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The Competitiveness of Cities A report of the Global Agenda Council on Competitiveness The Competitiveness of Cities August 2014 © World Economic Forum 2014 - All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum. REF 040814 Contents Preface 3 Preface As leaders look for ways to make their economies more competitive and to achieve higher levels of growth, 4 Acknowledgements prosperity and social progress, cities are typically identified 5 Executive Summary as playing a crucial role. Today, more than half of the 7 1. Introduction world’s population lives in urban areas ranging from mid- size cities to mega-agglomerations, and the number of city 8 2. City Competitiveness in the dwellers worldwide keeps rising. Many factors that affect Global Economy: Megatrends competitiveness, such as infrastructure, educational and 12 3. City Competitiveness: A research institutions, or the quality of public administration, Definition and Taxonomy are under the purview of cities, and many city-level initiatives to improve on different areas of competitiveness are under 14 4. The Big Basket: Mini Case Espen Barth Eide way. Yet while some cities are successful in attracting Studies of City Competitiveness Managing Director investment and talent, and ensuring prosperity and good from Around the World Centre for Global public services for their citizens, others are struggling to Strategies 14 Case Studies from the United cope with challenges such as large-scale influx of people or World Economic the inability to provide basic services, jobs or housing. States Forum 17 Case Studies from Latin The World Economic Forum has been studying America: Colombia, Mexico, competitiveness for over 30 years by focusing on the Brazil, Argentina and Chile assessment of the productive potential of countries 19 Case Studies from Europe: in The Global Competitiveness Report series. To Germany, Poland and France complement this strand of work, the Forum created the Global Agenda Council on Competitiveness as part of 21 Case Studies from the Middle the Network of Global Agenda Councils. The Council’s East and Africa: Turkey, Saudi objective is to deepen and broaden the understanding Arabia, Morocco and Nigeria of competitiveness and equip global leaders with tools 23 Case Studies from India to address competitiveness challenges. In 2012, Council Members identified the leadership role that cities are taking 24 Case Studies from China in stimulating the competitiveness of countries and regions 26 Case Studies from East-Asia: as a key issue for further study. Malaysia, Philippines and Republic of Korea This report presents a taxonomy of drivers of city competitiveness as well as a number of representative case 28 5. The Small Basket: studies of cities. The case studies are drawn from different Competitiveness in Seven Cities geographies and varying levels of development that face 28 Dubai different challenges and starting points. The objective of this work is to inspire and motivate city leaders, the private 31 Singapore sector and civil society to work together to address the 34 Detroit most important competitiveness challenges of cities by shedding light on creative and innovative initiatives put into 37 Bilbao and the Basque place by cities around the world. Country 40 Monterrey This report would not have been possible without the thought leadership and commitment of Professor 43 Ningbo Razeen Sally of the National University of Singapore, who 44 Surat chaired the Global Agenda Council on Competitiveness 49 6. Conclusion: A Checklist of What in 2013-2014; and of the two previous chairs of the to Reform and How to Reform Council, Deborah Wince-Smith, President, Council on Competitiveness, USA, and Clément Gignac, Chief 56 Members of the Global Agenda Economist and Senior Vice-President, Industrial Alliance Council on Competitiveness 2012- Insurance and Financial Services, Canada. Special thanks 2014 go to Margareta Drzeniek Hanouz, Head of the Global Competitiveness team, and Martina Larkin, Head of the Network of Global Agenda Councils, as well as Jennifer Blanke, Daniel Akinmade Emejulu, Gemma Corrigan and Cecilia Serin, all at the World Economic Forum, for their support in the process. The Competitiveness of Cities 3 Acknowledgements This report, the result of a genuinely collective effort, is the I would like to thank Jeffrey Finkle, President of the culmination of almost two years of discussion, including International Economic Development Council (IEDC), for intensive days in Dubai and Abu Dhabi, United Arab arranging a presentation by Kevin Murphy of our draft work Emirates. to city leaders attending the