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Local Economic Development and Urbanism

This document discusses local economic development (LED) and cities. It provides a brief history of LED, noting that it has passed through three waves since the 1960s, with each wave developing a better understanding of successful programs. Currently, the focus is on quality of life, employment, environment, livability, and social inclusion through participatory and partnership approaches. It is emphasized that certain programs do not work, such as untargeted marketing or subsidies, but are still used. The document then discusses how cities are engines of economic growth due to economies of scale, agglomeration, and other natural advantages that outweigh disadvantages. It focuses on how the urban economy can be jumpstarted through these inherent strengths.

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‫כלכלה עירונית‬ ‫כיצד נבנית "מערכת אקולוגית" עירונית של עסקים ותושבים‬ ‫עיר ללא הפסקה ופרברים סביב לה‬ ‫סוגיות אורבניות בתל אביב‬ ‫קורס חדש וחלוצי של "המכללה החברתית-כלכלית"‬ ‫בשיתוף עם מרחב על אורבניות בישראל‬ ‫‪nachman@miu.org.il‬‬ ‫0102 ‪May‬‬ ‫‪www.miu.org.il‬‬
Agenda • A brief history of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
What is LED? • The purpose of local economic development (LED) 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.
The Industrial Revolution • Group I - English-speaking • Group II - Japan • Group III - northwest Europe • Group IV - the rest of Europe and European-dominated economies in Latin America. • Group V - the rest of Asia and Africa.
A Brief History of LED Prior 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
A Brief History of LED • Results of Marshall Plan seemed promising – Investment in hard infrastructure brought on rapid economic growth in western Europe • The recipe for LED seemed to be clear and this brought on huge investments that kicked off three waves of LED • Most of these investments have been fruitless…
A Brief History of LED • Since the 1960s, LED has passed through three broad stages or 'waves' of development. – In each of these waves LED practitioners have developed a better understanding of successful and unsuccessful programs. – Today LED is in its 'third wave'. – Although LED has moved through each of these waves, elements of each wave are still practiced today. – Each of the waves had some basis in a prevailing economic development theory – With each wave the appreciation of the difficulty and complexity of LED grew
The Three Waves of LED 1960s to 1980s to mid Late1990s early1980s 1990s onwards 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
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 • Urban regeneration government (both business and as a tool social) • Business friendly policies
Have we all learnt the lessons of past LED attempts?
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 strategies http://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
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…
Agenda • A brief history of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
Urban Economics from Econ171 Economic Development UC Berkeley Lecture 27 Urbanization by Atanu Dey 14
Cities are the biggest idea • Cities represent the largest and the most persistent human artifact • Cities are the aggregation of the biggest ideas of humans • Urbanization matters because that is what humans naturally tend to do Lecture 27 Urbanization Atanu Dey 15
Urbanization Matters • Economic Growth and Urbanization are bi- directionally causally connected Growth Urbanization • Why is this so? • Economies of scale and agglomeration Lecture 27 Urbanization Atanu Dey
The Big Picture • The World is getting more urbanized Lecture 27 Urbanization Atanu 17 Dey
Ginza Area in Greater Tokyo 18 Lecture 27 Urbanization Atanu Dey
Share of World Population Residing in Urban Areas By World Region 1950-2030 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 19 Lecture 27 Urbanization Atanu Dey 1950 1975 2003 2030
Some fun facts • Half the world’s population occupies only 1.5 percent of the world’s land area • The world is heterogeneous – Wealth is unequally distributed – North America, European Union and Japan account for 75 percent of the world’s wealth – Around 1 billion have less than 2 percent of the world’s wealth Lecture 27 Urbanization Atanu 20 Dey
Economic Activity is Spiky
More fun facts • Growing cities – 35 million (a quarter of Japan’s population) lives in Tokyo – 4 percent of its land • Mobile people – 35 million people move every year within the US • Specialization – Western Europe trade around 35 percent of their GDP 22 Lecture 27 Urbanization Atanu Dey
Urbanization and Growth • Growth correlates with urbanization • ―… no country in the industrial age has ever achieved significant economic growth without urbanization.‖ 23
Story of Civilization • 900M • Civilization is about • 3% in cities 1800 cities • 1,600M 1900 • 10% in cities • The world is getting urbanized = civilized • 6,000M+ 2000 • 50% in cities • Projected 10,000M 2050 • 75% in cities 24 Lecture 27 Urbanization Atanu Dey
Agenda • A brief history of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
Why Cities Persist? • Cities have natural economic advantages • The advantages outweigh the disadvantages • Positive relationship between size and productivity • Larger cities produce more innovations • Cities are engines of economic growth – They manufacture wealth 26 Lecture 27 Urbanization Atanu Dey
Cities are Engines of Growth • They manufacture wealth – Manufacturing occurs in urban areas – Why rich countries are predominantly urban • Urbanization makes mass production possible – Manufacturing is related to scale economies – Scale economies require people in terms of variety and quantity 27 Lecture 27 Urbanization Atanu Dey
Cities and Transaction Costs • Transaction Costs are lower in cities • Infrastructure has scale economies – High fixed costs – High aggregate demand reduces the average costs • Education can be more efficiently produced and consumed in cities Lecture 27 Urbanization Atanu Dey 28
Fun Observations  As producers seek scale economies, agriculture disperses but manufacturing clusters  Services become even more clustered than manufacturing  Cities facilitate scale economies of all types  Doubling city size will increase productivity by 3%-10%  In the US, 96% of all innovations occur in metros  Smaller cities specialize, receiving industries as they mature and relocate  Mid-size cities have mature industries and are industrially specialized  Large cities are diversified and are service oriented  Most countries have an urban hierarchy: a few large cities and many small cities with varied economic functions 29 Lecture 27 Urbanization Atanu Dey
Education • Major factor in economic growth • Cannot be efficiently provided in villages • Scale economies are huge in education – High fixed costs and low marginal costs – Especially using ICT (Information and Computing Technology) 30 Lecture 27 Urbanization Atanu Dey
Mega Regions • 40 mega-regions, 1.2 billion people – Around 70 percent of world output – 85 percent of all innovations • 5 billion people living in 191 countries produce the rest • A resident of a mega-region is 8 times as productive in goods, and 24 times as productive in innovations 31 Lecture 27 Urbanization Atanu Dey
Internal Scale Economies • The cost of producing each unit of something changes when the volume produced increases or decreases • What’s the reason for increasing returns to firm scale? 34 Lecture 27 Urbanization Atanu Dey
External Agglomeration Economies • Localization economies – Clustering of Firms in the same Industry – Arise from clustering of activities near a specific facility, such as a transport terminal, a big market or a large university. • Urbanization economies – Diversity of different Industries in the same area – Arise from common infrastructure, the diversity of labour and market size. 35 Lecture 27 Urbanization Atanu Dey
Economies • Internal scale economies arise from sharing of fixed costs by a large quantity of outputs and are higher in heavier industries • External Agglomeration Economies: – Localization economies arise from input- sharing and competition within the industry – Urbanization economies come from industrial diversity that fosters innovation and exchange of ideas and technology 36 Lecture 27 Urbanization Atanu Dey
The 12 Urban Economies of Scale Type of economy of scale Example 1. Pecuniary Being able to purchase intermediate inputs at volume discounts 2. Static Internal 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 others External or agglomeration 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
Cities, it turns out, have natural advantages • Cities naturally offer Variety, a wide range of valued choices. They naturally offer Convenience. In cities, there are more choices close at hand. Discovery is another city advantage. Cities offer people more chances to discover things they didn't know they liked, things they didn't know they wanted to know, and people they didn't know they could make things with (including fun and babies). And cities naturally offer more Opportunity to their citizens in the form of access to jobs, education and smart people. • But here's the problem: We keep screwing it up. • We keep undermining the city’s natural advantages. Instead of building compact cities that magnify, amplify and intensify these city advantages, we've blown it…
Agenda • A brief history of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
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.
