COMPETITIVE CITIES IN THE

GLOBAL ECONOMY

A Synthesis Report

City Competitiveness

Santa Cruz de Tenerife, Spain, March

3-4, 2005

Attractiveness of cities

Nagoya, Japan, 2-3 June

2005

Sustainable cities

Montreal, Canada, 13-14

October, 2005

Urbanization: the Challenge of the New Century

By 2007, the world will have more urban residents than rural

residents for the first time in history (United Nations, 2003)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

Millio

ns o

f P

eo

ple

Rural Population Urban Population

Urbanization in OECD Countries: a well advanced process

53 % of the OECD total

population lives in urban

regions

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Turk

ey

Mexic

o

New

Zeala

nd

Canada

Austr

alia

Fin

land

Unite

d S

tate

s

Sw

eden

Irela

nd

Norw

ay

OE

CD

Avera

ge

Spain

Sw

itzerland

Gre

ece

Port

ugal

Neth

erlands

Denm

ark

Japan

Fra

nce

Austr

ia

Belg

ium

Germ

any

Unite

d K

ingdom

Italy

Kore

a

Pola

nd

Slo

vak R

epublic

Czech R

epublic

Hungary

Average Annual Growth in Population in Predominantly Urban Areas (1980-2004)

80% including less

densely populated

areas in intermediate

regions

- 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000

TokyoSeoul

New YorkMexico City

OsakaRhine-Ruhr

Los AngelesIstanbul

ParisChicago

AichiBusan

Randstad-HollandLondon

MilanMunich

BerlinPhiladelphia

DallasMadrid

FrankfurtMiami

OECD AverageHouston

WashingtonFukuoka

BarcelonaAtlanta

TorontoHamburg

DetroitBostonSydney

San FranciscoAnkaraAthens

BrusselsRome

PhoenixMelbourne

GuadalajaraMontreal

IzmirSeattle

MonterreyMinneapolis

NaplesWarsow

San DiegoBudapestSt. Louis

LisbonStuttgart

BaltimoreTampa Bay

BirminghamLille

DaeguManchester

ZurichPittsburgh

CopenhaguenDenverPrague

ValenciaTurin

ViennaStockholm

KrakowCleveland

PueblaLeeds

PortlandVancouver

HelsinkiOsloLyon

DublinAuckland

Population

Globalisation and the emergence of metro-regions

78 metro-regions with more

than 1.5 millions inhabitants

United Nations

OECD

Megacities

A common OECD Definition for metro-regions based on

functional areas

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

BerlinM ontreal

CopenhaguenOslo

LondonZurich

TorontoBirminghamStockholm

Detro itVancouver

AucklandLeeds

RandstadPittsburgh*

M anchesterCleveland

ChicagoHoustonSt. Louis

DenverPortland

New YorkNaplesDallas

AtlantaLos Angeles

BostonPhiladelphia

PhoenixSeattle

M inneapolisSan Francisco

BaltimoreViennaLisbon

Rhein-RuhrSan Diego

LilleM elbourne

OsakaHamburgFukuoka

M iamiTampa BayWashington

SydneyHelsinki

TokyoFrankfurtValencia

AichiBarcelona

ParisLyon

StuttgartM unich

DublinPragueM adridAthens

BrusselsKrakowDaeguSeoul

BusanRomeTurin

WarsowM exico City

PueblaM onterrey

GuadalajaraM ilan

BudapestIstanbulAnkara

Izmir

Key actors of national economies

Produce the bulk of national GDP

Around 50%: Budapest, Seoul, Copenhagen, Dublin, Helsinki, Brussels, (Montreal, Toronto, Vacouver in their respective provinces), etc.

