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Local Economic Development    in the Urban Context   The Israeli Mayors’ Institute on City Renewal                 Septemb...
• What is the current thinking on LED and how did it develop?   – A bit of history
Economic Development  before the 1800s…              • …was boring!                – Production followed                  ...
The Industrial Revolution                  English-speaking                  Japan                  northwest Europe      ...
A Brief History of LEDPrior to WWII                            Post WWII•   Economic Development was     •         A new c...
A Brief History of LEDThe success of the Marshall Plan kicked off                                                  1960s t...
Summary of Current Thinking on LED                     Goal is quality of life for all  Employment         Environment    ...
• Why is so much invested and so little accomplished?   – The outdated view of LED in Israel
Summary of Outdated Thinking on LED                   Goal is Employment Generation      Top-Down               Attract ou...
Typical Shortcuts proposed for LED• Attract:  – Outside investment  – Outside transplants  – Outside talent  – Outside res...
Attract Big Outside Business Transplants•   How    – Provide incentives to big businesses to move to your city    – New in...
Attract Outside Talent / Affluent Residents•   How    – Lavish marketing, branding and advertising campaigns that      foc...
Connect Under-Developed Regions to             Successful Ones•   How     – Highways from the furthest towns and cities to...
Economic Development is not ―Fair‖• The strong get stronger  – Successful cities / towns create and attract more talent,  ...
• Why do people gather together in cities?  – to survive and develop
The World is Getting More             Urbanized• Opportunities are focused in Cities where people concentrateHalf the worl...
The World is Getting More Urbanized                   100                                                                 ...
More Big Cities and              Big Cities are Getting Bigger    ~15% bonus in economic    output for doubling city size!...
Economic Output is Focused in City-Metro Regions          • 40 Mega-Metro Regions Today              – A resident of a meg...
• Why is development focused in cities?  – Urban Economies
Cities Have Natural Economic Advantages            Urban Economies                                      Scale             ...
The 12 Urban EconomiesType of economy of scale                                       Example                1. Pecuniary  ...
• Why focus on city design?  – Cities have natural economic advantages
Cities have natural   economic advantages  Poor city design               Good city design• can undermine               • ...
Typical Faults in City Design that    Undermine Economic Advantages•   Highway that cuts the city in half•   Universities ...
Highway that cuts the city in half      Chicago        vs.      Tel-Aviv
Highlights of Smart Growth Economic Benefits                                               Source: Growing Wealthier,     ...
Infrastructure Savings             (construction and operation)•   Compact development reduces infrastructure costs and sa...
• What about other economic advantages?  – City design, the neglected opportunity
The Neglected Opportunity  The Basic Structure of the Economy             People and      • Education and Training        ...
• Why focus on local businesses?  – LED is incremental
Why focus on Local Businesses?                  LED is incremental      It develops based on the existing local economy•  ...
What is the difference between    Economic Development and Economic Growth?•   Economic development depends more on busine...
• Why LED in the context of cities?  – Different strategies for 4 types of cities
LED in the Context of Cities     from the easiest to the most difficult                              LED in a Great City  ...
LED in theContext of Cities                                   LED in a Great City                             LED in the R...
•   What can be done differently to make LED more effective?    – Some strategies and tools that leverage development forces
LED in a Great City                                            LED in a Great City LED in the Region of a Great CityLED in...
LED in a Great City                                             LED in the Region of a Great City  LED in the Region of a ...
LED in a Great City LED in the Region of a Great City                                                Leveraging the five f...
LED in a Town Outside a         LED in a Great City LED in the Region of a Great CityLED in a Town Outside a Great City Re...
Attract Big Outside Business Transplants•   How    – Provide incentives to big businesses to move to your city    – New in...
Attract Outside Talent / Affluent Residents•   How     – Lavish marketing, branding and advertising campaigns that focus o...
Connect Under-Developed Regions to         Successful Ones•   How    – Highways from the furthest towns and cities to the ...
City Center Renewal as a LED Tool                                                 or        How to increase Density, Varie...
E.g. The Main Street Programs Success              Economic Statistics• 1980-2007 Reinvestment Statistics• Dollars Reinves...
Laboratory for Urban Intensification as a LED Tool                        or  How to increase Density, Variety and Access ...
