Liveanomics urban liveability and economic growth

l Sam Adams, mayor of Portland, Oregon USAl Andrew Carter, head of research, Centre for Cities UK l Greg Clark, city expert UK l Warrick Cleine, managing partner, KPMG Vietnam l Carol Co

Commissioned by Philips

reports, commissioned by Philips, which examine the issue of liveability in cities The first report

in the series addressed what city residents want from their cities, and how city leaders can deliver on citizens’ requirements This second report examines the role of business within cities The Economist Intelligence Unit bears sole responsibility for the content of this report The findings and views expressed within do not necessarily reflect the views of Philips

Our research drew on two main initiatives:

l In September 2010, we conducted a survey of urban professionals around the world In total, 575 respondents took part, representing cities in Asia (30%), North America (30%), Western Europe (30%) and the rest of the world (10%) See Who took the survey? for more details

l To supplement the survey results, we conducted in-depth interviews with business and civic leaders and other experts in urban affairs See Interviewees for more details

Sarah Murray was the author of the report, and David Gow contributed Iain Scott and Chris Webber were the editors We would like to thank everyone who participated in the survey, and all the interviewees, for their time and insight

January 2011

Who took the survey?

Respondents range in age, from 19-80, with most aged between 26 and 60 More than one-third have lived in their city for more than 20 years, one-fifth for 10-20 years, and another one-fifth for 5-10 years Three-quarters of respondents are married (of those, 58% have children) They are professionals

who work for a range of industries, with the majority from the financial and professional services, IT and technology, energy and natural resources, manufacturing, education and healthcare, publishing and media, and retail

Please note that not all figures quoted correlate precisely with the charts provided, typically because

of rounding

l Sam Adams, mayor of Portland, Oregon (USA)

l Andrew Carter, head of research, Centre for Cities (UK)

l Greg Clark, city expert (UK)

l Warrick Cleine, managing partner, KPMG (Vietnam)

l Carol Coletta, president and chief executive of CEOs for Cities (USA)

l Karl-Heinz Daehre, minister for regional development and transport, Sachsen-Anhalt (Germany)

l Ryan Gravel, urban designer and senior associate, Perkins+Will (USA)

l Frank Jensen, president, Eurocities and mayor, Copenhagen (Denmark)

l John Kasarda, co-author of Aerotropolis: The Way We’ll Live Next and a professor at University of

North Carolina’s Kenan-Flagler Business School (USA)

l Stanley Litow, head of corporate citizenship and corporate affairs, IBM; and president, IBM Foundation (USA)

l Teresa Lynch, senior vice-president for research, Initiative for a Competitive Inner City (USA)

l Josh McManus, co-founder and creative strategist, CreateHere (USA)

l Harold Miller, president, Future Strategies (USA)

l T.V Mohandas Pai, head of human resources, education and research, and board member, Infosys, Bangalore (India)

l Wally Olins, chairman of Saffron Brand Consultants, London (UK)

l Deanna Oppenheimer, chief executive of UK retail banking, and vice-chair of global retail banking, Barclays, London (UK)

l Professor Philipp Oswalt, head of the IBA and the Bauhaus Foundation, Dessau (Germany)

l Paul Romer, economist and senior fellow, Stanford Center for International Development and the Stanford Institute for Economic Policy Research, and Henry Kaufman visiting professor at the Stern School of Business, New York University (USA)

l Terry Schwarz, director, Cleveland Urban Design Collaborative, Kent State University (USA)

l Todd Sinai, associate professor of real estate and business and public policy at the University of Pennsylvania’s Wharton School of Business, (USA)

l Fred Smith, chairman, president and chief executive officer, FedEx (USA)

l Regina Sonnabend, an urban planner at the Bauhaus Foundation (Germany)

l Colin Tweedy, chief executive, Arts & Business, London (UK)

Interviewees

Executive summary

T here is no doubt that the lives of cities and of the businesses located in them are inextricably

intertwined But how closely linked are cities’ economic growth and their liveability?