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
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 LED in a Great City What makes the city the true engine of LED • Compact and vibrant mixed population communities lead to interaction, opportunity and innovation • Easy access to skilled and unskilled talent • Easy access to customers and markets • Easy access to suppliers • Easy access to technology and knowhow • Easy access to credit • Easy access to low-cost startup space and to expansion space • Low regulatory barriers to small business • Lot’s of imports to replace
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 LED in a Great City • 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
LED in a Great City LED in the Region of a Great City The cycle of city development LED in a Town Outside a Great City Region LED in a City that is not Great Density Quality Variety Of & Life Access Innovation Opportunities People & Culture Intensity Development
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 • Create a great place to live and to develop economically • Provide attractive and efficient access to the City • The City will do the rest – The Five Economic Forces Exerted by Cities on Their Own Regions 1. City markets 2. City jobs 3. City developed technology 4. Transplanted city work 5. City generated capital
LED in a Great City LED in the Region of a Great City Leveraging the five forces to LED 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
LED in a Great City LED in the Region of a Great City LED in a Town Outside a Great LED 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) • Leverage current thinking on LED • Create a great place to live and to develop economically How? • In the existing center of town • 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 towns Leverage initial through innovation and improvisation sales to • Repeat last two steps forever
LED in a Great City LED in the Region of a Great City LED in a City that is not Great LED 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) • 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) • 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 cities Leverage initial through innovation and improvisation sales to • Repeat last two steps forever
LED in a Great City How to Jumpstart 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 & Life Access Where is the ―handle‖ ? Innovation Opportunities People & Culture Intensity Development
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 • Urban regeneration government (both business and as a tool social) • Business friendly policies
Local Agenda 21 • The Local Agenda 21 (LA21) Campaign promotes a participatory, long-term, strategic planning process that helps municipalities identify local sustainability priorities and implement long-term action plans. • It supports good local governance and mobilizes local governments and their citizens to undertake such multi- stakeholder process. • A 2002 survey found that – more than 6,400 local governments in – 113 countries have become involved in LA21 activities over a – 10-year period.
But, a great strategic plan… • … in a binder on the shelf… • Is just that - • A great plan on the shelf! • The questions remain the same: – How do you advance ever closer to your vision of a successful town, based on daily decisions and based on existing budgets? – How do you jump-start the cycle of city development?
LED in a Great City How to Jumpstart 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‖ Innovation Opportunities People & Culture Intensity Development
Urban Regeneration as a LED Tool or How to increase Density, Variety and Access •Provide loans to accelerate private storefront and Use the ―charrette‖ collaborative urban residence renewal planning 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 plan Third 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
The critical role of the MIU in LED in Israel Goal is quality of life for all In 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
Thank You nachman@miu.org.il May 2010 www.miu.org.il
Can LED be achieved by attracting transplants? • Transplants within a city region vs. transplants from afar • What do transplants need? What makes transplants possible? • What is their influence on the local economy? • How many are available? • What are the costs to attract one?
Can LED be achieved in peripheral cities and towns by their residents? • Yes! If it can be achieved (and it can not always be achieved) then it can be achieved by the local residents – the problem is not the residents! – What are the conditions that enable LED?
The three waves of LED - #1: Wave Focus Tools First: During the first wave the focus To achieve this cities used: was on the attraction of: 1960s to •massive grants early 1980s •mobile manufacturing •subsidized loans usually investment, attracting outside aimed at inward investing investment, especially the manufacturers attraction of foreign direct •tax breaks investment •subsidized hard infrastructure •hard infrastructure investment investments •expensive "low road" industrial recruitment techniques
The three waves of LED - #2: Wave Focus Tools Second: During the second wave the To achieve this cities provided: focus moved towards: 1980s to •direct payments to individual mid 1990s •the retention and growing of businesses existing local businesses •business •still with an emphasis on incubators/workspace inward investment attraction, •advice and training for small- but usually this was becoming and medium-sized firms more targeted to specific •technical support sectors or from certain geographic areas •business start-up support •some hard and soft infrastructure investment •During this wave much effort was also invested in trying to improve rural quality of life, urbanization and city growth was seen as a problem
The three waves of LED - #3: Wave Focus Tools Third : The focus then shifted from To achieve this cities are: individual direct firm financial Late 1990s transfers to making the entire •developing a holistic strategy onwards business environment more aimed at growing local firms conducive to business. •providing a competitive local investment climate During this third (and current) wave •supporting and encouraging of LED, more focus is placed on: networking and collaboration •soft infrastructure investments •encouraging the development of •public/private partnerships business clusters •networking and the leveraging of •encouraging workforce private sector investments for the development and education public good •closely targeting inward •highly targeted inward investment investment to support cluster attraction to add to the competitive growth advantages of local areas •supporting quality of life improvements
LED focus on Cities and Towns • At the threshold of the 21st century, cities and towns headline the World Bank's development campaign. • Within a generation, the majority of the developing world's population will live in urban areas, while the number of urban residents will double, increasing by over 2 billion inhabitants. • Cities and towns are not only growing in size and number, they are also gaining new influence. • The urban transition offers significant opportunities to improve the quality of life for all individuals, but whether this potential is realized depends critically on how cities are managed and on the national and local policies affecting their development. http://siteresources.worldbank.org/INTINFNETWORK/Resources/urban.pdf
THE WORLD BANK URBAN & LOCAL GOVERNMENT STRATEGY • Urbanization is a defining phenomenon of this century… • …main challenge for the urban policy maker is to understand the importance of managing this system of cities or ―portfolio of places‖ (of different sizes and vocation) within a country so as to maximize the benefits of agglomeration economies… • With more than half of GDP coming from cities, the economic future of most developing countries will be determined by the productivity of these burgeoning urban populations. • This interdependency between macro-economic performance and urban welfare has been seen in the aftermath of macro-economic crises in Argentina, Brazil, East Asia, and Russia http://www.wburbanstrategy.org
Local Economic Growth • Cities are engines of economic growth. As a nation's primary source of job creation and wealth generation, cites produce goods and provide services which strengthen economic opportunities for the entire country. Local Economic Development (LED) is a process of planning and implementation that seeks to increase the economic potential of a city, town, or region. LED aims to improve the economic future and the quality of life for all local residents and businesses. Although the process can be time-intensive, it is important to bring the public, business and civil society sector together to work collectively in creating better conditions for growth and employment generation. This ensures that all available local resources are accessed and that there is sufficient buy-in across all sectors to increase the chances of sustainability. • Much of a city's potential competitive advantage lies in its various forms of capital (human, natural resources, land, location, and infrastructure). • Decentralization has forced local governments to take more responsibility for designing their own economic development strategies, usually in partnership with the private sector. http://www.makingcitieswork.org/urbanThemes/Localecongrowth