Plugging the leaks• Keep the money circulating in your city
Thank You and see you in November 2011‫כנס אשקלון־מרחב לפיתוח כלכלי עירוני‬     "‫"העיר כמנוע לצמיחה כלכלית‬           nac...
Backup Slides
LED in a Town Outside a Great         LED in a Great City LED in the Region of a Great CityLED in a Town Outside a Great C...
LED in a Great City LED in the Region of a Great City                                                LED in a City that is...
LED in a Great City                      How to start the cycle of city                                                   ...
What is LED?         The Old Simple View• Local Economic Development is      Employment Generation
Cities are Engines of  Economic Development and Growth• Why is this so?  – Economies of scale and of agglomeration        ...
Why is LED Important?•   Big differences in productivity possible since the Industrial Revolution    144x                 ...
Urbanization Matters for      Economic Growth• Economic Growth and Urbanization are bi-  directionally causally connected ...
The critical role of Merhav in          LED in Israel                       Goal is quality of life for allIn order to imp...
What is LED?            The Current View• The purpose of Local Economic  Development is  – to build up the economic capaci...
Which Programs Do Not Work   (But We Still Keep Using Them!)   • Unfortunately there are countless examples of failed     ...
Infrastructure Savings              (construction and operation)•   Compact development reduces infrastructure costs and s...
tools for local economic renewal•   bizfizz     – BizFizz is the leading business support model in the UK in which       C...
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LED in the urban context for Mayors Institute - English

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Presented to the Israeli Mayors Institute on City Renewal Sep 2011
Abstract: After more than 50 years of massive investment in Local Economic Development (LED) worldwide, what has been learned regarding what works and what does not? If in the past economic development was focused on employment generation, today the accepted definitions of LED are much more intricate – they define the purpose of LED as achieving “quality of life for all” and the process as a collective effort of “public, business and non-governmental sector partners“. This sober view has developed over decades of huge but mostly fruitless investments in LED worldwide, in three waves, that where kicked off by the success of the Marshal Plan.
Have the lessons of the past been learned or do we keep investing in approaches that have failed in the past? Unfortunately not, we still see; Top down efforts by central government to lead LED programs, instead of a participatory approach, including all stakeholders and sectors, led by local government. A focus on outside big business transplant, instead of support of innovation, entrepreneurship and policies focused on the success of local businesses. Attempts to jumpstart and support LED over entire regions, instead of focusing on cities as the true engines of economic growth.
Why have the leading LED practitioners worldwide focused on cities and urban economic development over the last decade? Urbanization matters - economic growth and urbanization are bi-directionally causally connected - “no country in the industrial age has ever achieved significant economic growth without urbanization.”. 1.2 billion people living in the 40 mega-metro regions worldwide produce around 70% of world output and 85% of all innovations. 5 billion people living in 191 countries produce the rest. A resident of a mega-metro is 8 times as productive in goods, and 24 times as productive in innovations. Cities are engines of economic growth, they manufacture wealth. Why is this so?
Cities have natural economic advantages that include internal scale economies and external agglomeration economies. But poor city design can undermine these advantages and create barriers to economic development, whereas good city design can enhance these advantages. How can we leverage the natural economic advantages of cities with good city design? Compact mixed-use development that focuses on pedestrian and public transport access is key.
How does the urban economy develop? How can we jumpstart economic development, when it is missing, in Israeli cities? Viewing economic development in the context of a network of interrelated towns and cities clarifies that different types of towns and cities, within the network, require different approaches to LED. Great cities that generate more wealth than they consume require one approach for continued development. Towns and cities within the region of a great city require a second approach. Towns that are outside the region of a

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LED in the urban context for Mayors Institute - English

  1. 1. Local Economic Development in the Urban Context The Israeli Mayors’ Institute on City Renewal September 2011 nachman@miu.org.il www.miu.org.il
  2. 2. • What is the current thinking on LED and how did it develop? – A bit of history
  3. 3. Economic Development before the 1800s… • …was boring! – Production followed Population Production
  4. 4. The Industrial Revolution English-speaking Japan northwest Europe the rest of Europe and Europe-dominated economies in Latin America. the rest of Asia and Africa.