A survey of urban professionals conducted by the Economist Intelligence Unit shows that the idea

of liveability has a number of different components Jobs and cost of living, public transport and roads, safety and security and culture and nightlife all rank highly among our respondents’ list of factors contributing to a city’s attractiveness as a place to live and work

In the first report in this series, we spelled out the strategies policymakers need to adopt in order

to maintain and improve liveability for citizens Some of the key steps include providing a good public transport system, getting a bigger say in planning policy, taking a more sensitive approach to urban design and handing over more control of public services to citizens This second report explores the relationship between business performance and liveability in cities, and highlights some of the ways

in which business and policymakers are working together to make cities more liveable

Whatever the type of challenge being faced by an individual city, improving liveability can only help to strengthen its attractiveness for residents, workers and potential investors But coming up with a realistic and effective strategy for boosting economic growth is a hugely difficult challenge, particularly when wider economic forces are working in the opposite direction History has shown that long-term shifts in patterns of trade across the globe and the introduction of new technologies

or production methods can undermine the industries upon which some cities were built Declining cities in the former manufacturing heartlands of the north of England and in the “rust belt” of the United States provide powerful evidence of this And, try as they might, policymakers have frequently found it agonisingly difficult to hold back the tide of change

Even in those cities where economic growth is occurring, the challenge of enabling this can be enormously complex Often the problem is that those people already living in high growth areas resent the changes associated with it and try to block the developments and investments—in housing and transport, for example—that are needed to facilitate growth Rather than blocking growth altogether, however, these kinds of obstructions frequently lead to congestion and affordability problems as more and more people and businesses try to cram into houses, offices and trains that were simply not designed to meet such high levels of demand

It is important to look at liveability—a misunderstood and often misused term—but equally important to understand that for citizens and companies, there is a clear hierarchy of needs What is clear from our research is that what business primarily wants from city leadership is policy that helps to stimulate job creation, followed by basic liveability factors such as good infrastructure, schools and

so on

Mayors and civic leaders can occasionally be beguiled by the “softer” aspects of liveability Opera houses, parks and other assets associated with liveability are all important components of great cities’ brands, but getting the basics right first helps cities to compete globally on a more equal footing.Among the key findings of our research are:

Jobs take precedence over liveability when people are choosing where to locate

Our survey shows that the main reason for urban professionals to move to a city is its jobs market and cost of living Moreover, respondents say that their organisation’s main benefit in being located in their city is its access to talent and labour But with workforces increasingly prepared to relocate for the best opportunities, there is a question mark over policymakers’ ability to develop local skill levels and encourage skilled workers to remain in their city

Deliver the housing needed to meet demand

As we spelled out in our first report, rising house prices are often seen as a sign of a city’s economic success One important challenge for policymakers who are looking for ways to help maintain their city’s economic growth is to make sure that there is enough housing to meet demand in economically dynamic areas Failure to do so can result in housing affordability problems, dissuading talent from moving from low-performing to high-performing areas This is not simply an issue for policymakers As Todd Sinai of the University of Pennsylvania’s Wharton School of Business points out, “in a city that’s more expensive, the first thing that has to happen is that workers need to get paid more”

Open the door to foreign investment

In difficult economic times, policymakers are often pressured into favouring support for local businesses over foreign companies But such strategies are not necessarily the right way forward, according to our survey—only 15% of respondents see that as a priority for their civic leaders, as opposed to almost one-third who would prefer it if multinationals were encouraged to set up shop in their city, in order to make it more competitive for business The presence of multinational companies

in a city can raise its image elsewhere, and branding can play a big role in the business life of a city More than one-half of respondents regard their city’s international profile and good reputation as important benefits to their organisation’s decision to locate there, and nearly three-quarters believe their city’s image helps it to attract important industries

Enlist the help of the commercial sector

Respondents to our survey consider that it is the public sector that should shoulder most responsibility for services such as public transport and the maintenance of parks and schools But the business sector already plays a key role in developing cities’ liveability, supporting culture, sporting events, healthcare

facilities, transport infrastructure and environmental initiatives As civic leaders face tighter budgets they should be prepared to take the initiative in asking business for more help The cost to the city of London’s ambitious cycle hire scheme, for example, would have been far greater without a substantial investment from Barclays, a bank Of course, in engaging in philanthropic endeavours an organisation’s ambition may largely be to generate brand awareness But Londoners, for their part, have shown that they are prepared to become two-wheeled advertisements for Barclays in exchange for a more convenient journey around town.

