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Technical Change and the Urban Development Cycle
Abstract
The paper describes the pronounced 'long swings' or 'urban development cycles' of 20-30 years duration which have created successive waves of urbanisation in the British economy since the Industrial Revolution, and which can be related to successive long waves of technological development within the economy as a whole. A more detailed examination of the post-war period shows that in each sector of building two types of shorter cycles, causing pronounced building booms and slumps, are superimposed on the dominant long swing of post war urban development. The discussion concludes by examining the prospects for the next urban development cycle in Britain related to the new wave of micro-electronic and information technologies, and then draws out the main policy implications of the analysis.
... Indeed building activity is subject to more pronounced cyclical fluctuations than other components of investment, or the national product as a whole and this poses particular problems for an assessment of likely future levels of land demand. As Barras (1987) argues: ...
... The length and volatility of this building cycle as compared with that for other investment goods reflects the long gestation and construction period of substantial industrial building projects, during the course of which the state of the market inevitably changes. Barras (1987) observes that instability in building activity caused by divergences between investor and user demand has been intensifying, because of the tendency for investors to play a more dominant role in property markets. There have been some recent indications , however, (e.g. from work done for Glenny, 1992) of more firms developing for their own purposes -rather than being dependent on investors whose planning criteria may not closely match their needs -and this trend may be associated with a more stable demand pattern. ...
... It is particularly important at this time to look for indications of change, and to be wary of projecting `trends', whether these are based on very recent experience or even that of the past couple of decades. Barras (1987) has argued that the locational and building requirements for new industrial buildings in the next phase of economic and urban development will differ considerably from those prevailing in the post-war upswing. In particular he suggests that: `the adoption of new microelectronics-based technologies in manufacturing industry (will) improve the economic viability of smaller scale production, moving away from the standard production line towards more flexible and customised manufacturing processes, while at the same time increasing the demand for ancillary services such as research and development and software production. ...
The objectives of the study were to provide an input to the development of SERPLAN policy to address the issue of industrial land supply issue at South East regional level. The focus of this was on assessing the adequacy of supply of industrial land and buildings of different types in the light of demand by industrial occupiers in different locations and environments, and for different tenures. This was to underpin refinement of the strategic aim to redress the imbalance between West and East London, the assessment of how qualitative and quantitative differences in supply bear on industrial growth, and provide evidence of the requirements of industrial firms in the growth sectors and/or those generating further employment as well as of the potential impact of speculative hope values in displacing industrial demand.
... Distribution warehouses similarly have developed over the 30 years to a distinct investment class. These changes can be seen as the latest in a series of urban development cycles lasting approximately 30 years caused by technological progress and identified by Barras (1987). The impact of car travel and the rapidly developing ICT technology means that property forms have been developed to meet new demand requirements. ...
... Table 3. the balance of risk and return in the 'institutional portfolio ' 1981-2006. Start 1981198219831984198519861987198819891990End 198519861987198819891990199119931994 annualised 5 year returns 9.7 9.0 12. Despite the emphasis of investment theory it is exceedingly difficult to see an optimising pattern to these statistics. ...
... Table 3. the balance of risk and return in the 'institutional portfolio ' 1981-2006. Start 1981198219831984198519861987198819891990End 198519861987198819891990199119931994 annualised 5 year returns 9.7 9.0 12. Despite the emphasis of investment theory it is exceedingly difficult to see an optimising pattern to these statistics. ...
Real estate investment portfolios of financial institutions have seen dramatic changes over the last three decades or more. Historically such property investment decisions have been seen within a portfolio diversification paradigm that has sought to balance risk and return. This paper considers the role of the supply of assets in the determining and constraining the UK institutional portfolio. The supply of real estate assets not only expands during property booms but has also been transformed by a long term urban development cycle as cities adapt to cars and the ICT revolution that has brought new property forms. The research examines long term trends in investment change by disaggregating into ten property forms rather than the usual three land use sectors. It then assesses to what extent investment patterns can be explained in terms of portfolio theory, short term net returns of individual sectors or driven by the supply of real estate assets. It concludes that the supply of real assets is an overlooked explanation.
... In the uK this coincided with the launch of the Investment Property Databank (IPD) long run Index running from 1971, which provides reliable property data (rIcS 1994;Baum 2001). as Barras (1994) indicated, his personal interest on the subject was first prompted by the 1970s property crash, which led to the publication of several papers including Barras (1983Barras ( , 1984Barras ( , and 1987, as well as series of papers commissioned from the economic and Social research council (eSrc) on building cycles in Britain ( Barras, ferguson 1985Barras, ferguson , 1987aBarras, ferguson , 1987b. these early modern property cycle studies were based on the hypothesis that major property cycles are generated by their endogenous forces. ...
... Since then the relevance of the subject has attracted greater attention of scholars, who investigated different aspects of the subject. In the uK, lewis (1965) published historic survey of British economic growth from 1700 to 1950, Barras (1987) published an extensive study of post-war building, rIcS (1994,1999) examined the main elements of the uK property cycles. Subsequently, as Barras (2009) indicated, research into property cycles began to be conducted in private sector consultancies rather than in academia with the purpose of commercial forecasting. ...
The existence of cycles in building and property, has grown to have significant importance in the UK and internationally; whereas property markets have been characterised by boom and bust cycles with a negative impact on the national economies. As a result, property cycles became a popular research topic amongst property professionals and scholars, with a greater understanding of the cyclical behaviour of the property market being seen as a major guide to the financial success (failure) of property investments. consequently, considerable literature has accumulated over the years on the subject. This paper provides a review of this literature, mostly written in the UK and US, with international insights on the subject. This paper reviews research on the subject chronologically over a one hundred-year period. The study is designed to provide readers with a historical overview of Property cycles research by emphasising the underlying theme which dominated a particular period of this research, as well as indicating methods, data analysis techniques employed and outcomes of these studies. Its ai is to put more clarity on the subject, as well as help to navigate anyone interested in Property cycles through a considerable amount of research which has accumulated over the last century.
... Urbanization has been driven by technology transitions that redefine urban hierarchies and bring new types of specialization to the urban economic base. As a result, many urbanists argue that the pattern of urbanization has not been a smooth evolution-it has been marked by major transformations from one form of city to another (Borchert, 1967;Barras, 1987;and Berry, 1995). ...
... Because new technologies are changing the organization of work and the nature of production processes, the potential for a mismatch between infrastructure developed for the mass-production metropolis and the infrastructure needs of the postindustrial metropolis is significant (Barras, 1987). Several urban redevelopment efforts undertaken by core cities in the 1980s adapted urban infrastructure and buildings designed for industrial and goods-handling functions to fit the needs of an information-based services economy. ...
