Tourism and its Contribution to Regional Development: Three Case Studies

Fast growing tourism industries have provided a focus for policymakers and academics concerned with regional and national economic development in periphery areas. General and, in the context of this paper, event tourism, comprise an important development platform for both periphery rural areas facing a bleak future due to depressed agriculture conditions, and for post-industrial and urban areas seeking new industries to replace traditional employment in manufacturing and slow growth service industries. The promotion of tourism and leisure service industries as a regional growth driver, particularly in peripheral regions, may ignore certain underlying industry characteristics. Often tourism features low wages and unskilled labour, lessening income-related demand effects, and, further, militating against the development of a highly skilled workforce. Moreover, external ownership of large tourism concerns, together with an underdeveloped local tourism infrastructure can limit the contribution of new tourism activity to regional growth prospects. This paper compares and contrasts the impacts of three very different cases of tourism development in Wales. The first case is the now well-established annual Brecon Jazz festival in mid-Wales. This internationally renowned event attracts 50,000 visitors per annum to a rural setting which faces increasing difficulties in traditional agricultural activities, and is searching for diversification opportunities. The second case examines the sustainable visitor related impacts of Blaenavon Industrial Landscape, an exceptionally well-preserved industrial heritage site in the South Wales coalfield. The area has recently received World Heritage Site status, and is to undergo significant preservation works and development of visitor facilities in the next few years. The third case examines the 1999 Rugby World Cup. The event was hailed as the world''''s fourth biggest sporting event and was hosted by Cardiff, the capital of Wales in the autumn of 1999. The local economic effects (forecast in the case of Blaenavon) of each development are examined and compared within the framework of Input-Output tables for Wales, augmented by tourism sector data. The paper examines the very different patterns of visitor spend associated with each case activity, and how far the effects of the activities being promoted square with local economic development needs. Implications for tourism development policy are examined in the context of the research findings. Bibliography: Department for Culture, Media and Sport (1999) "Tomorrow%27s Tourism: A growth Industry for the new Millennium" HMSO Fletcher, J. E. (1989). Input-output analysis and tourism impact studies. Annals of Tourism Research, 16: 514-529 Hill, S. & Roberts, A. (1998) %22Welsh Input-Output Tables for 1995" University of Wales Press National Assembly for Wales (2000) "Objective 1 Single Programming Document: West Wales and the Valleys" HMSO

Linking Innovative Potential to SME Performance: An Assessment of Enterprises in Industrial South Wales

The attraction of inward investment from the UK and from overseas was the main focus of regional development policy in Wales for much of the 1970s and 1980s. Whilst Wales has been particularly successful in attracting foreign enterprise, the contribution of new investors to improving longer term regional economic prospects has been questioned at several levels. With concerns over inward investor stability, embeddedness, and contribution to local value added, increasing weight has been given to the encouragement, and development of innovative indigenous SMEs in the Welsh economy. General and sectoral initiatives to encourage SME development and innovation in Wales have also taken place against a background of historically low levels of new firm formation in the region, together with the presence of factors expected to hinder SME growth including low levels of capital availability. Ultimately, it is hoped that a strongly performing indigenously controlled and innovative SME sector will go some way to improving regional growth prospects, and hence play a role in reducing the GDP per capita gap between Wales and the UK. During the 1990s a series of research and consultancy studies in Wales have been undertaken seeking to audit SME activities, define needs and identify market failures in provision of information and services. These have formed the basis of revised policy and then for new resource directions emanating at the European, regional and local levels. Encouraging innovative activity has been at the forefront of the network of initiatives currently underway in Wales. New initiatives have often been instituted without a clear appreciation of the nature of innovation, and how innovative activities link to innovative outputs and then feed through to improved business performance. This paper examines the link between innovative activity, outcomes and the performance of SMEs in Wales. A range of European, UK and locally developed initiatives in Wales seek to encourage innovative activity in indigenous SMEs. However, it is the contention of this paper that these initiatives have often been instituted without a clear appreciation of how, if, and which innovative activities feed through to improved business performance. The paper offers a general method of assessing the innovative potential (the configuration of management practices, capabilities, internal and external linkages facilitating the generation of appropriation of ideas) of manufacturing SMEs. This then leads on to an examination of how far innovative potential is connected to operational and general business performance. The paper describes how the model was developed and used to assess the innovative potential of a sample of manufacturing SMEs in Industrial South Wales, and how far the innovative potential can be linked to improved operational and business performance. The introduction to the paper reviews current literature on innovation in SMEs, and demonstrates how far recent studies have succeeded in measuring, and then linking innovative inputs of SMEs to innovative outputs and firm performance. The second section builds upon the review to develop a working model of an innovative SME. Innovation is considered not only in terms of new product or process development but more generally as practice. The model reveals the innovative firm as one that identifies, interprets, and applies knowledge effectively, and as appropriate throughout the organisation. The model described represents a synthesis of previous research. Key factors in the model include strategy and the techniques and practices deployed to facilitate the development and appropriation of ideas for innovation. Broadly this focuses on SME commitment to innovation, and management practices supporting this commitment. The third section describes how the model was operationalised into an auditing tool, and then used to assess the innovative potential of a sample of manufacturing SMEs in Industrial South Wales. The fourth section summarises the results from the initial research programme, and in particular, considers whether the unique operating structures usually associated with SMEs hinder or facilitate the adoption of new structures for organisational learning. Moreover the section examines whether the existence of certain configurations of practices coincide with improved business performance and operational efficiencies. The conclusions consider these results in the context of the directions being adopted by current regional SME policy initiatives in Industrial South Wales.