Focus on the basics of urban life – transport, roads, houses, schools and safety

When a city secures a major sporting event such as the Olympic Games, is it a boon for business? Urban professionals don’t think so They think it is far more important to get the basics right by improving public transport and roads, providing better schools and improving safety CEOs such as FedEx’s Fred Smith agree “Ultimately, you have to have both good economics and good quality of life—they feed each other,” he says

From the earliest times of human commerce, when trade crossroads became sites for settlements,

the world’s greatest cities have arisen and flourished around commerce Florence had its Medici bankers; Flanders its wool merchants; Manchester its cotton mills; and Detroit its carmakers

Wherever you look around the world, business has often played a pivotal role in the story of urban growth and change

Business continues to play a central part in the development of the world’s cities, but the economic role played by different cities has evolved over time as the forces of globalisation and technological change have reshaped patterns of trade and shifted the focus of business growth Some cities, including Manchester and Detroit, have declined as the industries on which they were built have shed jobs Others, such as Bangalore in India and Beijing in China, have grown rapidly as economic growth

in developing countries has surged

Against the backdrop of intense competition and long-term change, urban policymakers must find ways to maximise their city’s economic growth In attempting to do so, many have become interested

in the relationship between economic growth and liveability The thinking is that businesses and highly-skilled workers, particularly those in mature industrialised economies, are increasingly basing their location decisions on the quality of life on offer in a city as well as the strength of its economy The basic idea, therefore, is that if city leaders can improve the liveability of their city, they can attract the businesses and skilled workers needed to grow their economies

This argument seems straightforward enough, but how strong is the relationship between liveability and economic growth in cities? Can a modern city thrive without having a high quality of life? Which other factors influence economic performance in cities? And, after looking at the evidence, what should be the priorities for city leaders trying to stimulate economic growth in their areas?

Introduction

What businesses want from cities varies enormously As Greg Clark, an adviser to city agencies

around the world, says: “If you’re in film, fashion and TV you want London or New York—big and dirty, with lots of different people and real edge that creates a buzz If you’re doing bioscience

or pharmaceuticals, you want precision labs and so you might prefer Boston, Zurich or Singapore.” But despite the diverse range of needs that businesses have, there are some requirements

that are important to all We discuss these below and explain the role that liveability plays in fostering their development

n Experts differ on the importance of quality of life as a driver of economic growth

Part I: What businesses need from cities

39 29

24 21 15

14 11 9 8 3

8

To seek better work opportunities

I was born here/it has always been my home

I was posted here by my employer

For healthcare considerations Other

What were your main motivations in coming to your city? Select up to three

(% respondents)

In our survey, access to talent and labour were cited by 63% of respondents as being what makes their city a good place in which to locate their organisation, while 58% said that their organisation had chosen its location because it could access a happy, healthy workforce One-third of urban professionals say improving schooling and education would make their city more competitive for business, making it their second-highest priority.

Businesses are looking for a deep talent pool in the fields in which they need to be successful,” says Carol Coletta, president and chief executive of CEOs for Cities, a US network of urban leaders “Talent pools in places where there are other talented people That speaks highly to the need for quality of place and quality of opportunity.”

Cities’ power to attract talent is why KPMG sited its Ho Chi Minh City offices in the downtown area, rather than where its clients are, in industrial zones outside the city “The number one reason for being located where we are is the people,” says Warrick Cleine, managing partner of KPMG Vietnam

“What forms part of being an employer of choice is having a high-quality office building and shops and restaurants around it that staff can go to.”

There is a question mark over just how much city leaders and other policymakers can do to retain skilled workers, however “A lot of places are successful in developing talent because they have the right higher education institutions, but they can’t necessarily hang on to that talent,” says Ms Coletta Andrew Carter, head of research at Centre for Cities, a London-based think-tank, explains that this is because workers are increasingly mobile “When a city is creating jobs, its population tends to increase and when it’s losing them its population falls,” he says “That’s just a normal part of the adjustment process in all economies Skilled people find it easier to access jobs elsewhere so they’re often among the first to leave when the jobs begin to dry up It’s very difficult to see how city leaders in places like Liverpool [UK] can prevent that from happening.”

