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Metropolitan Brussels
2010 and beyond
Brussels Attractiveness Symposium December 9th 2010
Martin EichlerSenior Economist and Member of the Executive Board
2
Content
Metro Brussels and the 2008/2009 crisis
Metro Brussels structural performance
Brussels and demography
Brussels’ attractiveness Attractiveness: in the long run a deciding factor for regional
success The attractiveness of Brussels revised
3
Regional definitionsMetro Brussels and the benchmarking regions
Brussels Capital Region(Brussels C.R.)Halle-Vilvoorde
Brabant Walloon
Source BAKBASEL
B r u s s e l - H o o f d s t a d
V l a a m s G e w e s t
R e g i o n W a l l o n n e
Stoc k holm s lä n
Upps a la lä n
Söde rm a nla nds lä n
Ös te rgötla nds lä n
J önk öpings lä n
Kronobe rgs lä n
Ka lm a r lä n
Gotla nds lä n
Ble k inge lä n
Sk å ne lä n
Ha lla nds lä n
Vä s tra Göta la nds lä n
Vä rm la nds lä n
Öre bro lä n
Vä s tm a nla nds lä n
Da la rna s lä n
Gä v le borgs lä n
Vä s te rnorrla nds lä nJ ä m tla nds lä n
Vä s te rbotte ns lä n
Norrbotte ns lä n
Metro Brussels
Madrid
Edinburgh
Dublin
Paris
Lyon
Zurich
Vienna
Frankfurt
Berlin
Stokholm
Randstad
Luxembourg
London
MilanNote All regions in this presentation
are metropolitan regions if not stated otherwise
MEAV: Metropolitan Average (European)
Metro Brussels Sample of benchmarking regions
4
Metro Brussels and the 2008/2009 crisis
How did Brussels perform during the 2008/2009 economic turmoil compared to other metropolitan regions?
What are the factors driving this performance?
Which conclusions can be drawn for the future?
5
Real GDP growth Different impact of the crises on metropolitan regions
Note In % p.a. (at constant prices and PPP), sorted according to growth 2007-2009Source BAKBASEL
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Lyon
Berlin
Luxe
mbo
urg
Metro
Bru
ssels
Paris
Madrid
Rand
stad
Vienn
a
MEAV
Edinb
urgh
Zuric
h
Fran
kfurt
Lond
on
Stoc
kholm
Dublin
Milan
2008 2009
6
Industries react differently on crisisSlump in economic activities 2009 vs. 2005-2007
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Agric
ultur
e
Extra
ction
Food
Texti
le & cl
othin
gWoo
d
Pape
r, pr
int. &
pub
lish.
Fuels
Chem
ical
Rubb
er &
plas
tics
Oth. n
on-m
etall
ic mine
ralMet
al
Mecha
nical
engin
eerin
g
Compu
ters &
office
equ
ip.
Electr
ic &
electr
onic
Prec
ision
& optica
l ins.
Tran
spor
t equ
ipmen
t
Other m
anufac
turin
g
Utilitie
s
Cons
tructi
on
Trad
e an
d Re
pair
Tour
ism
Tran
spor
t
Commun
icatio
n
Finan
ce
Busin
ess s
ervic
es
Non-m
arke
t servic
es
Aggregate economy
Note Growth of GVA, in % p.a., 2009 minus average 2005-2007, in Western Europe (WE17) Source BAKBASEL
7
-30%
-25%
-20%
-15%
-10%
-5%
0%
-4% -2% 0% 2% 4% 6% 8%
Share of GVA
Gro
wth
of
GV
A FinanceBusiness Services
Mechanical Engineering
Construction
Non-market services
Computers & office equip.Transport equipment
Trade and repair
Different industry structures in regionsRegions are differently exposed to the economic downturn
Stuttgart
Turku
Metro Brussels
London
-30%
-25%
-20%
-15%
-10%
-5%
0%
-6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14%Share of GVA
Gro
wth
of
GV
A
FinanceBusiness Services
Mechanical Engineering
Construction
Non-market services
Computers & office equip.