  5. 5. A Brief History of LEDPrior to WWII Post WWII• Economic Development was • A new concept was born - Economic focused by each nation on Development aid to other nations developing their own economy aimed at improving quality of life – Included trade with other without altering basic social structures nations (conquering) – Included investment in – Driven by multiple factors: territories, colonies and other • The recognized need for global nations directly or indirectly stability – to avert another WW under the control of empires in • Political influence – the ―cold war‖ order to exploit their resources • Create bigger markets for goods and services – globalization – Creation of the UN, the WorldBank, the IMF, ITO / GATT / WTO – The Marshall Plan – Creation of USAID • Continued investment in own LED
  6. 6. A Brief History of LEDThe success of the Marshall Plan kicked off 1960s to 1980s to mid Late1990s early1980s 1990s onwards three waves of LED Regions / Cities and Nations Sectors Towns Skills/Education, Hard Attract Foreign Attractive Policies Infrastructure and Investment and and Manufacturing Support Local Public/Private Transplants Businesses Partnerships
  7. 7. Summary of Current Thinking on LED Goal is quality of life for all Employment Environment Livibility Social inclusion Participatory Growth of local Focus on cities approach businesses• Including all • Promotion and • As engines of stakeholders and support of economic sectors innovation and development• Led by local entrepreneurship • As a great place to government (both business and live and work social) • Urban regeneration • Business friendly as a tool policies
  8. 8. • Why is so much invested and so little accomplished? – The outdated view of LED in Israel
  9. 9. Summary of Outdated Thinking on LED Goal is Employment Generation Top-Down Attract outside Focus on approach businesses regions • Central Government • Promotion and • Attempts to conceived, controlled, support of big jumpstart and and directed business support LED over strategies transplants entire regions • Total dependence on • Attract outside • Connect under- central government investments and developed regions outside talent to successful ones
  10. 10. Typical Shortcuts proposed for LED• Attract: – Outside investment – Outside transplants – Outside talent – Outside residents• Connect: – Under-developed regions to successful ones … if only LED was so easy…
  11. 11. Attract Big Outside Business Transplants• How – Provide incentives to big businesses to move to your city – New industrial parks at the outskirts of city• Why it doesn’t work – Good candidates for transplant are bad at helping develop the local economy… • Good candidates for transplant, need to be relatively independent of local suppliers, customers, talent, financers, etc… – Demand for transplants is so high relative to the supply that the price to be paid to attract them (through incentives) is higher than the benefit. – Supply of industrial parks is higher than demand – Economic development depends more on business variety than on size • Better to have many small different businesses than a few large businesses• What can be done instead? – Later in the presentation
  12. 12. Attract Outside Talent / Affluent Residents• How – Lavish marketing, branding and advertising campaigns that focus on outsiders – Incentives to relocate to your city / town – New ―luxury‖ neighborhoods on the outskirts of the city / town – Regional colleges and universities in fenced off campuses outside of cities / towns• Why it doesn’t work – Talent enables mobility – Demand for talent is so high relative to the supply that the price to attract them (through incentives) is higher than the benefit – People talented in one area expect talent in all other areas that effect their life • work, school, services, goods, entertainment, recreation and culture – Demoralizing message to existing residents – ―you are not good enough‖ – Regional colleges do not create a strong connection to any city / town• What can be done instead? – Later in the presentation
  13. 13. Connect Under-Developed Regions to Successful Ones• How – Highways from the furthest towns and cities to the center of Israel – Trains also, with stations on the outskirts of cities and towns• Why it doesn’t work – Commute times of over 60min a day are hard to sustain long term for a significant population – It is more common that successful cities develop goods and services that remote towns need than the other way around – ―Great Cities‖ develop the towns in the region that surround them from the closest to the furthest, in that order • The influence of the ―Great City‖ will be felt in a town only after the towns closer to the city have been influenced significantly• What can be done instead? – Later in presentation
  14. 14. Economic Development is not ―Fair‖• The strong get stronger – Successful cities / towns create and attract more talent, investments and businesses and become more successful… ~15% bonus in economic output for doubling city size!• LED is incremental – It develops based on the existing local economy – There is NO shortcut! – But, when it works, the process can be fast… How do you leverage natural development forces?