“What forms part of

32 29 27 25 22 15

12 11 7

Improving public transport/roads Improving schooling/education Encouraging multinational companies to set up business Improving safety and security

Raising the city's profile and improving its reputation Reducing corruption

Reducing environmental impact Supporting local businesses ahead of multinationals Improving healthcare facilities and access to care Attracting major sporting/cultural events Other

What do you think should be the main priorities for your city's mayor/leadership in order to make your city more competitive for business? Select up to three

(% respondents)

Transport and connectivity

Transport connections have always been a key driver of economic growth in cities and towns In the past, a city might have grown up around a river crossing Today a city’s growth is more likely to be linked to its proximity to an airport (see box), port or motorway hubs

In our survey of urban professionals, 37% of respondents regard transport links to other key cities and markets as being a primary benefit of being located in their city And 61% of respondents say city leaders should address transport, far ahead of factors such as better education (33%), encouraging multinationals to set up business (32%), and improving safety and security (29%)

Getting people to work on time is one function of a good transport system But our respondents’ emphasis on transport links reflects another evolving trend—the fact that the line between people’s professional and private lives is becoming increasingly blurred

“Time is becoming ever more valuable,” says Ms Coletta “Technology is becoming richer and more diverting and as a result people are living 2-7, so if you don’t provide good public transport or alternatives to the automobile that’s a real problem.”

Deanna Oppenheimer, the chief executive of UK retail banking at Barclays, argues that good transport systems are essential to the economic health of cities such as London, where the company sponsors a city-wide cycle hire scheme “Investment and improvements to London’s transport infrastructure will assist economic prosperity in the city,” she says

Transport systems are clearly important both in maintaining quality of life and business performance, but policymakers should not see investment in transport as a magic solution that will always spark growth irrespective of underlying circumstances According to Mr Carter, “areas that have experienced decline often have transport systems that are easily able to cope with the demands now being placed on them because they were designed for much higher usage The fact that some areas have really great public transport systems doesn’t necessarily mean that they will be attractive to businesses and workers There are plenty of other factors at play.”

The aerotropolis

As transport and logistics companies gather around the world’s biggest airports and their related transport corridors, a new urban form is emerging: the airport city Professor John Kasarda

of the University of North Carolina’s Kenan-Flagler Business School argues that airports are set to shape urban development in the decades to come

“Show me the busiest airports today and I’ll show you the great urban centres of tomorrow,” he says

Professor Kasarda, who has co-authored a

book on the concept (Aerotropolis: The Way We’ll

Live Next), points to a shift in many places where

airports no longer simply serve the city but have themselves become airport cities “They’re taking

on all the functions of a modern metropolitan centre,” he says “Upscale restaurants, casinos, hotels, trade and exhibition complexes and financial units are all locating around the airport, and this is creating a second downtown.”

“The aerotropolis should bring together urban and regional planning, and business strategy and site planning,” Professor Kasarda continues, “so airports function more efficiently and the region itself is more economically efficient, aesthetically appealing and environmentally sustainable.”

Affordable housing

Liveability also means being able to find decent, affordable housing Housing features highly among the schemes highlighted by our respondents when asked to outline something they believe would benefit their city Many respondents suggest access to “affordable housing” One respondent cites

“mass housing projects and eradication of ghettos”, while another believes it would be beneficial to curb

“certain building restrictions that artificially inflate the cost of living.”

However, high house prices are not necessarily a problem in themselves “New York is expensive but

it has no trouble getting good workers,” says Todd Sinai, associate professor of real estate and business and public policy at Wharton “But in a city that’s more expensive, the first thing that has to happen is that workers need to get paid more.”

Indeed, high or rising house prices should probably be seen more as a sign of economic success, reflecting the fact that more people want to live in an area The big challenge for policymakers is to ensure that the supply of housing is meeting demand for it as this evolves over time In the UK in particular, the failure to build houses in economically dynamic areas where there is high demand, such

as London, Cambridge and Brighton, is regularly identified as one of the key failings of cities policy.1

As a result, there have been increasing volatility and affordability problems in the UK housing market, making it harder for people to move from low- to high-performing areas where jobs are more plentiful

on the local economy (an estimated US$28.6bn

in goods and services and US$8bn in total wages earned in 2007)

However, Fred Smith, FedEx Corporation’s chairman, president and chief executive officer, maintains that businesses support cities through more than wealth and employment generation

“Businesses should offer their particular expertise to the city at large and to segments within the city,” he says “We’re logistics experts, for instance, so we can share our expertise with any company trying to move goods, including non-profits such as food banks and

agencies providing disaster relief.”