Peering into the Dawn of an Urban Millennium • Urbanization—the increase in the urban share of total population—is inevitable, but it can also be positive. The current concentration of poverty, slum growth and social disruption in cities does paint a threatening picture: Yet no country in the industrial age has ever achieved significant economic growth without urbanization. Cities concentrate poverty, but they also represent the best hope of escaping it. www.unfpa.org/swp/2007/english/introduction.html
Competitive Cities in the Global Economy • Cities are important generators of wealth, employment and productivity growth and often quoted as the engines of their national economies. Productivity levels are generally higher in metropolitan area and the increased trade and capital flows give rise to increased flows of people, goods, capital, services and ideas. In many OECD countries, metropolitan regions produce a larger percentage of the national GDP than their representative population percentage. The growing economic and demographic importance of metro-regions and their increasing relations to the worldwide economy raises important policy issues. http://www.oecdbookshop.org/oecd/display.asp?lang=EN&sf1=identifiers&st1=042006041e1
Higher-Density Development • Most public leaders want to create vibrant, economically strong communities where citizens can enjoy a high quality of life in a fiscally and environmentally responsible manner, but many are not sure how to achieve it. Planning for growth is a comprehensive and complicated process that requires leaders to employ a variety of tools to balance diverse community interests. Arguably, no tool is more important than increasing the density of existing and new communities, which includes support for infill development, the rehabilitation and reuse of existing structures, and denser new development. Indeed, well-designed and well-integrated higher- density development makes successful planning for growth possible. http://www.uli.org/sitecore/content/ULI2Home/ResearchAndPublications/Reports/Affordable%20Housing/Content/Higher%20Density%20Development.aspx
We must have strong cities to have a strong America. • CEOs for Cities is a national network of urban leaders dedicated to creating next generation cities that hold the answers to many of the challenges our nation faces. • If you care about keeping America globally competitive, fostering innovation, providing citizens access to opportunity and education, combating climate change, improving healthcare outcomes and learning how diverse people can co-exist peacefully, then you must be concerned about cities because that is where the solutions to these challenges will be met. • You can’t have a strong America without strong cities. http://www.ceosforcities.org/about
Economic Vitality requires a Supportive Physical Framework • The Congress for the New Urbanism views disinvestment in central cities, the spread of placeless sprawl, increasing separation by race and income, environmental deterioration, loss of agricultural lands and wilderness, and the erosion of society's built heritage as one interrelated community-building challenge. • We recognize that physical solutions by themselves will not solve social and economic problems, but neither can economic vitality, community stability, and environmental health be sustained without a coherent and supportive physical framework. http://www.cnu.org/charter
Key Assets for Prosperity are in Cities • …metropolitan areas are the engines of national prosperity • To achieve true prosperity, our nation must leverage the key assets - innovation, infrastructure, human capital, and quality places - principally concentrated in metropolitan areas • Prosperity—true prosperity—is based on achieving three types of growth: – Productive growth boosts innovation and entrepreneurship, generates quality jobs and rising incomes, and helps the U.S. maintain its economic leadership – Inclusive growth expands educational and employment opportunities, reduces poverty, and fosters a strong and diverse middle class – And sustainable growth strengthens existing cities and communities, conserves fiscal and natural resources, and advances U.S. efforts to address climate change and achieve energy independence http://www.brookings.edu/~/media/Files/Projects/blueprint/blueprint%20docs/execsumbp.pdf http://www.brookings.edu/projects/blueprint.aspx
…metros are the new norm in global economic development… • …metros are more than the sum of their parts. When they function at their highest pitch, metros epitomize the special ―multiplier‖ value of concentration, clustering, and agglomeration in economic life, a value celebrated over the centuries by economists such as Adam Smith, Alfred Marshall, and Paul Krugman. The gains are manifold. Thanks to the cost- effective sharing of fixed resources in relatively dense locations, infrastructure investments yield markedly higher payoffs in metropolitan areas than in non-metro areas… • Metropolitan density yields invention: Patenting rates rise markedly with increased employment density, such as is provided by metropolitan areas. • Metro areas also accelerate residents’ wage growth, because they promote learning, help match people to jobs and people to people. Economists Edward Glaeser and David Maré found that workers in large metro areas earn a 33 percent wage premium, that the premium accrues to them over time, and that it stays with them when they leave the area. Metro areas themselves seem to speed the accumulation of human capital. • And finally, metropolitan land-use and placemaking bring special advantages. More compact development patterns preserve rural lands and valuable ecosystems that rapid suburbanization might otherwise consume. http://www.brookings.edu/articles/2009/0311_metro_katz.aspx
A REVIEW OF THE FISCAL AND COMPETITIVE ADVANTAGES OF SMARTER GROWTH DEVELOPMENT PATTERNS • This paper makes the case that more compact development patterns and investing in projects to improve urban cores could save taxpayers money and improve overall regional economic performance. • The cost of providing public infrastructure and delivering services can be reduced through thoughtful design and planning. Several studies suggest that rational use of more compact development patterns from 2000 to 2025 promise the following sorts of savings for governments nationwide: – 11.8 percent, or $110 billion, from 25-year road building costs; – 6 percent, or $12.6 billion, from 25-year water and sewer costs; and – 3.7 percent, or $4 billion, for annual operations and service delivery. • Regional economic performance is enhanced when areas are developed with community benefits and the promotion of vital urban centers in mind. Studies show that productivity and overall economic performance may be improved to the extent compact, mixed-use development fosters dense labor markets, vibrant urban centers, efficient transportation systems, and a high ―quality-of-place." Productivity increases with county employment density. • Suburbs also benefit from investment in healthy urban cores. Finally, studies suggest that to the extent these smarter development patterns foster equity in regions by improving center-city incomes and vitality, they will also enhance the economic well-being of the suburbs as well as the city. City income growth has been shown to increase suburban income, house prices, and population. Reduced city poverty rates have also been associated with metropolitan income growth. www.brookings.edu/urban/pubs/200403_smartgrowth.pdf
New Strategies for Regional Economic Development! • …metropolitan areas have fared significantly better than rural areas in terms of economic and population growth in recent decades… • Approaches that adopt a tabula rasa approach to the dynamic relations of cities, regions and the nation lack the necessary understanding to provide real solutions for the needs of diverse communities. By adopting a local economic development approach, place-based strategies will be able to position America for success in the 21st century. http://www.lincolninst.edu/pubs/dl/1708_928_America 2050 report 2009.pdf
City Development = Local Economic Development ―If the last century was the century of urbanization, the twenty-first will be the century of cities. It is in the cities that decisive battles for the quality of life will be fought, and their outcomes will have a defining effect on the planet’s environment and on human relations.‖ • Jaime Lerner, Former Governor of Paraná, Brazil, and former Mayor of Curitiba http://www.worldwatch.org/node/4854
Local Economic Development, Human Development, and Decent Work Best practices and trends • Based on the review of hundreds of LED programs from 24 organizations Worldwide • Current Trends: – The most significant item that characterizes them is the participatory approach. – … participation is now considered the base, the condition sine-qua-non for fostering local economic development strategies and actions. – A new trend is, however, coming along: participation is not seen as an instrument for building consensus, but as a way of good governance. The accent on good governance, in fact, is more and more evident in the most recent initiatives, such as the Ilo, Undp and Unops Ledas, the World Bank, South Africa and it, in fact, also responds to the human development aims of United Nations. – Objectives, strategies and tools, of course, vary from case to case. – Also in this case “raditional”objectives could be recognized in the t improvement of employment, when job creation, promotion of micro and small local enterprise, attraction of external investment, territorial revitalization are mentioned. However a new typology of advanced objectives is recognizable: the improvement of the quality of life of the citizens in a more integrated approach, which includes human development, decent work, inclusion of the socially excluded people and the protection of the environment.