An investigation of key growth industry sectors in Wales using Multi-Sectoral Qualitative Analysis

This paper examines the problem of key sector identification in regional economies. Whilst the paper questions the desirability of policy focusing on the promotion of key sectors, it suggests that tools are generally underdeveloped to identify these sectors. The paper suggests that multi-sectoral qualitative analysis provides one means of forming conclusions on sector potentials.

Changes in Manufacturing Linkage Patterns in Scotland and Wales: Hollowing Out and Foreign Direct Investment?

Trends in inward investment in Scotland and Wales have influenced manufacturing’s inter-linkages with the local economy in different ways. The paper shows that there could be a hollowing out of the manufacturing sector in these regional economies which is linked to trends in inward investment.

Tourism and its Contribution to Regional Development: Three Case Studies

Fast growing tourism industries have provided a focus for policymakers and academics concerned with regional and national economic development in periphery areas. General and, in the context of this paper, event tourism, comprise an important development platform for both periphery rural areas facing a bleak future due to depressed agriculture conditions, and for post-industrial and urban areas seeking new industries to replace traditional employment in manufacturing and slow growth service industries. The promotion of tourism and leisure service industries as a regional growth driver, particularly in peripheral regions, may ignore certain underlying industry characteristics. Often tourism features low wages and unskilled labour, lessening income-related demand effects, and, further, militating against the development of a highly skilled workforce. Moreover, external ownership of large tourism concerns, together with an underdeveloped local tourism infrastructure can limit the contribution of new tourism activity to regional growth prospects. This paper compares and contrasts the impacts of three very different cases of tourism development in Wales. The first case is the now well-established annual Brecon Jazz festival in mid-Wales. This internationally renowned event attracts 50,000 visitors per annum to a rural setting which faces increasing difficulties in traditional agricultural activities, and is searching for diversification opportunities. The second case examines the sustainable visitor related impacts of Blaenavon Industrial Landscape, an exceptionally well-preserved industrial heritage site in the South Wales coalfield. The area has recently received World Heritage Site status, and is to undergo significant preservation works and development of visitor facilities in the next few years. The third case examines the 1999 Rugby World Cup. The event was hailed as the world's fourth biggest sporting event and was hosted by Cardiff, the capital of Wales in the autumn of 1999. The local economic effects (forecast in the case of Blaenavon) of each development are examined and compared within the framework of Input-Output tables for Wales, augmented by tourism sector data. The paper examines the very different patterns of visitor spend associated with each case activity, and how far the effects of the activities being promoted square with local economic development needs. Implications for tourism development policy are examined in the context of the research findings. Bibliography: Department for Culture, Media and Sport (1999) "Tomorrow%27s Tourism: A growth Industry for the new Millennium" HMSO Fletcher, J. E. (1989). Input-output analysis and tourism impact studies. Annals of Tourism Research, 16: 514-529 Hill, S. & Roberts, A. (1998) %22Welsh Input-Output Tables for 1995" University of Wales Press National Assembly for Wales (2000) "Objective 1 Single Programming Document: West Wales and the Valleys" HMS