In turn, Mr Smith says, cities need to offer incentives to make it attractive for companies to locate or do business in them He cites sales tax exemptions on new equipment, tax moratoriums

on land or capital improvements, tax incentives for industrial investment or the creation of jobs, tax exemption to encourage research and development, and accelerated depreciation of industrial

equipment Cities, he adds, can also provide bond financing and loans for construction and equipment Beyond such business incentives, however, Mr Smith stresses that quality of life—good schools, safe neighbourhoods, cultural opportunities, reasonable living costs—is critical in attracting businesses to a city, fuelling the local economy, which in turn generates more jobs and attracts more businesses “It’s a restorative cycle,” he says

“Ultimately, you have to have both good economics and good quality of life They feed each other.”

1 Nickell, S ‘Housing’

in Options for a New

Britain London: Palgrave

(2009); Aldred, T Arrested

Development: Are we

building houses in the right

places? London: Centre for

Cities (2010)

efficiency is reflected in some of the things our respondents say they would like to implement in their city “Make city government more transparent and accountable,” says one Others would like

to see a reduction in “red tape” and “barriers to business” Meanwhile, 20% of respondents say that good local governance and political stability are the main benefits of being located in their city And with most city leaders across the world facing a prolonged period of fiscal austerity, they may find it worthwhile to increase their engagement with business to both understand their needs and draw on their expertise

Liveability and city growth: a mixed picture

While the idea that city growth and liveability might go hand in hand is appealing, experts’ views differ

on the importance of quality of life as a driver of economic growth

Harold Miller, president of US consulting firm Future Strategies, argues that “Pittsburgh’s greatest strength is quality of life People want to come to an area with a high quality of life and lots of amenities that were built up over decades.” And Greg Clark suggests that companies look to cities

to provide the liveability factors that can attract a healthy supply of talented workers to their doors because “businesses follow talent and talent follows quality of life”

Meanwhile, Mr Carter recognises that liveability can be an important factor in the location decisions

of people and businesses, but stresses that the city growth equation tends to be more complicated than this “Studies show that the processes of globalisation and technological change have created

a long-term shift in the geography of job creation in the UK Improving a city’s liveability may help

to maximise economic growth, but we shouldn’t pretend that’s going to completely reverse a major long-term shift in where jobs are being created I’m afraid the evidence just doesn’t support that kind

of conclusion.”

Liveability takes on a whole new meaning when it comes to employment—nobody wants to live in a

city where there are no jobs Indeed, unless city leaders are able to foster economic opportunities, their city is likely to decline The evidence shows this clearly, with places like Detroit and Liverpool experiencing significant population losses over recent decades as the number of jobs available in these cities has fallen

This point is supported by the findings of our survey Almost 60% of respondents cite the job market and cost of living as the leading factor in their decision to live in a city And, of those respondents who have moved to their current city, 89% did so because they were either posted there by their employer

or because they were “seeking better work opportunities”

Concern about the availability of jobs and the strength of the economy over the next three to five years is also an issue for many of our respondents Nearly 0% cite economic uncertainty as one of the most critical pressures their city will face over this period And 30% say that improving the jobs market and cost of living would be one of the first things they would change in order to make life less stressful

Key points

n Unless civic leaders are able to foster economic opportunities, their city is likely to decline

n The benefit of tax breaks for businesses is hard to calculate—policymakers should look at other incentives

n Branding of cities plays an important role, both in attracting talent and in boosting business opportunities

Part II: What the city must deliver

58 47

44 34

28 23

20 17 17 6

Jobs market and cost of living Public transport, road links and parking Safety and security

Culture, nightlife and sporting facilities/events Access to decent childcare and education Parks and access to green/open spaces General environment and cleanliness Layout of the city, quality of its buildings and housing Access to quality healthcare

Range of shops and stores

In your view, which factors are most important to you in making a city an attractive place in which to live and work?