The United States is in the midst of a technological revolution, driven in large part by rapid advances in microelectronics. There has been much speculation about the impacts of the "information superhighway" on society as a whole, but surprisingly little is known about the potential effects of this technology revolution on the spatial distribution of jobs and people either broadly or in urban conditions specifically. This paper reviews the literature and research assessing the impact of technology on both intra- and intermetropolitan change. Based in part on the review of the literature and the findings from the Office of Technology Assessment report, The Technological Reshaping of Metropolitan America, the final section speculates how this technology revolution will affect cities and metropolitan areas.
... Housing construction activities are subject to cycles of 15 to 25 years long (Kuznets, 1930;Barras, 1987). By definition, the upswing side of the cycle is marked by surplus of demand over supply, while the downswing is characterized by developers cutting back on housing construction because of limited demand, sluggish sales, and high vacancy rates. ...
... While the economically different behavior of people-as consumers or investors-at times of economic growth versus times of economic recession is almost axiomatic, knowledge concerning possible spatially differential responses is only now accumulating. The attempt at understanding the contemporaneous functioning of the spatial processes in tandem with the temporal politico-economic and technological trends is shared by a stream of recent studies (Manson et al., 1984;Barras, 1987;van den Berg et al., 1987;Whitehand, 1987;Berry, 1988Berry, , 1991Mera, 1988Mera, , 1995Krakover and Morrill, 1992;Leitner, 1994;Lees and Bondi, 1995). Some authors suggest, though on a regional scale, both the existence of geographical spatial cycles and their full synchronization with temporal economic swings (Amos, 1990(Amos, , 1995. ...
This paper argues that the degree of spatio-temporal conformity between housing supply and demand changes in different stages of the building cycle. It is hypothesized that, during the upswing period, population growth reacts quickly to housing construction, and thus spatio-temporal conformity is anticipated. On the contrary, during the downswing period, population growth reacts much more slowly to housing opportunities and therefore spatio-temporal disconformity between population growth and housing supply is expected. These postulates are tested for the Tel-Aviv metropolitan area during the building cycle from 1968 to 1990. Population growth and housing construction growth were found to proceed in almost full harmony during the upswing period, whereas they diverge greatly during the slowdown years. The main disconformity found in the latter period is a revival of housing construction growth close to the central parts of the metropolis at a time when the highest population growth continued in the outskirts.
... It was the yield-maximizing logics of the financial sector, for example, that dictated the excessive focus upon high-end retail development in Britain's town centers; luxury shopping facilities, along with expensive office space, were favored by developers and their financial backers because they promised the highest returns. 72 Emboldened by this combination of an enabling planning regime and a flood of private investment, Arndale's directors vigorously began to promote what would become their signature development type: the covered shopping center (or mall, in US terminology). Chippindale was again the driving force here and became something of an evangelist for this new mode of retail development-"uncompromising in his criticism of old-fashioned shopping methods" and able to "expound fluently, and almost indefinitely, on covered shopping centres," as one contemporary recalled. ...
This article tracks the remarkable role played by a commercial property developer, the Arndale Property Company, in the transformation of urban Britain across the second half of the twentieth century. This was an era of great change in cities, as urban environments were remodeled and urban centers had to adapt to deindustrialization and the rise of a consumer-driven and service-dominated economy. Arndale was at the forefront of these changes, installing dozens of shopping centers in British towns and cities from the 1950s to the 1990s. The company imported American-inspired commercial architectures, furnishing cities with new landscapes of consumption and mass leisure through which the affluent society was encountered and made concrete. Arndale was also a driving force in the growing financialization of urban property development that began in Britain as early as the 1950s and gathered pace as the century wore on. The company's history thus illuminates important shifts in economic activity and cultural life that had far-reaching impacts on British cities and society. It also highlights Arndale's role at the heart of the postwar urban renewal order, showing how far the company's success depended on its status as a favored partner to public planning authorities pursuing town center redevelopment. The centrality of such public-private developmental partnerships, often overlooked, particularly within adjacent urban disciplines, reveals much about the precise contours and political economy of the British postwar settlement.
... To generalise, at an urban parcel scale, the urbanisation processes can be represented as a loop of three main phases: development, operation and renewal (Whitehand, 1994;Barras, 1987). Because of the continuous and dynamic nature of urban environments, a variety of specific pollutant sources and management activities are uniquely associated with each urbanisation phase, which forms the framework illustrated in Fig. 8. ...
To support sustainable urban planning and the design of water pollution mitigation strategies, the spatial and temporal trends of water quality in urban streams needs to be further understood. This study analyses over ten years of surface water quality data from 53 upstream catchments (20 of them predominated by a single type of land use) and two lowland sites across Greater Melbourne, Australia. We evaluated the impact of various catchment characteristics, especially urban land uses, on spatial and temporal urban water quality trends. Here, we focused on common urban pollutants: total suspended solids (TSS), total phosphorous (TP), total nitrogen (TN), zinc (Zn), copper (Cu) and nickel (Ni). Site median nutrient and heavy metal concentrations were negatively correlated with the catchment's elevation and its average annual rainfall. Further analysis shows that such trends were driven by the geographical pattern of Melbourne-i.e. low-laying sites tend to have less rainfall and be more urbanised. Only median concentrations of heavy metals (Zn and Cu) were correlated to catchment imperviousness. Further characterising of the urban environment was done into specific land uses (residential, industrial and commercial), yet median concentrations of all pollutants were not significantly correlated with land uses. This is because simple metrics, such as land use proportions, do not adequately reflect the significant variability in pollution sources that can exist even within the same land use type. Indeed, our temporal analysis found that the water quality difference between catchments with similar land uses is likely caused by their site-specific pollutant sources (construction and illegal discharge) and environmental management actions (waste-water management actions) regardless of similarities in land use. A 3-stage urbanisation cycle (development, operation and renewal) is suggested to further explain the urban water quality variance, but more data from small areas of an urban catchment is required to directly understand the unique impact of each urbanisation stage on water quality.
... Such shocks effectively force market actors into a response and lay challenge to conventional notions of incremental change and path dependency (North, 1991;Oliver 1992). Theories of speculative residential development (see Barron, 1983;Barras, 1987Barras, , 2009Gore and Nicholson, 1991;Guthrie, 2010;Healey and Barratt, 1990;Kanemoto, 1985;Markusen and Scheffman, 1978;Payne, 2015Payne, , 2013 reveal four 'shocks' in the housing market that can disrupt the business operations of speculative housebuilders: ...
The vicissitudes and volatilities of recent housing market cyclicality have restructured, reconfigured and reorganised housing systems and their supply demand characteristics. Surprisingly little attention has been paid to (re)examining supply side outcomes, much less the influencing effect of supply behaviour in response to demand-side change and their interactions. Indeed, one of the biggest unanswered questions in housing studies today is how supply side characteristics, specifically those of speculative housebuilders, have been affected by the turbulent, transitionary context presented by the global financial crisis. Addressing the gap, this paper presents a novel analysis of how Britain's biggest housebuilders respond to significant institutional shock in their operating environment and considers how this enables and constrains housing supply outcomes in the post-recession context.