References The World Bank Infrastructure Group Urban Development ―Cities in Transition: World Bank Urban and Local Government Strategy‖ (2000) http://siteresources.worldbank.org/INTINFNETWORK/Resources/urban.pdf The World Bank ―Systems of Cities, Harnessing urbanization for growth and poverty alleviation‖ (2009) http://www.wburbanstrategy.org The World Bank Urban and Local Government Strategy ―Urban Strategy Paper Concept Note‖ FINANCE, ECONOMICS & URBAN DEPARTMENT SUSTAINABLE DEVELOPMENT NETWORK (2009) http://www.wburbanstrategy.org USAID ―Making Cities Work, Local Economic Growth, Introduction‖ (2009) http://www.makingcitieswork.org/urbanThemes/Localecongrowth OECD Territorial Reviews, ―Competitive Cities in the Global Economy‖ (2006) http://www.oecdbookshop.org/oecd/display.asp?lang=EN&sf1=identifiers&st1=042006041e1 ULI–the Urban Land Institute ―Higher-Density Development: Myth and Fact‖ (2005) http://www.uli.org/sitecore/content/ULI2Home/ResearchAndPublications/Reports/Affordable%20Housing/Content/Higher%20Density%20Developme nt.aspx CEOs for Cities ― www.ceosforcities.org/about ― (2008) http://www.ceosforcities.org/about CEOs for Cities Newsletter ReThink: 06.18.2009 ―Amplifying City Advantages, Excerpts from Carol Coletta's speech to the Congress for the New Urbanism‖ (2009) CEOs for Cities ―Cities and Economic Prosperity, A Data Scan On The Role Of Cities In Regional And National Economies‖ (2001) http://www.ceosforcities.org/work/cities_and_economic_prosperity The Congress for the New Urbanism ―Charter of the New Urbanism‖ (2009) http://www.cnu.org/charter Brookings Institution’s Metropolitan Policy Program ―Blueprint for American Prosperity, Unleashing the Potential of a Metropolitan Nation, An Overview‖ (2008) www.blueprintprosperity.org Brookings Institution’s Metropolitan Policy Program ―Miracle Mets, Our fifty states matter a lot less than our 100 largest metro areas‖ (2009) http://www.brookings.edu/articles/2009/0311_metro_katz.aspx The Brookings Institution Center on Urban and Metropolitan Policy ―INVESTING IN A BETTER FUTURE: A REVIEW OF THE FISCAL AND COMPETITIVE ADVANTAGES OF SMARTER GROWTH DEVELOPMENT PATTERNS‖ (2004) www.brookings.edu/urban/pubs/200403_smartgrowth.pdf United Nations Population Fund ―State of World Population 2007 Unleashing the Potential of Urban Growth - Online Report, Introduction, Peering into the Dawn of an Urban Millennium‖ (2008) www.unfpa.org/swp/2007/english/introduction.html Lincoln Institute of Land Policy ―America 2050, New Strategies for Regional Economic Development!‖ (2009) http://www.lincolninst.edu/pubs/dl/1708_928_America 2050 report 2009.pdf Worldwatch Institute ―State of the World 2007: Our Urban Future, Foreword - The Honorable Jaime Lerner‖ (2007) http://www.worldwatch.org/node/4854
Cities / Towns separated into 4 groups • Should we differentiate between different categories of cities? And score within each category differently? • Subjective separation based on economic behavior 1. Part of Tel-Aviv metro area 2. Next to become part of Tel-Aviv metro area 3. Part of secondary city metro area (Haifa, Jerusalem, Beer-Sheva, Ashdod) 4. Periphery – all the rest
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 what's really happening in your local economy, and how you can make it better.
local multiplier 3 • Local money flows in Localton (top) and Leakyville (bottom) The area in blue represents money that’s stayed in the local economy
revitalize older, traditional business districts • The Main Street Four-Point Approach™ is a community-driven, comprehensive methodology used to revitalize older, traditional business districts throughout the United States. It is a common-sense way to address the variety of issues and problems that face traditional business districts. The underlying premise of the Main Street approach is to encourage economic development within the context of historic preservation in ways appropriate to today's marketplace. The Main Street Approach advocates a return to community self-reliance, local empowerment, and the rebuilding of traditional commercial districts based on their unique assets: distinctive architecture, a pedestrian-friendly environment, personal service, local ownership, and a sense of community. – Organization – Promotion – Design – Economic Reconstructing • the four points of the Main Street approach correspond with the four forces of real estate value, which are – social, – political, – physical, and – economic.
Economic Statistics: The Main Street Program's Success Historic Preservation Equals Economic Development • 1980-2007 Reinvestment Statistics • Dollars Reinvested:- Total amount of reinvestment in physical improvements from public and private sources.$44.9 BillionAverage • reinvestment per community (i):$11,083,273 • Net gain in businesses:82,909 • Net gain in jobs:370,514 • Number of building rehabilitations: 199,519
Eight Principles of Success Comprehensive Incremental Self-help Partnerships Identifying and capitalizing on existing assets Quality Change Implementation

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Local Economic Development and Urbanism

  • 1.
    ‫כלכלה עירונית‬ ‫כיצד נבנית"מערכת אקולוגית" עירונית של עסקים ותושבים‬ ‫עיר ללא הפסקה ופרברים סביב לה‬ ‫סוגיות אורבניות בתל אביב‬ ‫קורס חדש וחלוצי של "המכללה החברתית-כלכלית"‬ ‫בשיתוף עם מרחב על אורבניות בישראל‬ ‫‪nachman@miu.org.il‬‬ ‫0102 ‪May‬‬ ‫‪www.miu.org.il‬‬
  • 2.
    Agenda • A briefhistory of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
  • 3.
    What is LED? •The purpose of local economic development (LED) 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.