Select up to three

(% respondents)

On the other hand, urban professionals, who are often less vulnerable to unemployment than less skilled workers, are understandably more confident that their city can deliver on business and employment opportunities than on other things More than half (51%) of our survey respondents think their city has been performing well on this issue, significantly higher than those who cite social factors such as housing, safety, culture and community relations (37%) and infrastructure such as transport and utilities (26%).

Policies to spark business growth

While the public and non-profit sectors contribute to city employment, the private sector is often the main driver of growth in the jobs market And it will need to be relied upon even more heavily as public spending cuts are introduced by governments across the world over the next five years

So what can cities do to try to stimulate private sector jobs growth in their areas? Some have adjusted their tax regimes; San Francisco, for example, froze payroll taxes for two years, and also offered payroll tax incentives to businesses creating new jobs

However, Ms Coletta warns policymakers against relying too heavily on tax incentives when trying

to attract new businesses to locate to their city “In most cases, cities don’t know what the payback on tax incentives is,” she says “It’s very difficult to calculate, and most cities would be better off focusing

on other incentives—on the quality of talent, quality of place, quality of opportunity and making sure there’s a good business climate.”

In the wake of the global economic downturn, of course, a good business climate is harder to find

“Capital requirements are rising to the surface and there’s a real sense among small businesses that their access to capital is limited,” says Teresa Lynch, senior vice-president for research at the Initiative for a Competitive Inner City, a non-profit company founded to promote private sector engagement in inner city prosperity “It becomes more of a concern in cities that are concentrated in manufacturing,

a sector in which there hasn’t historically been a big equity play.”

Some cities are devising innovative programmes to help small businesses expand and generate employment In the US, Portland has set up working groups to develop microcredit programmes that could provide local entrepreneurs with access to capital and a micro-exchange, that would offer local investors opportunities to invest directly in local non-public companies.2

In good times and bad, cities also need to find ways of smoothing the path to business creation

“City governments can use their influence to speed up processes like getting telephone systems established, or reducing the time it takes from agreeing a lease to occupying a building,” says

Mr Clark

Many cities are using technology to do this, creating one-stop shops to which businesses can turn when establishing their enterprises, in order to obtain permits and licences, pay taxes and so on Singapore’s EnterpriseOne portal offers everything from market research and information on funding options to online business registration But a flashy online interface means little unless there is also back-office co-ordination between city departments “It’s important to have a political decision and a strategy from the beginning,” says Frank Jensen, president of Eurocities, a network of major European cities, and mayor of Copenhagen, which is providing a one-stop-shop for businesses locating in the

2 Portland job creation and

stimulus, Office of the City

Auditor, Portland, Oregon,

reducing the time it

takes from agreeing

a lease to occupying

a building.”

Greg Clark

city “If it’s based only on what the civil servants are dealing with, it’s much harder to concentrate all the functions in one office.”

Civic authorities can also support business incubation organisations, often in public-private partnerships In Pittsburgh, economic revival has been boosted by a culture of innovation, helped

by organisations such as the Pittsburgh Life Sciences Greenhouse, which is partly funded by the Commonwealth of Pennsylvania and the state’s department of community and economic development Some believe that the challenge of generating economic activity should be looked at more

broadly—and that means bringing artists and designers into the process In Chattanooga, Tennessee,

a non-profit organisation called CreateHere organises business planning workshops and initiates joint projects—such as the creation of a park in Detroit—that bring together individuals and groups from diverse sectors of the city, including artists, designers, architects, engineers and general contractors

Josh McManus, founder of CreateHere, says that few cities have yet to make the connection between creativity and economic development “In more cosmopolitan cities, there’s sometimes a recognition

of creativity as impacting quality of life,” he says “But to draw a link between sustainable economic development and creativity is very rare.”

