Delivering Local Development
NEW GROWTH AND INVESTMENT STRATEGIES This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Photo credits: Cover ©Marketing Manchester.
© OECD 2013
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Foreword
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This work was undertaken as part of the LEED Programme’s Delivering Local Development activity led by Debra Mountford and is supported by the European Commission. The report case studies cover 11 countries: Australia, China, France, Germany, the Netherlands, Norway, Spain, South Africa, Switzerland, the United Kingdom and the United States. Sincere thanks are expressed to Amsterdam, Barcelona, Hamburg and Manchester for inviting the LEED Programme to carry out this analysis. We are grateful to Greg Clark, Chair of the OECD LEED Forum on Development Agencies and Investment Strategies who was the lead author and Tim Moonen who led the case study research. We are also grateful to Mike Emmerich and Baron Frankal, New Economy Manchester and Rachel Combie, Marketing Manchester; Arthur van Dijk, Amsterdam Airport Area; Michel van Wijk, Schiphol Area Development Company and Martijn van Vliet Department of Economic Affairs, City of Amsterdam; Jordi Sacristan, Barcelona Activa; and Melanie Parr, HafenCity. Other participating cities are duly thanked for their collaboration and support of the project. Lottie Tempest Mountford edited the 12 case studies. Richard Grange, Marketing Manchester and François Iglesias, OECD LEED designed the cover. Jennifer Allain prepared the report for publication. 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sector strategy created in 2011 in – New actor coalitions to co-ordinate and collect finances for key – “Humuslaag” – densification of research networks to prompt innovation Amsterdam tandem with the Amsterdam Economic projects – Five new sector-specific science parks Board – Research institute and university communities – Convert office space to alternative usages under “kantorenloods” scheme – Diverse specialisms in design, media, food, biotechnology, – Mechanisms to foster a start-up culture – employment markets, Barcelona Creixement (Growth) 30-point energy and sustainable mobility financing, spaces, spread of positive entrepreneurial values Barcelona initiative, complements 2011/12 – Gateway position to the Mediterranean – China and Mediterranean outreach strategy round-table EUR 1.4 billion Metropolitan Action Plan – Climate, quality of life – Leadership in smart urbanism through Mobile World Capital Set of initiatives led by the city of Boston – Highly diversified economy – 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sciences and Hamburg supports companies’ equity base – PROFI R&D project support up to EUR 1 million trade sectors – Hamburg Innovation Trust Development Programme supports high-risk SME technology products – “City Deal” to earn back up to GBP 30 million a year national tax – Improved co-operation with central government over revenues generated by metropolitan infrastructure investment transport delivery and housing – GBP 300 million Evergreen Fund using pension fund investments – High-tech Enterprise Zone around the airport, offering Manchester – Help areas transition from public sector investment – Regional Growth Fund attracts public-private bid co-operation five-year business rate discounts and simplified setup dependence – GBP 1.2 billion metropolitan Transport Fund borrows against – Resurrect development surrounding the airport future income and uses temporary increase in council tax '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(62(&' 32±3$57, 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Public investment tools Private investment tools and flows Key knock-on benefits – BoostInLyon start-up accelerator, supports 10-12 web – City chief financer of City of Entrepreneurship Programme and and creative start-ups a year mentor support network – EUR 90 million of public and private investment in – Eliminate barriers to entrepreneurship, grow networks Lyon – Competition for EUR 35 billion national scheme “Future BIOASTER microbiology institute. 