-30%
-25%
-20%
-15%
-10%
-5%
0%
-10% -5% 0% 5% 10% 15%
Share of GVA
Gro
wth
of
GV
A FinanceBusiness Services
Mechanical Engineering
Construction
Non-market services
Electric & electronic
Transport equipment
-30%
-25%
-20%
-15%
-10%
-5%
0%
-10% -5% 0% 5% 10% 15% 20% 25%
Share of GVA
Gro
wth
of
GV
A
FinanceBusiness Services
Mechanical Engineering
Construction
Non-market services
Transport equipmentComputers & office equip.
Note x-axis: derivation of share of GVA of industry in regions economy from Western Europe sharey-axis: Growth of GVA, in % p.a., average 2009/2010 minus average 2005-2007, in Western Europe (WE17)
Source BAKBASEL
8
90
95
100
105
110Paris London Berlin Frankfurt
Milan Randstad Vienna Dublin
Stockholm Lyon Madrid Zurich
Edinburgh Luxembourg Metro Brussels MEAV
Real GDP development 2007 to 2009Metro Brussels did fairly well
Note Index 2007=100 based on real GDP (at constant prices and exchange rates, PPP corrected)Source BAKBASEL
9
Forecasts for growth of real GDPPerspectives for Metro Brussels in the coming years are good
Note In % p.a.Source BAKBASEL, Oxford Economics
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
Lond
on
Dublin
Stok
holm
Luxe
mbo
urg
Metro
Bru
ssels
Edinb
urgh
Rand
stad
Vienn
aPa
ris
Züric
hLy
on
Fran
kfurt
Madrid
Berlin
Milan
201020112012-2016
10
Metro Brussels structural performance
Metro Brussels performance during 2008/2009:Coping with the crises due to structural strength?
Is Metro Brussels keeping up with other metropolitan regions in economic advancement in the middle term?
Which role plays the internal structure of the Metro Brussels region?
11
GDP per capita 2009Metro Brussels amongst the most productive regions in Europe
Note In 1'000 US$ (at constant prices and exchange rates, PPP corrected)Source BAKBASEL
0
10
20
30
40
50
60
70
80
90
100
Luxe
mbo
urg
Lond
on
Brus
sels
Zuric
hPa
ris
Vien
na
Stoc
kholm
Dublin
Rand
stad
Lyon
Fran
kfurt
MEAV
Milan
Madrid
Edinb
urgh
Berlin
12
80
100
120
140
160
180
200
220
240
260
280Paris London
Berlin Frankfurt
Milan Randstad
Vienna Dublin
Stockholm Lyon
Madrid Zurich
Edinburgh Luxembourg
Metro Brussels MEAV
Real GDP growth trends since 1990 In the longer run Metro Brussels growth is less impressive
Note: Index 1990=100 based on real GDP (at constant prices and exchange rates, PPP corrected)Source: BAKBASEL
13
Sources of growth 2000-2009 Participation is a key challenge for Metro Brussels
Note In % p.a. (at constant prices and exchange rates, PPP corrected)Source BAKBASEL
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Luxe
mbo
urg
Dubli
n
Madrid
Lond
on
Edinb
urgh
Lyon
Stoc
kholm
Metro
Bru
ssels
MEAV
Paris
Rand
stad
Vienn
a
Zuric
h
Fran
kfurt
Berlin
Milan
GDPhourly productivityhours worked per personpopulationparticipation
14
100
102
104
106
108
110
112
114
116
118
120
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Real GDP
Employment
Population
100
105
110
115
120
125
130
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Real GDP
Employment
Population
Growth of real GDP, employment and population, 2000 to 2009Different patterns in the different parts of Metro Brussels