... This has been encouraged by a benchmarking culture made possible by IPD information (Henneberry, Roberts 2008). -a major "urban development cycle" occurred (see Barras 1987), that was initially impelled by the impact of car travel and then by the rapidly developing ICT technology. Cities have undergone massive changes in spatial structure, intra-urban land use patterns and new property forms fashioned by decentralisation pressures. ...
This paper examines changing transactions activity and liquidity over thirty years in the UK. It reviews the multi-dimensional concept of liquidity analysis and demonstrates that it is not just a function of the time necessary to sell an asset, a typical real estate perspective. Instead liquidity is defined in terms of transactions activity. The paper then hypothesises that urban change and an increased information base has contributed to a more active management of real estate portfolios and increased liquidity. Superimposed on this long term trend it is also hypothesised that property cycles create rise and falls in liquidity. The empirical core quantifies the changing nature of liquidity and transactions activity over thirty years from 1981 based on the IPD database. It confirms the hypothesised substantial rise in liquidity but increasing variability in the level of transactions activity from one year to the next queries the cyclical liquidity hypothesis. This is supported by causality tests. Over the last two decades a short term opportunity driven real estate investment culture appears to have emerged stimulated by the increased churn of properties, partly the consequence of the pace of urban change. It has brought greater volatility to the commercial real estate market.
... La naturaleza de sus trabajos obvia el papel de los espacios suburbanos y de los procesos de generación de áreas urbanas. Por último, otros destacados analistas (Kuznets, 1958;Hage, 1979;Barras, 1987;Nystrom, 1992;Antrop, 2004, etc.) también defendieron la existencia empírica de una secuenciación del crecimiento y decrecimiento urbano ligado a determinados ciclos económicos y tecnológicos, principalmente en Europa y Estados Unidos. ...
By analyzing all the flows of rural exodus, urban concentration and urban deconcentration in a single comprehensive system, we can find settlement logics characteristic of each socioeconomic stage. This article attempts to synthesize these patterns, which lead to changes of prominence in territorial dynamics between different habitats and migratory typologies that occur over time. We conceptualize the resulting model as territorial transition. Although it has a theoretical link with important precedents, it can be considered an original contribution, since it has not previously been conceptualized in such detail. The narrative sequence has two parts. It begins by presenting the basis, the theoretical background and the stages of territorial transition, and continues by drawing a contrast with the observed reality of the Spanish case, analyzing in detail certain key specific features. In conclusion, we highlight that the formulation of this model may allow the interpretation of apparently confusing or conflicting phenomena of other international territorial systems.
... Cairncross believed that a cyclical process is subordinate to the process of growth and arises from it. Barras (1987) some thirty years later thought the reverse to be true, with building cycles of various lengths being the cause of unstable property markets, creating the cyclic tendency of urban development itself. He believes that each of the long (Kondratieff waves, as defined by Schumpeter in 1939) cycles is stimulated by technological change but that supply and demand control the short-term cycles. ...
... La naturaleza de sus trabajos obvia el papel de los espacios suburbanos y de los procesos de generación de áreas urbanas. Por último, otros destacados analistas (Kuznets, 1958;Hage, 1979;Barras, 1987;Nystrom, 1992;Antrop, 2004, etc.) también defendieron la existencia empírica de una secuenciación del crecimiento y decrecimiento urbano ligado a determinados ciclos económicos y tecnológicos, principalmente en Europa y Estados Unidos. ...
Analizando conjuntamente los flujos de éxodo rural, concentración y
desconcentración urbana, en un mismo sistema comprensivo, podemos encontrar unas lógicas de asentamiento características de cada momento socioeconómico. Este artículo es un intento por sintetizar esas pautas, que dan lugar a cambios de protagonismo en las dinámicas territoriales entre diferentes hábitats y en las tipologías migratorias que se suceden en el tiempo. Denominamos transición territorial al modelo resultante. Aunque tiene un entronque teórico con importantes precedentes, puede considerarse este como una aportación original, en tanto no existen formulaciones tan
explícitas y detalladas del mismo. La secuencia expositiva tiene dos partes: se comienza presentando los fundamentos, antecedentes teóricos y fases de la transición territorial; continúa con un contraste con la realidad observada en el caso español, analizando en detalle algunas particularidades relevantes. Subrayamos, como conclusión, que la formulación de este modelo puede permitir la interpretación de fenómenos aparentemente confusos o contrapuestos de otros sistemas territoriales internacionales. //
By analyzing all the flows of rural exodus, urban concentration and urban deconcentration in a single comprehensive system, we can find settlement logics characteristic of each socioeconomic stage. This article attempts to synthesize these patterns, which lead to changes of prominence in territorial dynamics between different habitats and migratory typologies that occur over time. We conceptualize the resulting model as territorial transition. Although it has a theoretical link with important precedents, it can be considered an original contribution, since it has not previously been conceptualized in such detail. The narrative sequence has two parts. It begins by presenting the basis, the theoretical background and the stages of territorial transition, and continues by drawing a contrast with the observed reality of the Spanish case, analyzing in detail certain key specific features. In conclusion, we highlight that the formulation of this model may allow the interpretation of apparently confusing or conflicting phenomena of other international territorial systems.
... Since then the relevance of the subject has attracted greater attention of scholars, who investigated different aspects of the subject. In the UK, Lewis (1965) published historic survey of British economic growth from 1700 to 1950, Barras (1987) published an extensive study of post-war building, RICS (1994; examined the main elements of the UK property cycles. Subsequently, as Barras (2009) indicated, research into property cycles began to be conducted in private sector consultancies rather than in academia with the purpose of commercial forecasting. ...
The existence of cycles in the general business sector, as well as in building and property has grown to have significant importance in the UK, whereas the UK property market has been characterised by boom and bust cycles with a negative impact on the overall British economy. As a result, property cycles became a popular research topic amongst property professionals and scholars, with a greater understanding of the cyclical behaviour of the property market being seen as a major guide to the financial success (or failure) of property investments. Consequently, considerable literature has accumulated over the years on the subject. This paper provides a review of this literature with an annotated bibliography. The literature reviewed was mostly written in the UK and US, and includes contributions from both academics and professionals. This paper reviews research on the subject chronologically over one hundred year period. The particular emphasis is on the research methods, data and data analysis techniques employed, and the outcomes of the studies. The objectives are to provide a guide to the literature on property cycles, put more clarity on the subject as well as help to navigate anyone interested on property cycles throughout a considerable amount of research.
... The urban built environment, as an assemblage of highly durable and spatially fixed assets, is in many respects a time capsule that reflects stages of earlier metropolitan growth. Barras (1987), among others, has argued that in Western Europe and North America major 435 technological breakthroughs, including the introduction of new transport technologies that underlie Kondratiev long waves, have resulted in periodic urban expansion. An earlier work by Adams (1970) identified four major transport eras, with each stage associated with distinct cycles of housing construction. ...