  15. 15. • Why do people gather together in cities? – to survive and develop
  16. 16. The World is Getting More Urbanized• Opportunities are focused in Cities where people concentrateHalf the world’s populationoccupies only 1.5% of theworld’s land area Lecture 27 Urbanization Atanu 16 Dey
  17. 17. The World is Getting More Urbanized 100 Israel 92% 87 85 80 80 80 77 74 73 75 73 72 66 64 61 61 61 60 Percent 54 54 51 48 42 39 39 40 37 29 25 24 20 15 17 0 World Africa Asia Europe Latin Northern Oceania America America and the Caribbean 17Lecture 27 Urbanization Atanu Dey 1950 1975 2003 2030
  18. 18. More Big Cities and Big Cities are Getting Bigger ~15% bonus in economic output for doubling city size!• Successful cities grow to metros• Metros grow to mega-metros (>5M pop) – 1955 – 11 Mega-Metros – Today - 50 Mega-Metros – 2015 – 60 Mega-Metros 18 1955 - 11 mega-metros 2015 - 60 mega-metros
  19. 19. Economic Output is Focused in City-Metro Regions • 40 Mega-Metro Regions Today – A resident of a mega-metro region is • 8 times as productive in goods, and • 24 times as productive in innovations Population Economic Output Innovations 19
  20. 20. • Why is development focused in cities? – Urban Economies
  21. 21. Cities Have Natural Economic Advantages Urban Economies Scale • Sharing of fixed costs by a large quantity of outputs Localization Agglomeration • Input-sharing and competition within the industry Urbanization Agglomeration • Innovation and exchange of ideas and technology 21 Lecture 27 Urbanization Atanu Dey
  22. 22. The 12 Urban EconomiesType of economy of scale Example 1. Pecuniary Being able to purchase intermediate inputs at volume discounts 2. StaticInternal Falling average costs because of fixed costs of operating a plant technological Technological 3. Dynamic Learning to operate a plant more efficiently over time technological 4. ―Shopping‖ Shoppers are attracted to places where there are many sellers Outsourcing allows both the upstream input suppliers and downstream firms to 5. ―Adam Smith‖ Static profit from productivity gains because of specialization Localization 6. ―Marshall‖ Workers with industry-specific skills are attracted to a location where there is a labor pooling greater concentration 7. ―Marshall- Reductions in costs that arise from repeated and continuous production activity Dynamic Arrow-Romer‖ over time and which spill over between firms in the same place learning by doing 8. ―Jane Jacobs‖ The more that different things are done locally, the more opportunity there is for innovation observing and adapting ideas from othersExternal oragglomeration 9. ―Marshall‖ Workers in an industry bring innovations to firms in other industries; similar to Static labor pooling no. 6 above, but the benefit arises from the diversity of industries in one location. Urbanization Similar to no. 5 above, the main difference being that the division of labor is 10. ―Adam Smith‖ made possible by the existence of many different buying industries in the same division of labor place 11. ―Romer‖ The larger the market, the higher the profit; the more attractive the location to Dynamic endogenous firms, the more jobs there are; the more labor pools there, the larger the growth market—and so on Spreading fixed costs of infrastructure over more taxpayers; diseconomies arise 12. ―Pure‖ agglomeration from congestion and pollution
  23. 23. • Why focus on city design? – Cities have natural economic advantages
  24. 24. Cities have natural economic advantages Poor city design Good city design• can undermine • can enhance these these advantages advantages and and create barriers catalyze economic to economic development development Improving City Design is a neglected opportunity for Economic Development in Israel
  25. 25. Typical Faults in City Design that Undermine Economic Advantages• Highway that cuts the city in half• Universities and Colleges in fenced off campuses on the outskirts of cities• Employment parks on the outskirts of cities• Train stations on the outskirts of cities• Retail malls on the outskirts of cities• Lack of a city center that encourages interaction of people• Tree-like street network undermines accessibility vs. simple grid• Car based sprawl and zoning vs. people based compact mixed-use development• Low densities that require huge investments in infrastructure and operation costs• Fences, fences and more fences
  26. 26. Highway that cuts the city in half Chicago vs. Tel-Aviv
  27. 27. Highlights of Smart Growth Economic Benefits Source: Growing Wealthier, Center for Clean Air Policy January 2011
  28. 28. Infrastructure Savings (construction and operation)• Compact development reduces infrastructure costs and saves money. – Average annual cost to service a new family of four (police, fire, highway, schools and sewer): • Compact suburban Shelby County, KY = $88 • Sprawling Pendleton County, KY = $1,222 – Sources: Brookings Institution Annual Cost to Service a New Family $1,400 $1,200 $1,000 $800 $600 $400 $200 $- Sprawling Compact
  29. 29. • What about other economic advantages? – City design, the neglected opportunity
