Greg Clark

World Bank

February 2011

Strategies and Catalysts for Urban

Economic Development After the Crisis

The Agenda: Cities and Investment, City

Economic Development

The Agenda: OpenCities, London, New York,

Barcelona, Cape Town, Joburg, Toronto, Sao

Paulo, Mumbai, and ….

Today

Overview

Crisis and after

Local economies

Next economy?

Catalytic projects play in city strategic plans?

- Hosting Global Events

- Development Agencies

Local Government/Economic Development

Local development systems

Local economic leadership

After the crisis?

Recession, Recovery

and Reinvestment

“Recession, Recovery and Reinvestment:

the role of local economic leadership”

OECD LEED Programme Book

The impact of, and response, to the crisis and recession in 41 localities:

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Aarhus

Barcelona

Basel

Berlin

Bilbao

Birmingham

Brussels

Cardiff

Cologne

Glasgow

Rome

Turin

Zurich

Budapest

Prague

Riga

Warsaw

Vienna

Los Angeles

Miami

New York

Pittsburgh

Toronto

Cape Town

Beijing

Hong Kong

Mumbai

Shanghai

Singapore

Tokyo

Auckland

Hamburg

Helsinki

Lille

Liverpool

London

Lyon

Marseille

Milan

Munich

Paris

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Banking Crisis

Recession

Policy Response

and Stimulus

Public Finance Crisis

Global Economic

Shift Cities in

the Crisis

Four key areas of concentration observed:

New economic strategies: Focus around distinctiveness, high

skills, talent attraction and innovation

New investment strategies: New and innovative approaches to

partnering and delivering with the

private sector

New partnerships with higher

tiers of government: New long term working relationships

with central government in particular

based on more flexibility and local

autonomy

New focus on efficiency: Drive for improved quality at lower costs

Towards long term recovery and reinvestment

The new world city horizon

A larger, more diffuse network of world cities, with a reorganised basisfor competition

BUT High value-added knowledge-intensive business more critical than ever

Cities need access to finance capital, accounting/legal services, insurance,marketing, advanced logistics to meet supply chain functions

Expertise AND Attractiveness: The challenge for established world cities

Improve quality of life• Reduce congestion (Paris 2006-2030 master plan for sustainable mobility, London

congestion charge, Tokyo 3 loop roads by 2015)• Affordable Housing (New York $7.5bn New Housing Marketplace Plan up to 2013)

Improve governance and establish networks of partners Integration of governance capabilities across national and local scales, to provide

framework of collaboration for city and partners (Greater Paris initiative andLondon’s mayoral system post-2000)

Global environmental and climate change leadership PlaNYC (2030) , the 10-year plan for a Carbon-Minus Tokyo

Adopt single tightly co-ordinated brand platform for international promotion (‘Barcelona GLOBAL’ international positioning programme, and NYC Marketing)

Use land-use powers to drive social and regional territorial equality Strategies to counter unequal development (Paris regional SDRIF plan) Commitment to care for aging society (Tokyo model for sustainable anti-agist society)

Power AND openness: The challenge for emerging world cities

Openness to international populations and ideas are critical for success of powerfulemerging world cities. Many are working on a range of internationalisation strategies:

• Improved business climate• (Toronto Agenda for Prosperity, Mumbai Transformation Programme, Miami International Trade

Consortium)

• Ambitions to become a regional/international talent capital• (Hong Kong’s ‘Asia’s world city’ positioning, Singapore’s ‘Global Schoolhouse’ campaign, Sao Paulo’s

study abroad initiative)

• International event-led marketing and infrastructure overhaul• (Cape Town’s leverage of 2010 World Cup, Auckland’s 2006 City Events Strategy)

• Investment in and promotion of cultural and recreational qualities.• (Singapore’s ‘Global City for the Arts’ branding and Renaissance City Plan, Louvre Abu Dhabi)

• Generating international institutional and organisational presence• (Turin’s attraction of EU/UN bodies)

Embrace the next economy? New cycle

features.......

• Productivity rather than consumption.