Principal components analysis of small-area data provided by China's 2000 Population Census shows that major new economic and social forces largely shape the spatial composition of housing in Guangzhou. This is generally manifested in a series of concentric rings: the old urban core, the middle zone of reform housing, and the outer ring of new commodity housing. In addition, urban villages punctuate the metropolitan landscape. Corresponding analysis of sociodemographic attributes depict a metropolis in transition, with market elements and choice-based housing decisions beginning to impinge on the urban fabric. However, the deeply entrenched socialist institutions established during the early years of the People's Republic ensure the continuing dominance of the workplace and occupational attributes as factors structuring China's metropolitan space.
... Cyclical fluctuations reflecting disequilibrium in the market directly determine supply of and demand for property. As argued, the business cycle, an intrinsic aspect of the free economy, induces the building cycle (Barras 1987). Underinvestment in the urban physical environment was the constant problem plaguing many Chinese cities in the post-1949 era, which was characterized by an economy of shortages. ...
China’s economic reforms have introduced market forces to the domain of urban construction. A market is seemingly evolving to the extent that urban development in China appears to resemble that in the capitalist economies. Once controlled by central plans, urbanization is starting a new chapter in a traditionally rural society. Nevertheless, determined by the gradualist nature of transformation, many old institutions still remain effective. A new framework is formulated along with interactions between new and old institutions. Unique urban development in transition has emerged with the coexistence of plan and market, which makes the transition toward market uncertain. Establishment of a market system is compromised by the remaining plan factors.
... During the last quarter of the 20th century, the forces of decentralisation engulfed the spatial structure of cities and led to a revolution in the pattern of land use. Barras (1987) identifies four major UK urban development cycles since 1850, each lasting 20-30 years, that correspond to the mid Victorian, the Edwardian (at the turn of the 20th century), the interwar (1919-39) and the postwar (after 1945) building booms. The latest transformation of cities can be seen as a fi fth major urban development cycle. ...
The paper discusses the long-term relationship between property investment and urban economic change which is in turn the consequence of changing transport and industrial technologies. This is exemplified by the decentralisation of economic activities and population suburbanisation that has transformed the spatial structure of cities in the UK over the past 30 years. As part of this process, new property forms have evolved including retail parks and office parks. The paper examines the consequences for the property market and the responses of the planning system and institutional property investors that have traditionally viewed property as a long-term investment medium. The analysis begins by considering the context of urban economic change. The heart of the research examines the changing structure of property portfolios and the development of investment markets for these new property forms. The pace of urban change is shown to be slowed by property investment responses.
As a result of the Parliamentary elections held on October 1st, 2012 the „Georgian Dream” Coalition supported by the majority of population came to power of the country. The new authorities did many good things out of the promises given to society, but unfortunately, what was done is still far from those expectations the society waited for and the promises made by the coalition of „Georgian Dream” before coming to power. Today’s government voluntarily or involuntarily didn’t manage to change the vicious system of country’s governing introduced by the United National Movement. All of this entirely touched the higher education system in Georgia. Unfortunately, higher education in Georgia is still administered by the law passed by the „Nationals” that immensely damaged
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ზოგიერთი მოსაზრება საქართველოს კანონზე „ უმაღლესი განათლების შესახებ “
education and science and, which in the near past was blasted by the political forces being today in power. Proceeding from the higher education interests we consider it necessary to abolish the current law on higher education in Georgia and adopt a new, which will be fair and democratic and will better take into account national and international experience in higher education development and management sphere. Briefl y about some of them: 1) According to the article 15, paragraph 2, the governing bodies of higher educational institutions are: the Academic Council, Senate, Rector, Head of Administration and Quality Assurance Service. According to the same article, paragraph 3, the governing bodies of faculty are: the Council of Faculty, Dean, and Faculty Quality Assurance Service. We have the following remarks on the given article: a) It seems that educational institution’s management scheme is too complicated. According to this law, the management body includes 2 Senates, one of which (academic council) is the highest representative body, while the other (representative body) - ordinary. If this is so, then why it is needed and by what logic it is justifi ed that most of the decisions made by the Academic Council are approved by the Senate which is a subordinate body. In addition to the above noted, the existence and operation of two senates are related to such negative consequences, as: unjustifi ed division of management functions and, therefore, scattering of intellectual resources having management capability; extra costs of material and fi nancial resources that is associated with the increase of staff due to two senates functioning, increased staff offi ces and their maintenance, expenses related to the election of the councils’ makeup, etc. Coming out from the interests of educational institution’s effective management it is recommended that instead of the current two senates function one senate and be called not academic, but the senate of educational institution; b) We consider it also unnecessary that the chief of administration is presented as a separate organ of the management of educational institution. In our view, the chief administrative manager of human, material and fi nancial resources should be only the Rector and not someone else; c) I think that inclusion of Quality Assurance Service in higher educational institutions as well as faculty management organs is not justifi ed. It administers nobody, excepting the relevant service of faculty in case of educational institution. At faculty it administers only 2-3 employees of its staff; 2) The title of Article 16 of the current Law on Higher Education is “Higher Educational Institution’s Management Principles.” In fact, 5 paragraphs formulated in this Article discuss what is provided by higher educational institution. I think, it is better for this article to be formulated in different wording; 3) The name of the 30th article of the law is „Dissertation Council.” According to the fi rst paragraph of this article, the dissertation council is the organ conferring doctoral academic degree which is set by the faculty. According to the given law, scientifi c
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ნუგზარ პაიჭაძე
degrees and titles existing in the country were abolished before adopting this law that is completely unjustifi ed. Such nihilistic attitude towards science has negatively impacted on the development of science in the country. The motivation of people to become scientists – decreased signifi cantly. Many people think that after completion of the third cycle of educational program and gaining academic doctoral degree they are at the highest level in science. We fi rmly believe that this illusion is caused by the current law on higher education, according to which scientifi c degrees existing previously actually equated to the doctor’s academic degrees. Proceeding from the interests of science development, it is appropriate to make relevant amendments to the law of higher education which belatedly, but at least partially will rectify the above mentioned fl aw. Namely: additionally it should be introduced doctoral scientifi c degree, which can be obtained by persons holding an academic doctoral degree or a candidate degree of sciences in case of successful defense of dissertation thesis. Since after making the noted changes there will be essentially two different dissertation defence boards, it is appropriate to call one of them doctoral academic degree conferring board (as it is at present), while the other – doctoral scientifi c degree conferring board. The fi rst will function at all faculties having a third level of teaching and the other will be set up relevant higher educational and scientifi c institutions, in relevant fi elds of science considering the number of highly qualifi ed scientifi c personnel employed in them; 4) Along with the introduction of the scientifi c degree, it is appropriate to introduce the rank of professor, which can be held by the person having defended a doctoral scientifi c degree; 5) We have a remark about the third level of teaching – currently established practice of students’ recruitment for doctoral program. In our opinion, the existing rules of recruitment need to be improved in doctoral program. I think, it is necessary to introduce an entrance exam in specialty for doctoral program students with the aim of recruiting a decent contingent of them. In addition, I believe that we should be cautious with the setting of the number of contingent for doctoral program. I believe that it is now too infl ated, which can negatively affect the selection of doctoral students and their training quality. It should also be noted their future employment possibilities. At the same time, I think, the state should pay all the costs related to the training of doctoral students and take more active part in determining the number of doctoral students. It is desirable that all the above noted be refl ected as a separate paragraph in the relevant article of the law on higher education; 6) We have certain remarks on the rule of formation and working of dissertation defence board currently operating at the faculty and conferring academic doctoral degrees. Now, according to the current rules, members of the dissertation defence board are all professors and associate professors. Therefore, the number of members of the board exceeds 100 persons at some faculties. It is clear, that such expanded board is less operational. In our view, it is appropriate to establish a coordination council consisting of 10-15 leading
