Transforming Urban Economies

Policy Lessons from European and Asian Cities

Andrea Colantonio, Richard Burdett, Philipp Rode

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780415830577
• eBook ISBN: 9781134622238
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

Cities house the majority of the world's population and are the dynamic centres of 21st century life, at the heart of economic, social and environmental change. They are still beset by difficult problems but often demonstrate resilience in the face of regional and national economic decline. Faced by the combined threats of globalisation and world recession, cities and their metropolitan regions have had to fight hard to maintain their global competitiveness and protect the quality of life of urban residents

Transforming Urban Economies: Policy Lessons from European and Asian Cities, the first in an ongoing series of research volumes by LSE Cities, provides insights in how cities can respond positively to these challenges. The fine-grained and authoritative analysis of how Barcelona, Turin, Munich and Seoul have been transformed in the last 20 years examines comparative patterns of decline, adaptation and recovery of cities that have successfully managed to transform their economies in the face of economic hardship.

This in-depth and practical analysis is aimed at urban leaders, designers, planners, policymakers and scholars who want to understand the dynamics of economic resilience while cities are still suffering from the aftershocks of the 2008 recession. The book highlights the importance of aligned and multi-level governance, the need for strategic public investments and the role of the private sector, universities and foundations in leading and guiding complex processes of urban recovery in an increasingly uncertain age.

Part I

Transforming Urban Economies

1

Introduction

Background and context

The past twenty years have witnessed the comprehensive restructuring and transformation of cities worldwide from industrial centres to globalised, information-driven metros (Castells, 1997, 1998). Economic geographers have tended to frame this transition in terms of a move from ‘Fordism’, which was centred around mass production and consumption, to more flexible and sophisticated forms of economic activity based on greater diversity and more flexible production structures (Harvey, 1990; Britton, 1991). Catalytic events such as the oil crisis of the 1970s, and the opening up of regional markets to global trade of the 1980s and 1990s, exerted a significant contribution towards this profound restructuring of local production systems that had driven economic and urban expansion for almost a century across the globe. As a result, cities that were the economic and political hubs of their respective regions and the drivers of their nation’s development faced a period of steep economic and social decline. While facing the deteriorating legacy of their ‘old economy’, these cities also had to confront a new set of challenges prompted by the unfolding of the ‘new economy’ characterised by rapid technological change, global competition and the emergence of high-tech, service and knowledge industries. In their own way, Barcelona, Turin, Munich and Seoul are living exemplars of this transition.

The beginning of the 1990s provided European cities with a unique opportunity for economic renaissance. The creation of the European Single Market, the embryonic establishment of a supranational urban policy agenda at EU level (Commission of the European Communities, 1997), and the creation of the structural funds and annexed programmes such as URBAN I and II (Carpenter, 2010), allowed several cities across Europe to adopt comprehensive strategies to transform their urban fabric and revitalise their economic base. Similarly, the 1997 widespread financial crisis in Asia and competing regional interests led several countries, including Thailand, Indonesia and South Korea, to re-think their national development strategies and the role that cities should play in promoting growth and innovation. At the core of this policy shift is the recognition that cities play a pivotal role in generating prosperity and delivering effective national and supranational policies, particularly in relation to economic development, social cohesion and the environment, as well as employment and innovation.

Up until the mid-1990s, there was no explicit urban policy at EU level because this was considered to be the responsibility of national, regional and particularly local governments. However, since the late 1990s, urban and regional economic development climbed up the policy agenda in individual member states and the EU as a whole. Similar trends concerning the rising importance of the urban economic agenda at regional and national level can be observed in emerging global regions such as South-East Asia and Latin America. Nonetheless, the impact of the EU and its funding and institutional structures on the fortunes of many cities in European countries accounts for a very particular trajectory of ‘supra-national’ public investment that has shaped their economic development.

