoldus, Martijn & Sako Musterd (2002b) Wonen in de Regionale Kennisstad; Wonenin de Ambitieuze Stad – Verdieping. Amsterdam: AME.

Castells, M. (1989) The Informational City: Information Technology, EconomicRestructuring, and the Urban-Regional Process. Oxford/Cambridge, Mass.: BasilBlackwell.

Creative Cities (2002). Den Haag: Ministerie van VROM/ Delft: VerenigingDeltametropool.

Florida, Richard & Gary Gates (2001) Technology and Tolerance: the Importance ofDiversity to High-Technology Growth. Washington: The Brookings Institution

Hall, P. (1998) Cities in Civilization. New York: Pantheon.

Kloosterman, R.C. & B. Lambregts (2001) Clustering of economic activities inpolycentric urban regions: the case of the Randstad. Urban Studies 38 (4), pp. 713-728.

Lambooy, J.G. (1998) Knowledge production, organisation and agglomerationeconomies. GeoJournal, 41, pp. 293-300.

Lambooy, J.G. (2002) De innovatieve stad en de arbeidsmarkt. In: S. Musterd & H.Ottens (Red.) Strijd om de Stad, pp. 73-85. Assen: Van Gorcum.

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Helbrecht, I. (1998) The Creative Metropolis; services, symbols and spaces. Paperpresented at the yearly conference for the association of Canadastudies. Grainau.

Musterd, Sako (2002) Amsterdam Unfragmented; Social, Ethnic and Spatial Integrationin a Dutch Welfare State City. Forthcoming.

Musterd, Sako (2002) De Nieuwe Amsterdamse Kernvoorraad. Woonmilieus in decreatieve, culturele kennisstad. Amsterdam: gemeente Amsterdam.

Storper, M. (1992) The limits to globalization: technology districts and internationaltrade, Economic Geography, 68, pp. 60–93.

Zukin, Sharon (1995) The Cultures of Cities. Oxford: Blackwell.

Figure 1 Residential locations of three categories of knowledge workers who areemployed in Amsterdam; location quotients, 2002.Source: ABF Strategie 2002

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a: knowledge workers in higher education in arts, culture, social sciences and law;architects; media; advertising and local government

b: high educated workers in information, communication and technology and in thefinancial sector

c: knowledge workers in higher education in science, medical sciences and economicsciences

Figure 2 Concentrations of immigrants from Western countries, 1994, 2001Source: UvA Geography and Planning, 2002