The IPL newsletter: Volume 15, Issue 303

INTRODUCTION

This newsletter is published by The Innovation Policy Lab at the Munk School of Global Affairs, University of Toronto, and sponsored by the Ministry of Research and Innovation. The views and ideas expressed in this newsletter do not necessarily reflect the views and policies of the Ontario Government.

Cluster Atlas of Canada

Greg Spencer, Local IDEAs
This report identifies where the major industrial clusters exist within Canada and provides indicators of their relative performance. The purpose is to provide a comprehensive overview of the economic landscape of the country and map areas of strengths and weakness in order to inform decisions concerning allocation of public resources. A well-established methodology for identifying and mapping clusters is derived from the work of Spencer et al (2010). The main data sources are the 2011 National Household Survey and supplementary data acquired for the project.

The Competitiveness of Cities

World Economic Forum
Cities have been the engines of productivity and growth throughout history, and will be essential to the future growth and competitiveness of nations and regions. This is especially true at a time of massive and rapid urbanisation in emerging markets; hence, the focus on the competitiveness of cities. In this report, a four-part taxonomy of city competitiveness was developed, including (1) institutions, (2) policies and regulation of the business environment, (3) “hard connectivity”, and (4) “soft connectivity”. This has been applied to a “big basket” of 26 cities, with a mini case study on each; and to a “small basket” of seven cities, each of those with a full case study. The report also identified six global “megatrends” especially relevant to cities (1) urbanisation, demographics and the emerging middle class; (2) rising inequality; (3) sustainability; (4) technological change; (5) industrial clusters and global value chains; and (6) governance. Led by urbanisation, they condition the greater operating environment for cities around the world. It is up to cities to take advantage of these megatrends, as well as to mitigate negative forces such as rising inequality, pressure on natural resources and the environment, and a diminution of trust in public authorities.

General lessons on city competitiveness, elicited from the case studies, are presented in the following checklist that includes “how-to-reform” and “what-to-reform” elements:

1. Institutions (how to reform) – governance or decisionmaking framework

Leadership and vision – A clear, far-sighted view of where cities should head, and a single-minded, practical will to ensure they get there are key – showing the power of mayors as “chief executive officers” (Singapore; Dubai, United Arab Emirates; Bilbao, Spain; Medellin, Colombia; and Surat, India are stellar examples). But negative examples of poor leadership, for example Detroit, USA, show what to avoid.

Institutional strength – Singapore highlights the importance of gradually building up strength of institutions through successive development phases. However, Monterrey, Mexico and Cebu, Philippines, point to fragile institutions that can endanger existing gains as well as future competitiveness.

Decentralization, coordination and collaboration – Cities should take maximum advantage of decentralizing power (successful examples are Bilbao; Ningbo, China; Dubai; Penang, Malaysia; Busan, Republic of Korea), coordinating across jurisdictionswhere necessary (as in the city-region of Bilbao-Basque Country), and promoting publicprivate collaboration (as in Bilbao; Guadalajara, Mexico; Medellin; Wroclaw, Poland).

Windows of opportunity – Cities should look out for opportunities, often during a political or economic crisis, to push through the required number of decisive reforms (as Singapore and Surat have shown, and as Detroit has the chance to do at present).

2. Policies and regulation of the business environment

(what to reform)

Getting the basics right – Stable and prudent macroeconomic policies, efficient and simple taxation, a flexible labour market, openness to trade and foreign direct investment, simple and transparent domestic business regulation, a safety net that protects the most vulnerable – these are the primary lessons for good public policy. One of the important takeaways from the Singapore case study is to keep policy simple for producers, consumers and citizens. While the case studies have several other examples of getting the basics right, plenty examples exist of getting them wrong.

Developing own foreign economic policies – Cities should create their own policies on trade, foreign direct investment, tourism and attracting foreign talent, and advance these globally as far as possible (as in Singapore; Dubai; Manisa, Turkey; Hyderabad and Ahmedabad, India; and Ningbo).

3. Hard connectivity (core physical infrastructure)

A mix of planning and organic growth is needed – These are complements, not substitutes. The borough of Manhattan in New York City is an excellent example with its street grid and “room for expansion”. Both overplanned (e.g. Brasilia, Brazil; Chandigarh, India; many cities in China) and underplanned cities should be avoided.

Big hard-connectivity gaps should be plugged – Most emerging-market cities still have such gaps; closing them will require massive investments to avoid barriers to productivity and growth.

Urban density is preferable to urban sprawl – This includes“building tall” in city centres, which is good for business, innovation, the arts and culture, and the environment. Hong Kong SAR and Singapore are great examples of urban density, as is Chicago, USA in recent years. Mumbai, India is a glaring counter-example of very poor urban planning. Chinese cities could also do with more density and less sprawl.

Intelligent choices in infrastructure – Examples include Ahmedabad’s public transport system, Singapore’s electronic road pricing and water treatment systems, Busan’s port and port logistics, and Hong Kong SAR’s mass transit system.

4. Soft connectivity

Soft connectivity, the city’s social capital, is as important as hard connectivity in the 21st century’s knowledge economy – While soft and hard connectivity are mutually reinforcing, soft connectivity is also about supporting an open society in the city, which spurs ideas, entrepreneurship, innovation and growth.

Education is the ultimate soft connectivity – US cities such as Boston, Pittsburgh and St Louis have escaped post-industrial decline and specialized in knowledgeintensive niches by capitalizing on their strengths in education. In Asia, Singapore has become the continent’s education hub.

Cities need to facilitate digital infrastructure – This will support human-computer interfaces that empower individuals and take full advantage of hard connectivity. It has the power to significantly increase personal and organizational productivity.

Making cities more liveable must be a higher priority – This means improving the quality of urban life, especially for upper-middle- and high-income cities. Good examples are Wroclaw; Leipzig, Germany; Busan; and Curitiba, Brazil. Singapore and Dubai, as global cities, appreciate that they have to expand and diversify their educational, cultural and recreational facilities to attract top global talent.

Soft connectivity failures can also be instructive – Examples include Chandigarh; Lagos; and even Chicago, USA’s metropolitan area (Chicagoland).

In conclusion, four observations can be made:

1. Successful cities are flexible and adapt quickly to changing conditions.
2. The taxonomy is one of interactive parts, not of elements in isolation. The important factor is the interaction of all four parts, with the use of new technology as only one example.
3. The right mix of priorities must be tailored to specific conditions and stages of city development. Obviously, priorities for a Western city with a stable population and facing sluggish growth, unemployment and ageing demographics will be quite different to those of an emerging-market city with lower income levels, high growth potential and a rapidly-expanding population. Cities have big differences in their natural and policy endowments, and hence in their conditions for reform.
4. Reforms at the municipal level are usually more feasible than at the national level, even when they seem impossible in national capitals. Urbanization trends enlarge these possibilities. Cities should grasp this opportunity, experiment with new rules and put reforms on a fast track.