Urban governance in the knowledge-based economy: challenges for different city types.(PART 2: POLICIES AND THEIR LIMITATIONS)

Challenges for small cities

In the knowledge-based economy, smaller cities located far from a major metropolitan area face the threat of losing skilled people and knowledge-intensive business to larger agglomerations. They will find also it hard to benefit from increasing international (temporary) migration and FDI. Their lack of scale brings a number of disadvantages in terms of international accessibility and infrastructures such as international schools and expat communities. For these cities, the challenge is finding ways to develop a distinctive niche or cluster, preferably one in which the city has strengths in both the business sector and the university. Developing their quality of life assets may put some of these cities in a good position to develop tourism or to attract (wealthy) elderly people as a source of growth.

Perhaps more promising and relevant to many strategies is taking steps to create scale by cooperating with neighbouring cities in setting up joint facilities and amenities.

Policy challenges for national governments

It is important for national governments to recognize the distinctive and growing role of cities as primary sources of both national growth and competitiveness and develop policies accordingly and all levels of government must be prepared to co-design policies that affect what happens there. It is also important, however, that policymakers also understand that cities can be focal points for social problems and threats and develop policies to mitigate these.

An important challenge is to design policies and policy frameworks that fuel the urban engines that in turn power the nation. One role of national governments is to fight policy fragmentation. In many metropolitan areas, growth is hampered by lack of horizontal co-operation between local administrations. To counter this, national governments may have to introduce formal administrative reforms or, more easily, provide incentives that encourage such co-operation. Another instrument to empower urban regions is a decentralisation of fiscal resources to lower levels of government. A critical success factor for effective decentralisation in turn is the quality of urban management. Capacity-building for policy actors at the local level has to be a priority.

National governments should take the wide disparities between cities into account and create policy frameworks that allow for differentiated approaches. They can do so by supporting the design and implementation of local policy answers to local problems and opportunities within a national framework. They could encourage actors in the metropolitan region to develop strategies in public private partnerships and support the implementation of the strategies in different ways. 'City contracts' are a good instrument to achieve this.

National governments face the challenge of maintaining a reasonable spatial balance in the nation and not allowing growth of some regions to be at the expense of others. While such regional policy is by no means easy and will demand a lot of governments of all levels, this kind of 'equalisation' of chances and outcomes is important to national unity.

This paper has argued that in the knowledge-based economy, the best cards seem to be in the hands of internationally well-connected urban areas that have a diversified economy, a strong knowledge base, and a high quality of life. In the coming years, these cities' relative position is likely to improve further; the increasing internationalisation of research and business make cities' cultural diversity and accessibility clear assets in the race to attract (foreign) firms and people. These cities will benefit from the trend of improving co-operation between universities and business because they are strong in both respects.

A key policy question for national governments is thus whether to back the winners or help the losers, or, in other words, whether to invest in the already thriving places or in the weaker areas. 'Backing the winners' would increase concentration of human capital and knowledge intensive business in already densely populated urban areas and make these regions even more attractive for investments from abroad. Concentration has a price too, however, in terms of congestion and crowding out. Also, it may further hollow out the knowledge base of provincial cities and disrupt the spatial balance. The position of non-metropolitan urban regions needs specific policy attention. They are a vital part of the urban systems of many states and typically fulfil important functions for large hinterlands. To safeguard the vitality of these cities and in a bid to maintain reasonable spatial balance, governments could encourage smaller, non-metropolitan cities to develop specific niches and specialisations in a creative way and to engage in strategic partnerships with other cities.

References

Batty M (2005) Cities and complexity, Cambridge MA: MIT Press.

Castells M (2000) The Information City, the New Economy, and the Network Society' in People, cities and the new information economy, Materials from an International Conference in Helsinki. 14-15 December 2000, pp. 22-37

Castells M (2001) The information city, the new economy, and the network society, in Kasvio A, Laitalainen V, Salonen H and Mero P (eds) People, cities and the new information economy, Proceedings of an International Conference in Helsinki, 14-15 December 2000, pp. 22-37.

