Productive Transformation in Quito and LimaNetworking Event by CAF, UN Habitat, UN ESCAP:

Asia, Africa, Latin America

Marco Kamiya y Patricia Polo

Department of Public Policy and CompetitivenessVicepresidency of Public Policy and Development Strategies

Medellin, April 9, 2014

The Link Between Transformation Policies and Equity

Infrastructure +

Social Policies +

Productivity Policies + = EQUITY

Well designed policies…. …leads to better outcomes

Source: Prepared by Author

City Policies Framework

Generation of sustainable growth and jobs through higher productivity and promotion of competitive sectors.

Strategy that establishes the national urban priorities in political, economic and spatial areas by improving institutional coordination and city finance.

“Fairness” with less inequality and more opportunities in gender, youth and spatial planning with better city design, governance and infrastructure.

PRODUCTIVITY URBAN POLICIES EQUITY

Cluster, Value Chain, Agglomerations, Foreign Investment, Business Climate, Training,

Defin

ition

Polic

ies Land Planning, Public

Services, infrastructure, Social Policies, Security, etc.

Laws and Regulations, Informality, Roads and Transport City-Periphery, Welfare.

Source: Prepared by Author

Export Structure

Peru (Lima) Ecuador (Quito)

Source: Atlas of Economic Complexity

Economic Complexity and Growth

Latin America Asia Africa

Expected growth pc GDP (2009-

2020)

2009 2020 Expected growth pc GDP (2009-

2020)

2009 2020 Expected growth pc GDP (2009-

2020)

2009 2020

Peru (2.13%)

$4469 $5635 Vietnam (3.48%)

$1113 $1622 South Africa (2.9%)

$5786 $7920

Ecuador (2.12%)

$4202 $5290 Timor-Leste $644 Kenya (3.5%)

$738 $1073

Complexity and Expected Income in 2020

From red (more complex) to white (less complex)

Source: With data from Atlas of Economic Complexity, CID, Harvard University

Productive Transformation Policies (PTP) ¿To be or…?

Current level of Complexity

Ease

to P

rodu

ce N

ew P

rodu

cts

Broad Space to diversify

Need ad hoc sector support to produce more

complex products

Limited room to diversify. Need active industrial

policy

Need to improve business conditions for

sectors in place

Source: Author with CID Data, Harvard University

What are Productive Transformation Policies?

Productive Transformation Policies is a strategy for economic growth through production of more complex products and subsequent diversification resulting in more exports, jobs and higher incomes.

PTP Strategy

Are sector reforms stressed?

Is infrastructure linked with sectors?

Are right technologies and FDI targeted?

Is innovation strategy in place?

Are education and training embedded?

Lima (Peru) Quito (Ecuador)

Yes or Not? Yes or Not?

Yes or Not? Yes or Not?

Yes or Not? Yes or Not?

Yes or Not? Yes or Not?

Yes or Not? Yes or Not?

Quito (Ecuador)

Fuente: http://www.inviertaenquito.com/

Ecuador: City of Quito

Ecuador Quito

Población (2010) 14.306.876 2.239.191

PBI (2012) U$S 84,5 MM U$S 20,2 MM

PBI per cápita (2012)

U$S 5.638,5 U$S 6.441

Desempleo (urbano) 12/2013

4,86% 4,04%

Source: INEC; Banco Central; Instituto de la Ciudad del DMQ.

Source: Central Bank of Ecuador

VAB Quito US$ ‘000 %

Agriculture, livestock, forestry, fishing 105,674 0.8

Mining 35,492 0.3

Manufacturing 2’668,892 21.0

Electricity and water 47974 0.4

Construction 926,010 7.3

Commerce 1’410,015 11.1

Professional activities and real state 2’933,067 23.1

Public sector 816,507 6.4

Other sectors 3’771,598 30.0

TOTAL ECONOMY 12’715,229 100%

Quito: Gross Value Added (2008)

Fuente: Mancheno y Carrera, 2013.

Main manufacturing sectors are metal products; pharmaceuticals; automotive; chemical and food processing sectors.

