As has been noted earlier, during the winter and spring, 2005, I interviewed city officials, academic researchers, representatives of entities such as the chamber of commerce with regard to the strategic–economic planning experi- ences of their urban regions. In addition I was able to accumulate a large number of planning documents, studies, and data that have given me what I believe to be a solid understanding of what these ten cities have been doing with regard to SEP. On the basis of this information I can offer five observa- tions that are most relevant given the topic of this chapter:
• City leaders can indeed have major impacts on the economic lives of their cities through effective strategic–economic planning.
• The turbulence of macro- and micro-economics and of regional and global economic and political events such as regional economic inte- gration, introduction of the Euro, EU economic stagnation, the opening up to Central Europe, emergence of new competitors from China, India, Brazil and other emerging economies have made planning initiatives more difficult. But many cities have risen or fallen in relation to compa- rable cities, in large part due to the actions of their city leaders.
• Effective governance and strong leadership with a clear and widely accepted vision are essential for a successful experience with SEP.
• Today’s activity of comparative advantage may well become tomor- row’s problem area. Low-skill, poorly educated workers employed in traditional manufacturing may not be employable in the technology- related economic activities that will be the base of the urban economy of the near future. This will result in the usual varieties of urban social pathologies such as exclusion, unemployment, crime, deteriorating housing, and so forth.
• Regular examination of the aspect of a city’s economic development over time is important if rising tax burdens and deteriorating quality of urban life are to be avoided.
The remainder of this section of the chapter will be devoted to amplification of these observations from my examination of the experiences of these ten urban regions.
Leaders Can Have Impacts
Plans, decision-making structures, assignment of responsibilities, review procedures, and so forth all exist on paper; what makes for effective imple- mentation, however, is the quality of the leadership that is provided by the individual who is ultimately in charge of the effort. All participants must have the understanding that none of their colleagues will be allowed to be slack in carrying out their responsibilities. What quality leadership means for any indi- vidual city depends upon the governmental and administrative context in which it functions. For example, it was very important for Lyon that Raymond Barre was mayor during much of the 1990s, because of the importance of the national government in Paris in the distribution of funds and the empowerment of local authorities. Mr. Barre was not only well regarded in Lyon, he was also considered to be a powerful figure in Paris. Without his clout in the national government, developments would have been less positive for the city. For Turin in the early 1980s and Milan a decade later local governments were
racked by corruption scandals and the chief executive of the city government has to be held responsible for this. These two corruption scandals halted any initiatives by local government until recently since the residents understand- ably demanded that the municipal books be put in order and some assurance of honest performance of duties could be gained. Turin was fortunate enough to have a respected mayor in office during the mid-years of the 1990s and his actions have resulted in what appears to be a potentially successful strate- gic–economic planning process, beginning with the city’s successful bid for the Winter Olympics in 2006.
In each of the ten cities, students of local government can identify mayors or urban region chief executives who were effective and who sparked effec- tive planning exercises and economic expansion, and, of course, others whose administration supervised a period of stagnation. This is not to suggest that a charismatic and competent mayor can turn around any city, but it seems to be closer to the truth to suggest that this sort of leadership is the sine qua non of a competitive city and of efforts to enhance that competitiveness.
Effective Governance
While leadership is essential to effective strategic–economic planning, little can be accomplished without a structure of governance that is equally effec- tive. Cities that have had long experience with planning, such as Amsterdam and Barcelona, or that have had in place an approach to economic develop- ment that is consistent and successful, such as Munich and Lyon, are examples of cities with effective governance. Responsibilities are clearly assigned, lines of reporting are defined, squabbling among various metropolitan units and agencies is minimal, and so forth. An example to the contrary is given by the US city of Buffalo, New York. In the early 1990s, following adoption of the Canada–US Free Trade Agreement, Buffalo had designed a strategic plan that was based on realization of the potential benefits from the agreement. But when the municipal leaders met, they included representatives of two counties, two airport commissions, four bridge commissions, the chamber of commerce, the Western New York Development Agency, the city and perhaps one or two others – with no single individual having the authority over the others to ensure that the plan could be effectively implemented. Buffalo has continued to stagnate ever since.
In some instances in which cities have seen a spatial expansion of the loca- tion of corporate production and distribution facilities into contiguous areas, such as Munich and Barcelona, it has been necessary to create metropolitan- wide cooperation and governance structures without which no effective action would be possible. In other cases, cities such as Hamburg and Dresden had to reach out to other sub-national or national entities if they were to realize the
potential benefits of the liberalization of interaction throughout the extent of their economic reach. In these structures, there must be a clear net benefit to all of the participating municipalities if they are to continue their engagement – this participation cannot be seen merely as a way of making the central city more competitive on the vague promise of some spin-off or spread benefits to come to other municipalities at some future date.