IEDC’s international conference in Philadelphia in 2014; this resulted in useful feedback. My predecessors as Chairs of the World Economic Forum Also, a group of informal advisers provided comments Global Agenda Council on Competitiveness – Deborah to help us structure the work appropriately. They are too Wince-Smith, President, Council on Competitiveness, numerous to mention here, but I would like to thank all of USA, and Clément Gignac, Senior Vice-President and them. Chief Economist, Industrial Alliance Insurance and Financial Services, Canada – as well as Council Member Razeen Sally Orlando Ayala, Chairman of Emerging Markets, Microsoft Corporation, USA, sparked the idea of working on city Chair, Global Agenda Council on Competitiveness competitiveness. Clément initiated the project during his Visiting Associate Professor, Lee Kuan Yew School of period serving as Chair. Most Council Members contributed Public Policy, National University of Singapore, and Director, case studies; some contributed two or more. I thank all European Centre for International Political Economy, of them for their sterling work. But I will single out Kevin Brussels Murphy, President, Partners for Sustainable Development and President and Chief Executive Officer, J.E. Austin Associates, USA, not only for writing several case studies, but also for helping me put together the sizeable “general bits” of the report and editing all of it. The final sprint – the two weeks before our deadline – placed particular demands on his time. My thanks also go to Margareta Drzeniek Hanouz for her excellent work as World Economic Forum coordinator of our Council. She guided us efficiently and was a keen promoter of the project throughout. Not least, she contributed a mini case study on Wroclaw. I would like to thank those outside the Council who contributed case studies: Sandy Baruah and his colleagues at the Detroit Regional Chamber; Reuben Abraham, Chief Executive Officer and Senior Fellow at IDFC Institute, Mumbai; Rogelio Cortes, Jorge Tadeo Lozano, Leonardo Pineda, Marcia Campos, Elvira Naranjo, Armando Villareal and Marcia Villasana, who collaborated with Council Member Jose Torre on three Latin American mini case studies; Stephanie Heier, Director of Emerging Markets, Microsoft Corporation, USA and her colleagues, who collaborated with Orlando Ayala on mini case studies from Latin America, Africa and China; the Economic Policy and Research Foundation of Turkey (TEPAV) for the Manisa mini case study; and Amit Kapoor, President and Chief Executive Officer, India Council on Competitiveness, as well as Kevin Stolarick at the Rotman School of Management, University of Toronto, Canada, for the three Indian mini case studies. I am very grateful to them for material that has added so much to the final product. 4 A Report of the Global Agenda Council on Competitiveness Executive Summary Cities have been the engines of productivity and growth – Institutional strength – Singapore highlights the throughout history, and will be essential to the future importance of gradually building up strength of growth and competitiveness of nations and regions. This is institutions through successive development phases. especially true at a time of massive and rapid urbanization in However, Monterrey, Mexico and Cebu, Philippines, emerging markets; hence, the focus on the competitiveness point to fragile institutions that can endanger existing of cities. gains as well as future competitiveness. In this report, six global “megatrends” especially relevant to – Decentralization, coordination and collaboration cities are identified: (1) urbanization, demographics and the – Cities should take maximum advantage of emerging middle class; (2) rising inequality; (3) sustainability; decentralizing power (successful examples are (4) technological change; (5) industrial clusters and global Bilbao; Ningbo, China; Dubai; Penang, Malaysia; value chains; and (6) governance. Led by urbanization, they Busan, Republic of Korea), coordinating across condition the greater operating environment for cities around jurisdictions where necessary (as in the city-region the world. It is up to cities to take advantage of these of Bilbao-Basque Country), and promoting public- megatrends, as well as to mitigate negative forces such private collaboration (as in Bilbao; Guadalajara, as rising inequality, pressure on natural resources and the Mexico; Medellin; Wroclaw, Poland). environment, and a diminution of trust in public authorities. – Windows of opportunity – Cities should look out for This raises the question of the competitiveness agenda for opportunities, often
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