Martin Rhisiart, Professor of Strategy and Innovation at the University of South Wales, argues that improving the economic prospects of Newport is best achieved through an effective City Region approach.

"If Newport was a region of Cardiff it would do better economically. Many people won't like these words but I believe this started a long time ago - size matters. If I was king, I would go [from] Swansea to Newport and I'd circle it and include the valleys. I'd say that's Cardiff.”

The words of Sir Terry Matthews in March 2013– repeated at a recent M4 Business Network Event at the Celtic Manor in September – point to the issues of critical mass and external perceptions.

During 2011-12, I served as a member of the Welsh Government’s Task and Finish Group on City Regions. One of our main aims was to establish whether a City-Region approach to economic development would improve the economic performance of Wales.

The report of the Group makes a reasoned case for supporting two City Regions in Wales – what have become the Swansea Bay City Region and the Cardiff Capital City Region.

But, what does that mean for Newport?

Over all, the past decade can be characterised as one of relative economic decline for Newport. This is not to say that all is gloomy – there are many positive signs and opportunities.

However, levels of GVA (gross value added - the main indicator of economic growth) have declined in Monmouthshire and Newport from levels slightly above the UK average in 2005 to 85.8 per cent of it in 2013. During the same period GVA levels for Cardiff and the Vale of Glamorgan have remained around the UK average.

If Newport’s performance is benchmarked against that of other cities in the UK (using research by the Centre for Cities), it does not compare favourably.

There were 6,500 fewer jobs in Newport in 2013 compared with 2004 (-9 per cent), with 6,200 fewer private sector jobs (-11.8 per cent).

This places Newport 61/64 and 59/64 of UK Cities in these two important indicators.

During the same period, there was a very modest growth in the number of businesses in the city (+3 per cent or 105 businesses), which placed Newport 60/64 in the UK rankings. In other words, there isn’t a strong surge in entrepreneurial business growth in Newport.

Cardiff’s performance over the same period is better (+11 per cent), which placed it 37/64 in the UK.

Widening our lens, research by the McKinsey Institute reveals that the Top 600 urban centres in the world (with 20 per cent of the population) produce 60 per cent of global GDP. The same research forecasts that this trend is likely to continue but we will see new entrants from Asia in the Top 600 urban centres.

This reinforces the point that cities are vital. Successful cities are key engines of economic development around the world. Scale and critical mass are important, as are the external perceptions of employers and investors.

In Wales, our cities generate only 33 per cent of our income/wealth – the lowest level of all UK nations and regions.

Improving that performance is a top priority for Wales and the coordination of efforts will be crucial.

For Newport, that means playing a very important role – alongside other local authorities in South East Wales – in developing a stronger Cardiff Capital Region.

Improving the planning system and connectivity are important elements in a City Region approach, helping to drive investment.

In February 2015, the Cardiff Capital Region produced its first major output – its framework for ‘Powering the Welsh Economy’. It focuses on four key themes: connectivity, skills, innovation and growth, and identity.

Newport has a number of opportunities and seeds for growth – that are aligned with these themes - including:

• Transport and proximity to larger urban areas: Newport is part of a strategic transport corridor, and is close to important urban hubs in Cardiff and Bristol. This should be considered an opportunity, particularly in regenerating the urban centre of Newport.

• Hi-tech engineering and innovation: the Newport area is home to many innovative high tech and engineering firms, such as SPTS, Airbus Group and IAC. There is comparatively little awareness of this. Can Newport develop itself into the recognised high-tech centre of Wales?

• Big data opportunities: Newport is home to two important UK public bodies - the Office for National Statistics and the Intellectual Property Office. Big data offers huge business, economic and social potential. With movements towards more open use of Government’s data sets, Newport could be at the vanguard of the big data revolution.

• Major events: the Celtic Manor is already an internationally recognised host of major events. With the proposed international convention centre there, the scale and scope of the opportunities are much greater. Embedding this – and capturing the benefits – in the city of Newport and its surrounding areas should be a major objective for those steering the project.

• Big development and organic growth in the city centre: the opening of the Friars Walk development is a major milestone in the regeneration of Newport. Encouraging and supporting independent stores and local businesses is important for reaffirming the sense of place in Newport. Creating this vibrant mix is an important attractor.

• Skills and learning: the University of South Wales is a major institution in Newport. The City Campus on the banks of the River Usk has become an icon of the regeneration of the city. The further development of the University in the heart of Newport will strengthen the position of Newport as a city of learning and knowledge – not just in attracting young talent but also in serving the business and social needs of the area.

For Newport, the experience of the past decade signals some key economic challenges.

However, it also has assets and opportunities that can support the renewal of the economic and social fabric of the city. The transformation is unlikely to happen in isolation – the collective wellbeing of South East Wales can be best served from strategic collaboration through an effective Cardiff Capital Region approach.