One third: Oslo, Aukland, Prague, Tokyo, Stockholm, London, Paris

-40% -20% 0% 20% 40% 60% 80% 100% 120% 140% 160%

WarsowMonterrey

IstanbulBudapest

LondonSan Francisco

IzmirWashington

PragueMexico City

ParisAnkaraLisbonBoston

GuadalajaraPueblaSeattle

StuttgartMilan

MinneapolisNew YorkStockholm

MunichDenverVienna

PhiladelphiaAuckland

MadridDallasRome

FrankfurtLyon

DublinBrussels

HelsinkiToronto

TurinAtlanta

HoustonSan Diego

OECD AverageChicago

BusanLos Angeles

HamburgTokyo

BarcelonaCopenhaguen

AichiSydneyDetroit

RandstadVancouver

BaltimoreCleveland

AthensPortland

MelbourneOsaka

St. LouisRhein-Ruhr

MontrealPhoenixKrakow

SeoulZurich

PittsburghOslo

ValenciaBirmingham

LeedsTampa Bay

MiamiManchester

FukuokaLille

BerlinNaplesDaegu

-20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

MonterreyWarsow

BostonLondon

San FranciscoMexico City

LisbonIstanbul

New YorkParis

PraguePuebla

BudapestVienna

WashingtonGuadalajara

San DiegoSeattleAnkara

Los AngelesHouston

PhiladelphiaHamburg

DallasLyon

FrankfurtRomeIzmir

DenverStuttgart

MilanTurin

AtlantaStockholm

MunichChicago

DetroitOECD Average

AucklandBusan

BrusselsMinneapolisRhein-Ruhr

TokyoDublin

PortlandBaltimore

ZurichOsakaMadrid

AichiCopenhaguen

HelsinkiPhoenix

Randstad-HollandBirmingham

MiamiSydney

St. LouisClevelandBarcelona

TorontoMelbourne

SeoulManchesterTampa Bay

LeedsVancouver

MontrealFukuokaAthens

OsloNaples

KrakowValencia

BerlinLille

Pittsburgh

Higher GDP per capita… Higher productivity…

…then their national average

Higher employment…

URBAN ASSETS

Global and regional headquarters, large labour force, research insitutes, accessibility

in transportation and telecommunications, etc…

Krakow

Chicago

Aichi

Munich

Ankara

San Francisco

Washington DC

Puebla

Athens

Denver

PhoenixDublin

Berlin Busan

Randstad-Holland

London

Boston

Atlanta

Philadelphia

Detroit

Seattle

Madrid

Lille

Leeds

Lyon Sydney

Barcelona

FukuokaMonterrey

Copenhagen

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

- 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000

Population

Per

Cap

ita G

DP

in

PP

Ps (

US

D)

Positive correlation between population size and income…

Sample of 69 OECD metro-regions with less than 10 million

Auckland

Zurich Stockholm

Vienna

OsloLisbon

Prague

Tokyo

Mexico CityIstanbul

Athens

Seoul

Budapest

Helsinki

Brussels

Randstad-Holland

Copenhagen

Sydney

Paris

Dublin

20%

30%

40%

50%

9 9.5 10 10.5 11

Linearised Income (per capita GDP)

Metr

o-r

eg

ion

al S

hare

of

Nati

on

al G

DP

…with an advantage for capital cities (16 out of 20)

Sample of metro-regions representing more than 20% of their national

output

Agglomeration economies

URBAN ASSETS

Advantages of both diversification and specialisation in high-value added activities

Strong innovative capacity More than 81% of patents are produced in urban regions

Great endowment of human capital

-30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0%

BusanLyonPueblaSydneyGuadalajaraMexico CityFukuokaMonterreyLisbonZurichOsakaOsloBirminghamMelbourneRandstad-HollandPragueAichiIzmirDaeguAucklandCopenhaguenLeedsSeoulManchesterDublinTokyoAnkaraRhine-RuhrWarsowOECD AverageIstanbulHamburgHelsinkiKrakowFrankfurtStuttgartBarcelonaMunichLondonStockholmBerlinValenciaTurinBrusselsBudapestMadridMilanLilleRomeParisAthensNaples

Lower old-age dependency ratio Higher level of skills

Higher capital stock per capita (physical

infrastructure, transport and telecommunications,

universities and research institutes, etc..)