Steel Manufacturing in Wales : Ensuring a Sustainable and Prosperous Future

This briefing reviews the current contribution of steel manufacturing to the Welsh economy and considers how new technological opportunities around decarbonising steel production – with potential to service the transitioning economy - might affect this contribution and the pattern of environmental effects connected to the industry. We address a series of factors that might be considered by policymakers in connection with the future evolution of steelmaking in Wales, where around 8,000 (largely full-time) people are currently employed in the sector, with an additional 2,000 or so full-time equivalent jobs in related activities, such as metal casting. However, the issues discussed are relevant to other parts of the UK with important steel manufacturing sectors such as Teesside. We set these in terms of considering the current economic contribution of the industry’s primary steel production with focus on Port Talbot, setting this contribution against the associated point source emissions. This enables consideration of the potential impacts and trade-offs in considering both the domestic impacts of industry change on jobs, incomes and regional unemployment challenges, and increased reliance on imported steel and its associated carbon emissions. We then consider potential options for, and implications of, decarbonising and/or change in the production profile of the Welsh industry, set in the context of potential market opportunities as economies move through the net zero transition

Responsibility for regional waste generation: A single region extended input-output analysis with uni-directional trade flows

The paper uses a regional input-output (IO) framework and data derived on waste generation by industry to examine regional accountability for waste generation. In addition to estimating a series of industry output-waste coefficients, the paper considers two methods for waste attribution but focuses first on one (trade endogenised linear attribution system (TELAS)) that permits a greater focus on private and public final consumption as the main exogenous driver of waste generation. Second, the paper uses a domestic technology assumption (DTA) to consider a regional ‘waste footprint’ where local consumption requirements are assumed to be met through domestic production.waste attribution; regional economy; input-output analysis; Wales

Reconsidering the calculation and role of environmental footprints

Following the recent Copenhagen Climate Change conference, there has been discussion of the methods and underlying principles that inform climate change targets. Climate change targets following the Kyoto Protocol are broadly based on a production accounting principle (PAP). This approach focuses on emissions produced within given geographical boundaries. An alternative approach is a consumption accounting principle (CAP), where the focus is on emissions produced globally to meet consumption demand within the national (or regional) economy1. Increasingly popular environmental footprint measures, including ecological and carbon footprints, attempt to measure environmental impacts based on CAP methods. The perception that human consumption decisions lie at the heart of the climate change problem is the impetus driving pressure on policymakers for a more widespread use of CAP measures. At a global level of course, emissions accounted for under the production and consumption accounting principles would be equal. It is international trade that leads to differences in emissions under the two principles. This paper, the second in this special issue of the Fraser Commentary, examines how input-output accounting techniques may be applied to examine pollution generation under both of these accounting principles, focussing on waste and carbon generation in the Welsh economy as a case study. However, we take a different focus, arguing that the ‘domestic technology assumption’, taken as something of a mid-point in moving between production and consumption accounting in the first paper, may actually constitute a more useful focus for regional policymakers than full footprint analyses

Foreign manufecturing and changes in industry linkage patterns in Scotland and Wales

