Adjusting to new economic
realities: local growth and
investment strategies.
Debra Mountford Udine, 2013
A challenging context for local
development
• Local economies confronted by serious
challenges in the pursuits of viable
e...
Lessons from our work
•
•
•
•
•
•

Growth Strategies
Investment tools and trends
Economic leadership
City approaches
Chall...
Growth Strategy
(1) More strategic cluster consolidation capable of growing
employment
– Improved pathways for intra-secto...
Growth Strategy

Economic Board

•
•
•

Integration along 2 development corridors
‘Humuslaag’- densification of research
C...
Growth Strategy

Manchester Greater Manchester Strategy

Lyon

Nanjing

Devised with CoC, the Univ/Lyon,
and business grou...
Investment Tools and Trends
Public investment
•Retention of revenues generated within metropolitan area (eg. Manchester)
•...
Main sources of investment since 2008

What’s changed?

Amsterdam

•
•

American investment leads in ICT, creative, financ...
Main sources of investment since 2008

What’s changed?

Manchester

•

Reliance on expanding US firms, also German and • R...
Public investment tools

Amsterdam

Barcelona

Boston

•

Scholarship Fund, 50% local govt, to
attract PhD-level talent

•...
Public investment tools

Manchester

•
•
•

Lyon

Nanjing

Private investment tools

‘City Deal’ to earn back up to £30m/y...
Delivery and organisational adjustments
Overcome political fragmentation through integrated city-regional bodies
-Increase...
How has national/regional government role
changed?
Amsterdam

•

Commitment to specific core projects (especially logistic...
A new kind of leadership
New ethos of pragmatism
•Compromises to improve the coherence of cluster and mobility strategies
...
What’s needed from national government?
• Local business climate and stable framework conditions
• Rationalisation of comp...
What’s needed from the private sector?

• Grasp the changing economic requirements of local areas.
• Foster a competitive ...
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Future Forum 2013 - Debra Mountford

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Future Forum 2013 - Debra Mountford