• Distinctive rather than „copying‟.

• Specialisation in knowledge-led activities.

• Entrepreneurship and Innovation.

• Orientation towards growing markets.

• Human capital, Talent, Openness,

• Quality of life and Quality of place.

• Green economy, Resource efficiency and Low carbon.

• Leadership rather than Government......

• Assets rather than cash.....

Lessons from N America, lessons from Europe.

Catalysts

Hosting global events

Development Agencies

Global Events

EXPOs, World Cup, Olympics, Festivals.

Who is now bidding and hosting?

Catalysts with multiple benefits.

Alignment and acceleration of city plans.

Good planning and management of benefits and leverage is essential.

Influence public investment cycles

Global Events and Local Development

“The Urban Investment Opportunities

Of Global Events” (July 2010)

Previously held events

• Barcelona, Summer Olympic Games 1992

• Paris, FIFA World Cup 1998

• Lisbon, EXPO 1998

• Turin, Winter Olympic Games 2006

Planned events

• London, Summer Olympic Games 2012

• Glasgow, Commonwealth Games 2014

• Milan, EXPO 2015

Events being considered

• Amsterdam, Summer Olympic Games 2028

Global Events and Local Development

"Local Development Benefits from

Staging Global Events” (2008)

• EXPO

• Petroleum Congress

• City of Culture

• Summer Olympic Games

• Winter Olympic Games

• FIFA World Cup

• Americas Cup

• G7 & 8 Summit

• EU Summit

• Earth Summit

Tensions

i. Existing strategies and plans v new opportunities

ii. New start or accelerator?

iii. Place improvements v social and economic outcomes

iv. Awarding bodies v Host bodies

v. Purpose v benefits

vi. Direct v indirect impacts

vii. Inclusion v exclusion

viii. Short term v long term

ix. Skill and leadership v lack there of

x. Good luck v bad luck

Sciencewww.citiesandregions.com 18

The right event?

The benefits of bidding

Developing a clear and effective legacy

Breadth of legacy benefits:

Visitor Economy

Transport and urban infrastructure

Cultural infrastructure

Sporting infrastructure

Visible legacy

City image, marketing and positioning

Business interest and investment

Science, Research, Education, Innovation.

Managerial and events strategy

development

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Developing a clear and effective legacy

Depth of legacy benefits: (+ 1 to + 10 years)

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Developing a clear and effective legacy

Events help overcome problems that cities have

Investment Failure: leverage

Market failures: stimulus

Co-ordination and capacity failures: governance dividend

Information failures: communication opportunity

Raising civic ambitions and expectations. Shaping an investment market for several business cycles.

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Case Study: Cape Town World Cup 2010

Infrastructural legacy – $2 billion investment in 3 years

16.5

hectare

Green

Point Urban

Park

Upgrade of key

interchanges on

highways

connecting the

Central City: eg

Hospital Bend -

$40 million

Upgraded

rail

network

($65 million

upgraded

CT Station)

First phase of

new Integrated

Rapid Transit

System,

including

connection to

CT airport.

Case Study: Cape Town

Impact on business

•Tourist industry: 20-25% growth during World Cup; lessons from organising

unique and authentic Cape Town visitor experience

•Stronger Cape Town profile and brand = enhanced business branding and

marketing

•Future leverage as an event, conventions and festival city

Impact on governance

• Enhanced citizen participation - improved communications with Central

City stakeholders

• Enforced cooperation: Govt departments, city agencies and private

companies learning to work more closely together

• Skills development: negotiating with FIFA and national government,

planning and coordinating diverse work-streams, issuing complex tenders,

managing multiple contracts, up-skilling construction industry

• Long-term planning - impetus for City Development Strategy, Central City

Development Strategy and Creative Cape Town (bid for World Design Capital

in 2014)

Case Study: Johannesburg World Cup

2010

Urban regeneration

The Ellis Park Precinct - $15 million City

investment, $55 million private investment

• new public square, new park

• Upgrade of commuter train station

• New 5-a-side soccer pitches for children

• release of public land made available for housing investment

Nasrec Precinct (between Soweto and

Johannesburg)

• New coach station, updated train station

• new pedestrian bridge linking divided areas.

