Very quietly I take my leave,
As quietly as I came here;
Quietly I wave good-bye,
To the rosy clouds in the western sky.
Chinese people visiting the UK to see the tablet commemorating Xu Zhimo’s poem Saying Good-bye to Cambridge Again reputedly express amazement that such a small island could have run an empire covering a quarter of the world.
The concern for many Europeans is that innovations changing the world are now primarily coming out of emerging markets, first the US in the 20th century and now Asia, leaving the Old World as a theme park for visitors to quietly come and go.
But the cluster of businesses based around the so-called Golden Triangle of London, Cambridge and Oxford stretch from healthcare, information technology, consumer internet and heavier industry, such as transport and engineering.
These businesses have put the region fourth for business research and development (R&D) intensity in the Organisation for Economic Co-operation and Development’s (OECD) survey of innovative areas among the wealthiest countries in the world.
The top 4% of regions accounted for one-third of OECD growth from 1995-2005. Many entrepreneurs in this part of the UK have close links with established businesses’ corporate venturing units, universities and the City of London’s financial and other services industry.
Almost all the 40 corporate venturing units from UK-based companies are based in this triangle, including Cambridge-based private industrial conglomerate Marshall, which set up a seed fund earlier this year, oil major BP, publisher Reed Elsevier, advertising services group WPP, chip maker ARM, consumer goods group Unilever and drug company GlaxoSmithKline, according to research by Global Corporate Venturing, and many of the businesses already have close links with universities that are researching new ideas.
Last year, four universities in the region – Cambridge, Imperial, Oxford and University College London – were ranked in the top 10 by the QS World University Rankings.
These universities are also regular centres for venture capitalists and entrepreneurs from Silicon Valley in the US or elsewhere and who are invited to travel between the universities as part of regular visits, such as the Silicon Valley comes to Oxford event, which take place at the Saïd Business School.
Overlooking these connections is the UK government, which is trying to act as a groundsman for innovation rather than umpire. This means providing words of encouragement and an appropriate regulatory environment rather than using public funding to direct areas that will grow.
The UK government has closed most of its regional development agencies in the past year, but its inward investment body, UK Trade and Investment (UKTI), has set aside £15m to bring technology companies to the country and promote the east end of London, between Old Street and the Olympic village being built for next year’s games, as a Tech City for social media.
Eric van der Kleij, chief executive of Tech City, said at the Global Corporate Venturing Symposium last month that this cluster, called Silicon Roundabout, had grown from some 15 high-tech companies in 2008 to about 200 today.
He said his ambition was for Tech City to be seen as the best place in Europe for these types of businesses to set up after being established in November with backing from US firms Google, Facebook and Intel.
David Cameron, UK prime minister, said at the time: "We are not just going to back the big businesses of today, we are going to back the big businesses of tomorrow. We are firmly on the side of the high-growth, highly innovative companies of the future.
"Right now, Silicon Valley is the leading place in the world for hightech growth and innovation. But there is no reason why it has to be so predominant. Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make east London one of the world’s great technology centres."
The UK government’s move away from regional development agencies, however, has been in contrast to the trend among OECD nations.
The OECD’s Regions and Innovation Policy said as regions increased their role, coherence across levels of government was more important given tight budgets. In Belgium, Germany and China, regions are responsible for at least 50% of public R&D-related spending and the share has been growing over the past five years in most countries.
The government’s withdrawal from regional development has followed the economic downturn since the credit crunch started in mid-2007. Switzerland-based non-profit World Economic Forum said the UK had slipped out of the top 10 since the crisis, down to 12th from eighth.
The forum’s Global Competitiveness Index 2010-11 said: "The macroeconomic environment remains the country’s greatest competitive weakness, with deficit spending that must be reined in to provide a more sustainable economic footing going into the future."
However the report added: "The country [UK] benefits from clear strengths, such as the efficiency of its labour market (eighth), standing in contrast to the rigidity of many other European countries.
"The country continues to have sophisticated and innovative businesses that are highly adept at harnessing the latest technologies for productivity improvements and operating in a very large market (ranked sixth for market size). These are all characteristics that are important for spurring productivity enhancements."
In healthcare, an informal coalition between Oxfordshire Bioscience Network and One Nucleus – an organisationcreated in April last year out of the Cambridgebased ERBI and the London Biotechnology Network – was set up in the autumn to promote closer working relationships with bioclusters internationally.
The Golden Triangle "represents the densest region in Europe for life sciences companies, forming a critical mass comparable to international superclusters such as the Massachusetts cluster", the coalition said.
London and Cambridge are home to at least 60% of the UK’s life science industry base and four of the UK’s five academic health science centres, which are increasingly being used by the National Health Service to encourage innovation.
A similar pattern is found in the information and communications technology industry, which employs more than a million people in the UK and contributes more than £66.4bn to the local economy.
While accurate figures for hi-tech companies are hard to come by, Oxfordshire is estimated to be home to 3,500 such companies employing 45,000 people, while Cambridgeshire’s Silicon Fen reportedly has 1,400 of these companies employing more than 40,000 people, according to research published in Oxford Today.
Entrepreneurs also have access to perhaps the world’s biggest financial and business services capitals as well as Europe’s biggest venture capital market.
Academic Richard Florida said the most successful metropolitan areas in the US between 1990 and 2000 had been the ones with the most vibrant cultural scene to attract the "creative classes".
London’s global appeal as a cultural centre with relative tolerance, combined with its research base across the Golden Triangle, gives it access to scientific and entrepreneurial talent to capitalise on the combination of complicated technology with soft-information skills from media and other services.
The clouds might be rosy in the western sky because they are reflecting a new dawn.
Key indicators 2009
Population: 61.9 million
Gross domestic product: $2,183.6bn
GDP per capita: $35,334
GDP as share of world total: 3.10%
Source: Global Competitiveness Index 2010-11 rankings by
World Economic Forum