FORMACIÓN ESPECÍFICA

West London in the Global Economy

3.23 More than ever before, global trends are relevant to local level economic prospects. The degree of flexibility in international industry and services is such that structural industrial changes on a global scale can impact on regional economies over a relatively short time frame. This is especially true for West London. Around 90% of the worldwide GDP is accessible from Heathrow (Estates Gazette January 2004) – this fact reaffirms the need for an international outlook for any Economic Development Strategy for West London.

3.24 West London has a number of global sectoral strengths, some of which are clearly linked to Heathrow. Such sectoral strengths include tourism; logistics; ICT; media and creative industries and food processing. Gateway Asia is a key initiative, developed by partners in Heathrow City led by the Southall Regeneration Partnership, to assist companies to increase sales and profitability by developing active trade links with South East Asia.

3.25 The following sub-section is intended to highlight the international opportunities and threats for West London, and as such

does not reflect trends or characteristics of the West London economy itself, but instead focuses upon international trends and characteristics.

Global Trends – Local Opportunities

3.26 Arguably, the most important trends to examine are those taking place in sectors that are liable to changing fortunes and changing location. These are the sectors in which growth and investment opportunities lie and where threats to economic success exist. Local level retail and decentralised service activity may be a vital part of any economy, but these activities tend to achieve a degree of stability and their fortunes depend largely on the prospects of other sectors. These other sectors provide goods and services to be consumed primarily outside the local area. They tend to employ more people in fewer business units and add higher value to the economy.

3.27 The locational flexibility in the production of much of the world’s output and the mobility of screen based service activities has had profound effects on the global economy. Many observers, particularly in the developed world, have been pessimistic about the impact this will have on high cost economies. In many industries the brunt of production is in the hands of a few, large firms. It is logical to assume that these multinational firms would seek the lowest cost bases. As developing

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economies started to win more and more manufacturing contracts, it seemed to many like one-way traffic.

3.28 The above view ignores the bigger picture of the world economy. There has been an eastward migration of much labour intensive activity. This has been a part, and a consequence, of a move towards wider international competition. In this environment a variety of locations retain competitive advantages. Developed countries, however, still dominate skilled manufacturing and high technology production. While the location decisions of much of the raw materials and unfinished goods production is based on reducing labour costs, further processing and production locations are more dependant on the quality of the workforce. However, other factors such as land values and access to new markets are also significant in choice of location. Knowledge-based industries where the latter factors are of less importance are sectors in which West London could develop and maintain a competitive advantage.

3.29 In the context of sustainable development, London takes up a disproportionate share of global environmental capacity, according to a study commissioned by the Mayor to measure London’s ‘Ecological Footprint’. The report concludes that, to be ecologically sustainable by 2050, Londoners will need to reduce their consumption of resources and production of waste by 85%.

3.30 A number of sectors have particular relevance to West London – a summary of global trends within certain sectors likely to affect the development of the West London economy is presented below.

3.31 The creative industries represents a particular sector in which

West London is strong, and is likely to be increasingly influenced by international markets. Like many of the creative industries, the TV and radio market has been characterised by technological change and changes in modes of delivery. Digital television not only offers a clearer picture for the consumer, but also offers new methods of generating revenues for the industry. As a result mainly of advancements in technology, the TV and radio market size increased by more than 100% during the 1990s, including growth in both TV network distribution and TV programming.

3.32 Continued growth in the global TV and radio market is forecast for at least the next three to four years. Cable and subscription spending is expected to rise by around 8% per annum in the United States and 6% per annum in Europe between the years 2002 and 2006.

3.33 Within the creative industries, advertising is one of the sectors most closely linked to the overall performance of the economy. In times of recession the advertising budget is often one of the first to be cut by major businesses, and similarly as an economy grows advertising is seen as a quick way to enable a product to enter a flourishing market.

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Forecasts predict that the dip in the global advertising market growth at the beginning of the millennium will be followed by an increase in advertising spending in line with overall economic growth throughout the United States and Europe.

3.34 A March 2003 Entertainment and Leisure Software Publishers’ Association report suggests that the computer games industry is growing faster than ever, and the global market tripled in size between 1995 and 2003. The global console software market is expected to grow by 15% per annum over the next five years.

3.35 The beginning of the millennium saw a contraction in growth of the computer software and services sector, partly as a result of global economic conditions, and partly as a result of the ‘dot.com’ boom and bust. However, the market is expected to regain strength and display continued significant growth in output over the next few years. International Data Corp (IDC) estimates that compound annual growth in systems and applications software will exceed 10% between the years 2002 and 2005. Growth in North America, Western Europe, Asia/Pacific as well as the rest of the world will remain stable, with proportionally equal growth forecast across these regions.