Broadly speaking, the urban agenda over the past two decades has become incrementally embedded in a new narrative of economic development in which single-sector approaches to growth have been replaced by integrated approaches underpinned by strong leadership, strategic planning and long-term foresight. This shift has allowed a number of European and Asian cities faced with acute crises just twenty years ago to pioneer innovative development strategies and mobilise new tools for economic change in order to adapt, recover and diversify into new sectors. The four cities of Barcelona, Turin, Munich and Seoul stand out – among many others – as having demonstrated the ability to overcome challenging economic and social crises and have succeeded in breaking free from their historical dependencies, demonstrating significant progress in economic and urban development across their metropolitan regions. They are the subject of this book.

Urban economists, planners and economic geographers have examined the economic transformations of local and regional economies through the development of influential and targeted approaches to urban economics. Some of these now established approaches – reviewed in detail in the following chapter – have deployed institutional theory alongside more traditional neo-classical and Keynesian economics, such as cluster-based development, regional institutional capacity, path-dependency and lock-in theory, the creative industries paradigm and regional innovation systems. However, it could be argued that from an empirical perspective much of the literature on these theories and policy approaches has been ‘limited’ in its thematic focus. For example, studies of urban economic transformation have focused on the investigation of a single economic sector, a specific city district or area, or a given aspect of the economy in order to test the main hypothesis and precepts of their originating theories. By contrast, this study attempts to cut across these ‘silo’ investigations of economic transformation with a multi-disciplinary, cross-sectoral and international perspective that takes into account leadership, economic performance, urban policy and planning as well as the key institutions and actors that have led the successful transformation of a small number of cities in Europe and Asia.

The present investigation, undertaken by LSE Cities (a research centre based at the London School of Economics and Political Science), examines comparative patterns of decline, adaptation and recovery of selected cities and their metropolitan regions that have successfully managed to transform their economies in the face of economic hardship. The study is intended as an in-depth and practical analysis of shifts towards new urban economies that is relevant to cities worldwide, especially those in the early stages of the urban transformation learning curve because it highlights the importance of aligned and multil-level governance, as well as the need of strategic public investments in response to market failures. The effects of the 2008 global crisis and its aftershocks have, in many ways, given this even greater resonance for urban scholars and city leaders who are concerned with an understanding of the dynamics of economic resilience in an uncertain age.

Case-study selection

Following a sifting process of over fifty potential case studies, the three European cities of Barcelona, Turin and Munich and the Asian metropolis of Seoul were selected on the basis of four characteristics:

1 growth and economic development on the back of steep decline;

2 common experience of showing resilience to economic crisis;

3 creative and institutionally aligned recovery efforts;

4 in part, the ability to innovate and promote the green economy.

In their own way, each of the four cities has had to deal with periods of profound economic decline or uncertainty – due to a range of economic and political factors – but have managed to respond to these challenges proactively and effectively. Barcelona, the capital of Spain’s most productive region of Catalonia, reinvented itself after nearly 40 years of General Franco’s dictatorship, strengthening its position in Europe and attracting foreign investment, international entrepreneurs and tourists. Turin, capital of the Italian region of Piedmont, has been one of Italy’s most effective industrial engines for decades but faced an acute crisis just twenty years ago. Home to car manufacturer FIAT, Italy’s ‘Detroit’ adapted and recovered, expanding into new sectors and markets, making the most of regional alliances and its local technical skills. The southern German city Munich, capital of the State of Bavaria, has been a leading centre for innovation but was negatively affected by Germany’s reunification and the 1993–94 recession. Yet, it came back to become one of the top performing cities in Germany. And Seoul, in the very different context of aggressive Asian economies, had to respond to a severe loss of its competitive edge through collaborative relationships between government and private sector becoming South Korea’s economic powerhouse.

