THE TRADITIONAL rivalry between Glasgow and Edinburgh is costing the economy millions each year, with experts warning that unless the two cities learn to work together, Scotland risks missing out on a host of money-spinning opportunities.

For decades, the accepted wisdom has been that cities need to compete to be successful. According to a major new report set to be published on Wednesday, however, Scotland's big two must get their acts together or suffer the consequences.

"Both Edinburgh and Glasgow, acting independently, can achieve some success, but this pales beside what they could do if they worked together," said John Lewis's managing director Andrew Murphy, one of a host of big business names throwing their weight behind the Glasgow Edinburgh Collaboration initiative.

"Only by working together can both cities properly play their role as Scotland's economic engine and harness the full potential of Central Scotland and beyond," he added.

Launching what is to be an ongoing campaign to foster a better working relationship across the central belt, this week will see the unveiling of a specially commissioned report. "Economic Collaboration Between Neighbouring Cities" highlights the many benefits of co-operation, and is expected to inform much of the campaign.

Following a comprehensive investigation into the benefits enjoyed by many collaborating cities worldwide, report author Greg Clark insists that many of their experiences hold useful lessons for Scottish policymakers.

"I cannot provide an exact figure for what the lack of co-operation is costing Edinburgh and Glasgow, but it is very significant," he said.

"In the past five years, Edinburgh and Glasgow have experienced growth constraints. Edinburgh clearly begins to overheat very quickly during a prolonged period of growth with the housing market and the labour market becoming very tight. Growth in Edinburgh is constrained not only by its size but by the limitations in its connectivity."

The situation is very similar in Glasgow, according to Clark. Collaboration would allow both cities to prolong their growth throughout each cycle by lending each other capacity and much bigger labour, housing and investment markets.

The collaboration between the Oresund region of eastern Denmark and southern Sweden shows how investment in infrastructure projects has improved connectivity and delivered long term benefits.

The Oresund Link was built in 2000 for £2.5 billion and bridges the strait between Copenhagen and Malmo. The effect has been to boost both GDP and the amount of foreign direct investment (FDI) in the region. In 2004, Paris and London were the only European urban areas to attract more FDI.

The experience of Vancouver and Seattle shows how hosting international events can act as a catalyst for collaboration between cities. Vancouver is to host the Winter Olympics in 2010 and this has acted to spur collaboration on a host of other issues.

Traffic handling and facilitation of business relations are the two main areas of co-operation at present. But the Pacific Northwest region also aims to market itself as "an excellent two-nation destination" and joint tourism marketing will be encouraged.

This example may be of special interest to Scotland two largest cities if Glasgow succeeds in winning its bid for the Commonwealth Games.

The experience of Milan and Turin in Italy shows the benefits of co-operation in higher education.

Students no longer restrict themselves to studying in their native countries. The market for education has opened up internationally. If universities can work together, as they have in Milan and Turin, they can offer a diverse and interesting package that acts as a real magnet for the region.

The Glasgow Edinburgh Collaboration initiative has garnered a great deal of support from businesses, retailers and cultural organisations.

One enthusiast is Manchester United manager Sir Alex Ferguson. He said: "An initiative to get Glasgow and Edinburgh collaborating together is great for Scotland. As a boy growing up in Govan, Edinburgh seemed a world away, never mind 46 miles. Back then I never thought I would see the day when the two cities would work together.

"A lot has changed since then, though, and an initiative that aims to bring Edinburgh and Glasgow closer together by developing faster transport links and partnerships in sectors like tourism will benefit the whole of the country."

CBI Scotland also backs the aims of the Glasgow Edinburgh Collaboration initiative. Iain McMillan, the director of CBI Scotland, said: "By working together, Scotland's capital and largest city can make a disproportionate contribution to further improving economic growth in Scotland.

"The initiative's three core themes of improved connectivity between the two cities, a focus on key sectors and on attracting the best talent are exactly what is needed to encourage further inward investment to the region."

Clark, however, also has a word of caution for those buoyed by the report's findings. He said: "I would stress that the benefits of collaboration take time. Joint ventures in tourism, for example, can show results in one or two years. But infrastucture initiatives take much longer."

Clark points out that the Oresund Bridge was 20 years in the planning and the project to link Johannesburg and Pretoria took 10 years.

He added: "The benefits don't come overnight. This report aims to concentrate attention on the long-term agenda. Cities have to be in it for the long game."