The Business of Cities

The next economy and the new cycle: What will cities need to do to succeed in the next cycle?

APAC City Summit, Greg Clark, July 2011

1

The Agenda: Cities and Investment, City Economic Development

The Agenda: OpenCities, London, New York, Barcelona, Cape Town, Joburg, Toronto, Sao Paulo, Mumbai, and .

The Business of Cities

i.

Leadership and performance of cities

ii.

Cities as markets for businesses and sites of commercial innovation

Building of a global language and epistemology of cities
4

iii.

Are Cities Like Businesses?

YES

NO

Business models, Service delivery Compete in Contested markets Organisation, leadership, Governance R&D, Investment, Innovate Human Capital Brand Customers Shareholders Mayors = CEOs

Risk taking is controlled Limited choice about service offering Poor fit between institutional and market geography. Complex governance and institutional frameworks Cannot chose customers or stakeholders easily Democratic system for selecting leaders Identity and brand is substantially shaped by others 5 (eg national/state brands)

What hinders city leadership from succeeding fully?

i. ii.

iii.
iv.

v. vi. vii.

Short-termism Insufficient powers Fragmented governance Lack of spatial policies within national and federal Govs. Financial instruments dont fit Public and media cynicism Political jeopardy

Banking Crisis

Global Economic Shift

Recession Cities in the Crisis

Public Finance Crisis

Policy Response and Stimulus

New Cycle?

Combination of forces
After the crash

Rise of cities

Globalisation

Population emergency

Carbon Emergency

Reinvention of cities after the crisis OECD, UCLG, others

New economic strategies: Focus around distinctiveness, high skills, talent attraction and innovation New and innovative approaches to partnering and delivering with the private sector

New investment strategies:

New partnerships with higher

tiers of government:

New long term working relationships with central government in particular based on more flexibility and local autonomy Drive for improved quality at lower costs

New focus on efficiency:

Embrace the Next Economy? New cycle features....... LSE, Brookings, UN, others
Orientation towards growing markets. Productivity rather than consumption. Distinctive rather than copying. Specialisation in knowledge-led activities. Entrepreneurship and Innovation. Human Capital, Talent, Openness. Quality of life and Quality of place. Green economy, Resource efficiency and Low carbon.

Leadership rather than Government...... Assets and value capture rather than cash.....

Lessons from N America, lessons from Europe.

30 richest cities in the world by GDP

2005
6 new cities in the Eastern Hemisphere
Source: PwC (2009) 11

www.citiesandregions.com

2025

A Re-Balanced World With No More Core and Periphery

Human and Urban Development and Ecological Footprint by Country

HUMAN DEVELOPMENT AND ECOLOGICAL FOOTPRINT BY COUNTRY

CITIES

WELL-DESIGNED

Openness

www.citiesandregions.com

19

Top dozen cities in the 5 comprehensive indexes

# City
Global Cities Index (ATK) 1 2 4 3 8 Global Power City Index 1 2 3 4 5 Global Urban Cities of Global Competi- Oppor- Cities tiveness tunity Survey Project 1 2 4 3 8 1 6 8 14 9 1 2 3 4 7 Aggregate ranking Total +/since 2008 +1 -5 -4 -6 +2

1 2 3 4 5

NEW YORK LONDON PARIS TOKYO SINGAPORE

5 14 22 28 37

6
7= 7= 9 10 11 12

LOS ANGELES
HONG KONG SEOUL CHICAGO SAN FRANCISCO TORONTO

7
5 10 6 12 14

14
9 8 25 22 23 10

7
10 9 7 6 23 46

10
12 13 7 3 2 5

6
17 13 11 16 9 15

44
53 53 56 59 71 85

-9
0 +5 -11 +4 -28 +4

Singapore has overtaken Los Angeles Seoul and Hong Kong have both surpassed Chicago for the first time Toronto suffered the largest fall

9 SYDNEY www.citiesandregions.com

2025

Top-end performance findings, 2009-11

New York and London have maintained their global leadership in finance centre capability, business connectivity, density of talent and human capital.