0%

10%

20%

30%

40%

50%

60%

Lon

don

To

kyo

Wa

sh

ing

ton

Den

ve

rS

an F

rancis

co

Bo

sto

nS

eatt

leM

adri

dS

an D

iego

Hels

inki

Min

ne

ap

olis

New

Yo

rkO

sa

ka

Chic

ago

Atla

nta

Oslo

Sto

ckh

olm

Bru

ssels

Fu

ku

oka

Ph

oe

nix

Aic

hi

Los A

ng

ele

sM

iam

iB

arc

elo

na

Dallas

Hou

sto

nP

hila

de

lphia

Detr

oit

Ta

mp

a B

ay

Pitts

bu

rgh

Pa

ris

Cop

enh

ag

ue

nS

t. L

ou

isM

anch

este

rR

an

dsta

d-H

olla

nd

Lee

ds

Lyon

Po

rtla

nd

Cle

ve

lan

dV

ale

ncia

Stu

ttga

rtB

irm

ing

ha

mS

yd

ne

yM

elb

ourn

eA

the

ns

Au

ckla

nd

Dub

linL

isb

on

An

kara

Bu

da

pest

Wa

rso

wL

ille

Pra

gu

eIz

mir

Kra

kow

Ista

nb

ulS

ha

re o

f L

ab

ou

r F

orc

e w

ith

Te

rtia

ry E

du

ca

tio

n

Metro-region Country

-6%

-4%

-2%

0%

2%

4%

6%

London

Pra

gue

Leeds

Mancheste

r

Birm

ingham

Naple

s

Sto

ckholm

Rom

e

Mila

n

Lyon

Wars

ow

Busan

Turin

Munic

h

Dublin

Stu

ttgart

Hels

inki

Tokyo

Fukuoka

Lis

bon

Vale

ncia

Madrid

Copenhagen

Paris

Aic

hi

Fra

nkfu

rt

Lille

Bru

ssels

Seoul

Oslo

Ankara

Ham

burg

Randsta

d-H

olla

nd

Osaka

Vie

nna

Ista

nbul

Rhin

e-R

uhr

Barc

elo

na

Berlin

Ath

ens

Izm

ir

Kra

kow

Daegu

Budapest

But Metro-regions not Always Synonymous With Success!!

A group of lagging metro-regions for almost all socio-economic indicators (e.g. Lille (France),

Fukuoka (Japan), Berlin (Germany), Pittsburgh (US), Naples (Italy). ..)

Differences with national averages not so large

for a number of metro-regions

GDP and productivity growth not always higher

than national averages

-5%

0%

5%

10%

15%

20%

25%

Pra

gue

Kra

kow

Bud

apest

Busan

Seo

ul

Dublin

Vie

nna

Stu

ttgart

Hels

inki

Daegu

Ham

bu

rg

Bru

sse

ls

Osa

ka

Copenh

aguen

Pari

s

Munic

h

Fuku

oka

Toky

o

Izm

ir

Ath

ens

Berl

in

Aic

hi

Fra

nkf

urt

Lyon

Ankara

Mila

n

Osl

oR

hin

e-R

uhr

Turin

Lill

e

Rom

e

Naple

s

Barc

elo

na

Randsta

d-H

olla

nd

Ista

nbul

Sto

ckholm

Vale

ncia

Madri

d

Pro

ductiv

ity G

row

th

National productivity grow th Metro-region productivity grow th

Productivity growth GDP growth

London Chicago

MunichMilan

Randstad-Holland

Aichi

Busan

Paris

Los Angeles

OsakaRhine-Ruhr

Istanbul

Mexico City

Seoul

Tokyo

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000

Population

Per

Cap

ita

GD

P in

PP

Ps

(US

D)

But Metro-regions not Always Synonymous With Success!!

Bigger means richer

until…

City size and income (metro-regions with over 6 million)

Have big cities really important

innovative capacity?

? ?

Patents

Congestion costs?