  1. 1. Adjusting to new economic realities: local growth and investment strategies. Debra Mountford Udine, 2013
  2. 2. A challenging context for local development • Local economies confronted by serious challenges in the pursuits of viable economic growth and job creation. • Local government budgets have been reduced. • National level funding streams and redistributive grants have diminished. • Access to private capital more demanding and risk averse.
  3. 3. Lessons from our work • • • • • • Growth Strategies Investment tools and trends Economic leadership City approaches Challenges for national governments The changing role of the private sector.
  4. 4. Growth Strategy (1) More strategic cluster consolidation capable of growing employment – Improved pathways for intra-sector sharing of technology and investment opportunities (2) Clearer support for SME research base around leading universities - commercially profitable synergies - More self-conscious HE cluster - international students/universities. (3) Growing jobs base by maximising reach into new global markets – pathways (events, missions, new air routes) for executives and business tourists – local businesses as international ambassadors and advocates
  5. 5. Growth Strategy Economic Board • • • Integration along 2 development corridors ‘Humuslaag’- densification of research Conversion of office space • Amsterdam 7-sector approach with Amsterdam Barcelona Key initiatives Start-up culture: financing, employment markets, space China outreach round-table Mobile World Capital Barcelona Creixement (Growth) 30• point plan • Boston Brisbane • 2031 Economic Development Plan Cape Town Economic Development Strategy Hamburg Innovation District Create Boston, single PoC • • • Conventions and cultural events Programme for Asian resource firms Digital Economy governance • • Metropolitan public transport corridors Radically improve the skills base. • • Cluster strategy in aviation, maritime, renewables Upgrade of port Initiatives of City of Boston and BRA • Vision Hamburg - Responsible Growth
  6. 6. Growth Strategy Manchester Greater Manchester Strategy Lyon Nanjing Devised with CoC, the Univ/Lyon, and business groups Key initiatives • • • Expand trade links - China, India, ME Grow Oxford Road science corridor Employer-led skills programmes • • • La Part-Dieu and Confluence districts BIOASTER institute of research Business ambassadors Live business development strategy • since 2009 • 321 Talent Plan to attract 3,000 entrepreneurs by 2016 Attract anchor engineering institutions • • World-class cluster groupings High-speed rail links with Gothenburg and Copenhagen • • • Qianhai – major new financial zone Large expansion of HE $2bn Creative Valley project Oslo Untitled Shenzhen Implemented through Five-Year Plan Zurich Metropolitan initiatives + Strategien • • Zurich 2025 Integrate clean technology cluster Expand spatial access for creative industries
  7. 7. Investment Tools and Trends Public investment •Retention of revenues generated within metropolitan area (eg. Manchester) •Decentralisation of nationally/provincially-held infrastructure funding mechanisms(Zurich) •Pursue core projects by trimming budgets (Amsterdam). •Consolidatation of regional investment capabilities (Cape Town) •Investment in training to maintain private sector jobs (Hamburg) Private investment •Privately-backed funds to grow science sectors (e.g. Amsterdam, Lyon and Nanjing). •Business-friendly Zones with favourable tax offerings and high accessibility (e.g. Manchester, Boston) •Competitions, accelerators and investment forums to better connect start-ups to private funds (e.g Lyon, Barcelona)
  8. 8. Main sources of investment since 2008 What’s changed? Amsterdam • • American investment leads in ICT, creative, finance. Twice as many Chinese companies investing Barcelona • • Netherlands, US and France - key sources in software, • Grasp of Barcelona’s potential as a chemicals, imaging, automotive, agrifood gateway to Mediterranean €500m Hong Kong investment in Port expansion. Boston • • • Developers instrumental in innovation district Influx of European life science firm investment Harvard Business School support from Tata Group Brisbane • Foreign and institutional investment mostly active in • Firms seek direct exposure quality central property assets, and toll road PPPs thriving Queensland economy Cape Town • • Banks primary funders of central city overhaul Convention Centre precinct €500m, private-led Hamburg • Logistics and industrial firms engaged in office- • Increase in private house-building building projects • More Korean and Japanese Open-ended real estate funds very active investment in energy/shipping • • Strong, growing Japanese logistics presence around airport. • Funding more school tuition • Summer internships scheme • Surge in wind/photovoltaic sectors • New interest from S.A./ Singapore to
  9. 9. Main sources of investment since 2008 What’s changed? Manchester • Reliance on expanding US firms, also German and • Recognition as a cheaper and viable Italian, esp.ICT, life sciences, advanced location for headquarters manufacturing Lyon • • French biotechnology firms Fast growing SME setup in e-commerce Nanjing • Most foreign investment through Development Zone. • Investment higher up the value chain in software and outsourcing. Oslo • • Investment in cultural flagship projects Surrounding niche financial services • Large real estate investment influx due to stability and low debt Shenzhen • • • Japanese investment in retail, electronics. MNC interest in business-equipped offices HK and global financial firm interest in Qianhai • FDI boom in real estate, vehicles • Recognition of Qianhai Zone’s regulatory advantages Zurich • • • Established tech firms show more support for SME and start-ups Swisscom CHF300m investment in fibre-optic network • More partnered investment in Local investment from headquarter bodies: e.g. FIFA cultural institutions