• public land holding released for housing

investment in 2010

Case Study: Johannesburg

Transport modernisation

Bus Rapid Transit system

• runs from Soweto into inner city

• Speed of funding and development

directly linked to WC

• boost for residential and business

investment in low-income areas

Gautrain

• South Africa‟s first fast inter-city

commuter train, between Jo‟burg,

Pretoria and Tambo Airport.

• Biggest PPP in Africa, $4bn

• Forecast 140,000 passengers per day

Insights

The science of benefits and costs is incomplete.

Skills, capacity, institutional ability and leadership are critical, but challenging issues.

Planning and building the legacy different task from running the event.

Developing Countries have to get the match right between the event and the impact they need.

Governance benefits should not be overlooked: vertical, horizontal, public/private.

Image, Identity, Reputation, must be built through the event process and will stimulate multiple benefits. Visitor economy can leverage other opportunities.

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Development Agencies and Companies:

What are we talking about?

• A means to undertake some forms of city development in the public interest utilising a corporate structure rather than a municipal or governmental structure. Doing some of the business of local government as a business rather than as a local government service provider.

• Ensuring that Local Government has short life entities that can do complex interventions effectively with different skill sets and arrangements from those that Local Government usually has. Skills that Local government does not always otherwise have.

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Development Agencies: No single model: a wide

variety

Different starting points:Europe, North America, Asia, Latin America,

Different constitutional contexts.

Different freedoms and flexibilities.

Comprehensive, niche, sectoral development agencies.

Defined territories.

Public/Public, Public/Private, Private/Private.

Governments, Business, Trade Unions, Community.

New partners emerging: Universities, Airports, Sports Clubs, Utilities, Major Landowners…

Leads to different missions, objectives, and priorities.

Need for learning, and not copying.

Governance roles? Instrumentation roles? Joint Venture roles?

Business led development agencies?

Development Corporation Typologies

Typology

Urban

Development and

Revitalisation

Agencies

Productivity

and Economic

Growth

Agencies

Integrated

Economic

Agencies

Internationalisat

-ion Agencies

Visioning and

Partnership

Agencies

Purpose “Place drivers”

“Employment

and productivity

drivers”

“Place and

productivity

leaders”

“Place and

productivity

promoters”

“Place -shapers

and visioners”

Example

Agency

Value Added of Development Agencies

*Aggregate* Bring together otherwise disparate economic development efforts within one body

*Pace* Accelerate the local response to investors/developers.

*Scale* Enhance the magnitude of implementation, byenabling simultaneous delivery on multiple programmes andprojects by commissioning additional resources quickly

*Credibility* Enhance the reputation of local „negotiators,‟leading to external investor confidence

*Risk-sharing* Share costs etc between those partnerspromoting developments and investments

*Value Capture* Enable some of the fruits of economicdevelopment to be recycled within city budgets andprogrammes

Value added of Development Agencies

*Leverage and Capitalise* Unlock otherwise under-used assets, for example in real estate or infrastructure

*Financial Innovation* Devise wholly new sources and instruments for investment, perhaps in partnership with private financiers.

*Investment-readiness* Readying of key local projects, developing the propositions to make them more attractive to external investment.

* Efficiency* Increase efficiency in the utilisation of land, property and local investment markets

*Co-ordination* Overcome „co-ordination failures‟ arising from fragmented jurisdictions

*Promotion* Brand and market the city better, overcoming information gaps+ asymmetries to build a clearer image+ identity

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Development Agencies fostering the city

development system

i) Rowing ii) Steering

iii) Cheering iv) Coaching

Bilbao-Ría 2000: Bilbao Local Development System

NYCEDC: NYC Local Development System

Leadership and Systems

The local government role in the 21st century?

The role of Local Government...

The 4 roles of local government

i. Representation.

ii. Local Services.

iii. Regulation.

iv. Development and Investment.