70% private – Update of firms’ technological capability Investments” for funds in education, technology transfer, digital partner-funded industries – 65% private investment in Lyon Confluence development – 50:50 public-private Israeli partnership EUR 25 million joint healthcare technology fund – Science and technology Entrepreneurship Zone for – Entrepreneurialise centralised sectors – Re-organisation of state-owned enterprises to improve efficiency Nanjing 3 000 talents – Ideas and innovation impetus to make progress in of large-scale housing and transport projects – Personal financial incentives of EUR 120 000 emerging industries – 50% loan interest offset for small firm incubation and test phasing – Oslo Package 3 – toll fare increase which will fund road tunnel – Knowledge Partnership funding support for member modernisation, metro renewal and light-rail terminals institutions Oslo – Supports overall infrastructure and cluster priorities – Proposed EUR 100 million state fund for investments in – National R&D tax credit programme SkatteFUNN,highly entrepreneurship, healthcare and life science start-ups redistributive – Creation of coastal development zones, with simplified – Local government financing vehicle for public works. Companies – Diminished risk for transport infrastructure projects tax system, mature supervision. Infrastructure funded raise capital by lending and issuing bonds. City treasury injects – Attraction of Hong Kong, China banks, telecom and Shenzhen by bank loans and revenue from land-use rights. additional funds/collateral as needed. healthcare firms to set up in Qianhai – Relocation subsidies for IT firms, and incentives for IT – 3-5 year bond tranches as a check on local government debt – Increased contribution of ICT to GDP entrepreneurs – Rail Infrastructure Fund to integrate funding governance and waive interest on the debt financing up to 2030, to raise up to – Corporate tax of 21% (Zurich), 18% (Zug) and 12% – Maintenance of strong framework conditions for CHF 2.5 billion (Pfäffikon) corporations to invest Zurich – New agreements to share canton investment in bus, rail and – Wealth tax <1% – Improved art, performance and convention cycling – 50% tax reduction for some entrepreneurs infrastructure – Cantonal Lottery Fund for cultural projects and student housing '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(62(&' 3$57, 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prototyping and innovation – Unified metropolitan expression on sector development – HMG consolidates public marketing, tourism and Hamburg business development bodies under one aegis – Greater cluster management engagement with business community – GCMA has scope over unified labour market – New Greater Manchester Combined Authority – Institutionalised business leadership input into skills Manchester (GCMA) since 2011 and innovation strategy – Local Enterprise Partnership (LEP) – Streamlined agencies with more ambition in new sectors and markets – Incorporation of St. Etienne and Vienne into – More purposeful innovation clustering and metropolitan metropolitan governance orbit transport planning Lyon – 18 higher education institutions brought under – Re-arrangement of HEIs, research bodies, businesses “Université de Lyon” banner, resulting in Lyon Cité and private institutions in close mutual proximity Campus project – First regional planning strategy among seven cities – Reduction of 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38±3$57, '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(6 0$,1),1',1*6 7DEOH,National/supranational investments and impacts Main national/supra-national level investments What has changed since the crisis? Economic and growth benefits – EUR 1.4 billion upgrade of Zuidas business district transport connectivity, 70% – Commitment to core projects, especially – More balanced polycentric region with renewed Amsterdam nationally funded logistics and transport-related growth along designated corridors – European Investment Bank ongoing loans for Schiphol upgrades – Emergency debt-relief financing support, at – Helped develop a tax-free zone for entrepreneurs in the mobile technologies sector Barcelona the expense of cultural amenities and – Improved economic stability in the 22@ Innovation District infrastructure projects – USD 200 million capital grant state-level funding for key road works around – Growing amount of state aid from Boston Innovation District – More cohesive life sciences cluster Massachusetts – Health sector/hospital research funding – State government more attuned to city needs Brisbane – Shared funding for road infrastructure and AUD 600 million Supreme Court building – Incremental devolution of planning and – Greater capacity to manage urban sprawl tourism powers – Delegation of greater transport and housing – Transport infrastructure grant of EUR 300 million to cover 75% of MyCiTi rapid bus – Alignment with city’s job creation agenda powers Cape Town transit project – More responsiveness around sector and – Sharing 23% national fuel tax with local – World Bank investment in wind and photovoltaic sector competitiveness issues government to replace council levies – Key beneficiary of Federal Economic Stimulus Package, for e-mobility and universities – EUR 672 million of European Investment Bank loans from 2007-2011, including in – Recognition of cluster competitiveness to – More integrated academic-industry links Hamburg SME financing complement infrastructure support – Improved high-technology infrastructure – EUR 40 million of federal funds for aviation cluster from the Ministry of Education and Research – GBP 560 million Northern Hub rail investment – Support for GBP 130 million rail links with North England – GBP 32.5 million for sustainable travel projects – More competition for funding based on – Improved commuter accessibility, lower Manchester economic case. City beginning to be more – GBP 25 million Growing Places Fund allocation for key housing and Enterprise Zone congestion costs, talent pool expansion infrastructure successful in bids. – Nominated a super-connected city, awarded up to GBP 12 million from Urban Broadband Fund – Gap funding for key development projects – such as new football stadium and Turin – More targeted funding for a handful of growth – World-class research facilities Lyon rail link sectors – More jobs links with Italian firms – Support for Lyon biotechnology cluster Nanjing – RMB 68 billion (USD 10.7 billion) invested in urban construction in 2012 – More national support for software ambitions – Strong investment autonomy '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(62(&' 3$57, '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(6 0$,1),1',1*6±39 7DEOH,National/supranational investments and impacts cont. Main national/supra-national level investments What has changed since the crisis? Economic and growth benefits – Development of Innovation Norway, which co-operates with the private capital market – Preparation of SMEs for international – More supportive agenda around exports and Oslo to facilitate innovation competition global growth – Recognition of functional economic region – Improved independent investment capability, – Infrastructure stimulus package including metro, high-speed rail and airport size of Guangdong province Shenzhen ability to bridge gap on large public works investment – Permitted creation of joint ventures projects – Regulatory relaxation in Qianhai Zone – Federal Institute of Technology’s Hönggerberg “Science City” campus – EUR 330 million over ten years – Support for six kilometres underground cross-city link, Durchmesserlinie. In tandem – Deadlock over funding channels and – Important cross-border mobility Zurich with canton arrangements for key infrastructure projects enhancements – e.g. Limmat Valley – Delays to Brüttener