The Big Apple has maintained an outstanding tourist and business brand status, recorded excellent investment attraction figures, and regained its position as world fashion capital The British capital leads for foreign investment projects and labour force productivity. Londons HE institutions continue to be the worlds top ranked cluster.

Paris and Tokyo have important strengths unmatched by London and New York.

Tokyo excels on environment measures, and typically places higher on R&D and commercialised knowledge capacity. Pariss deficit in terms of business and finance power is compensated by superior transport infrastructure,, lifestyle benefits, and innovation incubation. Both Tokyo (3rd in Monocle, 9th in GPCI, 18th in EIU) and Paris (2nd in GPCI, 16th in EIU) typically achieve high rankings for quality of life - a characteristic not shared by LON/NY.

Singapore and Hong Kong are now part of the big six

Both surpass Paris and Tokyo in finance, business environment, global firm connectivity, human capital, and smart growth. Singapore has world-leading infrastructure, and is the outstanding environmental city in Asia.
(Siemens 2011)

The pairs imitations are cultural-educational assets, innovation-led R&D, and politicalinformational influence

The rise and divide of Asian cities

Tokyo remains just ahead as overall continental leader. Japans capital is the top Asian
city in the 2010 Global Power City Index, the 2010 Global Cities Index and the 2011 World Cities Survey. In each case it is the citys research pedigree and environmental stewardship that are preserving its advantage. (Knight Frank 2011; AT Kearney 2010; MORI MF 2010)

Singapore, Hong Kong and now Seoul are emerging as three all-round finance and lifestyle hubs. This triumvirate have superior ratings for internal and external connectivity,
and are among the biggest global improvers in the Global Financial Centres Index series since 2007. (Z/Yen 2007-2010; MORI MF 2010)

Shanghai is improving its cultural and quality of life credentials more rapidly than Beijing, but both are rising from a low base. Shanghai improved its position in Cultural
Experience and Cultural Interaction metrics by 10 places since 2008. Both Chinese powerhouses are outside the top 10 Asian cities for liveability. (Mercer 2010; MORI MF 2010; AT Kearney 2010)

Many large Asian cities are NOT making global strides Delhi, Bangkok, Jakarta, Karachi all have poor business and quality of life brands. Despite much fanfare about future growth projections, Mumbai is progressing only very steadily

Top 10 Asian cities in Global Financial Centres Index,

2007-2011

Seoul, Beijing and Shanghai have moved well clear of Kuala Lumpur and Mumbai as international finance centres

www.citiesandregions.com Source: Z/Yen

23

Pearl River Delta Regional Specialisation

24

North American cities

New York endures as North Americas premier investment and talent destination No.1 fDi North American city of the future 2011/12 and continent leader for R&D, greenfield investment and professional services (GPCI 2010; IBM 2010; Z/Yen 2011) Chicago and Toronto are two strong global contenders as others lose their global range Among 9 finance global leaders. Toronto excels in innovation and cultural diversity; Chicago is top five for intellectual assets and knowledge talent (Z/Yen, 2011; PNYC/PwC 2010, 2011; AT Kearney 2010) In terms of connections to global firm circuits, San Francisco and Miami plummeted from 17th and 25th respectively in 2000 to 46th and 68th by 2008. (GaWC 2009) The rise of Texan cities Austin stands out for successful incubation of small businesses /entrepreneurs (Kiplinger 2010) Houston-3rd fDi City of the Future 2011/12 thanks to investment strategy and human resources Green shoots in the North West Seattle emerges as a highly connected creative hub, overtaking Stockholm + Geneva. (GUCP, 2010) Portland has best national green credentials; and (of 1 million+ cities) the highest percentage of workforce in the creative class (Business Courier 2010; Sustain Lane 2008) Canadian cities exceed expectations due to prime conditions for life and work 5 Canadian cities in the top 10 for quality of living in the hemisphere (fDi Intelligence 2011) Calgary and Montreal rapidly improving in labour attractiveness and finance respectively (TBoT 2010)

