Stephen Nicol:
Microscope economics

Liverpool's economy is on the up. Employment and productivity have grown strongly in recent years, bringing the city more in line with national levels of economic performance, while confidence is highlighted by increased private sector investment.

As the city settles into its year as Capital of Culture, it can now look forward to the next phase of its development. It may not be just culture that holds the best hope of driving its economy forward, but also knowledge.

The single most important challenge facing Liverpool, and the region as a whole, is to move towards higher-value, knowledge-based activity. A high proportion of employment created recently has been in lower-value jobs.

Fortunately there is one location in Liverpool where such knowledge exists in abundance.

The area stretching from the southern end of Hope Street to Prescot Street in the north contains a remarkable concentration of assets, including the University of Liverpool, Liverpool John Moores University, the Royal Liverpool University Hospital and Liverpool School of Tropical Medicine amongst others.

The Knowledge Quarter, as it is becoming known, covers just 1% of the city area. Despite this, the institutions within it account for 14,000 full-time jobs, 7% of all jobs in Liverpool, and bring in £1bn in annual income.

Researchers within this area are at the forefront of efforts to tackle many of the world's most critical health challenges, including cancers, malaria, obesity, bird flu and SARS. It is the only location in the UK outside London with outstanding expertise in biological sciences, veterinary science and tropical medicine. It is also home to many major science projects. What's more, its role as a centre of learning is supported by a strong cultural offer, including two cathedrals, two theatres, the Royal Liverpool Philharmonic and hotels, bars and restaurants.

The Knowledge Quarter represents an important platform on which to base the city's future growth - and to strengthen the North West economy as a whole. However, to compete successfully in the knowledge economy, Liverpool must be able to offer an environment that can attract and retain the best and most creative people.

So what does it need to do to achieve this? Our research shows there are a number of key factors that successful knowledge-based environments share, a sense of place being at the top of the list. In the knowledge economy, quality of place is increasingly important in attracting investment.

The area should have a distinct identity. It should also have clear but permeable boundaries - it needs to be a defined area but have good links to its surroundings - and good internal links allowing people to navigate efficiently between buildings.

Knowledge locations have open spaces that foster a sense of interaction, and iconic architecture, which reinforces their distinctive role. They have an engaging feel and are welcoming to young people, who are equally drawn by the area's cultural buzz as its academic history.

Liverpool's Knowledge Quarter has many of these assets but it also has many challenges to overcome.

Although it is an existing centre of excellence, and an attractive and distinctive place to work, Liverpool Knowledge Quarter also has its fair share of eyesores and poorly managed public areas. Internal connections could be better, as could the approaches from other areas of the city.

We have proposed a number of ways in which the quarter could be improved, and be developed as a more cohesive urban location with a much stronger identity. These include tackling key 'grot spots', creating a strong route from Lime Street Station up Mount Pleasant and Brownlow Hill, investing in underperforming areas such as the Brownlow Hill and London Road quadrants, improving connections within the quarter, finding better solutions to car parking and overcoming the domination of the area by cars in general.

The organisations within the Knowledge Quarter have all embarked on programmes of investment and redevelopment. This - together with the possibility of public sector investment - gives the area new opportunities to tackle the challenges.

A number of recent studies have clearly demonstrated the economic case for investing in knowledge quarters. Compared to the development in other areas of the city in recent years, the investment required to realise the Knowledge Quarter's potential will be modest. However the dividend, in terms of the impact on the Liverpool City Region's long-term prosperity and competitiveness, could be immense.