Cambridge in the 21st Century

The commercial expansion of Cambridge has been a highly political issue since the 1950s. Many believed that the enlargement of the city and its infrastructure raised a considerable risk of reducing the quality of life in the area. Today, much of the local population still believes that the unique atmosphere found in Cambridge and the quality of life that it offers are being directly threatened by the high-tech sector's drive for growth.

As a result, planning officials have been restrictive and Cambridge is simply considered by many to be "full." Cambridge businesses today are confronted with some serious challenges connected with their successful development on the one hand and its limited space and infrastructure on the other, raising worries about the impact of their growth on the ease with which businesses can operate in the area. Some of these concerns are:

• House prices are going up, which leads to increased commuting and so congestion.

• Recruitment becomes more difficult because of acute competition for skilled staff in the city.

• The very character of the city becomes threatened and so entrepreneurs are deterred from moving there.

According to some of Cambridge's local heroes, the government is considered to have two key roles to play within this context:

1. Remove obstacles so that market mechanisms can function more efficiently .

2. Act as a catalyst, providing the impetus needed to get from pilot project to full-scale service.

Both of these are within the purview of central government, whereas local government only has a bearing on the second. Paul Auton, chairman of Arthur D. Little/Cambridge Consultants, affirms this.

Paul Auton

A constructive role for government: Remove impediments

If government wants to stimulate the formation and growth of new enterprises , it should concentrate on removing impediments rather than spending money on grants, soft loans, and providing advice. These latter might have been appropriate to development areas in Scotland, Wales, and northern England, but in Cambridge the limitation to growth is poor infrastructure. We do not lack entrepreneurial spirit, venture capital, or business advice, but we do suffer from poor transportation, lack of housing, and disjointed government ” both national and local.

Government can help by putting resources into infrastructure, streamlining the planning system, and making the area as business friendly as Munich or Stockholm. Government should also invest more in universities and basic research. Finally they should remove tax disincentives. Changes to capital gains tax is welcome, but it is at the expense of great complexity and the National Insurance rules as applied to options is a disaster.

When governments aim to adapt their region's business environment to the imperatives of the global Innovation Economy, they need to understand that this environment needs to live up to standards of global competition. Transforming a slow-paced, and possibly regulated industrial region into a fast-paced, market-driven innovation region can be problematic for governments when implications of global technology, global competition, and other global market forces have not been fully considered. This becomes an issue especially for those regionally minded policy makers , who are traditionally used to looking inward at their region rather than positioning it within the context of global competition. Questions of competing globally have often been dealt with by national policy makers, not regional ones. In this context, the Cambridge model of limiting the government's role to removing impediments and letting market players drive the development of the region seems appropriate. However, the greater the extent of the change required for its transformation, the more difficult it will become for private business to drive the change for any given region. The example of Munich has shown us that the government was important to create certain initial sparks that lead to the development of innovation centers, high-tech clusters, and technology platforms. Bavarian State Minister Erwin Huber clearly stated that the role of his government was to merely create an environment in favor of innovation and entrepreneurship, but not to take the lead in the region's development. Benefiting from its world-class university and its "small is beautiful" orientation, Cambridge may indeed accomplish its transition to the global Innovation Economy without much government support. In other regions around the world the case may not be as simple.

About the Author

This chapter was co- authored by Philip Heimann . He studied management at ESCP-EAP European School of Management in Paris, Oxford, and Berlin, has worked for the consulting firm A.T. Kearney and is currently preparing his doctoral thesis on linking corporate and regional innovation systems. Philip currently resides in Berlin, Germany.