North American city performance in the 2010 Global Power City Index

With the exception of New York, all North American cities lost positions since the first edition in 2008, suffering in dimensions of economic intensity and political influence

www.citiesandregions.com

Source: MORI Memorial Foundation

North American city performance in the 2010 Global Cities Index

Source: AT Kearney

North American cities are much higher rated here thanks to excellent human capital ratings; Chicago is up 2 places to 6th globally, while San Francisco (15th to 12th) and Boston (29th to 19th) are among the biggest gainers in the 2010 edition.
27

Cushman La Salle & FDI Top European Buck Wakefield European Real Consultant 2010 Cities of Estate Tech Cities European the Future Growth Index Cities 2010/11 Index Monitor 2010 No of Cities ranked* London Paris Frankfurt Berlin Barcelona Madrid Milan Brussels Stockholm Vienna Munich Rome Moscow Zurich Amsterdam Dublin Helsinki Copenhagen Oslo Hamburg Manchester Istanbul Warsaw 34 1 2 3 7 5 8 11 4 16 22 9 28 33 13 6 20 31 25 34 15 12 26 24 22 3 15 12 6 23 13 19 14 24 9 10 11 30 23 8 9 4 7 17 18 29 7 21 25 1 2 8 16 5 11 5 16 6 15 30 2 1 104 1 4 20 55 51 46 34 29 5 12 3 82 2 9 30 21 14 8 6 24 36 25 22

ULI, Real Estate ULI, Real Emerging Estate Trends 2010 2010 Devmt Investment Prospects Prospects 27 4 3 10 8 26 25 6 19 12 5 1 9 24 11 18 27 14 22 2 7 13 27 5 11 14 12 25 27 10 22 9 7 2 15 8 6 15 26 17 23 3 1 4

C+W 10, European Cities Monitor, Internal Transport

C+W 10, European Cities Monitor, External transport links 34 1 2 3 9 11 7 15 5 20 22 6 23 31 9 4 29 31 13 26 17 8 34 29

EuroEuroEuroC+W 10, barometer, barometer, barometer, European Saffron Siemens Support for satisfaction satisfaction Cities European European foreign with with public Monitor, City Brand Green City population outdoor transport, Quality Barometer Index s in city, recreation, 2009 of Life 2009 2009 34 10 4 26 13 1 6 25 16 3 11 2 19 36 5 17 19 18 7 13 11 26 34 35 56 5 19 43= 26= 15 20= 47= 25 16 6 5 21 7 1 3 33 47 50 15 17 35 28 66 53 6 53 55 43 9 20 31 5 18 33 2 11 17 39 1 13 11= 7= 3= 6 14 72 2 1 11= 16= 3= 9 7= 9 2 4 64 2 59 40 56 50 7 21 5 61 50 5 2 8 72 12 8 36 61 65 32 59 54 40 35 23 30 11 10 75 24 8 75 34 56 75 31 12

34 1 2 11 3 6 4 22 12 7 16 4 29 33 9 8 24= 16 24= 18 18= 10 35 33

Performance in the European Cities Monitor 1990-2011, 2010-11

London has been Europes top-rated business city in Cushman & Wakefields European Cities Monitor since 1990, stretching its lead to an unprecedented level in 2009.