Inward investment from foreign manufacturing firms has been sought as a remedy to regional industrial problems in the UK. Foreign manufacturing offers the prospect of industrial diversification, new jobs and incomes, and can also represent a stimulus to new ideas and practices in domestic industries. The potential for production externalities from the foreign to the domestic sector has been investigated in a number of empirical studies. The wider potential for foreign manufacturing to become a driver of regional competitive advantage is expected to be linked to a number of factors including underlying investment motives, subsidiary age and type, subsidiary size, degree of value added within the plant, type of plant/degree of autonomy, nationality of ownership, entry mode, industry sector, and the structure of the host/regional economy. An additional and inter-linked factor with the above is the extent to which foreign plants are embedded through their purchasing linkages into their respective local economies. The degree of embeddedness determines the indirect employment and output supported by foreign firm activities in regional economies, and is a general indicator of the extent to which foreign firms contribute towards regional growth. Previous research has work has highlighted the comparatively low levels of linkage that exist between inward investing sectors and local supply bases. For example, Turok (1993, 1997) demonstrated the Scottish electronics industry (including large numbers of inward investors) purchased just 12% of material inputs in Scotland, and that (with reference to Input-Output tables for Scotland) output based multipliers for the electronics sector still revealed a poor quality of linkages into the local economy. In Northern Ireland, Crone and Roper (1999) reported that weak supply linkages between foreign and regional firms had restricted the potential of positive production externalities. In Wales, Roberts (1996) considered the backward (and forward) linkages created by foreign manufacturing sectors in the local economy using 1994 Input-Output tables for Wales. Overall, this research found that, on average, less than 17% of non-wage spending of foreign manufacturing firms occurred in the Welsh economy (see also Gillespie, 2000). Finally, Brand, Hill and Munday (2000), explored in a regional Input-Output framework, the direct and indirect economic contribution of foreign owned and domestic manufacturing to the economies of Wales, Scotland and the West Midlands. The study demonstrated that foreign owned manufacturing in these regions purchased less locally than domestic firms. As a result in most of the industry sectors explored the output supported in other regional industries was generally greater in the domestic than in the foreign owned case. The analysis also explored how far each job created in foreign and domestically owned manufacturing contributed to regional value added. The superior productivity of the foreign sector meant that it generally contributed more per employee to regional value added than its domestic counterpart. The analysis of the impact of foreign (and in some cases domestic) manufacturing on local economies within an Input-Output framework has largely been based on cross-sectional information. The present paper attempts to develop a more dynamic perspective by considering structural changes over time. The objective of this paper is to explore the role of foreign manufacturing in changing the pattern of industry linkages in Wales and Scotland – two regions which have attracted comparatively high shares of new UK foreign inward investment. These two regions also make for a valuable comparative study with some analysts suggesting that there are important differences in the underlying quality of inward investment between the two regions (Hood, 1991). The paper uses information from the Scottish Input-Output tables 1973 and 1996 (see Fraser of Allander, 1973, and Scottish Executive, 1999), and Welsh Input-Output tables 1968 and 1996 (see Ireson and Tomkins, 1978; and Hill and Roberts, 2001) to examine the changing structure of these regional economies over time. The focus of the paper is comparing manufacturing sectors where there have been high and low levels of foreign investment. The influence of foreign manufacturing is considered in the context of changes in the export orientation, import propensity and indirect employment and output effects of selected industry sectors. The wider context of the paper is continuing concern in the UK on the more dynamic impacts of foreign manufacturing industry in improving the economic prospects for UK regions, and the validity of the ‘inward investment’ model of development. The second section of the paper reviews the development of foreign manufacturing in the Welsh and Scottish economies, and critically analyses previous research that has explored the role of the foreign sector in these regions within an Input-Output model framework. The third section examines how foreign manufacturing might be expected to impact differently from the domestic sector in terms of impact on the structure of the regional economy over time. For example, in terms of its higher productivity, and different import and export propensities. The fourth section describes the Input-Output tables that are available for Wales and Scotland, and more specifically, discusses issues of comparability of tables of different vintages. The methodology used to reconcile the industry sectors in the table is discussed. The fifth section examines the nature of structural changes in the two economies, including an analysis of local trading propensities, together with estimates of multiplier effects of selected industries characterised by high and low levels of foreign direct investment (in the period 1968-1996 for Wales, and 1973-1996 for Scotland). The final section contains conclusions. References Hill, S. & A. Roberts (2001), Input-Output Tables for Wales 1996. Cardiff: South East Wales Economic Forum. Hood, N. (1991), Inward Investment and the Scottish Economy, Royal Bank of Scotland Review, 169, pp. 17-32. Brand S., Hill, S. & M. Munday (2000), Assessing the Impacts of Foreign Manufacturing on Regional Economies: The Cases of Wales, Scotland and West Midlands. Regional Studies 34, pp. 343-55. Crone, M. & S. Roper (1999), Knowledge Transfers from Multinational Plants in Northern Ireland, paper given to Regional Science Association European Congress, University College Dublin, August 23rd-27th. Fraser of Allander Institute, University of Strathclyde, The Scottish Council Research Institute Limited and IBM UK Scientific Centre (1978), Input-Output Tables for Scotland 1973. Scottish Academic Press, Edinburgh. Gillespie, G. (2000), Modelling the System-wide Impact of Foreign Direct Investment in Scotland: An Ownership-Disaggregated Regional Computable General Equilibrium Analysis, Ph.D thesis, University of Strathclyde. Ireson, R. & C. Tomkins (1978), Inter-Regional Input-Output Tables for Wales and the Rest of the UK 1968. HMSO, London. Roberts, A. (1996), The Economic Impact of Foreign Manufacturing Investment in Wales. Unpublished Ph.D, University of Wales, Cardiff. Scottish Executive (1999), Input-Output Tables and Multipliers for Scotland 1996. Government Statistical Service, Edinburgh. Turok, I. (1993), Inward Investment and Local Linkages: How Deeply Embedded is ‘Silicon Glen? Regional Studies 27, pp. 401-17. Turok, I. (1997), Linkages in the Scottish Electronics Industry: Further Evidence, Regional Studies 31, pp. 705-711