  30. 30. The Neglected Opportunity The Basic Structure of the Economy People and • Education and Training • Business and Social Talent Entrepreneurship • Financial and Business Policies and • • Stability and Security Social Justice and Inclusion Institutions • • Health and Wellbeing Land Use and Planning (Real- Estate and Infrastructure) Place and • • Urban Form and Real-Estate Transportation and Communication Infrastructure • • Energy, Water and Waste Natural Resources
  31. 31. • Why focus on local businesses? – LED is incremental
  32. 32. Why focus on Local Businesses? LED is incremental It develops based on the existing local economy• How Does Economic Development Happen? D + nTE + A nD• Existing work generates new work! – D is a Division of work • The work required to provide a product or service is made up of Divisions of work – A is Additional work • An existing division of work inspires a new Additional product or service – TE is Trial and Error • Generating new work requires much Trial and Error
  33. 33. What is the difference between Economic Development and Economic Growth?• Economic development depends more on business variety than on size – Better to have many small different businesses than a few large businesses
  34. 34. • Why LED in the context of cities? – Different strategies for 4 types of cities
  35. 35. LED in the Context of Cities from the easiest to the most difficult LED in a Great City LED in the Region of a Great City LED in a Town Outside a Great City Region LED in a City that is not Great A Great City generates much more wealth than it consumes for mere existence.A Great City generates enough wealth to support growth in the city as well in its surrounding region.
  36. 36. LED in theContext of Cities LED in a Great City LED in the Region of a Great City LED in a Town Outside a Great City Region LED in a City that is not Great Beer-Sheba
  37. 37. • What can be done differently to make LED more effective? – Some strategies and tools that leverage development forces
  38. 38. LED in a Great City LED in a Great City LED in the Region of a Great CityLED in a Town Outside a Great City Region LED in a City that is not Great • What is the role of Urban Planning and Transportation in creating a great place to live and to develop economically? If the City provides Mixed age Small Density Mixed use buildings Blocks It can become a LED generator
  39. 39. LED in a Great City LED in the Region of a Great City LED in the Region of a Great City LED in a Town Outside a Great City Region LED in a City that is not Great City marketsCreate a great place to liveand to develop economically City jobsProvide attractive andefficient access to The City The Five Economic Forces Exerted by CitiesThe City will do the rest on Their Own City developed Regions technology City Transplanted generated city work capital
  40. 40. LED in a Great City LED in the Region of a Great City Leveraging the five forces toLED in a Town Outside a Great City Region accelerate LED in the region of a Great City LED in a City that is not Great ToD in the Center of Regional Towns of a Great City Is Beer-Sheva a Great City? Stockholm The Gr Stockholm Transit Oriented Metropolis The Gr Copenhagen Transit Oriented Metropolis What about rail stations in the center of the towns? The 1961 National Capital Plan Source – Prof. Danny Gatt for Gr Washington BC
  41. 41. LED in a Town Outside a LED in a Great City LED in the Region of a Great CityLED in a Town Outside a Great City Region LED in a City that is not Great Great City Region Need to become a Great City (or wait for a Great City to develop nearby) How? • Outdated thinking • Current thinking – – Attract: Focus on • Outside investment – Local businesses • Outside transplants – Local residents • Outside talent – Local connectivity • Outside residents – Connect: • Under-developed regions to successful ones
  42. 42. Attract Big Outside Business Transplants• How – Provide incentives to big businesses to move to your city – New industrial parks at the outskirts of city• What can be done instead? Focus on local businesses – Offices, retail and other non-polluting businesses in the city center – Retention and growth of existing local businesses – a great place for business • Renewal of city center – Development of new local businesses based on existing businesses – Development of local businesses for existing needs (import replacement) • Plugging the leaks, keep the money circulating in your city – Development of local businesses that leverage local and regional advantages – Economic development office – Attract outside business transplants from a neighboring ―great city‖ • only if you are in the region of a ―great city‖ and are ―next in line‖
  43. 43. Attract Outside Talent / Affluent Residents• How – Lavish marketing, branding and advertising campaigns that focus on outsiders – Incentives to relocate to your city / town – New ―luxury‖ neighborhoods on the outskirts of the city / town – Regional colleges and universities in fenced off campuses outside of cities / towns• What can be done instead? Focus on local residents – Retention and growth of existing talent – a great place to live and develop • Renewal and intensification of existing neighborhoods – Education and training for new talent growth • Colleges without fences in city centers – Attract outside talent from a neighboring ―great city‖ • only if you are in the region of a ―great city‖ and are ―next in line‖