Note Index, 1990=100, based on real GDP (GDP at constant prices and exchange rates, PPP corrected)Source BAKBASEL
Brussels Capital Region
Brabant Walloon and Halle-Vilvoorde
15
Share of industries, 1980 to 2009 Strong structural change in Metro Brussels …
Note in %, based on USD at current prices and exchange ratesSource BAKBASEL
10.3%
11.8%4.4% 5.0%1.2%
12.7%
6.7%
3.8%
0.1%
2.2%
12.8%
2.9%
13.9%
3.3%
9.0%
Pharmaceuticals and chemicals Precision and optical equipment, watchesHotels, restaurants, etc (a55+a92) LogisticsBanking and insurance Real estate
Business Services excl. Real Estate (a71-a74) Education and research (a73+a80)Health and social services Interest groups and other associations Other prim. and sec. sector ConstructionTrade and repair Postal service and telecommunications
Public administration and other tert. sector
5.3%
12.4%
2.8%
8.7%
17.9%
2.6%
0.8%
4.8%
5.2%
8.0%
10.1%
10.8%
4.6%5.3%0.6%
8.3%
2.7%
11.0%
4.8%
12.7%
6.4%
0.6%4.7%
15.0%
11.2%
9.1%
5.1%5.9%
0.7%1.8%9.5%
4.0%
14.0%
2.8%
1.2%
17.6%
9.8%
10.6%
5.8%3.7%
0.1%1.9%
5.3%4.8%
8.9%
2009 2009
19901990
MetropolitanRegions Average
Metro Brussels
16
Share of industries, 1980 to 2009 … with the parts of MB developing quite differently
Note in %, based on USD at current prices and exchange ratesSource BAKBASEL
5.0%
1.5%
4.3%
8.6%
16.6%
13.4%
5.6%
4.4%
0.1%1.1%
11.2%
2.4%
11.1%
4.2%
10.5%
Pharmaceuticals and chemicals Precision and optical equipment, watchesHotels, restaurants, etc Logistics
Business Services excl. Real Estate Education and researchInterest groups and other associations Real estateHealth and social services Banking and insuranceOther prim. and sec. sector ConstructionTrade and repair Postal service and telecommunications
Public administration and other tert. sector
4.0%
19.4%
1.1% 5.1%
15.8%
5.2%0.1%
2.3%
7.9%
13.8%
5.1%
0.3%13.2%4.6%2.1%
5.0%1.2%
21.1%
3.5%
10.5%
4.4%2.3%13.6%
0.3%
5.0%
18.2%
8.2%
2.2%0.1%4.3%
11.9%
5.5%
10.2%
2.4%
15.7%
1.6%
5.4%
16.3%
4.7%4.5%
0.1%
0.9%
7.8%5.0%
8.1%
2009 2009
19901990
Walloon Brabant and
Halle-Vilvoorde
Brussels Capital Region
17
Brussels demography
Exceptional population growth in Brussels?
Is it a source for economic growth?
18
Growth of Population, 1990 to 2009 Population growth in Metro Brussels strong but not exceptional
Note In % p.a.Source BAKBASEL
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Madrid
Dublin
Luxe
mbo
urg
Zuric
h
Vien
na
Metro
Bru
ssels
Stoc
kholm Mila
nMEA
VLy
on
Lond
on
Edinb
urgh
Paris
Rand
stad
Berlin
Fran
kfurt
90-00
00-09
19
Population forecasts, 2000-2060Strong population growth in Brussels due to external migration
Note In personsSource Bruessel Studies (Bureau du Plan, 17. mars 2009)
-20'000
-10'000
0
10'000
20'000
30'000
40'000
2000 2010 2020 2030 2040 2050 2060
Population change
Net external migration
Net internal migration
Natural change
0
200'000
400'000
600'000
800'000
1'000'000
1'200'000
1'400'000
2000 2010 2020 2030 2040 2050 2060
Brussels Capital Region
Population level Population change (per year)
20
Brussels populations growthSources?