  • 4.
    The Industrial Revolution • Group I - English-speaking • Group II - Japan • Group III - northwest Europe • Group IV - the rest of Europe and European-dominated economies in Latin America. • Group V - the rest of Asia and Africa.
  • 5.
    A Brief Historyof LED Prior 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.
    A Brief Historyof LED • Results of Marshall Plan seemed promising – Investment in hard infrastructure brought on rapid economic growth in western Europe • The recipe for LED seemed to be clear and this brought on huge investments that kicked off three waves of LED • Most of these investments have been fruitless…
  • 7.
    A Brief Historyof LED • Since the 1960s, LED has passed through three broad stages or 'waves' of development. – In each of these waves LED practitioners have developed a better understanding of successful and unsuccessful programs. – Today LED is in its 'third wave'. – Although LED has moved through each of these waves, elements of each wave are still practiced today. – Each of the waves had some basis in a prevailing economic development theory – With each wave the appreciation of the difficulty and complexity of LED grew
  • 8.
    The Three Wavesof LED 1960s to 1980s to mid Late1990s early1980s 1990s onwards 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
  • 9.
    Summary of CurrentThinking 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 • Urban regeneration government (both business and as a tool social) • Business friendly policies
  • 10.
    Have we alllearnt the lessons of past LED attempts?
  • 11.
    Which Programs DoNot 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 strategies http://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
  • 12.
    Typical Shortcuts proposedfor LED • Attract: – Outside investment – Outside transplants – Outside talent – Outside residents • Connect: – Under-developed regions to successful ones … if only LED was so easy…
  • 13.
    Agenda • A briefhistory of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
  • 14.
    Urban Economics from Econ171Economic Development UC Berkeley Lecture 27 Urbanization by Atanu Dey 14
  • 15.
    Cities are thebiggest idea • Cities represent the largest and the most persistent human artifact • Cities are the aggregation of the biggest ideas of humans • Urbanization matters because that is what humans naturally tend to do Lecture 27 Urbanization Atanu Dey 15
  • 16.
    Urbanization Matters • EconomicGrowth and Urbanization are bi- directionally causally connected Growth Urbanization • Why is this so? • Economies of scale and agglomeration Lecture 27 Urbanization Atanu Dey
  • 17.
    The Big Picture •The World is getting more urbanized Lecture 27 Urbanization Atanu 17 Dey
  • 18.
    Ginza Area inGreater Tokyo 18 Lecture 27 Urbanization Atanu Dey
  • 19.
    Share of WorldPopulation Residing in Urban Areas By World Region 1950-2030 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 19 Lecture 27 Urbanization Atanu Dey 1950 1975 2003 2030
  • 20.
    Some fun facts •Half the world’s population occupies only 1.5 percent of the world’s land area • The world is heterogeneous – Wealth is unequally distributed – North America, European Union and Japan account for 75 percent of the world’s wealth – Around 1 billion have less than 2 percent of the world’s wealth Lecture 27 Urbanization Atanu 20 Dey
  • 21.
  • 22.
    More fun facts •Growing cities – 35 million (a quarter of Japan’s population) lives in Tokyo – 4 percent of its land • Mobile people – 35 million people move every year within the US • Specialization – Western Europe trade around 35 percent of their GDP 22 Lecture 27 Urbanization Atanu Dey
  • 23.
    Urbanization and Growth •Growth correlates with urbanization • ―… no country in the industrial age has ever achieved significant economic growth without urbanization.‖ 23
  • 24.
    Story of Civilization • 900M • Civilization is about • 3% in cities 1800 cities • 1,600M 1900 • 10% in cities • The world is getting urbanized = civilized • 6,000M+ 2000 • 50% in cities • Projected 10,000M 2050 • 75% in cities 24 Lecture 27 Urbanization Atanu Dey
  • 25.
    Agenda • A briefhistory of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
  • 26.
    Why Cities Persist? •Cities have natural economic advantages • The advantages outweigh the disadvantages • Positive relationship between size and productivity • Larger cities produce more innovations • Cities are engines of economic growth – They manufacture wealth 26 Lecture 27 Urbanization Atanu Dey
  • 27.
    Cities are Enginesof Growth • They manufacture wealth – Manufacturing occurs in urban areas – Why rich countries are predominantly urban • Urbanization makes mass production possible – Manufacturing is related to scale economies – Scale economies require people in terms of variety and quantity 27 Lecture 27 Urbanization Atanu Dey
  • 28.
    Cities and TransactionCosts • Transaction Costs are lower in cities • Infrastructure has scale economies – High fixed costs – High aggregate demand reduces the average costs • Education can be more efficiently produced and consumed in cities Lecture 27 Urbanization Atanu Dey 28
  • 29.
    Fun Observations  Asproducers seek scale economies, agriculture disperses but manufacturing clusters  Services become even more clustered than manufacturing  Cities facilitate scale economies of all types  Doubling city size will increase productivity by 3%-10%  In the US, 96% of all innovations occur in metros  Smaller cities specialize, receiving industries as they mature and relocate  Mid-size cities have mature industries and are industrially specialized  Large cities are diversified and are service oriented  Most countries have an urban hierarchy: a few large cities and many small cities with varied economic functions 29 Lecture 27 Urbanization Atanu Dey
  • 30.
    Education • Major factorin economic growth • Cannot be efficiently provided in villages • Scale economies are huge in education – High fixed costs and low marginal costs – Especially using ICT (Information and Computing Technology) 30 Lecture 27 Urbanization Atanu Dey
  • 31.
    Mega Regions • 40mega-regions, 1.2 billion people – Around 70 percent of world output – 85 percent of all innovations • 5 billion people living in 191 countries produce the rest • A resident of a mega-region is 8 times as productive in goods, and 24 times as productive in innovations 31 Lecture 27 Urbanization Atanu Dey
  • 34.
    Internal Scale Economies •The cost of producing each unit of something changes when the volume produced increases or decreases • What’s the reason for increasing returns to firm scale? 34 Lecture 27 Urbanization Atanu Dey
  • 35.
    External Agglomeration Economies •Localization economies – Clustering of Firms in the same Industry – Arise from clustering of activities near a specific facility, such as a transport terminal, a big market or a large university. • Urbanization economies – Diversity of different Industries in the same area – Arise from common infrastructure, the diversity of labour and market size. 35 Lecture 27 Urbanization Atanu Dey
  • 36.
    Economies • Internal scaleeconomies arise from sharing of fixed costs by a large quantity of outputs and are higher in heavier industries • External Agglomeration Economies: – Localization economies arise from input- sharing and competition within the industry – Urbanization economies come from industrial diversity that fosters innovation and exchange of ideas and technology 36 Lecture 27 Urbanization Atanu Dey
  • 37.
    The 12 UrbanEconomies of Scale Type of economy of scale Example 1. Pecuniary Being able to purchase intermediate inputs at volume discounts 2. Static Internal 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 others External or agglomeration 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
  • 38.