  44. 44. Connect Under-Developed Regions to Successful Ones• How – Highways from the furthest towns and cities to the center of Israel – Trains also, with stations on the outskirts of cities and towns• What can be done instead? Focus on local connectivity – Transportation in the metro region of a ―Great City‖ and just beyond – Transportation between towns and cities in remote areas • To leverage regional advantages and to provide a bigger local market – ToD at train stations or strong connection of train stations to town center – Connect remote developing town to a successful city market • Only if the town has developed a very high value product or service and is transport limited for distribution
  45. 45. City Center Renewal as a LED Tool or How to increase Density, Variety and Access•Provide loans to accelerateprivate storefront and Use the ―charrette‖ collaborative planningresidence renewal tool as the basis of a LED program •Create a great place to live for local residents •Create a great place to succeed for local First stage: businesses • Surgical urban •Leverage the true identity of the city / town intervention plan in as seen by the local residents the public space •Local residents strengthen their sense of belonging by planning their town •Leverage existing budgets for public building projects to implement the planThird stage: •Local residents are• Private Development Second stage: empowered by seeing their Construction and • Renewal of the plans adopted and Renovation near the public space implemented public space
  46. 46. E.g. The Main Street Programs Success Economic Statistics• 1980-2007 Reinvestment Statistics• Dollars Reinvested: Total amount of reinvestment in physical improvements from public and private sources.$44.9B average• Reinvestment per community: $11,083,273• Net gain in businesses: 82,909• Net gain in jobs: 370,514• Number of building rehabilitations: 199,519
  47. 47. Laboratory for Urban Intensification as a LED Tool or How to increase Density, Variety and Access • Tools for the intensification and renewal of deteriorating urban residential neighborhoods in Israel, while reinforcing the quality of housing and urban variety. • Aging residential projects, built by the government cheaply and quickly following massive waves of immigration in the 50s, 60s and 70s, constitute the largest part of Israel’s housing stock, yet they are also the most neglected, and are characterized by: – small residential units – cramped quarters inappropriate for growing families – uniform housing stock – all apartments are of the same size and plan – low-quality construction – improvements within apartments are expensive, and improvements to the building as a whole are even more so – lack of access to amenities, community services and good consumer products • The tool is based on Merhav’s 10 Principles for Good Urbanism
  48. 48. Plugging the leaks• Keep the money circulating in your city
  49. 49. Thank You and see you in November 2011‫כנס אשקלון־מרחב לפיתוח כלכלי עירוני‬ "‫"העיר כמנוע לצמיחה כלכלית‬ nachman@miu.org.il September 2011 www.miu.org.il
  50. 50. Backup Slides
  51. 51. LED in a Town Outside a Great LED in a Great City LED in the Region of a Great CityLED in a Town Outside a Great City Region LED in a City that is not Great City Region• Need to become a Great City (or wait for a Great City to develop nearby) • Produce and sell something of value to a solvent market by turning Jumpstart the any advantage into an opportunity economy • Earn Imports • Replace imports for yourself and for economically similar townsLeverage initial through innovation and improvisation sales to • Repeat last two steps forever • Leverage current thinking on LED • Create a great place to live and to develop economically How? • In the existing center of town
  52. 52. LED in a Great City LED in the Region of a Great City LED in a City that is not GreatLED in a Town Outside a Great City Region LED in a City that is not Great• Need to become a Great City (or wait for a Great City to develop nearby) • Produce and sell something of value to a solvent market by turning Jumpstart the any advantage into an opportunity economy • Earn Imports • Replace imports for yourself and for economically similar citiesLeverage initial through innovation and improvisation sales to • Repeat last two steps forever • Leverage current thinking on LED • Create a great place to live and to develop economically How? • In a small focused area of the city (urban acupuncture)
  53. 53. LED in a Great City How to start the cycle of city development LED in the Region of a Great City LED in a Town Outside a Great City Region LED in a City that is not Great Density Quality Variety Of & The Life Access ―handle‖ InnovationOpportunities People & Culture How do you advance ever closer to your vision of a successful town, based on daily decisions and based Intensity Development on existing budgets?