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ზოგიერთი მოსაზრება საქართველოს კანონზე „ უმაღლესი განათლების შესახებ “
professors for conferring doctoral academic degree; the board will involve representatives of separate modules of doctoral program. There will be formed groups of 5-7 people according to the modules of doctoral program. The coordination council will set up onetime dissertation board (presumably of 10-15 persons) for concrete dissertation defence; the board will consist of the members of the relevant module of the coordination council and other specialists from similar profi le. A single decision of the dissertation defence board must be approved by the noted coordination council. Dissertation defence boards which are formed by such a principle will be disburdened from extra formalism existing today and will be more competent, effi cient and fl exible. 7) We have remarks on Article 5 of the law regarding personnel. Briefl y about some of them: a) According to Article 33 of the law, the higher educational institution’s academic staff members are professors (professors, associate professors, assistant professors). The question is – why are not teachers included in the composition of the academic personnel? According to the same law their function is an important activity with student, such as: conduction of seminars, practical and laboratory works. Perhaps, it will be better if in the relevant article of the law there is written that the higher educational academic staff consists of professors and teachers, or coming out from the fact that the word “professor” is of Latin origin and in Georgian it means “teacher,” in the above mentioned article there should be written that professors composition includes professors, associate professors, assistant professors, senior teachers and teachers; b) I think that introduction of the age limit provided for in Paragraph 2, Article 6 of the academic staff should be abolished. Keywords: Georgia, education, reforms, higher educational institutions, management. JEL Codes: I20, I21, I28, I29
Purpose
The purpose of this paper is to assess the duration of the UK commercial property cycles, their volatility and persistence to gauge future market direction.
Design/methodology/approach
The study employs a novel approach to dissect cycles in a form of a three-step algorithm. First, the Hodrick-Prescott de-trends the selected variables. Second, volatility (measured by the variance) screens periods of atypical fluctuations in the series. Finally, the series is regressed against its past values to assess the level of persistence. The sequential steps screen the length of the cycles in UK commercial property market to facilitate interpretation.
Findings
The estimates suggest that UK commercial property market follows an eight-year cycle. Combined modelling results indicate that the current market trend is likely to change over the coming year. The modelling suggests increasing probability of a market correction in late 2016/early 2017.
Practical implications
This updated appreciation of the UK commercial property cycle duration allows for better market timing and investment decision making.
Originality/value
The paper adds additional evidence on the contested issue of UK commercial property cycle duration.
The construction industry covers a wide range of loosely integrated groups and sub-markets whose output varies, but which basically consists of the production, alteration or repair of durable buildings and capital goods involving the use of land combined with other scarce resources — a combination found in other industries, but construction has certain unique characteristics deriving largely from the physical nature of the construction product and its demand.
The core of Stockholm's central business district, Lower Norrmalm, underwent a process of total renewal during the post-war period. This study asks if this renewal process may be interpreted as a manifestation of a logic of cyclicity inherent to the economies of regions and nations. Time series over construction activity are presented for three geographical levels: Stockholm, the inner city and Lower Norrmalm. The observed booms and slumps are analysed in terms of construction activity on the national scale, transportation and urbanization, and finally, economic and spatial restructuring. Developments on Lower Norrmalm during this period seem to have been part of a regional and national building cycle. The local effects of these forces would have been very different were it not for the mediating and actively orchestrating roles assumed by local institutions. -from Author
This book provides an economic and econometric analysis of real estate investment and real estate market behaviour. Peijie Wang examines fluctuations in the real estate business to reveal the mechanisms governing the interactions between the industry and other sectors of the economy.
The new economy hypothesis identifies the southern and western parts of the United States as important source points for industrial creativity that can rival the northeast. This study shows that this viewpoint, based on invention and innovation, is warranted. Regional technology production in the country is being helped by the presence of professional, skilled labor, rather than manufacturing and related activities as in times past. While the northeast or midwest now operate in a much more competitive inventive spatial system, and are being outperformed technologically by California, Texas, and Florida combined, all regions of the country are patenting inventions more than ever before.
This is the first book that looks at how offices and office markets in cities have changed over the last 30 years. It analyses the long-term trends and processes within office markets, and the interaction with the spatial economy and the planning of cities. It draws on examples around the world, and looking forward at the future consequences of information communication technologies and the sustainability agenda, it sets out the challenges that now face investors. The traditional business centres of cities are losing their dominance to the brash new centres of the 1980s and 1990s, as the concept of the central business district becomes more diffuse. Edge cities, business space and office parks have entered the vocabulary as offices have also decentralised. The nature and pace of changes to office markets set within evolving spatial structures of cities has had implications for tenants and led to a demand for shorter leases. The consequence is a rethink of the traditional perception of property investment as a secure long term investment, and this is reflected in reduced investment holding periods by financial institutions. Office Markets & Public Policy analyses these processes and policy issues from an international perspective and covers: • A descriptive and theoretical base encompassing an historical context, a review of the fundamentals of the demand for and supply of the office market and offices as an investment. Embedded within this section is a perspective on underlying forces particularly the influence of technological change. • A synthesis of our understanding of the spatial structure and dynamics of local office markets at the city level. • An assessment of the goals and influence of planning policies, and the evaluation of policies designed toward the long term sustainability of cities as services centres. This goes beyond standard real estate and urban economics books by assessing the changing shape of urban office markets within a spatial theoretical and policy context. It will be a useful advanced text for honours and postgraduate students of land economy; land management; property and real estate; urban planning; and urban studies. It will also be of interest to researchers, property professionals, policy-makers and planning practitioners.
Through their actions it would appear that cities are in active pursuit of growth and the economic rewards tourism seems to promise. Growth extends its benefits most abundantly when it occurs as part of a healthy economic process and considers the needs of all constituents within a community. Growth, however, is not a valid objective. Growth is the outcome of successful performance. For tourism businesses, that means satisfying visitors. For cities that means enhancing quality of life. Cities should focus, instead, on development with emphasis not simply on tourism development in cities but on the overall development of cities. As an active ingredient in the development of cities, tourism needs to be carefully planned. Planners, developers and managers, however, require a broad perspective of urban tourism so that the challenges it creates can be more easily identified and managed.