    Cities, it turnsout, have natural advantages • Cities naturally offer Variety, a wide range of valued choices. They naturally offer Convenience. In cities, there are more choices close at hand. Discovery is another city advantage. Cities offer people more chances to discover things they didn't know they liked, things they didn't know they wanted to know, and people they didn't know they could make things with (including fun and babies). And cities naturally offer more Opportunity to their citizens in the form of access to jobs, education and smart people. • But here's the problem: We keep screwing it up. • We keep undermining the city’s natural advantages. Instead of building compact cities that magnify, amplify and intensify these city advantages, we've blown it…
  • 39.
    Agenda • A briefhistory of LED – Summary of current best practices • LED in the context of cities and towns – Urban Economics – Cities have natural economic advantages – How does the urban economy develop? – How can we jumpstart economic development?
  • 40.
    LED in theContext 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.
  • 41.
    LED in aGreat 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
  • 42.
    LED in aGreat 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 LED in a Great City What makes the city the true engine of LED • Compact and vibrant mixed population communities lead to interaction, opportunity and innovation • Easy access to skilled and unskilled talent • Easy access to customers and markets • Easy access to suppliers • Easy access to technology and knowhow • Easy access to credit • Easy access to low-cost startup space and to expansion space • Low regulatory barriers to small business • Lot’s of imports to replace
  • 43.
    LED in aGreat 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 LED in a Great City • 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
  • 44.
    LED in aGreat City LED in the Region of a Great City The cycle of city development LED in a Town Outside a Great City Region LED in a City that is not Great Density Quality Variety Of & Life Access Innovation Opportunities People & Culture Intensity Development
  • 45.
    LED in aGreat 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 • Create a great place to live and to develop economically • Provide attractive and efficient access to the City • The City will do the rest – The Five Economic Forces Exerted by Cities on Their Own Regions 1. City markets 2. City jobs 3. City developed technology 4. Transplanted city work 5. City generated capital
  • 46.
    LED in aGreat City LED in the Region of a Great City Leveraging the five forces to LED 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
  • 47.
    LED in aGreat City LED in the Region of a Great City LED in a Town Outside a Great LED 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) • Leverage current thinking on LED • Create a great place to live and to develop economically How? • In the existing center of town • 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 towns Leverage initial through innovation and improvisation sales to • Repeat last two steps forever
  • 48.
    LED in aGreat City LED in the Region of a Great City LED in a City that is not Great LED 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) • 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) • 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 cities Leverage initial through innovation and improvisation sales to • Repeat last two steps forever
  • 49.
    LED in aGreat City How to Jumpstart 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 & Life Access Where is the ―handle‖ ? Innovation Opportunities People & Culture Intensity Development
  • 50.
    Summary of CurrentThinking 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 • Urban regeneration government (both business and as a tool social) • Business friendly policies
  • 51.
    Local Agenda 21 •The Local Agenda 21 (LA21) Campaign promotes a participatory, long-term, strategic planning process that helps municipalities identify local sustainability priorities and implement long-term action plans. • It supports good local governance and mobilizes local governments and their citizens to undertake such multi- stakeholder process. • A 2002 survey found that – more than 6,400 local governments in – 113 countries have become involved in LA21 activities over a – 10-year period.
  • 52.
    But, a greatstrategic plan… • … in a binder on the shelf… • Is just that - • A great plan on the shelf! • The questions remain the same: – How do you advance ever closer to your vision of a successful town, based on daily decisions and based on existing budgets? – How do you jump-start the cycle of city development?
  • 53.
    LED in aGreat City How to Jumpstart 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‖ Innovation Opportunities People & Culture Intensity Development
  • 54.
    Urban Regeneration asa LED Tool or How to increase Density, Variety and Access •Provide loans to accelerate private storefront and Use the ―charrette‖ collaborative urban residence renewal planning 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 plan Third 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
  • 55.
    The critical roleof the MIU in LED in Israel Goal is quality of life for all In 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
  • 56.
    Thank You nachman@miu.org.il May 2010 www.miu.org.il
  • 57.
    Can LED beachieved by attracting transplants? • Transplants within a city region vs. transplants from afar • What do transplants need? What makes transplants possible? • What is their influence on the local economy? • How many are available? • What are the costs to attract one?
  • 58.
    Can LED beachieved in peripheral cities and towns by their residents? • Yes! If it can be achieved (and it can not always be achieved) then it can be achieved by the local residents – the problem is not the residents! – What are the conditions that enable LED?
  • 59.
    The three wavesof LED - #1: Wave Focus Tools First: During the first wave the focus To achieve this cities used: was on the attraction of: 1960s to •massive grants early 1980s •mobile manufacturing •subsidized loans usually investment, attracting outside aimed at inward investing investment, especially the manufacturers attraction of foreign direct •tax breaks investment •subsidized hard infrastructure •hard infrastructure investment investments •expensive "low road" industrial recruitment techniques
  • 60.
    The three wavesof LED - #2: Wave Focus Tools Second: During the second wave the To achieve this cities provided: focus moved towards: 1980s to •direct payments to individual mid 1990s •the retention and growing of businesses existing local businesses •business •still with an emphasis on incubators/workspace inward investment attraction, •advice and training for small- but usually this was becoming and medium-sized firms more targeted to specific •technical support sectors or from certain geographic areas •business start-up support •some hard and soft infrastructure investment •During this wave much effort was also invested in trying to improve rural quality of life, urbanization and city growth was seen as a problem
  • 61.
    The three wavesof LED - #3: Wave Focus Tools Third : The focus then shifted from To achieve this cities are: individual direct firm financial Late 1990s transfers to making the entire •developing a holistic strategy onwards business environment more aimed at growing local firms conducive to business. •providing a competitive local investment climate During this third (and current) wave •supporting and encouraging of LED, more focus is placed on: networking and collaboration •soft infrastructure investments •encouraging the development of •public/private partnerships business clusters •networking and the leveraging of •encouraging workforce private sector investments for the development and education public good •closely targeting inward •highly targeted inward investment investment to support cluster attraction to add to the competitive growth advantages of local areas •supporting quality of life improvements
  • 62.
    LED focus onCities and Towns • At the threshold of the 21st century, cities and towns headline the World Bank's development campaign. • Within a generation, the majority of the developing world's population will live in urban areas, while the number of urban residents will double, increasing by over 2 billion inhabitants. • Cities and towns are not only growing in size and number, they are also gaining new influence. • The urban transition offers significant opportunities to improve the quality of life for all individuals, but whether this potential is realized depends critically on how cities are managed and on the national and local policies affecting their development. http://siteresources.worldbank.org/INTINFNETWORK/Resources/urban.pdf
  • 63.
    THE WORLD BANKURBAN & LOCAL GOVERNMENT STRATEGY • Urbanization is a defining phenomenon of this century… • …main challenge for the urban policy maker is to understand the importance of managing this system of cities or ―portfolio of places‖ (of different sizes and vocation) within a country so as to maximize the benefits of agglomeration economies… • With more than half of GDP coming from cities, the economic future of most developing countries will be determined by the productivity of these burgeoning urban populations. • This interdependency between macro-economic performance and urban welfare has been seen in the aftermath of macro-economic crises in Argentina, Brazil, East Asia, and Russia http://www.wburbanstrategy.org
  • 64.