Highly qualified migrants
Highly qualified migrants
Refugees Refugees
Investors /Entrepreneurs
Investors /Entrepreneurs
Less qualified migrants
Less qualified migrants
RetireesRetirees Family members of migrants
Family members of migrants
TouristsTourists
StudentsStudents
low qualifiedmigrants
low qualifiedmigrants
21
The attractiveness of regions
Does it matter?
What is “attractiveness” of regions?
Which kind of attractiveness is relevant for metropolitan regions in Western Europe?
22
Why attractiveness and openness matters?
Cities in the Western hemisphere can only maintain their lead in economic welfare when they manage to keep ahead in productivity
This requires permanent innovation …
… which, in turn, requires the best people (talents, creative class, highly qualified)
The demand for talents is increasing and talents are increasingly mobile
Cities and regions compete in attracting and retaining human capital from all over the world
=>Policy makers need indicators to evaluate differences in both quality of life performance and openness among regions and to better design and assess regional policies!
23
A basic model for discussionThe way to long-term economic performance
Potential
resources structures
The ultimate goal is welfare. Its indicator is long-term economic performance.
Attractiveness
people companies
Openness
people companies
Long-term economic performance(welfare)
Source BAKBASEL
24
A basic model for discussion Determination factors
Potential: What is the economic foundation of the regional economy (today)? Resources: Availability of productive manpower and capital Structures: Portfolio of industry sectors, manpower and capital
Attractiveness: How attractive is it to go to a city/region (and stay there for some time)? People‘s climate: Quality of life for talents, workers, students and retirees Business climate: Framework conditions for companies
Openness: Is there access, or how easy is access to all relevant goods? for people: absence of barriers for entry and staying (and leaving) for business: absence of barriers for starting and conducting
(and closing) a company
25
People follow jobsversus Jobs follow people
One empirical result
In the short run: people follow jobs
In the long run: jobs follow people
Note Granger-Causality test: employment and population, 40 metropolitan regions in Europe and the US, 26 years (1980 – 2006)
Source BAKBASEL
Talents and economic developmentHow to solve the «hen and egg» problem?
26
The attractiveness of Brussels
Is there a concept to measure the relevant attractiveness?
What can we say about Brussels?
How can Brussels further assess and exploit its attractiveness?
27
Attractiveness is a multi-dimensional issue
Not one but numerous indicators and measurement concepts available
Summarized as indices
These indices are predominantly based on quantitatively measurable indicators
Alternative: subjective questionnaires
Economic attractiveness – Quality of life – OpennessOverlapping concepts for measurement
BAK Attractiveness
Index
Index ofOpenness
BAK Quality of Life Index
28
BAK Attractiveness IndexBrussels faces some disadvantages vis-à-vis its competitors
Note Index, WE17 = 100, 2009, no data available for MEAV and LuxembourgSource BAKBASEL
95
100
105
110
115
120
Zuric
h
Rand
stad
Lond
on
Fran
kfurt
Dublin
Paris
Vienn
a
Stoc
kholm
Edinb
urgh
Brus
sels
Berlin
Milan
Wes
tern
Europ
e
Madrid
Lyon
29
Brussels: Attractiveness profile“Belgium” factors create a disadvantage for Brussels
Note Position of Brussels within the benchmarking sample (for each indicator, percentiles) Higher values indicate a better performance; IBD 2010
Source BAKBASEL
Taxation (Companies)
Taxation (Manpower)
Accessibility (Global)
Accessibility (Continental)
Regulation (Product Market)
Regulation (Labour Market)
Universities quality: TS per 100'000 inhabitants
Patent density
Publication density
Expenditures on research and development
Brussels
Inn
ova
tio
nT
axat
ion
Acc
essi
bil
ity
Reg
ula
tio
n
50% 75%25%-- ++
30
Company taxation and taxation of highly qualified* manpower, 2009
Zurich
Brussels
Stockholm Milan
LyonParis
Randstad MEAVDublin
FrankfurtBerlin MadridVienna
London, EdinburghLuxembourg
25%
30%
35%
40%
45%
50%
55%
60%
10% 15% 20% 25% 30% 35%taxation of companies
taxati
on
of
man
pow
er
Note Effective average tax rates (EATR) in %, *disposable income of EUR 100‘000/single personSource BAKBASEL, ZEW
31
People can not be forced but must be attracted!