What are the ingredients of the local government

role in the 21st century?

The role of Local Government...

The 4 roles of local government

i. Representation.

ii. Services.

iii. Regulation.

iv. Development and Investment.

• This 4th role is different: requires additional expertise, new

geographies and new structures and arrangements...

Acting upon markets...

Acting within markets...

Political Economic

Political geography Economic geography

Political time Economic time

Political actors Economic actors

Political money Economic money

Core challenge for local government engaging with

economies

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Framework for local development

Pre-conditions

Business

environment

& investment

Educational

and research

base

Land and

physical

infrastructure

Social/ cultural

infrastructure &

quality of life

Ecological

base

Innovation

& creativity

Industrial

structure

Business

ownership & mgt

Human

capitalConnectivity

Use of

resources

Productivity Population

Development and growth

Drivers

Global economy and

Macro-economic

framework

Feedback effectsMarkets

Governance

structure

Environ

mgt

Leadership

Leadership challenges in cities and

regions.

i. Transition to a new economy and its business requirements

ii. Speed of adjustment to post oil economy and low carbon futures

iii. Openness to international populations

iv. Rapid and dynamic growth of metropolitan regions

v. Service needs of dynamic populations and businesses

vi. Greater transparency to customers and stakeholder

vii. Investment not enough. Financial resources are finite and national public finance is slow to follow growth. Lack of investment tools

viii. Formal power and competence less than needed. City and regional governments do not control everything: boundaries, competences, division of labour with higher/lower tiers, markets, regulation/freedom

ix. National and sub-national governments guard their own space. Co-ordination challenges

Capacity and leadership issues in local

economic development

• One Plan, One Voice, One Identity

• Economic agenda across whole City Government

• Organised and demanding business leadership

• Customer orientation

• Focus on a number of top priorities, sectors, and spaces

• Expanding capacity to implement

• Range of delivery vehicles that can attract external investment.

• Problem solving and Project Management orientation.

• Strong economic agenda and partnerships

• Collaborative leadership that leads, empowers, focuses on big

picture

How does Local Government have a role in

economic prosperity?

Roles of Local Government depend upon constitutional position

of local government and existing institutional frameworks.

i. Vision setter and planner.

ii. Local dimensions of business climate.

iii. Infrastructure advocacy and management.

iv. Convenor and broker of alliances and coalitions.

v. Good local governance and services (planning, transport,

energy, education, housing, amenity).

vi. Information and communication (and branding and

positioning?)

vii. Physical capacity, and area regeneration.

viii. Local economic management (eg CBDs, Tourism areas, ports,

industrial parks, etc)

ix. Enterprise and Employment interventions.

x. National and Regional alliances and coalitions.

Bilbao Local Development System

Local Economic Leadership and the Local

Economic Development System

Economic Development

AgencyInstitutional

Effective

Local

Economic

Leadership

Private and Business Sector

And media

City Council

Citizens Groups

National

Government

Transfer between Countries 1

i. LED is not easy anywhere. Most OECD countries do it with variable success. Crisis has forced a rethink.

ii. Major co-ordination and leadership challenges are faced.

iii. Local Government has to operate well beyond it’s formal power, but can only do so if it uses it’s formal power well. Credibility.

iv. Convening and co-ordinating skills are to the fore.

v. The catalysts are seen as ways of producing this capacity. Pacing devices, partnering mechanisms.

Transfer between Countries 2

i. Many are now seeking to use or adapt tools developed in OECD countries. But the tools are not perfect and often context dependent.

ii. Most urban innovation requires creation of new tools because most governmental systems are not fit for economic development purposes.

iii. Most such tools, when they work, rest upon somewhat mature institutions, a deep pool of leadership talent, and negotiated systems. The tools don’t work on their own.

iv. The key issue is leadership talent. How it is developed and how it is recognised.

v. The bank can and does play a key role here.

Common Challenge

a. Economic Growth

b. Economic Development

c. Economic Inclusion

These are not alternatives. They need to be combined.

Common misunderstanding that we need to resolve.