Barcelona, Madrid and Berlin are the biggest improvers in the ranking over the past two decades, while Glasgow, Athens and Geneva are among the largest fallers.
www.citiesandregions.com 29

www.citiesandregions.com

30

Urban dynamics in Europe 1

Europes World Cities stay top but face global pressures London and Paris lead on almost all measures of economy wealth. Framework conditions may not work in their favour, eg taxation rates and open-ness to talent. Much depends on their ongoing international success. Select mid-size cities have outstanding cultural or niche economic-science functions Barcelona projects an image beyond its size, recording outstanding results for quality of life and international travellers While it does not play host to a high concentration of global firms, Berlin has improved its standing in a whole suite of cultural, intellectual and political measures. Stockholm consistently top-ranks for higher education, transport, health, green space + R&D Zurich by far the smallest city in top 15 of Global Power City Index + Global Financial Centres Index

Urban dynamics in Europe 2

Other historic centres have struggled to leverage prestige and social richness Rome, Milan are declining in business prospects and immersion in global networks Frankfurt has lost ground as cultural dynamism + brand trump financial measures Some are in between, holding their own Amsterdam and Vienna robustly rated for quality of life, innovation, culture and environment, but are declining on business and power measures Central and Eastern European cities are emerging slowly, but there are stand-out performers Polish cities, led by Warsaw, are finding niches in the new cycle, based on wellqualified and multilingual labour forces, attractive incentives and market proximity Ldz and Walbrzych Special Economic Zones are in the worlds top 20 Free Zones of the Future - Krakow is rated as the 4th most dynamic global outsourcing market Bucharest, Moscow and St. Petersburg all proving desirable locations for large firms. (fDi Intelligence 2011, Tholons 2010, ECM 2010)

32

SDRIF: Growth corridors

SDRIF: Regional connectivity

SDRIF: Multi-modal transport plan

SDRIF: Regional green space

33

LEE VALLEY

WOOD GREEN HARROW ILFORD ROMFORD

WESTERN WEDGE
EALING

THAMES GATEWAY

HOUNSLOW

KINGSTON CROYDON

BROMLEY

SUTTON

WANDLE VALLEY

Is city success inevitable...?

Development success is rarely the result of chance Successful cities can fail... e.g. Berlin

e.g. Milan

Success is the result of proactive and targeted efforts by city leaders to address constraints and capitalise on opportunities

Urban performance in Latin America, Africa/Middle East and Australasia

Consolidation but no decisive leadership yet in Latin America

Outside Brazil, capital cities are increasingly dominant in city indexes. AmricaEconomi finds eight of the top ten cities on the continent to be capitals Buenos Aires is just outperforming Sao Paulo and Mexico City as the continents major powerhouse. But external rivals for Latin American hegemony, Madrid and Miami, are currently still some distance ahead as all-round service providers. Western indexes often more impressed by sustainability of Curitiba and dynamo Santiago.

Growing influence of major cities in the Gulf, South Africa and Egypt.

Prior to Arab Spring, Cairo had emerged as a significant political centre and Africas leading outsourcing city. Johannesburg heads sub-Saharan Africa for talent and finance capability Dubais rise has stalled since 2008; Abu Dhabis comparative success has earned the emirate new benchmark prominence and gains as a competitive international traveller destination

Strong recovery and new global roles for leading cities in Australia and New Zealand.

Sydney frequently highlighted for unique balance between quality of life and economic prosperity. Visionary leadership has been praised for advances in managing its public realm and congestion. Brisbane, Auckland, and Melbourne acknowledged in rankings for improved infrastructure, creativity and brand.

Economic and financial dynamism

Quality of life

Talent and Human Capital AON People Risk Index 2010

Environment, Transport and Infrastructure

Brand

2010 Global Urban Competitiveness Project GaWC 2008 State of World Cities Brookings Global Metro Moniitor Recovery 09/10 Z/yen Global Financial Centres Index 2010 Mercer Consulting Quality of Life 2010 Economic Intelligence Unit Quality of Life 2011 QS Top university ranking 2010

Index title

No of Cities ranked
Brisbane Auckland Melbourne Sydney Perth Toronto Vancouver Cape Town Santiago

