WHY DO SOME CITIES CREATE MORE JOBS THAN OTHERS?

19 million more jobs! Yes, that’s the number of additional jobs that would have been created had ‘average’ cities performed as well as their competitive counterparts. 75% of these jobs would have been in the private sector.

What is a competitive city? How does a city become one? Is your city competitive?

What is a competitive city

A city is considered competitive if it can successfully help its firms and industries create jobs, raise productivity, and increase the incomes of citizens over time.
This story will show that competitive cities are not necessarily just the usual suspects (New York, London, and the like), but also secondary cities in developing and middle income countries.
Many of these cities are successful despite geographical adversity (landlocked locations, for instance) and challenges beyond their control (such as lingering regional conflicts). Making cities competitive is one of the key challenges of development.

Blue—Above average national growth (2005-12)
Orange—below average national growth (2005-12)

Comparing cities

A recent study looked at the world’s 750 largest cities. It showed that almost two thirds of them (66% or 497 cities) outperformed their countries in economic growth from 2005-2012.

Here is how the 750 cities stack up against each other in terms of economic performance.

The green bars below provide a visual comparison of each city's GDP growth above its country. The proportion of the two bars represents the relative size of each city's relative growth.

 

 

 GDP growth above country's

 

 

 GDP growth above country's

Not all competitive cities are alike

Some cities perform better than the others. In fact, the top 10% do markedly well. Take annual job growth – the top 10% grew jobs at 9.2% rate, while the other 90% averaged merely 1.9%.

Average Annual Growth
Population Jobs GDP Household Disp. Income
Percent Percent Percent Percent
— — — = mean

Closing the gap between the leaders and the laggards is a challenge but also an opportunity for addressing the world’s greatest development challenges.

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Bucaramanga
Colombia

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GDP Per Capita (USD): $8,0101.52 (2004) — $11,529.25 (2012)

Leveraged resource endowments to help their local economy recover from a deindustrialization crisis.

The city in the oil rich region avoided the resourse curse. Oil royalties were used to support education, healthcare, and poverty- reduction programs, helping to build up human capital.

What they achieved

The city achieved fastest GDP growth in Colombia and replaced declining manufacturing industries with dynamically growing ICT, healthcare and agro-industry.

What cities can learn

Inclusive strategic planning based on robust analytics can help cities adjust to changing global markets through clearly prioritized business support programs.

Coimbatore
India

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GDP Per Capita (USD): $1,681.56 (2004) — $3,045.96 (2012)

Permitted the private development of an economic zone.

The developer formed a pipeline of clients during construction, built the zone gradually as tenants came in, and then customized facilities and services to their needs.

The developer observed that some companies had run out of room to grow in places like Bangalore and Chennai and made targeted pitches positioning Coimbatore as a viable alternative, given its highly educated, English-speaking workforce that is available at significantly lower cost than in Tier 1 cities.

What they achieved

The zone has been able to attract Cognizant, Dell, and Bosch among its tenants, amassing 20,000 jobs.

What cities can learn

Market-driven industrial development, with appropriate guidance and support from the city government, allows for more customized and successful projects, avoiding new construction that sits empty.

Kigali
Rwanda

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GDP Per Capita (USD): $852.93 (2004) — $1,379.71 (2012)

Leveraged national reforms and implemented interventions to attract investment, support small business and become the top tourist and conference destination in East Africa.

The city benefited from national reforms that focused on streamlining business regulations, improving safety and quality of governance and strategic long term planning that brought large investment into high growth sectors. For instance, a number of hotels and a new conference center were built in Kigali to promote business tourism.

The city government reinforced the effectiveness of these national initiatives by focusing on accentuating livability through an effort to keep the city clean and safe, and tackling corruption within the city hall. The city also helped small businesses access land and funding and lured investors though its visionary thinking and long term planning.

What they achieved

The city achieved a sustained GDP growth rate of over 6% a year, has fully recovered from the 1994 genocide, and has exceeded pre-genocide level of development. It is now recognized as the safest and most livable city in the region and the tourism sector is developing.

What cities can learn

In a situation when the city itself has a rather small remit, it can support development through leveraging national policies, focusing on building capacity of the local government, addressing specific local issues, and focusing on making the most of its competitive advantage.

Changsha
China

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GDP Per Capita (USD): $8,0101.52 (2004) — $11,529.25 (2012)

Achieved rapid economic growth through implementing industry targeted support programs.

The city government focused their effort on the construction machinery industry and helped it access market information, link to global supply chains, and attract talent. The support led to fierce competition between two leading companies: Sany and Zoomlion.

To limit dependency on construction machinery, the city also proactively attracted and supported investors in other industries (e.g. automotive parts manufacturing). The city developed large industrial zones that offered infrastructure and investor services and are renowned for effective governance.

What they achieved

The construction machinery industry employs over 100,000 people and new industries including automotive manufacturing are on the rise.