Today all these cities are faring differently in response to the continued effects of the 2008 world recession and the impacts on economic growth of regional and global developments, especially the negative effects of the prolonged Eurozone crisis on Italy and Spain. But Barcelona, Turin, Munich and Seoul offer a distinctive lens on how cities can overcome periods of crisis. None of them has been perfectly successful, but each has made decisive progress, out-performing their peers, and generating more opportunities for future growth, trade and job creation. Ultimately, their experiences shed some light on how cities and metropolitan regions – on their own and acting in unison – can make a difference, making the most of local assets, institutions and human capital.

Aims and methodology

Accordingly, this volume focuses on the actual experience of transformation that has occurred in the four selected cities rather than the broader macro-economic context within which their decline and recovery occurred. It attempts to draw the policy lessons and extract examples of best practices from the interdisciplinary analysis based on a mix of qualitative and quantitative data examinations. The data gathering included academic evidence reviews, city and regional policy reviews, descriptive statistics and semi-structured interviews with key stakeholders and experts that took place during 2009–10.

The study set out to understand the inter-relationships between local, regional and, to a lesser extent, national contexts that determined intentional change; the processes of change; and, as far as possible, what aspects of the subsequent transformation could be attributed to these changes. In each city, research teams followed the same methodology that included the following steps:

• exploration of the ‘problem statement’ or the ‘opportunity’ identified by leaders at the city, metropolitan, regional, or national level to prompt measurable change in the local economy;
• analysis of the ‘before’ and ‘after’ statistics concerning the transformation of the cities, and the identification of a ‘turning point’ in the transformation of each city, the latter being a specific event, a change in government leadership, an economic shock or a confluence of multiple challenges;
• examination of the measurable change experienced by the metropolitan area with the objective to provide a documented account of the transformation of local economy and a clear analysis of the impact of the policy interventions as far as possible.

The analysis of the transformation process concludes with the review of the impact of the current global economic crisis on the transition process of each city as it stands at this time, and the examination of how in some instances this has prompted local leaders to re-think or adjust their local development strategies.

Structure

This book is divided into three main parts. Part I, comprising Chapters 1 and 2, addresses the context of the research and reviews the literature concerning urban transformation, its main policies and tools, and theoretical debates on local economic development which frames the analysis of the case study cities. Part II, comprising Chapters 3 to 6, go into significant detail in the four cases studies – Barcelona, Turin, Munich and Seoul – focussing on governance models, tools and policies underpinning economic change in each city. Part III, comprised of Chapter 7, summarises the key findings and draws the wider policy lessons from the selected case studies. Further to these parts, an appendix outlines the selection criteria and processes regarding the case studies.

References

Britton, S. G. (1991). Tourism, capital and place: Towards a critical geography of tourism. Environment and Planning D: Society and Space, 9(4), 451–78.

Carpenter, J. (2010). Integrated urban regeneration and sustainability: Approaches from the European Union. In A. Colantonio and T. Dixon (eds), Social sustainability and urban regeneration: best practice from European cities. Oxford: Blackwell.

Castells, M. (1997). The information age: Economy, society and culture. Volume II: The power of identity. Malden, MA: Blackwell.

Castells, M. (1998). The information age: Economy, society and culture. Volume III: End of millennium. Malden, MA: Blackwell.

Commission of the European Communities (1997). Employment in Europe, 1997: Analysis of key issues (Vol. 81450000). Commission of the European Communities.

Harvey, D. (1990). The condition of postmodernity. Oxford: Blackwell.

2

Overview of main theoretical debates

Introduction

There is an extensive literature on the theory and policy of urban and local economic development, an...

Table of contents

• Cover Page
• Half Title page
• series
• Title Page
• Copyright Page
• Contents
• Figures
• Tables
• Boxes
• Notes on authors
• Foreword by Craig Calhoun
• Acknowledgements
• Part I Transforming Urban Economies
• Part II Twenty years of Urban and Economic Transformation Learning from European and Asian cities
• Part III Concluding Perspectives
• Appendix Notes on the selection of case-study cities
• Index