Competitive Cities:

The challenge of inclusive growth

Professor Michael J. Enright
University of Hong Kong Enright, Scott & Associates Hong Kong Institute for Economics and Business Strategy

2011-11-15

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City Competitiveness
What is it?
The ability of the city to generate a rising standard of living for the citys residents. The ability to compete successfully in a range of economic activities that allows for economic advancement. The ability to contribute to regional and national development by providing services and support to a hinterland or other cities.

Why is it important? Because cities are:

Centers of population and opportunity Engines of development Markets for goods and services Service support centers Links to national and international markets Command, control, and coordination centers Public administration centers

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Competitiveness in
Industries

Activities

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Competitiveness in
Industries Clusters

Activities

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Competitiveness is systemic

Macro or National Level

Meso or Cluster Level

Competitiveness
Meta or Supranational Level

Micro or Industry Level Firm Level

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No single level can make a nation, region, or city competitive, any single level can make it uncompetitive
Industries/ Activities Competitive Industries/ Activities

Supranational

National

Cluster

Industry

Firm
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City competitiveness assessments

Firm Drivers Low-tech manufacturing Mid-tech manufacturing High-tech manufacturing Utilities Public services Financial services Professional services Manufacturing / ag support services Etc.
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Industry Drivers

Cluster Drivers

National Drivers

Supranational Drivers

Leverage points for developing country cities

Basic Urban planning Simple differentiation Intra-city roads Basic public transport Links to hinterland Basic telephony Running water in some places Variable electricity Policing in some areas Basic medical care Advanced Complex differentiation Multi-centric Spatial clustering Integrated, multi-modal systems Transport hub developments Global, intercity connections Internet Broadband Multi-media platforms Ubiquitous high quality utilities Consistency, uninterrupted Policing in all areas Advanced, varied medical care
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Transportation

Communication

Utilities Public services

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Leverage points for developing country cities

Basic Education, Training Primary Secondary Basic undifferentiated training Top-down Bureaucratic Non-transparent Day to day Tax breaks Infrastructure support Advanced Vocational Higher education Industry-specific training Interactive Professional Transparent Future-oriented Training support Targeted infrastructure Incubators Cluster development Streamlined regulation
Amenities, Retail, Food and Beverage, Entertainment Mixed use complexes, districts Competition for talent
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Administration

Business support

Lifestyle

Basic necessities Public safety

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Issue: Inefficient city structures

Most cities in developing Asia were built in earlier times
When life was very local Without modern transportation systems Without sufficient planning

The result is inefficient city structures

Undifferentiated cities, Limited geographic specialization No high interaction city centers Chaotic transportation, Urban sprawl

The solutions
Redevelopment (China) New satellite cities (India) Brand new cities (Malaysia) Vertical development and triage Strong planning systems

All this takes planning, execution, and finance

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Issue: Transportation challenges

Most cities in developing Asia have huge transportation challenges From the cities to the outside world Between centers within the city From outlying areas to city centers Within neighborhoods The results permeate the local economies Difficulty connecting to the rest of the world Difficulty supporting manufacturing and services Difficulty supporting agriculture and other primary production Solutions New highways (penetrating city core) and roads Mass transit systems New airport investment Focus on linking neighborhoods All this takes planning, execution, and finance
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Issue: Inadequate housing

(The Hong Kong and Singapore approaches)
The Problem
Large influxes of refugees Substandard housing Marginal, dangerous living Impossible to provide public services and utilities

The Results
40% of Hong Kong population in public housing 80% of Singapore population in publicly provided housing Two of the safest cities in the world Two of the best organized in terms of infrastructure Vast improvements in productivity

The Solution
Large scale, high rise housing provided by government Rental and sale depending on income levels

Public housing was one of the most important steps that allowed Hong Kong and Singapore to go from 3rd world to 1st world. All of this took planning, execution, and finance.
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Issue: Leveraging transportation for development (Hongqiao Transport Hub in Shanghai)

The Problem
No urban center for the western part of Shanghai Limited transport linkages with neighboring cities Limited long haul rail linkages Limited logistics capacity in western Shanghai Overcrowded airport, poor linkages to downtown Inadequate affordable housing, employment in western Shanghai Limited public services in western Shanghai
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The Solution
Hongqiao Area Transportation Hub (air, high speed rail, intercity rail, metro, bus routes, logistics center) Intensive surrounding development (office, retail, commercial, residential, industrial, logistics)

The new projects and surrounding development will decongest the city and allow Shanghai to enhance its position as a leading city
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ESAs Hub Area Project

Context
Chinas development Regional development Shanghai development

Assess potential for

High-end services Second-tier services Local services Logistics High-tech manufacturing Mid and low-tech manufacturing Creative and cultural industries High-end, affordable, relocation housing Utilities, amenities, entertainment, green spaces, public spaces

Lessons from
Airport related development Intercity and local rail development Polycentric cities Impacts of regional linkages Cluster-based development Industry-level competitiveness studies

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Functional layout

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Issue: Regional clusters and development

What are clusters?
Groups of firms in the same or related industries whose development is interdependent

Why are they important?

Economies develop through clusters They leverage and build local skills and capabilities They foster interaction and collaboration among firms They provide impetus and direction for innovative activities They develop and attract resources They allow locations to connect to the global economy They provide a useful unit for policy and public-private interaction

What are the types of clusters?

High technology agglomerations Low tech, labor intensive industries Fashion and creative industries Large scale manufacturing industries Small scale craft industries Business and financial services Anti-cluster clusters

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Clusters can be the subject (or object) of development policies

Overcoming specific market failures
Impacted information Managerial myopia Underprovision of public goods Coordination failures Cluster-specific information provision Cluster-specific education, training, infrastructure, services Cluster-specific research and technology programs Programs to foster linkages and coordinated action Investment promotion based on cluster dynamics

Through

Some of these approaches are not in the traditional multilateral arsenal

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Issue: Making urban development inclusive

Serving different parts of the community
Infrastructure Utilities, Public services Housing, Transportation Affordability and coverage issues

Improving public safety / health

Safe public spaces, such as community centers, retail locations, schools Safe water and food through sanitation and cold storage facilities Waste management to reduce disease Preventative and traditional medical care

Providing employment opportunities

Not just high-tech and modern services Construction, Tourism Urban support services Transportation and logistics Microfinance and small business promotion Traditional businesses

Community-based management and administration

Land, Transport issues Documentation issues Neighborhood-based services Ombudsman function

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Questions
How can traditional and new urban development paradigms be combined to promote development and prosperity? How can our traditional funding models be augmented to fund a combined approach? What modalities and structures should be put in place to leverage what we know about urban development and competitiveness to deliver better outcomes for the region? How do we build inclusiveness into the fabric of urban development in Asia?

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Thank you
Michael Enright
University of Hong Kong Enright, Scott & Associates Hong Kong Institute for Economics and Business Strategy Phone: 852-3101-8650 Fax: 852-3101-9635 E-mail: michaelenright@enrightscott.com

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