Concepts Richard Florida
the creative class Edward Glaeser
identifies factors to attract highly qualified people like:High incomes, rich variety of services and goods, aesthetics and physical setting, good public services, speed (commuting time), …
Florida and Glaeser measure different aspects of quality of life
They should be used combined
Attractiveness of a regionA broad approach is necessary
32
BAK–Qality of Life–Index Construction
Income and Consumptio
n
Housing Market
LabourMarket
Access to Markets
Economic Conditions
Climate Pollution Traffic
Environmental Conditions
Safety
Health
Education
Culture and Amenities
Societal Conditions
Quality of Life Index
A total of 28 indicators is used
33
Quality-of-Life Index
Again, Brussels at the lower part of the ranking
Quelle: BAK Basel Economics
Note Weighted ranking points, 2007; some data preliminary (including some data for Brussels)Source BAKBASEL
0
10
20
30
40
50
60
70
Economy Society Environment
34
Quality-of-Life Index: Societal conditions
Quelle: BAK Basel Economics
Note Weighted ranking points, 2007; some data preliminary (including some data for Brussels)Source BAKBASEL
0
10
20
30
40
50
Safety HealthEducation Leisure
35
Brussels: Quality of Life index
Economic Market Access and Property Markets are at competitive level … … but Labour Markets and Income limit the achievements of Brussels
in this field
Society Strongest area for Brussels Safety is the only limiting factor compared to the competitors … … while Education, Health and Leisure all contribute positively
Environment Climate and Location build a disadvantage for Brussels Infrastructure available for traffic is fairly good, Pollution is about
average
Note: Results are partly based on preliminary data, which is also true for Brussels, particularly for the data used in the Environment section of the index
36
Brussels’ position in other rankingsLiveability
Quality of Living survey by Mercer Consulting: Brussels is ranked 15th from 221 cities compared.Similarly to the BAK QoL-Index Brussels is behind Copenhagen, Amsterdam, Vienna, Stockholm, Frankfurt and Munich,
but before Stuttgart, Milano and Paris.
European Cities Monitor (Cushman & Wakefield): Brussels is ranked 4th in “best cities to locate a business today”.But in terms of “quality of life for employees” Brussels is outside
the top 10; it is ranked 16th from 35 cities
behind Copenhagen, Barcelona, Madrid, Munich, Stockholm and Vienna.
37
Brussels’ position in other rankingsGlobal city
GaWC studies (Globalisation and World Cities Research Network):
Cities ranked from Alpha++ world cities (New York, London), Alpha+ world cities (e.g. Hong Kong, Paris, Singapore, Tokyo) to Gamma- world cities. Brussels is a Alpha world cities together with Madrid, Moscow, Seoul, Toronto etc.
Global Cities Index (Foreign Policy et al) “the world biggest, most interconnected cities help to set global
agendas…”Brussels is ranked 11th. It reaches the third place among the Europeancities, behind London and Paris.
Global Power City Index (consultant firm Knight Frank LLP and Citibank)
rank “the world most influential cities according to economic activity,political power, knowledge and influence as well as quality of life”. Brussels reaches place 6 behind New York, London, Paris, Tokyo, Los Angeles.
38
The complementary concept of «Openness»What is openness?
Openness is the quality and sum of local conditions to attract and retain international populations (Towards OPENCities 2008)
Places are open to new people and ideas if they have “low barriers of entry” (Florida 2004)
Thus cities have to be attractive, so that people want to go and stay there open, so that people can go and stay there
Openness is equivalent to low barriers of entry for international populations easy integration and participation for international populations
39
The complementary concept of «Openness»Open for whom?