What cities can learn

A city can prosper through smart application of targeted policies and by addressing the core needs of high growth industries. However it is important to admit mistakes. Changsha discontinued support for electronics manufacturing industry after it failed to take root in the city.

Gaziantep
Turkey

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GDP Per Capita (USD): $4,354.16 (2004) — $5,902.19 (2012)

Achieved prosperity by helping local entrepreneurs access export markets.

The city benefited from developing an inclusive public-private coalition. The city government didn't dominate economic development policy, but actively engaged with the business community to identify policy priorities and leverage political influence to attract national government investment to the city.

The growth in the city was driven by multiple entrepreneurial local firms that improved their products, expanded into new industries, and reached new markets. While the city didn't have a strategy or sector development programs, it managed to create a friendly business environment that supported entrepreneurship.

What they achieved

Local businesses are exporting to 175 countries and exports have increased tenfold within a decade (2002-2013). The population has more than tripled over 25 years.

What cities can learn

Strong local growth coalition, favorable business environment and smart leveraging of national support can be important enabling factors.

Tangier
Morocco

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GDP Per Capita (USD): $2,253.28 (2004) — $2,660.94 (2012)

The city benefited from the large scale development effort of the national government and made the most of its endowments to become a logistic and manufacturing hub and a tourist attraction.

The government of Morocco had strategically decided to prioritize development of the north of the country, and invested into the development of the Tangier-Med port. To maximize the opportunities offered by the new port, a series of government agencies proactively supported the development of priority industries.

Industrial zones were opened to support manufacturing, and the old port was refurbished to become a tourist attraction. Local stakeholders were successful at making sure that interventions were inclusive and that the economic benefits of national investment were maximized.

What they achieved

In a matter of a decade, Tangier became a key logistics hub, a manufacturing center, a tourist destination, and one of the key growth poles in Morocco.

What cities can learn

Large scale national investment programs can have a transformative effect on a city economy. This requires smart strategic planning, leveraging local assets and close involvement of local actors who can link the investment to local context to maximize its effect.

There is no single magic recipe to make cities competitive

Here is how these 6 cities became competitive.

Bucaramanga
Colombia
Coimbatore
India
Kigali
Rwanda
Changsha
China
Gaziantep
Turkey
Tangier
Morocco

What do competitive cities do?

Competitive cities foster their rapid economic growth through four categories of interventions:

What is the pattern?

Different strokes for different cities but here are a few characteristics that are common to most competitive cities.

Competitive cities do not always need to overhaul their economies ‐ sometimes it is enough to do what you already do, but learn to do it better. They also pursue general, economy-wide reforms, pay close attention to tradable sectors, and conduct specific initiatives targeted to particular industries and investors.

THE COMPETITIVE EVOLUTION OF CITIES

Click on sections of the key to toggle different commerce categories.
At lower income levels, the cities are typically market towns that face the challenge of transformation from a service center to a production center through rapid industrialization. At middle-income levels (between $2,500 and $20,000), cities are typically production centers striving to increase productivity and take advantage of market opportunities rather than to dramatically transform their industrial mix. At higher income levels, cities typically become centers for financial and creative industries, with the challenge once again to transform themselves by shifting economic activity into higher value-added sectors

Competitive cities also pursue general, economy-wide reforms, pay close attention to tradable sectors, and conduct specific initiatives targeted to particular industries and investors.

The How of Competitive Cities

Competitive cities use a combination of three channels to get things done: Click a section of the pie to learn more.

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1: Catalyze a public-private growth coalition.


Competitive cities nurture public-private coalitions to solve particular problems. Effective growth coalitions change over time, and flexibility and adjustment are at the root of success. Often, cities that listen to their citizens and plan in short cycles see better results than cities that are tied to long-term linear plans.

2: Apply city scope and capability.


Competitive cities make economic development an explicit priority. Cities need to focus their efforts and prioritize according to the outcomes they care about most. They also need both the power and capacity to ensure successful interventions.

Economic development initiatives tend to span multiple departments and require coordination of programs, projects, and decisions.

Successful techniques in facilitating implementation in cities around the world include:

  • Aligning budget and initiatives around strategic outcomes
  • Solving problems when things go wrong during implementation
  • Being accountable and open to learning

3: Leverage regional and national relations.


Use external leverage with neighboring jurisdictions and other tiers of government. These can expand the city’s reach and engage with problems that one city alone cannot solve.

Each of the three channels can pave the way to success.


“Ultimately it is less important who is in the lead: successful cities have found various recipes for success. But it is important that cities harness all three channels to get things done"

What channels did they use?

Bucaramanga
Colombia
Coimbatore
India
Kigali
Rwanda
Changsha
China
Gaziantep
Turkey
Tangier
Morocco
View the Case Studies

To learn more about each of these cities, about what they did to become competitive and who lead this effort review the detailed case studies report.

Competitive Cities for Jobs and Growth by World Bank Publications on Scribd