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Naple

sB

erlin

Lille

Vie

nna

London

Detr

oit

Birm

ingham

Montr

eal

Osaka

Fukuoka

Lis

bon

Daegu

Seoul

Pitt

sburg

hC

levela

nd

Rhin

e-R

uhr

Bru

ssels

Housto

nC

hic

ago

Tokyo

St. L

ouis

Oslo

Auckla

nd

Melb

ourn

eR

andsta

d-H

olla

nd

Leeds

Vale

ncia

Ham

burg

Port

land

Denver

Toro

nto

Busan

Mancheste

rP

aris

Copenhaguen

OE

CD

Avera

ge

New

York

Dublin

Lyon

Rom

eD

alla

sB

arc

elo

na

Atla

nta

Los A

ngele

sS

tockholm

Aic

hi

Sydney

Bosto

nP

hila

delp

hia

Seattle

Phoenix

San F

rancis

co

Min

neapolis

Balti

more

Ath

ens

Vancouver

Budapest

San D

iego

Turin

Zurich

Fra

nkfu

rtM

iam

iH

els

inki

Tam

pa B

ay

Washin

gto

nK

rakow

Stu

ttgart

Pra

gue

Mila

nM

unic

hM

adrid

Wars

ow

THE URBAN PARADOX

Persistence of high pockets of unemployment

0

1

1

2

2

3

3

4

4

Unite

d S

tate

s

Kore

a

Sw

eden

Unite

d K

ingdom

Fra

nce

OE

CD

Avera

ge

Denm

ark

Japan

Sw

itzerland

Neth

erlands

Austr

ia

Italy

Mexic

o

Spain

Slo

vak R

ep

Pola

nd

Hungary

Austr

alia

Gre

ece

Crim

e a

gain

st pers

ons (

countr

y a

vg=1)

Predominantly Urban Intermediate predominantly Rural

On third of metro-regions have higher unemployment rate than their

national averages

Lower activity rates in urban regions (44.3%) than

intermediate (49.7%) and rural (44.5%)

Growth and Unemployment

Wealth and Poverty

High level of poverty in all types of

metro-regions (e.g. about 50% in Mexico

City, 22% in Rotterdam, 15% in Paris)

Exclusion of immigrants

Spatial polarisation (in 10 OECD

countries, up to 10% of the population

live in distressed areas)

Criminality (30% higher in urban regions)

Increasing role of large cities: what should policy-makers do?

Dilemma 1: Metro-regions versus other regions?

Causal relationship is not obvious

Impact on other regions is not clear

But public intervention is necessary

To sustain city competitiveness and adress negative

externalities

To seek a positive sum game and develop synergy

effects

Increasing role of large cities: what should policy-makers do?

Dilemma II. Which strategic vision in a market context?

Pursue a strategy of diversification based on clusters

Building assets of relations (universities, inter-firms, etc.)

Provide local public goods (tangible and intangible)

Avoid unrealistic expectations (not all metro-regions can be high tech)

Involve a wide range of stakeholder

Increasing role of large cities: what should policy-makers do?

Dilemma III. Economic dynamism or liveable city?

Liveability sustain competitiveness

City attractiveness (urban renaissance strategies, FDI attraction)

Burden of social and environmental costs

Time is crucial and delay is dangerous

Increasing role of large cities: what should policy-makers do?

Dilemma IV. Appropriate scale or closeness to citizens?

No best practice but considerable trade-offs in terms of benefits and costs

Most metropolitan governance overlook the question of long term strategy

Success depends on the public support

Social conflicts and tensions need to be addressed

Increasing role of large cities: what should policy-makers do?

Dilemma V. Metro-regions versus central/state government?

Higher level of governments are key for any metropolitan governance reform

Legal basis and incentives are crucial

New forms of vertical relationships (partnerships and contracts)

Increasing role of large cities: what should policy-makers do?

Dilemma VI. Participation of private sector actors in metro-regions' governance?

Better to deal with trade

associations than individual firms

A metro-wide level of governance

offers better chance of plurality

Increasing role of large cities: what should policy-makers do?

Dilemma VII. Unequal burdens or distorting subsidies?

Need for an urban lens to local finance

Pay more attention to perverse effects of

equalisation schemes