3.1•The Randstad: the Creation of a Metropolitan Economy Pietertordoir

A. The Economic, Infrastructural and Environmental Dilemmas of Spatial Development 3.1•The Randstad: The Creation of a Metropolitan Economy PieterTordoir Introduction In this chapter, I will discuss the future scenarios for the spatial and economic development of the Randstad (the highly urbanized western part of the Netherlands). Dur- ing the past 50 years, this region of six million inhabitants, four major urban centers and 20 medium-sized cities within an area the size of the Ile de France evolved into an increasingly undifferentiated patchwork of daily urban systems, structured by the sprawl of business and new towns along highway axes. There is increasing pressure from high economic and population growth and congestion, particularly in the northern wing of the Randstad, which includes the two overlapping commuter fields of Amsterdam and Utrecht. Because of land scarcity and a rising awareness of environmental issues, the Dutch planning tradition of low-density urban development has become increasingly irrelevant. The new challenge is for sustainable urban development, where the accommodation of at least a million new inhabitants and jobs in the next 25 years must be com- bined with higher land-use intensities, a significant modal shift to public transportation, and a substantial increase in the quality and diversity of the natural environment and the quality of life in the region.1 Some of these goals may be reached simultane- ously by concentrating development in high-density nodes that provide a critical mass for improved mass transit systems, rendering an alternative for car-dependent com- muters. Furthermore, a gradual integration of the various daily urban systems may benefit the quality and diversity of economic, social, natural, and cultural local envi- ronments within the polynuclear urban field. The catchword for this planning ambi- tion is the creation of a “Delta Metropolis,” which will involve a highly complex mix- ture of private and public investment and regulation. The knowledge base for this type of complex urban planning and development is growing, but a cornerstone for the suc- cess of the new planning policy has been altogether neglected: the economic base. This base is the subject of this chapter, which regards the past, present, and possible futures of the Randstad region economy and the possible support it may provide for the spatial development ambitions discussed above. The thesis put forward here is that the planning objectives for the Randstad can only be achieved if the economic structure gains a truly and internationally competitive 105 metropolitan character, where the high costs of sustainable, high-density and high- quality urban development are matched by high productivity and the value added by the urban economy. This should involve spiralling agglomeration economies, widen- ing and diversifying markets, subsequent increases in quality, the specialization of productive resources and business activities, and the reinvestment of resulting profits in the capacity and quality of local resources. Is such a “metropolitanization” scenario viable for the Randstad economy? 2 There are many uncertainties. The Randstad can only partially be characterized as a metropolitan-style economy. It is unknown whether such an economy can be “made” by policy. Even if the spatial economy starts to take the desired turns, the road will con- tain numerous pitfalls. Excessive costs of advanced transportation links might impede any further investment along the way. More generally, an imbalance between investment costs and benefits will cause a downward spiral of price inflation, investment failures and, eventually, stagnation. Cities can easily tip the fine balance between agglomeration economies and agglomeration diseconomies the wrong way. Price, density, and congestion levels and average commuting times com- mon for cities like London and Paris may be socially unacceptable to the Dutch. The accommodation of economic and spatial market growth without transport congestion will be difficult, and will require a doubling of public transport capacity in the next 25 years. And, finally, the market for a metropolitan-style economy may be a zero-sum game in Western Europe, in which case the Randstad will have to win its market share in high value-added activities from London and other nearby competi- tors. Nonetheless, because of the sharply increasing scarcity of land, the congestion, the ageing population and the rising demand for a higher quality of life and a better environment, the Randstad has no option but to develop an economy that can bear the ensuing financial burden. In order to keep inflation at bay and international competi- tiveness above par, productivity levels, which have for a decade been at a standstill in the Netherlands,3 have to find a structural growth path in the coming decades. Pro- ductivity can basically be stimulated in three ways: by innovation, by firm-internal economies of scale, and by external economies. The first two are traditionally the focus of economic development policy, and the third should become a new focus for economic policy. Spatial structure and limitations should become levers for external economies and productivity growth, and not a burden. This, in a nutshell, is the economic challenge for the Randstad. In this chapter, the conditions for a metropolitan-style economic and spatial development plan in the Randstad are discussed on the basis of urban and spatial economic theory on the one hand and historical and contemporary evidence on the other. The next section presents a concise overview of the economic history and current development issues of the conurbation, put in the wider geopolitical context of economic networks and urban structures in Western Europe. In a subsequent section, a discussion of mainstream agglomeration theory is followed by new theoretical concepts for advanced metropolitan functions and economies. After a crude assessment of the Rand- 106 PIETER TORDOIR stad economy in these terms, I conclude with preliminary policy recommendations and suggestions for further research. Lessons from Economic History The origins and futures of metropolitan economies must first of all be understood in the context of geopolitical trends and the intermediation of states and trading blocks in the formation of international trade zones. Metropolitan economies are connected to global markets and are highly dependent on the free movement of capital, labor and entrepreneurial talent. The metropolis harbors entrepreneurial communities from many nations with which it maintains economic and cultural links. Metropolitan economies are “the world in a city” – a global village avant la lettre, a local arena for the global network economy – where trade links are forged and managed. Global and local networks are thus juxtaposed in the metropolis,4 in which the state level has an in- triguing role. Ever since states started to determine conditions for trade and migra- tion, metropolitan fortunes have been related to changes in political geography. The rise and fall of Amsterdam in the sixteenth and seventeenth centuries is a telling ex- ample. In Europe, the disintermediation of the state is highly significant for the European urban system and the future of the Randstad economy. The responsibility for the spa- tially unrestricted conditions of an open economy, such as monetary and legal systems, is gradually shifting from the national to the EU level. Many economic conditions and resources are restricted to the urban and regional level, however, including markets for land, housing and labor, basic education, local infrastructure, and the qualities of the social, cultural, and natural environment. They therefore demand co- ordinated development and regulation at the regional level. European integration thus leads naturally towards a “Europe of the regions,” where everyone benefits from the level playing field of an unrestricted market but where actual regional competi- tiveness for investment mostly depends on the local capability of sustained area-spe- cific productive resources. Thus, within the EU we see increasing regional divisions of labor and resources specialization, and urban network formation at the international level. For metropolitan economies, the opportunities can only increase. But so will the competition. Since the local resource base is becoming less a matter of natural advan- tages and more a result of collective human action, local and regional ingenuity will decide economic fortunes. Efficient urban planning is a crucial element of this kind of ingenuity. In the Netherlands, the international and local levels have always been closely juxtaposed. For most economic activities, the national level is not a significant market limitation; the Dutch economy depends greatly on localized activities with either regional or international supply and demand markets. Two cornerstones of the Dutch economy – the port of Rotterdam and Schiphol airport – are good examples in this re- spect. In a way, the disintermediation of states brings the Randstad region back to the geopolitical situations of the late Middle Ages, when economic and cultural develop- THE RANDSTAD:THE CREATION OF A METROPOLITAN ECONOMY 107 ment was triggered by geographically extended networks of trading cities. The juxta- position of favorable local conditions and global trading networks created prolonged economic growth and prosperity in the Low Countries during the late

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