The global economic crisis of 2008 was precipitated by a housing market crash, thus highlighting the destabilizing influence of the property cycle upon the wider economy. This timely book by a world authority explores why cycles occur and how they affect the behaviour of real estate markets. The central argument put forward is that growth and instability are inextricably linked, and that building investment acts both as a key driver of growth and as the source of the most volatile cyclical fluctuations in an economy. The role of building cycles in both economic growth and urban development is explored through a theoretical review and a comparative historical analysis of UK and US national data stretching back to the start of the nineteenth century, together with a case study of the development of London since the start of the eighteenth century. A simulation model of the building cycle is presented and tested using data for the City of London office market. The analysis is then broadened to examine the operation of property cycles in global investment markets during the post-war period, focussing on their contribution to the diffusion of innovation, the accumulation of wealth and the propagation of market instability. Building Cycles: growth & instability concludes by synthesizing the main themes into a theoretical framework, which can guide our understanding of the operation and impact of building cycles on the modern economy. Postgraduate students on courses in property and in urban development as well as professional property researchers, urban economists and planners will find this a stimulating read - demanding but accessible.
Interest has grown again in recent years about the long-term and cyclical nature of building investment and its effect on the macroeconomy. This paper investigates the nature of building trends and cycles from the 19th century to the present day for eight major OECD economies. Focusing predominantly on non-housing structures, the Kalman filter is used to decompose the series into trends and cycles. It was found that building cycles exist in all countries, though with considerable variation. Comparisons of volatility between countries and between the different types of fixed investment are made. The long-run share of fixed investment in structures as a proportion of national income is investigated. Consideration is given to whether international building investment trends are coincident, and an analysis made of the long-term correlation between structures investment cycles.
n this paper, we analyze real estate cycles in the Lithuanian housing market. The literature has shown that in the context of the Lithuanian real estate examination, researchers employed mostly a formal turning point analysis or descriptive statistics to examine the cyclical nature of the Lithuanian housing market. An econometric assessment of the national real estate market is therefore called-in. We employed the Hodrick-Prescott filter to de-trend selected series. The findings indicate that Lithuanian house prices follow a three-year cycle. These results are however time-dependent, whereas fluctuations in the Lithuanian housing market vary. Our insights into the cyclical activity in the national housing market can be usefully employed by real estate market participants.
The purpose of this study is to analyze the impact of land-use and population change in rural area by new expressway. Chungbu expressway constructed in 1987, going through the south area of Kyunggi province from Seoul, was selected as a case expressway, and also 2 cities and 18 subdivisions of county in its surrounding area, as a case study area. To analyze the change characteristics before and after the construction, land-use maps of 1986 and 1996 were collected, including the census data for the years in cities and counties yearbooks. Remote sensing technology was applied to classify the land-use maps with six types of land use. Geographic information system was also used for spatial analysis, such as the land-use and accessibility changes. A 5 km buffer zone from interchange of the expressway showed about two times increase of urbanized built-up area than a 5 km buffer zone from the expressway. Accessibility from Seoul and cities was improved in most areas, which is accessing to Seoul through existing Youngdong expressway. Ten rural areas showed increased population with accessibility of average 52 minutes to Seoul and 19 minutes to cities, while eight areas showed decreased population with average 73 minutes to Seoul and 35 minutes to cities. This shows that the threshold value, which is time distance to Seoul and cities for population increase or decrease, one and half hours, respectively. Urbanized area was increased in most areas, even in population decrease areas, so this indicates that there are thinning rural areas, increasing urbanized area while decreasing population.
Administratively, before the year 2000 Karachi was distributed in five districts. Afterwards, it was divided into eighteen towns. It gave
rise to a great controversy that whether the 5-district system is administratively better or the 18-town system. A study of the population-area
distribution of the Karachi city with reference to 5-district system and 18-town system is the basis of this study. Hoover Indices (HI) and Lorenz
Curves (LC) are particularly utilized for the purpose. Comparing the outcomes we will be in a position to determine that which system is
scientifically better. It is found that the patterns for 18-towns are better than the 5-district patterns. The town wise population density can be
determined with the help various models. Spatial-Interaction Gravity Models (SIGM) and FGDM are utilized. These models are based on the
selection of a suitable pivot point. Pivots can be selected on the basis of being either most dense or less dense. The system is studied with the
help of both the approaches and the results are compared to conclude that selecting the least dense town as the pivot leads to better results.
Spatial Interaction Model (SIM) is another model which is developed here to determine the population density distribution. It also utilizes the
least pivot. It generates a distance gradient coefficient that determines the probability of change of the population density of the towns. SIM
results confirm the results obtained by applying FGDM. For this purpose Spatial Interaction Logistic Model (SILM) is utilized.
In light of recent events in the world economy it is becoming extremely difficult to ignore the existence of cycles in the general business sector, as well as in building and property. Moreover, this issue has grown to have significant importance in the UK, as the UK property market has been characterized by boom and bust cycles with a negative impact on the overall British economy. Hence, a better understanding of property cycles can be a determinant of success for anyone working in the property industry. The paper reviews chronological research on the subject, which stretches over one hundred years, characterizes the major publications and commentary on the subject, and discusses their major implications. The particular emphasis is on research methodologies and methods, data and data analysis techniques employed, and outcomes of these studies. The review also considers the literature on how regular the cycles are. It identifies four major and four auxiliary cycles, discusses their general characteristics, and key forces that produce them. The concluding remarks summarize the discussion and present key findings. Future planned research will discuss whether analysis of historical data and identification of the key external and internal forces in commercial property that produced the sequence of cycles, enables extrapolation from this historic data to reliably predict the future of the UK property market performance with accuracy.
This study contains an examination of the cyclical characteristics of Singapore commercial real estate and property stock prices and their frequency space correlation for the period 1975–1998. The approach taken is univariate spectral analysis and cross-spectral analysis. Results of the individual spectral indicate that the prices for the commercial real estate and property stock exhibit cyclical patterns. The full cycle is approximately eight years for both markets. Evidence from the coherency and cross-amplitude spectra suggests significant price comovement between the two markets in the long run. In addition, the phase estimates of the series imply a property stock lead of up to 1–3 quarters in the short run. However, this lead time eventually disappears in the long run.