Turbulence
The major elements of turbulence that have had the potential to affect nega- tively the performance of the ten cities have been enumerated. The importance of this turbulence for any individual city was largely determined by the economic structure and specialization of that city. Since the German economy has been so sluggish throughout the period of this study, cities such as Dresden and Amsterdam, for whose economies the German market is of such great importance, have been particularly hard hit by macro-economic stagnation.
Munich and especially Hamburg are linked to aerospace production and as long as Airbus finds the global market to be receptive they are far less affected by the state of the German or EU economies. But for these latter cities the exchange value of the Euro can pose significant problems if it appreciates and Airbus loses sales to Boeing because of this. The opening to Central Europe has the potential to increase demand of some 15 EU products, but this region has also become an attractive place to relocate some production from cities in the west. Manufacturing centers such as Turin and Barcelona have lost produc- tion facilities to locations in Central Europe. While both Hamburg and Dresden were able to develop important logistics and economic relationships especially with Poland and the Czech Republic, Munich was disappointed in the economic impact of the opening to the East due primarily to the weakness of the demand for Munich-produced goods there.
Passage of the SEA had very positive impacts on both of the Spanish cities, coming as it did so soon after Spain became a member of the EEC. Barcelona in particular was able to position itself as a key participant in the European urban structure and to use membership and the SEA as vehicles for the trans- formation of its economy following the isolation of the Franco years.
Increased competition from Asia has had a broad-based negative impact on industries such as ship-building, steel, motor vehicles, electronics and consumer goods. Hamburg saw its ship-building industry virtually disappear but both it and Amsterdam became regional centers for Chinese offices related to logistics and marketing. Munich lost much of the production of Völkl skis to China, but has been able to retain production of the high quality and high price end of the product line as well as the headquarters; this can be seen as a response that is typical of that of many EU urban regions – the low-skill activ-
ity is lost to Asia but the high end, design and headquarters functions remain in Europe. Cities which have traditionally been centers of the textile industry, such as Barcelona and Dresden, have lost this activity to producers in Asia and other low-wage countries.
So macro- and micro-economic and global and regional political turbulence have had their impacts on the ten cities studied, but the specific impacts are dependent upon the economic structure and specialization of that individual urban region. This is, of course, as should be expected.
Today’s Comparative Advantage can Create Tomorrow’s Social Pathology
The clearest example of this is to be found in Turin. During the post-WWII years, FIAT greatly expanded its production of motor vehicles. The labor force needed did not require much more than a certain amount of physical strength and coordination. The cheapest way to get this labor was to import workers from the south of Italy – from Sicily and other provinces in the Mezzogiórno.
This strategy was successful for several decades, until the rise of competition from more efficient producers in the rest of Europe and then in Asia. Since the beginning of the 1990s production by FIAT in its Turin facilities has steadily fallen, leaving the metropolitan region of Turin with a large force of largely uneducated workers with skills that are not suited to the modern production system of the industrialized world. The result is that today 60 per cent of Turin’s workers lack a high school education, many of whom are of an age that reduces the attractiveness of further training. A large number of essentially unemployable workers poses obvious threats to the fiscal viability of a city, to public safety, to the reputation of the city, and to the ability of the city to find a place for itself in an increasingly skill-intensive modern economy. So it can be seen that the elements that give a city its economic strength or competi- tiveness at one moment in time can turn around to be the factors which hamper the city’s effort to be competitive at a later date.
This phenomenon is experienced by all regional economies as they evolve along with the economic environment in which they exist. The shift from agri- cultural production to manufacturing continues to be eased by massive protec- tionist measures of one sort or another through the Common Agriculture Policy using the argument that no society can be dependent upon other, poten- tially antagonistic, nations for its basic sustenance; the same argument does not carry water when it is applied to the shift from manufacturing to services, and especially to high-skill services. Thus, when designing a strategic–
economic plan for the next decades, city leaders must be aware of the need continually to upgrade the skills of their labor force so as to avoid the devel- opment of competitiveness reducing social pathologies. Cities such as Munich
and Lyon that have pursued for decades a strategy of production based on science, technology and research have been largely able to avoid this potential problem, since their labor force is, as a matter of course, continually being upgraded.
Regular Examination
As a final observation from the study of ten internationally engaged cities in the EU, I would note briefly that once a plan has been adopted regular moni- toring of progress, difficulties, new insights, and so forth is absolutely neces- sary. The failure of one activity to be carried out as intended will have negative impacts on the ability of other objectives to be realized. Both an engaged lead- ership and effective governance can help greatly in assuring that the expected progress is being made in all areas, that the individuals assigned the tasks are able to do the work, and that necessary modifications to the plan can be iden- tified and implemented. Too much is at stake, in regard to the economic liveli- hoods of the metropolitan region’s residents, to allow favoritism and ineffective performance to be tolerated. The recently adopted plans of these ten cities have not been in operation long enough for observations to be made with regard to this aspect of the SEP process.