  54. 54. What is LED? The Old Simple View• Local Economic Development is Employment Generation
  55. 55. Cities are Engines of Economic Development and Growth• Why is this so? – Economies of scale and of agglomeration Lecture 27 Urbanization Atanu Dey 55
  56. 56. Why is LED Important?• Big differences in productivity possible since the Industrial Revolution 144x Tel-Aviv Metro Area 43% of Population on 7% of Area produces 59% of GDP 64x 10x Pre - Industrial Revolution Agriculture
  57. 57. Urbanization Matters for Economic Growth• Economic Growth and Urbanization are bi- directionally causally connected Economic Growth Urbanization• ―… no country in the industrial age has ever achieved significant economic growth without urbanization.‖ Lecture 27 Urbanization Atanu Dey 57
  58. 58. The critical role of Merhav in LED in Israel Goal is quality of life for allIn order to improve the quality of living in Israel, while contributing to the global sustainability effort, the MIU promotes qualityLivibility Employment Environment urban living based on compact, Social inclusion quality and sustainable urban environments. Participatory Growth of local Focus on cities approach businesses• Charrette all Including – • Making theand Promotion local • Weengines of as As view the city collaborative and stakeholders environment great support of the key mechanism economic planning sectors with all for the locals innovation and that provides development• stakeholders Led by local • entrepreneurship Compact, quality • peopleregeneration Urban the• government Quality in Density (both business and and sustainable opportunities to fulfill as a tool Toolbox for all social) cities provide their inherent sectors • opportunities and Business friendly potential• Mayors Institute breed innovation policies
  59. 59. What is LED? The Current View• The purpose of Local Economic Development is – to build up the economic capacity of a local area – to improve its economic future and – the quality of life for all.• It is a process by which – public, business and non-governmental sector partners work collectively – to create better conditions for economic growth and employment generation.
  60. 60. Which Programs Do Not Work (But We Still Keep Using Them!) • Unfortunately there are countless examples of failed LED strategies and projects. These include: – Expensive untargeted foreign direct investment marketing campaigns – Supply-led training programs – Excessive reliance on grant-led investments – Over-generous financial inducements for inward investors (not only can this be an inefficient use of taxpayers money, it can breed considerable resentment amongst local businesses that may not be entitled to the same benefit). – Business retention subsidies (where firms are paid to stay in the area despite the fact that financial viability of the plant is at risk) – Reliance on "low-road" techniques, e.g., cheap labor and subsidized capital – Government-conceived, -controlled, and -directed strategieshttp://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTURBANDEVELOPMENT/EXTLED/0,,print:Y~isCURL:Y~contentMDK:20185187~menuPK:402643~pagePK:148956~piPK:216618~theSitePK:341139,00.html
  61. 61. Infrastructure Savings (construction and operation)• Compact development reduces infrastructure costs and saves money. – Average annual cost to service a new family of four (police, fire, highway, schools and sewer): • Compact suburban Shelby County, KY = $88 • Sprawling Pendleton County, KY = $1,222 – Sources: Brookings Institution• Nationally, the U.S. can save over $100 billion in infrastructure costs over 25 years by growing compactly.• Chicago can save $3.7 billion over 20 years by growing compactly.• Charlottesville, VA can save $500 million in transportation costs with compact development. – Sources: Urban Land Institute, Chicago Metropolis 2020; Thomas Jefferson Planning District Commission
  62. 62. tools for local economic renewal• bizfizz – BizFizz is the leading business support model in the UK in which Coaching is the preferred methodology for offering business support to entrepreneurs living in areas of economic decline. Over the last seven years, BizFizz programmes have provided coaching to entrepreneurs across England and Scotland. The Civic Trust and new economics foundation are delighted that Coaching and supporting entrepreneurs by developing local resident led networks has been recognised by national government.• plugging the leaks – The issue is not necessarily that too little money flows into a neighbourhood. Rather, it is what consumers, public services and businesses do with that money. Too often it is spent on services with no local presence, and so immediately leaves the area.• local multiplier 3 – LM3 has been tried and tested across the UK, from agriculture to social enterprise to local government procurement, to determine how money coming into your community is then spent and re-spent. The Money Trail shows you how to use LM3 to find out whats really happening in your local economy, and how you can make it better.

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