In their treatment of development, researchers in the property sector tend to adopt positivist methodologies which emphasise the application of rational decision-making techniques by utility-maximisers within a mainstream economics paradigm. While considerably increasing our understanding of the development process, such research offers a partial view of its subject from a particular perspective. Recently, alternative methodological and theoretical approaches have evolved which strive to understand the wider institutional context of the development process. The paper critically reflects on these institutionalist approaches in order to develop a research framework which blends economic and social analyses of property development processes. The paper draws upon (re)interpretations of the authors' recent research to address the following points. First, that the economic structuring of development is a product of and, in turn, affects social processes. This is illustrated by a consideration of the price mechanism in the property market. Secondly, that social structures and processes are as important as their economic equivalents in 'explaining' property development. This is addressed by a discussion of the ways in which recent shifts in the social organisation of the property sector are reframing the strategies of development actors, leading to new structures of property provision and use. The paper concludes by arguing for the need to develop an understanding of property development processes which combines a sensitivity to the economic and social framing of development strategies with a fine-grain treatment of the locally contingent social responses of property actors.
Using long-run data for today's advanced economies, the pattern of housing investment is examined from the 19th century to the present day. Housing investment is shown to be subject to long cycles, the most pronounced of which were in the post-1945 era. Since 1970 the trend of housing investment has been flat for most countries considered, and falling as shares of national income. Fluctuations in housing investment demand may have helped to stabilise the world economy during the 1950s and 1960s but since then have switched to become a destabilising factor.
Outline The interaction between the property market cycle and the development industry at the local level is examined. The Sheffield office market is used as an example. Market trends result in limited periods of development profitability. Developers therefore face a difficult operational environment and adopt different tactics to cope with it. Some are more successful than others. The implications for the development sector and for the local economic development process are considered.
Modelling of UK commercial property development has been a growth industry in recent years. This paper examines the time series characteristics of the data on commercial output and considers the fruitfulness of modelling strategies with respect to it. The models estimated here make sense, and highlight the importance changes in national income, property values and construction costs in determining changes in commercial output. However, several technical and theoretical reasons suggest that they are likely to have poor forecasting ability. One reason is the data on commercial output have a low volatility, while the orders data are of poor accuracy and so are a bad substitute. Doubt is expressed over whether future econometric models can improve on this situation.
This study aims to develop a model to analyze urbanization in rapid-growth areas according to time distances from multigravity centers and to simulate the level of urbanization (urban land ratio) by the variation of spatial opportunity of accessibility. The multigravity centers reflect the settlement system of center places, such as big cities, middle cities, and rural areas. The time distance by car travel was used to represent the accessibility. The spatial opportunity for attractiveness was calculated by a linear summation function that has the quantified values of multiple criteria and their weighting values as a type of distance-decay function. For the south area of Seoul, Republic of Korea, the model parameters were calibrated using data sets from 1985, 1990, and 1995 by the nonlinear optimization method, and the latter two data sets were used to verify the simulated values of the former two. The application results show high correlation between observed and simulated values.
This paper examines the relationship between investment in built structures, economic growth and economic cycles in the UK from the middle of the 19th century and relates its findings to the development of London. A rising price of built structures relative to investment in equipment has existed throughout virtually all of the time-period. This, it is argued, has encouraged suburbanisation. In addition, a long-term rise in demand for housing is putting additional pressure on living space in the city. London has benefited however from the high level of building investment in modern economies, particularly in attracting key building-intensive activities, like financial services. Long-phases of building activity are shown in the data and they are argued to have a destabilising effect on London's economic growth. These relationships between the relative price of investment goods, long phases of higher and lower activity in their provision and the London economy, reinforce the need for a London-wide planning authority; and, if the social returns of building investment are greater than the private returns, as they probably are, for public infrastructure expenditure and for subsidies for new building investment in the city.
The Frostbelt–Sunbelt shift in the US, which is thought to have accelerated during the 1970s, corresponds with recent findings that invention and innovation in the Southern and Western parts of the country have come to rival the traditional manufacturing belt. Whether research and development (R&D), a key input to new technology, shows a similar pattern is the focus of this study. It is found, that there was a shift in R&D activity to the Sunbelt during some decades, but not all, and that the manufacturing belt has maintained a slight R&D lead in the country. Still, parts of the Sunbelt rivalled the Northeast for R&D already in 1963. Thus, any national shift in the location of R&D must have occurred prior to the 1960s and before it might be thought to have happened. In the US, R&D production associates well with places that have an educated, professional, and technically specialized labor force. Those states that continue to build on these and similar techno-societal conditions will arguably be in a better position to grow.
In this paper, data and analytical techniques not hitherto employed for the purpose have been used to explore the particularities of the role played by finance capital in influencing the spatio-temporal patterning of office construction in British regions. There was little variation in the supply of long-term finance to the property sector by investment capital over the last property cycle. Investors' influence was nevertheless substantial, but was exerted indirectly via the property price mechanism. Rents, reflecting demand for accommodation from local industrial capital, set the basic dynamic of regional property markets. However, investment yields were relatively insensitive to regional variations in rental trends. The interaction of rents and yields produced a price-induced set of regional office development cycles which were paradoxically both more similar and more different. Temporal cyclical convergence contrasted with growing interregional differences in office construction. These effects were contingent upon banking capital supplying sufficient short-term debt finance to support developers' responses to price signals and upon the rented sector forming an important part of the wider office property market.
The purpose of this study is to analyze the impact on land-use and population change in a rural area close to the construction of a new expressway through location modeling with spatial interaction analysis. Chungbu Expressway, constructed in 1987, going through the southern area of Kyunggi Province from Seoul, Republic of Korea, was selected as a case expressway, and two cities and 18 county subdivisions in its surrounding area, as a case study area. To analyze the change in characteristics before and after the construction, land-use maps of 1986 and 1996 were collected, including census data for the years in cities' and counties' yearbooks. Remote sensing technology was applied to classify the land-use maps with six types of land use. A geographic information system was also used for spatial analysis, such as land-use and accessibility changes. A 5-km buffer zone from the tollgate of the expressway showed about two times the increase of urbanized, built-up areas than a 5-km buffer zone from the expressway. Accessibility from Seoul and cities was improved in most areas, which is accessing Seoul through the existing Youngdong Expressway. Ten rural areas showed increased population with an average accessibility of 52min to Seoul and 19min to cities, while eight areas showed decreased population with an average of 73min to Seoul and 35min to cities. This shows the threshold time, which is the time distance from Seoul and middle cities, for population increase or decrease (66 and 33min, respectively) by optimizing the spatial interaction model developed empirically in this study. Urbanized areas were increased in most areas, even in population decrease areas. This indicates that there are thinning rural areas and increasing urbanized areas while population decreases at the same time.
A critical aspect of understanding changing urban structures in the late 20th century revolves around changes in urban transport generally and commuting specifically. How will the continuing deconcentration of large urban areas affect the links between work and residence and how will the changing spatial arrangements of large urban areas affect congestion and in turn the form of the 'new' urban region? The debates about future spatial forms are examined within the context of a case-study of the Randstad and the Southern Californian urban region. The tentative conclusions of the empirical analysis point to a strengthening of policentric structures. At the same time, increasing affluence, greater dependence on the automobile (even in the Netherlands) will in the short term at least, increase congestion. Thus the commuting paradox, shorter commutes but increasing congestion, is a function of urban spatial restructuring and the preference for the private car.
