All city leaders want their local economies to grow. Economic growth, however, does not automatically deliver a better quality of life for citizens and can often harm the environment. Indeed, many cities find they have to take expensive remedial action to fix problems caused by growth itself. It is better, then, not to assume that all growth is good, but to learn what smart growth looks like. Smart growth depends upon a strategic approach that identifies the very best growth opportunities and nurtures them, planning so the city and its surroundings can cope with the demands growth will place on them, integrating environmental thinking, and ensuring that all citizens enjoy their city’s prosperity.
ADOPT A STRATEGIC APPROACH
While all city leaders look for ways to promote their city’s prosperity, what marks the best among them is the strategic manner in which they pursue that goal. Simply offering tax breaks to entice newcomers or deciding without sufficient analysis that the
city’s future lies in the latest nascent industry, be it clean technology or biotechnology, is unlikely to have much impact. A more rigorous approach is required to identify the city’s best growth prospects. This is not to suggest that city governments should get overly involved in business. Rather, their leaders’ vision for the city should be colored by a sound assessment of where the city’s competitive advantages lie, so they can identify potential clusters of companies that can power growth. Cities must then support growth by making targeted investments and offering a “client service” to businesses to help them flourish.
Identify competitive clusters
Different cities have different starting points. But each needs to decide which sectors can best support growth and focus on those:
- Economic growth is likely to be stronger if clusters of companies from a sector or sectors develop.
- Their physical proximity to one another will lower supply costs, improve R&D collaboration
- and assist the building of an appropriately skilled workforce, among other benefits.
A first step therefore is to identify a city’s competitive advantages. The exercise might reveal that existing clusters have potential to be strengthened or that new ones can be nurtured. Cities in the southeastern United States, including Atlanta, Savannah, and Nashville, have succeeded in attracting foreign automakers because of their core strengths: talent, proximity to centers of innovation and higher education, good transport, and low input costs. London, meanwhile, has succeeded in forming a new high-tech cluster known as Tech City as a result of a national government initiative to foster growth. Within three years in a small part of the city’s East End, the number of digital and creative companies in the cluster grew from 11 to 300.
Invest to support growth
Targeted public-sector investment may be required to attract business to the city. As the city of New York pointed out in its 2011 Sustainability Plan, “Today’s mobility of people and capital has created fierce competition among cities. We’re competing for the best ideas and the most capable workforce. To thrive economically, we must create a setting where talented entrepreneurs—and the businesses they grow—want to be.” In response, the city has set no fewer than 400 targets to be met by the end of 2013 to improve public safety, green areas, mobility, and much more. Such improvements require investments of varying degrees. Dubai has invested hugely in infrastructure to transform itself into an international business and tourist center that is now home to the world’s largest port and the offices of 120 of the Fortune Global 500.
The activities thus generated account for 25 percent of Dubai’s annual GDP and for 20 percent of foreign direct investment for the entire United Arab Emirates. On a different scale but no less targeted in its intent, the state of Georgia in the United States spent $14.5 million to build a job-training facility in West Point for would-be automotive workers to help secure an investment by car manufacturer Kia. According to Chris Cummiskey, commissioner of Georgia’s Department of Economic Development, “Our people went over to Korea to see how [Kia] runs a manufacturing plant. Then we replicated that, set up an onsite training center, sorted through 30,000 applications, found the best, and trained more than 1,000 people. On the first day, the company opened at 100 percent efficiency.”4 The job-training facility has since trained all 3,000 employees hired by Kia at its plant in West Point.