500
136 107 91 46

525
87 40 43 7 103

150
64 91 14 45

75

221
36 =4

140 400+
21 10 2 7 43 68 38 37

90

100

221
23

140
=41 =27 =1 =1

82
73 71 79 81

=36 15 =16

51 19 28

=13 25 46 12

24 =10

18 10 21

23 40 324 142

14 92 96 41

63 92 117 5

=10 22

16 =4 86 90

4 1

29 40 =146

1 =13

12 75

=39 =13 30

=42 =10

59 80

64

331

47

144

=54

Abu Dhabi Dubai Bangalore

Vienna

245 55 276 52 63

43 149 13
43

83 28 75

74 85 41 72

56

=65 =65

=63 =63 26

www.citiesandregions.com 29 35 88

143

35

44

=1

Mercer 2009 Top 50 cities by infrastructure Price of Travel 2010- Public transport prices Euromonitor Destination Visitors 2009 Anholt 2006/2009 City Btands Index

2thinknow Innovation Cities 2010 Mercer Consulting EcoCIty 2010 Economist Intelligence Unit 2010 Infrastrcture Demographia Affordable Housing 2011

50
=38 43 =35 11

80

100

60

15 76 58

80 8 56 2

=18 =6

72 66 34 32

40 59 85

14 16

84 7

=18

73

28 37

New Cycle Agenda

38

Key features of new cycle

Values matter more than opportunism; eg standards Increased competition Different kinds of money, with different needs Broader imperatives Focus on long term value Impatience with waste or rigidity, dysfunctional systems Drive to lead innovation Identity and reputation Genuinely global age, have to reflect global values Agility and flexibility

39

Imperatives for growing cities

i.
ii. iii. iv.

v.
vi. vii. viii. ix. x.

Business & investment climate Liveability and connectivity Human capital creation, attraction, and retention Knowledge creation & commercialisation Entrepreneurship Agglomeration and specialisation Openness, diversity, multi-lingualism Identity and Reputation Integrated governance Inclusive growth

40

Leadership dividend competitive advantage of leadership

Specialisation in Knowledge-based activities, Entrepreneurship and Innovation...

Zurich
Pathway Towards the Next Urban Economy
A financial centre of international significance becoming an innovative location for knowledge and science

Keynote Intervention
Life Science Zurich One of most competitive life science clusters in Europe from 2002 Collaboration of ETH and University of Zurich, multinational pharmaceutical firms, and technology transfer institutes Key pillar in national and regional innovation ecosystem

Human capital, Openness, Talent and Flexibility...

Singapore
Pathway Towards the Next Urban Economy
A vibrant and distinctive global city open and diverse, and an excellent stepping stone to grow into and reach out to a Asia.

Keynote Intervention
Contact Singapore Contact Singapore promotes Singapore as a globally connected and friendly city to international workers Contact Singapore, with its focus on talent attraction, is a critical node

Human Capital responds to Quality of life and Quality of place...

Melbourne
Pathway Towards the Next Urban Economy
As a centre for the arts, culture, education and sports, Melbourne now one of the worlds top liveable cities

Keynote Intervention
Future Melbourne Long-term plan for the future direction of all aspects of city life A City for People is one of six key objectives A great place to live, Inclusive community, Healthy community, Designed for people, Affordable, Quality public space.

Green economy, Resource efficiency and Low carbon...

Aarhus
Pathway Towards the Next Economy
Emerging a European centre for Education, ICT, Alternative energies and Green technology

Keynote Intervention
Aarhus Capital of Wind Energy Aarhus is developing this ambitious new brand strategy in association with Vestas

Specialisation

Seoul

Story
Now considered a global city, Seoul is home to powerful conglomerates, thriving commercial and financial sectors as well as modern infrastructure and digital media platforms. Clustering: Samsung Electronic Corporation(SEC) recently has also pursued a cluster strategy. SEC first named its complexes located in Suwon as the Samsung Digital City in October 2009 High value-added specialisation: Policy to promote high tech and ICT sector and filter off non-competitive and low value added manufacturing sectors Digital city: Seoul Metropolitan City plans to complete DMC, or Digital Media City, by 2015. Digital Media Street is a test-bed for intelligent streetlights, Info-Booths, e-Boards and Sign-Boards.

