Regional Innovation Support Systems and Technopoles - Technopolis: Best Practices for Science and Technology Cities - page 55

4.2 The North East of England

The North East of England used to be one of the main industrial centres of Great
Britain during a long time. Industry was mainly based on coal mining and ship-
building in Tyne and Wear (around the cities Newcastle and Sunderland) and steel
production in Teesside (Middlesbrough) (Hassink 1993 ). Since the mid-1970s
governmental financial-aid for these traditional industries has been declining in a
rapid pace, so that the already falling number of employees in shipbuilding and
coal mining has been decreasing dramatically from then on. Regional policy
reacted very early on the decline of traditional industries, since the North East
became one of the first 'depressed areas' in the country in the early 1930s.
Measures were from then on aimed at attracting inward investment. The loss of
jobs in traditional industries was partly compensated by the attraction of branch
plants. In addition, the service sector could compensate part of the male job loss,
although particularly women were employed in this sector. Furthermore, the ser-
vice activities consist mainly of government administration and retailing, which
created particularly low-wage and part-time employment (Pike et al. 2006 ).
With the decline of traditional industries, the region lost economic control,
since the attracted branch plants are externally controlled. On the other hand, the
previous monostructured production structure diversified as several new industries
were attracted, but the size of the firms remained relatively large, which impedes
the economic flexibility of the region. Further, because of the increasing number of
branch plants the North East lost research and development activities and thus
innovative potential orientated towards product innovations (Pike et al. 2006 ). The
loss of economic control was also responsible for the lagging behind of the North
East concerning high-grade production orientated services, such as financial and
business consultancy. The North East possesses only few potential customers for
these kinds of services. In addition, the regional economy of the North East is
disintegrated, because of the over-representation of externally controlled branch
plants and the under-representation of innovative SMEs. Firms have few material
links with other firms in the region and thus a network economy does not exist at
all. Furthermore, they are faced with a peripheral location, the lack of public
research centres in the region, the brain-drain of graduates and the dearth of an
enterprise culture, as the relatively small number of business start-ups shows.
The North East of England has a long tradition of solving economic problems
by attracting inward investment. As traditional industries suffered early from a
decrease in demand, action was needed during the heyday of the traditional
regional policy (the 1960s). The aim was to reduce regional economic differences
by bringing work to the people. Since the mid-1970s expenditure for regional
policy grants has been cut, but some other activities of central government and
institutions in the North East emerged instead.
First, central government increased its efforts in improving the situation in inner
cities.

Urban policy was equipped with more financial back-up and Urban

Development Corporations were installed in the cities with the severest