Technological Level Sales (US$ mill)

Number of employees

Numbers of firms

Average number of employees

per firm

Number of

products

High Technology Intensity 25 454 29 10 14

Medium Technology Intensity 1,281 6,315 263 32 57

Low Technology Intensity 5,095 25,029 4,265 27 83

Focused in natural resources 10,577 26,361 2,880 89 85

Quito: Manufacturing by Technological Level (2013)

SECRETARIA DE DESARROLLO PRODUCTIVO Y COMPETITIVIDAD

DIRECCIONES

DIRECCION DE PROYECTOS ESPECIALES

UNIDAD DE INNOVACION

UNIDAD DE ENERGIA

DIRECCION DE PROMOCIÓN DE INVERSIONES Y

EXPORTACIONES

UNIDAD DE PROMOCION DE EXPORTACIONES

UNIDAD DE SERVICIOS AL

INVERSIONISTA

UNIDAD DE APOYO A LA COMPETITIVIDAD

ENTIDADES ADSCRITAS

EMPRESA PUBLICA METROPOLITANA DE RASTRO QUITO

EMPRESA PUBLICA METROPOLITANA QUITO TURISMO

EMPRESA METROPOLITANA DE SERVICIOS AEROPORTUARIOS

AGENCIA MUNICIPAL DE DESARROLLO ECONOMICO CONQUITO

Conquito (2003): Quito Agency working on vocational training, entrepreneurship and business development; access to finance and innovation.

Institute of Quito City – Instituto de la Ciudad de Quito (2010): Quito’s related research and planning.

Quito: Secretaría de Desarrollo Productivo

Quito: Local Productive Development Policies

Industrial Policy

Regional Policy

Science & Technology

Policy

III

III

I. Industrial ConglomeratesII. Zones S&D. Science ParksIII. Zones R&D

National Policy to Change the Productive Matrix

Lima (Peru)

Peru and LimaPeru Lima

Population (2013)

30.475.339 8.617.314

GDP (2012)* U$S 194,8 MM U$S 89,6 MM

GDP per capita (2012)

U$S 6.112 U$S 9.536

Unemployment (2012)

4,7 5,0

Source: INEI; Central Bank

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

31.90534.683

32.635

44.64442.423

32.677

25.14521.655

16.104 15.840 15.639 14.542

2.284 2.840 2.023 2.363 3.4991.277 .867 .964 .726 .846 .511 .690

Lima Metropolitana: Evolución de la pobreza y pobreza extrema -2001-2012

Pobreza Pobreza Extrema

Source: Bureu of Satistics (INEI).

Gross Value Added (1994 base prices) 2001 2012

Agriculture, Livestock and Forestry 3,9% 3,2%Fishing 0,2% 0,2%Mining 1,2% 0,7%Manufacturing 17,9% 17,5%Electricity and Water 1,5% 2,0%Construction 5,4% 5,5%Commerce 17,9% 20,3%Transport and Communication 9,7% 11,8%Restaurants and Hotels 5,4% 5,2%Government services 6,8% 5,2%Other services 30,2% 28,4%Gross Value Added 100,0% 100,0%

Peru: Gross Value Added

Important growth in productive clusters: Gastronomy and Gartments.

Peru: National Policy for Productive Development

Axis Objectives: Micro and SMEs, Cooperatives, Industry and

Commerce

Promotion of Productivity and Value Added

Productive development with integration and backward and forward value chain links.

Regulatory Framework Social, environmental, health, security, intellectual property, etc., for private sector activities.

Institutional Capacity Strengthen capacity to design and implement programs

Fuente: PESEM 2012-2016- Ministerio de la Producción

Lima: Local Productive Development Policies

Source: Peru - Protransporte

Finals Remarks

Lima and Quito have productive transformation policies in place with municipalities working at a district micro level with micro and SMEs, gender and youth projects.

1. Local and National Productive Transformation Policies need to be integrated in City Development Plans.

2. Services are important sector in the cities and need more attention as a source of income for Micro-SMEs and to address youth and gender disparities.

3. Cities need to permanently increase capabilities to produce more sophisticated products in order to provide jobs and higher incomes.

4. Cities needs to have a “learning by doing” system in infrastructure, logistics and innovation.

Thank you!

Marco Kamiya

Department of Public Policy and CompetitivenessVicepresidency of Public Policy and Development Strategies