Attempts to describe the determinants of rent. Describes the
initial stages in the development of a regional office rent prediction
model which uses readily available data and should aid the investment
decision-making process. Rejects cross-sectional analysis, preferring
time series approaches. Formulates a spatially disaggregated model which
allows for delays between changes in user output and changes in user
demand, and which reflects the variable adjustment rate between these
two factors. Argues that the combined influence of the independent
variables in the derived equation can explain up to 97 per cent of the
variation in rent over the period examined.
Consider the post-Fordism/flexible specialisation hypothesis.
Examines how it can shed light on future changes in the property
industry. Concludes that changes in the global economy – notably
the integration of circuits of financial capital and the reorganisation
of manufacturing industry – have potentially significant impacts
on the property market.
The property market is subject to not one but several cyclical influences of different periodicity. These only combine to produce major speculative building booms when there is a particular convergence of market conditions involving strong demand growth, supply shortages and credit expansion. The recent boom and slump is the second of this type in the postwar period, and shows many similarities to that of the early 1970s, both in terms of its underlying causes and its destabilizing impact on the property market. Such a cycle is unlikely to be repeated until at least the middle of the next decade.
This paper examines the impact on the commercial property markets of supply-side policies introduced by the UK Government between 1979 and 1990. It focuses on the structural changes made to the capital and land markets and investigates the long-term implications of these changes for the supply of commercial space. Supply-side policies implemented during the 1980s are examined and market evidence in the form of planning, construction and rental data is used to establish market fluctuations over the same period. The research clarifies the distinction between the short-term impacts and the long-term structural changes in the land and capital markets arising from those supply-side strategies. It examines in greater detail the significance of the structural changes to the future performance of the commercial property markets. The conclusions relate to the importance of these structural changes to any analysis or monitoring of activity within the commercial property markets from the 1990s onward. The potential impact on the commercial property markets of any further structural changes to the captial and land markets needs thorough investigation and should not be underestimated.
The paper summarizes the results of an EEC-sponsored research project on the impact of new technical devices likely to lead to the generation of new types of service activities. A series of policy initiatives are proposed as the basis for a European innovation strategy designed to maximize the benefits of the new technological revolution in services.
The paper examines the main features of the office market and the office development process in London, which is not only the largest office centre in the UK, but also in Europe as a whole. The discussion starts with the main factors which have contributed to the growth of London as a national and international office centre, concentrating in particular upon the main sources of demand for new office building. The cyclical nature of post‐war office development in London is described, illustrated by an examination of the relative trends in investment and development returns from new offices. The impact of the supply cycle upon the organization and funding of development, and upon its scale and location are then discussed, followed by a brief review of the impact of planning policy upon the office market. Finally, there is a review of the current situation at the end of the third post‐war cycle, and an assessment of the likely impact of new office technologies upon the demand for office space in the next development cycle during the late 1980s.
The paper sets out some foundations for a theory of innovation in service industries, and indicates the role that such innovation may play in the generation of growth cycles. The discussion starts with the origins of a major new technology in the capital goods sector, and its subsequent development according to the normal product cycle theory. This is followed by a consideration of the transmission process by which the new technology is taken up in user industries within the consumer goods and services sector. A “reverse product cycle” is then proposed to describe the innovation process which takes place in user industries such as services, once the new technology has been adopted. This cycle starts with process improvements to increase the efficiency of delivery of existing services, moves on to process innovations which improve service quality, and then leads to product innovations through the generation of new types of services. Finally, the existence of two out of phase innovation cycles in the capital and consumer sectors, deriving from a technology transmission process which causes disequilibrium in technical progress between the two, is put forward as a mechanisms helping to create the long wave fluctuations in economic development associated with Schumpeterian technological revolutions.
The paper is a report on the second stage of a project designed to investigate the incidence and causes of postwar building cycles in the British economy. In the first stage spectral analysis was used to identify the main postwar cycles in each sector of building (industrial, commercial, and residential), and the second stage has been concerned with the development of a theoretical framework suitable for dynamic modelling of these cycles. The modelling framework incorporates both an endogenous cyclical mechanism of the type used in accelerator models of investment, to reflect the long production lags in building activity, and the exogenous influence on the building cycle of variations in economic factors such as gross domestic product and interest rates. The modelling technique used to formulate the theoretical framework is based upon a transfer-function model of the Box - Jenkins type, incorporating an error-correction mechanism to reproduce the short-run dynamics and long-run equilibrium relationships between the variables. The third stage empirical results of the model-building exercise are reported in a separate paper.
In this paper are presented the results of the first phase of a project sponsored by the Economic and Social Research Council to analyse the incidence and causes of building cycles in Britain; five major sectors of construction are covered -- private industrial, private commercial, private housing, public housing, and other public building. Spectral analysis, supplemented by turning point analysis, is used to identify the main postwar cycles in each sector, and to measure their relative phasing and severity, distinguishing short 4 - 5-year demand cycles' associated with the business cycles from longer 'supply cycles' of up to 9-years duration. As the different sectors of building are aggregated, these shorter cycles tend to be smoothed out, revealing a dominant postwar long swing in building activity. This is then compared with previous long swings in the pre-1914 and interwar periods, each of which is associated with successive waves of urbanisation in Britain since the mid-19th century.
The author proposes a simple theoretical model of the accelerator type which helps to explain some observed characteristics of the pronounced office-development cycle in Britain. The British economy is currently experiencing its third major postwar cycle, the previous peaks of development activity having occurred in the early 1960s and early 1970s, the latter during the famous 'property boom'. The author begins with a summary guide to the literature on building cycles, examining the various exogenous factors which have been proposed to explain these cycles and identifying a crucial endogenous causal factor, which is the long production period between new building orders and completions. This delay is incorporated into an accelerator model of the development process, yielding a second-order difference equation which generates cyclical fluctuations around an equilibrium growth path. The behaviour of the model is then tested using typical values of the main parameters, and compared with the results of previous empirical research on the office-development cycle which has focused on the interaction of the user demand, investment demand, and development supply of new building.
The article analyzes the cycles of total construction and its major sectors after adjustment for the varying growth trends of real expenditures. Fluctuations in GNP and business fixed investment serve as "reference cycles." The findings elucidate the relationships between cycles in total construction and its components and between construction and GNP cycles. Special analyses are devoted to the movements of public versus private construction expenditures and to the "countercyclical" behavior of residential building. The paper shows increasing volatility of private construction over time and substantial inter-sector differences in average volatility. Although public policies have a strong potential influence on the cyclical performance of construction, the complexities revealed in the study indicate severe problems in attempts to stabilize its output. Copyright American Real Estate and Urban Economics Association.
Long cycles in residential construction
- A F Burns