    Local Economic Growth • Cities are engines of economic growth. As a nation's primary source of job creation and wealth generation, cites produce goods and provide services which strengthen economic opportunities for the entire country. Local Economic Development (LED) is a process of planning and implementation that seeks to increase the economic potential of a city, town, or region. LED aims to improve the economic future and the quality of life for all local residents and businesses. Although the process can be time-intensive, it is important to bring the public, business and civil society sector together to work collectively in creating better conditions for growth and employment generation. This ensures that all available local resources are accessed and that there is sufficient buy-in across all sectors to increase the chances of sustainability. • Much of a city's potential competitive advantage lies in its various forms of capital (human, natural resources, land, location, and infrastructure). • Decentralization has forced local governments to take more responsibility for designing their own economic development strategies, usually in partnership with the private sector. http://www.makingcitieswork.org/urbanThemes/Localecongrowth
  • 65.
    Peering into theDawn of an Urban Millennium • Urbanization—the increase in the urban share of total population—is inevitable, but it can also be positive. The current concentration of poverty, slum growth and social disruption in cities does paint a threatening picture: Yet no country in the industrial age has ever achieved significant economic growth without urbanization. Cities concentrate poverty, but they also represent the best hope of escaping it. www.unfpa.org/swp/2007/english/introduction.html
  • 66.
    Competitive Cities inthe Global Economy • Cities are important generators of wealth, employment and productivity growth and often quoted as the engines of their national economies. Productivity levels are generally higher in metropolitan area and the increased trade and capital flows give rise to increased flows of people, goods, capital, services and ideas. In many OECD countries, metropolitan regions produce a larger percentage of the national GDP than their representative population percentage. The growing economic and demographic importance of metro-regions and their increasing relations to the worldwide economy raises important policy issues. http://www.oecdbookshop.org/oecd/display.asp?lang=EN&sf1=identifiers&st1=042006041e1
  • 67.
    Higher-Density Development • Most public leaders want to create vibrant, economically strong communities where citizens can enjoy a high quality of life in a fiscally and environmentally responsible manner, but many are not sure how to achieve it. Planning for growth is a comprehensive and complicated process that requires leaders to employ a variety of tools to balance diverse community interests. Arguably, no tool is more important than increasing the density of existing and new communities, which includes support for infill development, the rehabilitation and reuse of existing structures, and denser new development. Indeed, well-designed and well-integrated higher- density development makes successful planning for growth possible. http://www.uli.org/sitecore/content/ULI2Home/ResearchAndPublications/Reports/Affordable%20Housing/Content/Higher%20Density%20Development.aspx
  • 68.
    We must havestrong cities to have a strong America. • CEOs for Cities is a national network of urban leaders dedicated to creating next generation cities that hold the answers to many of the challenges our nation faces. • If you care about keeping America globally competitive, fostering innovation, providing citizens access to opportunity and education, combating climate change, improving healthcare outcomes and learning how diverse people can co-exist peacefully, then you must be concerned about cities because that is where the solutions to these challenges will be met. • You can’t have a strong America without strong cities. http://www.ceosforcities.org/about
  • 69.
    Economic Vitality requiresa Supportive Physical Framework • The Congress for the New Urbanism views disinvestment in central cities, the spread of placeless sprawl, increasing separation by race and income, environmental deterioration, loss of agricultural lands and wilderness, and the erosion of society's built heritage as one interrelated community-building challenge. • We recognize that physical solutions by themselves will not solve social and economic problems, but neither can economic vitality, community stability, and environmental health be sustained without a coherent and supportive physical framework. http://www.cnu.org/charter
  • 70.
    Key Assets forProsperity are in Cities • …metropolitan areas are the engines of national prosperity • To achieve true prosperity, our nation must leverage the key assets - innovation, infrastructure, human capital, and quality places - principally concentrated in metropolitan areas • Prosperity—true prosperity—is based on achieving three types of growth: – Productive growth boosts innovation and entrepreneurship, generates quality jobs and rising incomes, and helps the U.S. maintain its economic leadership – Inclusive growth expands educational and employment opportunities, reduces poverty, and fosters a strong and diverse middle class – And sustainable growth strengthens existing cities and communities, conserves fiscal and natural resources, and advances U.S. efforts to address climate change and achieve energy independence http://www.brookings.edu/~/media/Files/Projects/blueprint/blueprint%20docs/execsumbp.pdf http://www.brookings.edu/projects/blueprint.aspx
  • 71.
    …metros are thenew norm in global economic development… • …metros are more than the sum of their parts. When they function at their highest pitch, metros epitomize the special ―multiplier‖ value of concentration, clustering, and agglomeration in economic life, a value celebrated over the centuries by economists such as Adam Smith, Alfred Marshall, and Paul Krugman. The gains are manifold. Thanks to the cost- effective sharing of fixed resources in relatively dense locations, infrastructure investments yield markedly higher payoffs in metropolitan areas than in non-metro areas… • Metropolitan density yields invention: Patenting rates rise markedly with increased employment density, such as is provided by metropolitan areas. • Metro areas also accelerate residents’ wage growth, because they promote learning, help match people to jobs and people to people. Economists Edward Glaeser and David Maré found that workers in large metro areas earn a 33 percent wage premium, that the premium accrues to them over time, and that it stays with them when they leave the area. Metro areas themselves seem to speed the accumulation of human capital. • And finally, metropolitan land-use and placemaking bring special advantages. More compact development patterns preserve rural lands and valuable ecosystems that rapid suburbanization might otherwise consume. http://www.brookings.edu/articles/2009/0311_metro_katz.aspx
  • 72.
    A REVIEW OFTHE FISCAL AND COMPETITIVE ADVANTAGES OF SMARTER GROWTH DEVELOPMENT PATTERNS • This paper makes the case that more compact development patterns and investing in projects to improve urban cores could save taxpayers money and improve overall regional economic performance. • The cost of providing public infrastructure and delivering services can be reduced through thoughtful design and planning. Several studies suggest that rational use of more compact development patterns from 2000 to 2025 promise the following sorts of savings for governments nationwide: – 11.8 percent, or $110 billion, from 25-year road building costs; – 6 percent, or $12.6 billion, from 25-year water and sewer costs; and – 3.7 percent, or $4 billion, for annual operations and service delivery. • Regional economic performance is enhanced when areas are developed with community benefits and the promotion of vital urban centers in mind. Studies show that productivity and overall economic performance may be improved to the extent compact, mixed-use development fosters dense labor markets, vibrant urban centers, efficient transportation systems, and a high ―quality-of-place." Productivity increases with county employment density. • Suburbs also benefit from investment in healthy urban cores. Finally, studies suggest that to the extent these smarter development patterns foster equity in regions by improving center-city incomes and vitality, they will also enhance the economic well-being of the suburbs as well as the city. City income growth has been shown to increase suburban income, house prices, and population. Reduced city poverty rates have also been associated with metropolitan income growth. www.brookings.edu/urban/pubs/200403_smartgrowth.pdf
  • 73.