Currid E (2006) New York as a global creative hub, Economic Development Quarterly 20(4): 330-350.

Dijkstra L (2004) European Cities in a Dynamic, Knowledge-based Economy, Kaupunkiseutujen kasvun aika, pp. 14-17

European Economic Research Consortium (ERECO) (2004) European Regional Prospects, Analysis and forecasts to 2008, ERECO and Cambridge Econometrics.

Florida R (2000) The Economic Geography of Talent, Pittsburgh PA: Carnegie Mellon University.

Fu S (2007) Smart cafe cities: testing human capital externalities in the Boston metropolitan area, Journal of Urban Economics 61: 86-111.

Glaeser E (2000) The new economics of urban and regional growth' in Clark G, Gertler M and Feldman M (eds) The Oxford Handbook of Economic Geography, Oxford: Oxford University Press, pp 83-98.

Glaeser E, Sheinkman J and Sheifer A (1995) Economic growth in a cross-section of cities, Journal of Monetary Economics 36: 117-143.

Henderson V (1997) Medium size cities, Regional Science and Urban Economics 27: 583-612.

Jacobs J (1961) The Death and Life of Great American Cities. New York: Random House.

Jacobs J (1984) Cities and the Wealth of Nations: Principles of Economic Life. New York: Random House.

Lambert L (2003) Lambert Review of Business University Collaboration.

Lambooy J (2007) Stedelijke economische groei: de locatie van de productiviteitsstijging, in Van Dijk J and Schutjens V (eds) De economische kracht van de stad, Assen: Van Gorcum.

Matthiessen C, Schwarz A and Find S (2002) The Top-level Global Research System 1997-99: Centers, Networks and Nodality. An Analysis Based on Bibliometric Indicators, Urban Studies 39(5-6): 903-927.

MERIT (2006) Evaluatie Programma Horizon, Maastricht: University of Maastricht.

OECD (2002) Territorial Review of Helsinki. Paris: OECD.

OECD (2004) OECD Territorial review of Montreal, OECD Observer, Policy Brief January, Paris: OECD.

Simon C (1998) Human capital and metropolitan employment growth, Journal of Urban Economics 43: 223-243.

Stoker G (1995) Public Private Partnerships and urban governance. Paper presented to the Housing Studies Association Conference, Edinburgh, July. Glasgow: Department of Government, University of Strathclyde.

van den Berg L, Pol P, van Winden W and Woets P (2005) European cities in the Knowledge Economy: The cases of Amsterdam, Dortmund, Eindhoven, Helsinki, Manchester, Munich, Munster, Rotterdam and Zaragoza, Aldershot: Ashgate.

van den Berg L, Braun E and van Winden W (2001) Growth Clusters in European Metropolitan Cities, Aldershot: Ashgate.

van den Berg L, Braun E and Otgaar A (2000) City and Enterprise: Corporate Social Responsibility in European and US cities, Rotterdam: European Institute for Comparative Urban Research, Erasmus University.

van den Berg L, Braun E and van der Meer J (1997) Metropolitan Organising Capacity; Experiences with Organising Major Projects in European Cities. Euricur Series, Aldershot: Ashgate.

van Winden W, van den Berg L and Pol P (2007) European cities in the knowledge economy: towards a typology, Urban Studies 44(3): 525-550.

van Winden W, van der Meer A and van den Berg L (2004) The development of ICT clusters in European cities: towards a typology, International Journal of Technology Management 3/4/5/6: 356-187.

van Winden W and van den Berg L (2004) Cities in the knowledge economy: new governance challenges, Research paper for the Urbact project STRIKE (Strategies of Regions in the Knowledge Economy), Rotterdam: Euricur.

van Winden W (2003) Essays on urban ICT policies, PhD thesis, Rotterdam: Tinbergen Institute, Erasmus University.

WILLEM VAN WINDEN Professor, School of Economics and Business, Amsterdam University of Applied Sciences, and School of Economics, Erasmus University, Rotterdam, The Netherlands

Print Get the Mag Weekly Updates