Local Economic Development and City Regions

Recently, analytical work has begun to focus on the role of city regions in creating wealth. Washington institutions have taken a practical approach with such work as Rojas, Cuadrado-Roura, and Fernandez Guell (2005), which documents city-level efforts in Rio de Janeiro to gather public, private, and civic forces to take action on the city’s decline, or to grapple with rapid industrialization in Curitiba, now that problems have arisen that the cities were not prepared to deal with. The pact of the automotive municipalities in Sao Paulo—the so-called ABC—is another instance of public and private groups working with unions and citizens acting more or less in concert. World Bank reports on Rio and Sao Paulo (World Bank, 2006), the comparative analysis of business climate in Chinese cities (Dollar et al., 2003), and Leautier’s review (2006) of cities in a globalizing world all tacitly or explicitly place cities in the economic spotlight.

On a more academic plane, analysts have been giving much attention recently to the ideas of competitiveness in regional economic development. Research has passed many waypoints in the past 40 years, moving from growth poles to Porter’s business clusters (1990), to Camagni’s work (1991, 1995), pointing to the importance of such values as trust, identity, and allegiance within and between networks in a locality or region. Camagni (1995) suggests an “innovative milieu,” seeing this as a feature of a region that affects all firms located there. Kitson, Martin, and Tyler (2004) review these and many complementary concepts of regional competitiveness, framing them in terms of various kinds of capital. Local knowledge, learning, and creativity are accepted parts of the soft infrastructure of city regions (Pinch et al., 2003). The ideas of trust, networks, and the conversion from tacit to explicit knowledge (Archibugi and Lundvall, 2001) involve close working relationships, cooperation, and collaboration (Polenske, 2004; Saxenian, 2007) and bring out the importance of networks (Grabher and Ibert, 2005; Polenske, 2007) and city learning (Campbell, 2008).

Parkinson (2005) cites specific city successes to illustrate city turnarounds, using third-party business rankings or average incomes and employment as metrics of change. Barcelona and Helsinki are two cities among many that have made significant advances. Healy and Baker’s ranking of cities as places to do business showed Barcelona jumping from 11th to 6th place between 1990 and 2002, and Helsinki making the list for the first time in 2002.

The emphasis in Europe, at least, is now on soft infrastructure and the capacity to build and manage relationships. Abrams and Murphy (2005) as well as Eberts (2005) place an emphasis on “embedding” new roles in local governments—roles that facilitate and enable, and that redress not only market failures but government failures as well. In essence, academic and policy analysts are both pointing to a knowledge-based vision, one that makes the most of knowledge capital in both local and upper levels of government and places an emphasis on learning and exchange to maintain a competitive edge.

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