Next Urban Economy...

Entrepreneurship and export Munich...

Story
Leading German metropolitan region for high-tech activity, with a powerful innovation system. Germanys Silicon Valley with dominant positions in electronics and advanced manufacturing famous for the Munich Mix of sectors and company sizes

Next Urban Economy...

Institutional thickness to propel innovation: With over 55,000 R&D full time equivalent positions, 13 universities, numerous government-financed research centers, and strong intellectual capacity in government, Munich is a model of institutional thickness. Strong service-manufacturing nexus: Economy based on interacting knowledge-intense services with advanced, knowledge-intense industries supports capacity to innovate

Identity building Barcelona...

Story
Achieved extraordinary transformations in its economy since the 1980s. Though hit hard by the crisis, offers important insights into urban economic transformation and re-invention.
Barcelona Economic Triangle: Metro-wide initiative formed of three sets of clusters, each specialising in different aspects of the next economy aerospace & logistics; science and creative industries; and knowledge in the 22@ Innovation District. Barcelona Activa: Pioneering local development agency created in 1986 that has remained ahead of the curve. Committed to a personalised, client-oriented approach to labour market solutions which combines both virtual and physical spaces for learning, networking and collaboration.

Next Urban Economy...

New sectors and niches Turin

Deep in crisis, Torinos auto sector has now adapted and recovered and the city has begun to diversify into new sectors such as design, aerospace and quality food and wine. Offers insights about reclaiming and diversifying local strengths.

Next Urban Economy... Steering growth towards new economic sectors: In 2008, Piemonte accelerated its efforts once again, setting up twelve Innovation Poles in sectors such as biotechnology, design and ICT. The project has attracted 90 million Euros from the EU so far. Bridging the gap: The Politecnico reconfigured its courses for the new economy (e.g. automotive engineering, design). Between 2001 and 2005, Banking Foundations invested a total of 380m in Torino, sponsoring new research and innovation institutes.

Leadership
Mayor Valentino Castellani, Turin, (1993-2001) Inherited City Unprecedented deficit of121 billion lira De-industrialisation e.g. FIAT 92,000 to 47,000 jobs (1986 and 1996) Torino seen as grey, dull and identity-less Style
Collaborative, visionary, thoughtful
"The event is important because if you dont have success, you dont get a legacy. But the event itself is too short. It starts and it ends up in a minute after years of work

Record of Achievement

Economic: 70% now employed in non-industral work (30% in mid-1990s). Strategic: Launch of Torino Strategic Plan 1998 Torino on the map: Summer tourism in Piedmont grew by 20% in 2007 Olympic legacy: Pinnacle of reinvention process and re-launch of Turin to the world

Leadership
Mayor Enrique Pealosa, Bogot, (1998-2001) Inherited City A city in good fiscal condition and a District Council that was mostly independent A city built more for the vehicle than for people Style Courageous, Leading by example, Vision Record of Achievement
If people are treated as special, as sacred even, they behave that way. This creates a different kind of society

Public transport: Longest pedestrian-only street in the world (17-22 kilometres), Transmilenio Bus Rapid Transit system carries 700,000 people daily Civic education: Increased children enrolment in public schools by more than 200,000, a 34% increase in four years

Leadership
Mayor Edi Rama, Tirana, (2000 - ) Inherited City Grey, decaying city and in need of re-invigoration Style
I'm not sure I am a politician, I would say that I am still an artist and I'm trying to use politics as an instrument for change.

Avant-garde , go-getter, courageous reformer

Record of Achievement

City clean up: Cleared the city centre of many illegally constructed buildings and 2,000 kiosks. Road widening, pot-hole filling. Aesthetic improvements: Ordered the painting of many old buildings in the Edi Rama colours (very bright yellow, green, and violet) Tourism growth: Tourism visitor increases. Visitors on Ionian cruise ships have increased, with hotels such as the Sheraton opening in 2004.

It all comes down to leadership www.TheBusinessOfCities.com

53