Tunnel and the Zimmerberg Base Tunnel because of a lack of federal government funds '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(62(&' 40±3$57, '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(6 0$,1),1',1*6 Local business climate and stable framework conditions DUH WKH ILUVW FULWHULRQ FLWLHV DUH DVNLQJ RI WKHLU QDWLRQDO JRYHUQPHQWV 7KLV PHDQV D IRFXV RQ PHGLXPWHUP HFRQRPLFVXFFHVVZKLVWDOVRSURWHFWLQJDQGQXUWXULQJIUDJLOHEXWLPSRUWDQWGHYHORSPHQWV )LQGLQJQHZPHDQVWRLQYHVWLVFULWLFDOIRUIXWXUHMREFUHDWLRQ&RPSHWLWLYHDQGVWHDG\ FRUSRUDWHWD[UDWHVVWHDG\HPSOR\PHQWODZVDQGDZHOFRPLQJEXVLQHVVDQGLQYHVWPHQW HQYLURQPHQWDUHWKHLQLWLDOEDVLVXSRQZKLFKILUPVDUHFXUUHQWO\FRQVLGHULQJUHORFDWLRQ DQGLQYHVWPHQW&LWLHVWKDWDUHFRQIURQWHGE\SROLWLFDOYRODWLOLW\DWWKHQDWLRQDOOHYHOILQG 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JRYHUQPHQWVZKLFKDUHUHOXFWDQWWRLQWHUQDOLVHHYLGHQFHRIXUEDQIXQFWLRQDOVFDOHZKHQ FRQVLGHULQJSROLWLFDORUHFRQRPLFUHGLVWULEXWLRQ6KHQ]KHQZDVRQHH[DPSOHZKLFKUHOLHG RQ*XDQJGRQJSURYLQFHWRUHFRJQLVHWKH3HDUO5LYHU'HOWDDVDIXQFWLRQDOODERXUPDUNHW +LJKHUWLHUVQHHGWRDFNQRZOHGJHWKHVHUHDOLWLHVLQRUGHUWRWKHQ IXQG WKH UHTXLVLWH LQWHUQDOFRRUGLQDWLRQ Facilitating the expansion of the private rented housing sector LVDQDWLRQDOOHYHO UHVSRQVLELOLW\ WKDW LV LQFUHDVLQJO\ XUJHQW IRU FLWLHV H[SHULHQFLQJ UDSLG DFFRPPRGDWLRQ UHQWDOFRVWVWKDWLPSDFWRQFRPSHWLWLYHQHVV7KHQDWLRQDOJRYHUQPHQWVDUHLQWKHVHFDVHV DVNHG WR IDFLOLWDWH WKH DWWUDFWLRQ RI PRUH LQVWLWXWLRQDO LQYHVWRUV LQWR SULYDWH KRXVLQJ DV PHDQVWRH[SDQGKRXVLQJFRQVWUXFWLRQ The development of an evidence-based and trend-based rather than politicised approach to local economies LV D VLJQLILFDQW GHPDQG RI QDWLRQDO JRYHUQPHQWV &LWLHV UHTXHVWWKDWFHQWUDOJRYHUQPHQWVSURSHUO\KRQHDQGGLIIHUHQWLDWHWKHLUDSSURDFKWRUHJLRQV EDVHG RQ GHWDLOHG DQDO\VLV DQG XQGHUVWDQGLQJ RI WKHLU HFRQRPLF 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R&D, especially vis-à-vis the clean technology sector Cape Town (e.g. REFIT pricing regulation) – Business climate signals and assurances – e.g. macroeconomic policy, transparency – National infrastructure funding support for waterways, railways and motorways Hamburg – Improved wind sector incentives – Investment in high-speed broadband across the whole region, and improved mobile infrastructure along key Manchester transport corridors Lyon – Funding and prompt finalisation of the Lyon-Turin tunnel rail link Nanjing – Provide more distinctive message about Nanjing’s higher education offer and entrepreneurial potential – High-speed rail commitment to link with Stavanger and Berge Oslo – Infrastructure to match spatial cluster needs – Less political volatility at national level over investment – Swift completion of high-speed rail projects in the Greater Pearl River Delta – to Guangzhou/Macau – and also Shenzhen to Beijing and Shanghai – Gap funding for major rail and road tunnel 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Chinese companies investing around airport since 2007 – France, Netherlands and United States are key sources – Multinational investment in software, chemicals, – Grasp of Barcelona’s potential as a gateway to Barcelona imaging, ICT, automotive, mobile applications, agrifood Mediterranean markets, because of its port – Substantial EUR 500 million Hong Kong, China investment in port expansion – Very large developer investment in Innovation District real estate – Funding more school tuition in tandem with – Influx of European life science firm investment, public sector Boston alongside beneficial distribution of federal health funds – Investment in summer internship scheme to – Investment in Harvard Business School from Tata improve post-school skills Group – Foreign and institutional investment mostly active in quality central property assets – Firms seeking direct exposure to the thriving Brisbane – Institutional investors engaged in PPPs for toll road Queensland economy projects – Banks leading funders and guide central city overhaul – Surge of investment in wind/photovoltaic sectors – Expansion