    New Strategies forRegional Economic Development! • …metropolitan areas have fared significantly better than rural areas in terms of economic and population growth in recent decades… • Approaches that adopt a tabula rasa approach to the dynamic relations of cities, regions and the nation lack the necessary understanding to provide real solutions for the needs of diverse communities. By adopting a local economic development approach, place-based strategies will be able to position America for success in the 21st century. http://www.lincolninst.edu/pubs/dl/1708_928_America 2050 report 2009.pdf
  • 74.
    City Development =Local Economic Development ―If the last century was the century of urbanization, the twenty-first will be the century of cities. It is in the cities that decisive battles for the quality of life will be fought, and their outcomes will have a defining effect on the planet’s environment and on human relations.‖ • Jaime Lerner, Former Governor of Paraná, Brazil, and former Mayor of Curitiba http://www.worldwatch.org/node/4854
  • 75.
    Local Economic Development, Human Development, and Decent Work Best practices and trends • Based on the review of hundreds of LED programs from 24 organizations Worldwide • Current Trends: – The most significant item that characterizes them is the participatory approach. – … participation is now considered the base, the condition sine-qua-non for fostering local economic development strategies and actions. – A new trend is, however, coming along: participation is not seen as an instrument for building consensus, but as a way of good governance. The accent on good governance, in fact, is more and more evident in the most recent initiatives, such as the Ilo, Undp and Unops Ledas, the World Bank, South Africa and it, in fact, also responds to the human development aims of United Nations. – Objectives, strategies and tools, of course, vary from case to case. – Also in this case “raditional”objectives could be recognized in the t improvement of employment, when job creation, promotion of micro and small local enterprise, attraction of external investment, territorial revitalization are mentioned. However a new typology of advanced objectives is recognizable: the improvement of the quality of life of the citizens in a more integrated approach, which includes human development, decent work, inclusion of the socially excluded people and the protection of the environment.
  • 76.
    References The World BankInfrastructure Group Urban Development ―Cities in Transition: World Bank Urban and Local Government Strategy‖ (2000) http://siteresources.worldbank.org/INTINFNETWORK/Resources/urban.pdf The World Bank ―Systems of Cities, Harnessing urbanization for growth and poverty alleviation‖ (2009) http://www.wburbanstrategy.org The World Bank Urban and Local Government Strategy ―Urban Strategy Paper Concept Note‖ FINANCE, ECONOMICS & URBAN DEPARTMENT SUSTAINABLE DEVELOPMENT NETWORK (2009) http://www.wburbanstrategy.org USAID ―Making Cities Work, Local Economic Growth, Introduction‖ (2009) http://www.makingcitieswork.org/urbanThemes/Localecongrowth OECD Territorial Reviews, ―Competitive Cities in the Global Economy‖ (2006) http://www.oecdbookshop.org/oecd/display.asp?lang=EN&sf1=identifiers&st1=042006041e1 ULI–the Urban Land Institute ―Higher-Density Development: Myth and Fact‖ (2005) http://www.uli.org/sitecore/content/ULI2Home/ResearchAndPublications/Reports/Affordable%20Housing/Content/Higher%20Density%20Developme nt.aspx CEOs for Cities ― www.ceosforcities.org/about ― (2008) http://www.ceosforcities.org/about CEOs for Cities Newsletter ReThink: 06.18.2009 ―Amplifying City Advantages, Excerpts from Carol Coletta's speech to the Congress for the New Urbanism‖ (2009) CEOs for Cities ―Cities and Economic Prosperity, A Data Scan On The Role Of Cities In Regional And National Economies‖ (2001) http://www.ceosforcities.org/work/cities_and_economic_prosperity The Congress for the New Urbanism ―Charter of the New Urbanism‖ (2009) http://www.cnu.org/charter Brookings Institution’s Metropolitan Policy Program ―Blueprint for American Prosperity, Unleashing the Potential of a Metropolitan Nation, An Overview‖ (2008) www.blueprintprosperity.org Brookings Institution’s Metropolitan Policy Program ―Miracle Mets, Our fifty states matter a lot less than our 100 largest metro areas‖ (2009) http://www.brookings.edu/articles/2009/0311_metro_katz.aspx The Brookings Institution Center on Urban and Metropolitan Policy ―INVESTING IN A BETTER FUTURE: A REVIEW OF THE FISCAL AND COMPETITIVE ADVANTAGES OF SMARTER GROWTH DEVELOPMENT PATTERNS‖ (2004) www.brookings.edu/urban/pubs/200403_smartgrowth.pdf United Nations Population Fund ―State of World Population 2007 Unleashing the Potential of Urban Growth - Online Report, Introduction, Peering into the Dawn of an Urban Millennium‖ (2008) www.unfpa.org/swp/2007/english/introduction.html Lincoln Institute of Land Policy ―America 2050, New Strategies for Regional Economic Development!‖ (2009) http://www.lincolninst.edu/pubs/dl/1708_928_America 2050 report 2009.pdf Worldwatch Institute ―State of the World 2007: Our Urban Future, Foreword - The Honorable Jaime Lerner‖ (2007) http://www.worldwatch.org/node/4854
  • 77.
    Cities / Townsseparated into 4 groups • Should we differentiate between different categories of cities? And score within each category differently? • Subjective separation based on economic behavior 1. Part of Tel-Aviv metro area 2. Next to become part of Tel-Aviv metro area 3. Part of secondary city metro area (Haifa, Jerusalem, Beer-Sheva, Ashdod) 4. Periphery – all the rest
  • 78.
    tools for localeconomic 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 what's really happening in your local economy, and how you can make it better.
  • 79.
    local multiplier 3 •Local money flows in Localton (top) and Leakyville (bottom) The area in blue represents money that’s stayed in the local economy
  • 80.
    revitalize older, traditionalbusiness districts • The Main Street Four-Point Approach™ is a community-driven, comprehensive methodology used to revitalize older, traditional business districts throughout the United States. It is a common-sense way to address the variety of issues and problems that face traditional business districts. The underlying premise of the Main Street approach is to encourage economic development within the context of historic preservation in ways appropriate to today's marketplace. The Main Street Approach advocates a return to community self-reliance, local empowerment, and the rebuilding of traditional commercial districts based on their unique assets: distinctive architecture, a pedestrian-friendly environment, personal service, local ownership, and a sense of community. – Organization – Promotion – Design – Economic Reconstructing • the four points of the Main Street approach correspond with the four forces of real estate value, which are – social, – political, – physical, and – economic.
  • 81.
    Economic Statistics: TheMain Street Program's Success Historic Preservation Equals Economic Development • 1980-2007 Reinvestment Statistics • Dollars Reinvested:- Total amount of reinvestment in physical improvements from public and private sources.$44.9 BillionAverage • reinvestment per community (i):$11,083,273 • Net gain in businesses:82,909 • Net gain in jobs:370,514 • Number of building rehabilitations: 199,519
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    Eight Principles ofSuccess Comprehensive Incremental Self-help Partnerships Identifying and capitalizing on existing assets Quality Change Implementation