Highly qualified migrants
Highly qualified migrants
Refugees Refugees
Investors /Entrepreneurs
Investors /Entrepreneurs
Less qualified migrants
Less qualified migrants
RetireesRetirees Family members of migrants
Family members of migrants
TouristsTourists
StudentsStudents
low qualifiedmigrants
low qualifiedmigrants
40
How can openness be measured?
Openness is a multidimensional and complex phenomenon
It can be measured by a large number of indicators which measure different aspects of openness
The indicators can be grouped thematically (e.g. into areas)
Each of these key factors represents one of the various dimensions of the quality of life of all inhabitants. Special attention is paid to the international populations which are important for the attractiveness and openness of the city
41
Indicators grouped systematically
Migration Freedom Barriers of entry Quality of living Intern. presence Education International flows
Intrastructure International events
Standard of living Diversity Actions
54 internationally comparable indicators, aggregated to
11 areas:
or 3 policy themes:
Internationalisation Leadership & Governance Managing diversity
42
43
44
Summing up
Economic performance of Brussels Was good during crisis … … but limited in a broader view There are challenges ahead
Attractiveness of the Brussels region … … is high – clearly a world city … often good in perceptions … but not confirmed by quantitative indicators
Options Awareness of the importance of high potentials Better understanding and monitoring of attractiveness
45
Thank you for your attention!
Senior Economist& Executive Board
Martin Eichler
Contact
BAK Basel Economics AGGueterstrasse 82CH-4052 BaselSwitzerlandTel + 41 61 279 97 14Fax + 41 61 279 97 28martin.eichler@bakbasel.comwww.bakbasel.com
46
Note: All regions are either official statistical regions (NUTS-classification) or an aggregate thereof
Definition Benchmarking Regions
Region IBC notation Country IB Key Type Delimitation
Brussels Greater Brussels BEL BELMBIB-Member Metropolitan Region
Paris Ile de France FK FK11 NUTS ZEAT
London Greater London UK UKI NUTS Region of England
Berlin Berlin DE BN NUTS Bundesland
Frankfurt FrankfurtRheinMain DE RMBAKBASEL IB-Aggregat
Milan Milano IT IT205 NUTS Provincie
Randstad Randstad NL RDBAKBASEL Metropolitan Region
Vienna Wien AT AT13 NUTS Bundesland
Dublin Greater Dublin Area IR IRGDBAKBASEL Metropolitan Region
Stockholm Stockholm SE SE01 NUTS Riksområden
Lyon Rhône FK FK716 NUTS Département
Madrid Comunidad de Madrid ES ES3 NUTS Agrupación de CCAA
Zurich Zürich CH ZH NUTS Kanton, BFS-Grossreg.
EdinburghMetropolitan Edinburgh UK UKME
BAKBASEL Metropolitan Region
Luxembourg LUXEMBOURG LUX LUX NUTS National Level
MEAVMetropolitan Regions Average MEAV
BAKBASEL
Average of the group of Metropolitan Regions
47
All data in this Chart-Set are from the «International Benchmarking Database» by BAKBASEL. For the BAKBASEL list of data within the International Benchmarking Programme please consult the «International Benchmarking Report».© Copyright for data and figures BAK Basel Economics AG. The data included herein are taken or derived from various data sources, among them particularly: - National and regional statistical offices, EUROSTAT- International Comparisons of Output and Productivity (ICOP), University of Groningen- Thomson Scientific Ltd. (TS), London, UK, © Copyright Thomson Scientific 2006 - Shanghai Jiao Tong University - Organisation for Economic Cooperation and Development, Paris (OECD) - Centre for European Economic Research, Mannheim (ZEW) - Institute for traffic planning and transportation systems, Zürich (IVT)
For further Information please contact:Marc Bros de PuechredonMarc.puechredon@bakbasel.com
Sources
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