of business district and regeneration – Small but growing interest from Saudi Arabia Cape Town of keynote areas and Singapore – Convention Centre precinct EUR 500 million, – Growing role of banking industry private-led – Logistics and industrial firms traditional big investors – Increase in private house-building – High volumes of office take-up and new office building Hamburg projects – More Korean and Japanese investment in advanced energy and shipping industries – Open-ended real estate funds very active – Reliance on expanding US firms, also German and Italian. Most investment in ICT, life sciences, advanced – Recognition that Manchester is a cheaper and Manchester manufacturing viable location for national and European headquarters – Abu Dhabi Investment Authority – French biotechnology firms heavily active – Established technology firms show more support Lyon – Fast growing SME setup in online for SME and start-up community business/e-commerce – Most foreign investment through economic and – Investment higher up the value chain in software Nanjing technology development zone and service outsourcing – Investment in cultural flagship projects – Large real estate investment influx due to Oslo – Surrounding niche financial services stability and low debt – Japanese investment in retail, electronics – Boom in foreign investment in real estate, – Large interest from multinational in fully-furnished vehicles and infrastructure Shenzhen business-equipped office centres – Recognition from finance and business services – Hong Kong, China and global 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UHTXLUHGLQWKHFKDQJHGODQGVFDSHQRZIDFHGE\PDQ\RWKHUV '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(62(&' 3$57, '(/,9(5,1*/2&$/'(9(/230(17 1(:*52:7+$1',19(670(17675$7(*,(6 0$,1),1',1*6±47 References $&6$ ³3DVVHQJHU7RWDOV´www.acsa.co.za/home.asp?pid=137. $'9 ³6WDWLVWLN ,9) ´ www.adv.aero/verkehrszahlen/archiv/statistiken-ivf- 2011. %URRNLQJV,QVWLWXWLRQ ³*OREDO0HWUR0RQLWRU´www.brookings.edu/research/inter actives/global-metro-monitor &LYLO $YLDWLRQ $GPLQLVWUDWLRQ RI &KLQD ³&LYLO $YLDWLRQ $LUSRUW 7UDIILF ´ www.caac.gov.cn/I1/K3/201203/P020120321570053265625.xls. &ODUN* Recession, Recovery and Reinvestment: The Role of Local Economic Leadership in a Global Crisis /RFDO (FRQRPLF DQG (PSOR\PHQW 'HYHORSPHQW /((' 2(&'3XEOLVKLQJ3DULV &ODUN*DQG-+X[OH\ ³5HFHVVLRQ5HFRYHU\DQG5HLQYHVWPHQW 7KH5ROHRI /RFDO (FRQRPLF /HDGHUVKLS LQ D *OREDO &ULVLV ± 7KH %DUFHORQD 3ULQFLSOHV LQ 3UDFWLFH´LQ%DLOH\'DQG&&KDSDLQ HGV The Recession and Beyond: Local and Regional Responses to the Downturn5RXWOHGJH2[IRUGSS &ODUN * - +X[OH\ DQG ' 0RXQWIRUG Organising Local Economic Development: The Role of Development Agencies and Companies /RFDO (FRQRPLF DQG (PSOR\PHQW 'HYHORSPHQW /((' 2(&' 3XEOLVKLQJ 3DULV GRL 10.1787/9789264083530-en '&/ 'H[LD&UHGLW/RFDO DQG&(05 &RXQFLORI(XURSHDQ0XQLFLSDOLWLHVDQG5HJLRQV Subnational Public Finance in the European Union www.ccre.org/en/communiques/view/338 ,0) ,QWHUQDWLRQDO 0RQHWDU\ )XQG Fiscal Monitor: October 2012 www.imf.org/external/pubs/ft/fm/2012/02/pdf/fm1202.pdf. /HH< ³*URZWK,PSDFW9DOXHWKURXJK6WUDWHJLF3DUWQHUVKLSV´SUHVHQWDWLRQIRU %RVWRQ:RUOG3DUWQHUVKLSVDYDLODEOHDWwww.slideshare.net/ashish_tandon/boston-as- a-preffered-investment-destinationDFFHVVHG2FWREHU 0DVVSRUW ³$LUSRUW 6WDWLVWLFV´ www.massport.com/logan-airport/about- logan/Pages/LoganStatistics.aspx. 0F.LQVH\ *OREDO ,QVWLWXWH ³8UEDQ :RUOG 0DSSLQJ WKH (FRQRPLF 3RZHU RI &LWLHV´www.mckinsey.com/insights/mgi/research/urbanization/urban_world. 0F.LQVH\ 4XDUWHUO\ ³*OREDO &LWLHV RI WKH )XWXUH $Q ,QWHUDFWLYH 0DS´ www.mckinseyquarterly.com/Cities_the_next_frontier_for_global_growth_2758. 0HWURSRROUHJLR $PVWHUGDP Economische Verkenningen 2011 www.metropoolregioamsterdam.nl/files/Economische%20verkenningen%20MRA%20 2011.pdf 8. &LYLO $YLDWLRQ $XWKRULW\ ³8. $LUSRUW 6WDWLVWLFV´ www.caa.co.uk/default.aspx?catid=80&pagetype=88&pageid=3&sglid=3. :&('3 Prospectus: Lead. 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