  10. 10. Public investment tools Amsterdam Barcelona Boston • Scholarship Fund, 50% local govt, to attract PhD-level talent • Pla Empenta – redirects €80m of local funds from investment budget into housing, to attract €300m private investment • Brisbane • Cape Town • Hamburg • Relies on state government for capital grant funding for life science/transport Accelerated shared city-state-federal funding for road tunnels, resurfacing Pool resources at provincial and city level City’s own VC company for SMEs (BTG Hamburg) supports companies’ equity base. Private investment tools • Life Sciences Fund - investment capital to early-stage biomedical firms. Backed by major banks • • Barcelona City Protocol - certification system Tax Free Zone for mobile technology start-ups • Up to 20% tax cuts for Innovation District firms MassChallenge $1m entrepreneur competition • • • 40-45% R&D tax offset for mining sector 3-year moratorium on hotel developer charges • • From Red Tape to Red Carpet Building upgrade cost offset in UDZs • Employee Qualification Programme, funds up to €3k of training per employee Programme to support high-risk SME tech start-ups •
  11. 11. Public investment tools Manchester • • • Lyon Nanjing Private investment tools ‘City Deal’ to earn back up to £30m/yr £300m Evergreen fund using pension fund • investment Regional Growth Fund • • City of Entrepreneurship programme ‘Future Investments’ for funds in edu, digital • Re-organisation of SOEs to improve efficiency of large-scale housing and transport projects • • • • Oslo • • Toll fare increase to fund road tunnels • €100m state fund for life science start-ups • Shenzhen • 3-5 year bond tranches as a check on local government debt Zurich • Rail Infrastructure Fund to integrate funding governance + waive interest on debt financing • High-tech Enterprise Zone around the airport, offering 5-year business rate discounts BoostInLyon start-up accelerator €90m in BIOASTER microbiology institute Personal financial incentives of €120k 50% loan interest offset for small firm incubation new regional Knowledge Partnership National R&D tax credit scheme - SkatteFUNN • Creation of coastal development zones, with simplified tax system, more liberal HR laws Relocation subsidies for IT firms • tax assistance for some entrepreneurs
  12. 12. Delivery and organisational adjustments Overcome political fragmentation through integrated city-regional bodies -Increased applicability and efficacy of innovation and mobility strategies -Shared ideas about integration and regional identity (Zurich, Lyon) -Pathway for dedicated and evidence-led private sector input (Manchester, Cape Town) -More professional approach to the fundamentally metropolitan and commercial character of economies. -Overturning the lack of shared vision and co-operation between stakeholders. Cluster agglomeration as driver of strategic cooperation across political boundaries. (eg Zurich) Improved relations with higher tiers of government: delegated powers (Oslo, Brisbane, Hamburg) More influence for expert development agencies over workforce development, landuse and infrastructure (Boston)
  13. 13. How has national/regional government role changed? Amsterdam • Commitment to specific core projects (especially logistics and transport-related) Barcelona • Emergency debt-relief financing support Boston • Growing amount of state aid (from Massachusetts) Brisbane • • Queensland state government more attuned to city needs Incremental devolution of planning and tourism powers Cape Town • • Delegation of greater transport and housing powers Sharing national fuel tax with local government to replace council levies Hamburg • Recognition of cluster competitiveness to complement infrastructure support Manchester • More competition for funding based on economic case. City beginning to be more successful in bids. Lyon • More targeted funding for a handful of growth sectors Nanjing • More national support for software ambitions Oslo • Preparation of SMEs for international competition Shenzhen • • • Recognition of functional economic region size of Guangdong Province Permitted creation of joint ventures Regulatory relaxation in Qianhai Zone Zurich • Overcoming deadlock over funding channels and arrangements for key infrastructure projects
  14. 14. A new kind of leadership New ethos of pragmatism •Compromises to improve the coherence of cluster and mobility strategies •Mindful of previous over-ambition •More astute lobbying for favourable national/federal investment Lead the agenda for open-ness •Communicate value of diversity and high-value immigrant workers for value chain position Positive and authentic engagement with private sector •Business support and market knowledge to re-assure end-user firms/investors Commitment to sound fiscal platform •Careful stewardship of balance sheets, projection of reliability and consistency Long-term, multi-cycle approach •encourage reflection on core assets
  15. 15. What’s needed from national government? • Local business climate and stable framework conditions • Rationalisation of complex policies and programmes into simple-topursue frameworks • National-level transport infrastructure investment (greater fiscal and organisational authority over transport needs) • Initial investment in niche higher education facilities • Recognition of practical economic geographies • Facilitate expansion of the private rented housing sector • Evidence-based and trend-based rather than politicised approach to local economies
  16. 16. What’s needed from the private sector? • Grasp the changing economic requirements of local areas. • Foster a competitive business climate • Support the internationalisation process with specialist knowledge • Activity and leadership in the housing sector • Address the jobs challenge for young people • Become a systematic strategic partner
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