Charter Cities in developing economies

Poor governance and corruption are often cited

as barriers to growth in developing countries, which are also home to some of the world’s fastest-growing cities But, as any policy expert

or development specialist will tell you, retrofitting for good governance is extremely difficult to do

Corruption is hard to weed out once it is embedded

in urban institutions, business models and cultures

One new concept in urban planning—called Charter Cities—explores ways in which good governance and freedom from corruption may

be built into new cities from the very start, by outsourcing their development The idea behind Charter Cities is that by building special reform zones, using unoccupied pieces of land and establishing charters to govern them, governments could quickly adopt new systems of rules that might

be very different from those that exist in the rest of the country

“Just as developing countries have learned that they can import technology, countries could leverage systems of governance that are working,” says Paul Romer, an economist and senior fellow at the

Stanford Center for International Development and the Stanford Institute for Economic Policy Research, and the Henry Kaufman Visiting Professor at NYU’s Stern School of Business

Professor Romer and his team have developed several Charter Cities scenarios In one, Australia and Indonesia join forces to create a new regional manufacturing hub Another suggests that Canada could develop a Hong Kong in Cuba, by modifying the existing treaty between Cuba and the US to shift control to Canada A Canadian administrator would establish and enforce legal protection and institutional stability for the territory

“Once you’ve appointed this strong executive,

it could look a lot like Hong Kong,” says Professor Romer “In Hong Kong civil service and regulatory traditions were brought in to some extent along with expatriates, but to a large extent they were developed by training people from the region.” Strong governance would attract foreign investors and residents to the city, while suburbs would emerge on the Cuban side of the city boundary As in the case of Hong Kong, the territory would eventually be returned to Cuban control, with

a special administrative treaty shaping how the city would be governed

However, he argues, it is something to which cities should devote more attention “Stimulating enough raw creativity in a community serves as the precursor to innovation,” he says “This innovation, when nurtured, turns into a much more sustainable form of economic development.”

City branding: Messaging for the metropolis

In the same way that companies need to advertise their products and services, civic leaders, planners and strategists need to be touting their cities’ strengths constantly in order to attract companies

to invest in their economies A city’s image also helps it to build and retain the vibrant, creative populations from which companies hire their employees

In marketing themselves, some cities have it easy Historic buildings and architectural monuments, seats of government and ancient academic centres guarantee many cities a place at the top of the metropolitan league tables

These big city brands exert a powerful pull—for example, despite their threats to desert London

in favour of better tax breaks in Switzerland, few bankers or hedge funds have actually done so Meanwhile, 73% of respondents to our survey believe that their city’s image helps it attract important industries For others, a strong dose of creativity is needed to establish the brand recognition that will help their cities compete socially, economically and culturally

Even big-brand cities face outdated views about what they represent “If you ask someone in Tokyo

or Moscow who’s not visited London what they know about London, in Tokyo, you’ll get Sherlock Holmes and in Moscow, you’ll get Charles Dickens and fog,” says Wally Olins, chairman of Saffron Brand Consultants “The levels of misunderstanding are vast for almost any city.”

To correct this, or build up a new image, cities need to be ready to spend money Toronto, in Canada, invested US$m in its Toronto Branding Project, launched in 2005 Part of the funding went on brand development and marketing, and consumer research was undertaken to identify what differentiated Toronto from other cities

“Starchitects”–celebrity architects—can also help to put cities on the map Since the Guggenheim Bilbao Museum opened its doors in 1997, Frank Gehry’s iconic design for the building has propelled

to international stardom the once little-known Spanish industrial city in which it is located If Bilbao

is anything to go by, then, the lesson for civic authorities seems to be that one way of creating distinction in an undistinguished city is to build it But some cities struggle to find or develop their identities, and instead try to mimic the characteristics of others “The tendency is to study the best practices and copy what’s safe because it’s been proven elsewhere,” says Ms Coletta “But you need to

do something new and stand out in a way that makes you different—and that’s a very difficult thing to get cities to understand.”

Ms Coletta cites the much-emulated Millennium Park in Chicago “You can pull it off the first time, but once you have the fifth version and people claim it’s their answer to Millennium Park, no one gets excited any more Then you’re an also-ran.”

The trick for cities is to recognise what they cannot be and to identify and emphasise their differentiating characteristics “Cities have to go though a painful process,” says Mr Clark “It’s about accepting constraints moving beyond rhetoric into reality.”

“You need to do

something new

and stand out in

a way that makes