Productive Cities and Metropolitan Economic Strategy

Dr. Marc A. Weiss
Chairman and CEO
Global Urban Development

A Theme Paper presented to the United Nations International Forum on Urban Poverty,
Fourth International Conference, Marrakech, Morocco, October 16-19, 2001.

In the 21st century the world has become urban, with the majority of the global population living in cities and towns. The fastest rates of urbanization are now taking place in developing countries, where average incomes are the lowest. This means that poverty, historically a rural phenomenon, is becoming an increasingly urban issue, in both the developed and the developing world. At the same time, cities and metropolitan areas are the main generators of economic prosperity, and thus are best positioned to contribute toward the elimination of poverty. The twin themes of this conference, "Productive Cities" and "Inclusive Cities" point toward the solution to this fundamental challenge.

This paper addresses how to make cities more productive, and particularly how to do so in ways that expand jobs and business opportunities, increase incomes, and improve quality of life for low-income families and communities. Such an approach requires viewing cities in their metropolitan regional context, and creating cooperative, pro-active growth strategies that connect and unite the public, private, and civic sectors across the urban landscape. It also depends on including poverty populations and settlements in creating their own prosperity, by treating them not as liabilities, but as human and physical assets to be mobilized for production, income and job generation, and wealth creation, as well as involving them in investment decision-making to ensure an equitable distribution of resources, infrastructure, services, incomes, wealth, quality of life, and economic opportunities.

Traditional poverty alleviation strategies focus on the manifestations of poverty itself. They seek ways to feed, clothe and house poor people. They try to find ways to deliver health care and other services with strained resources. Metropolitan Economic Strategy, on the other hand, addresses the root causes of poverty in a manner that empowers low-income people, and directly engages their own energies in altering their life circumstances, improving the surrounding environment, and contributing to the overall productivity of the region and nation.

Johannesburg will be included in the case studies I will discuss later in this paper, but here I would like to quote from a 1999 speech by World Bank President James Wolfensohn which nicely underscores the fundamentals of this strategic approach: "I had the pleasure of visiting Johannesburg last week....[They]....have decided that what they need to do is to have a comprehensive approach to the development of the city. They are looking not just at handouts, not just at the issue of having to provide services to people in poverty. They recognize that the only way you can deal with issues of urban development is on a comprehensive basis. Their plans are quite remarkable, and they are drawing on experience from the outside. They are looking at these townships and the issue of poverty in a way that is optimistic. They are seeking to enfranchise the people. The issue there is not looking at the poor with pity but as part of the solution."

The rapidly rising degree of worldwide urbanization has led to a growing recognition that cities and their surrounding urban regions play a vital role in national economic life. Indeed, the basic premise of my work on Metropolitan Economic Strategy - including the book I am co-authoring with former U.S. Housing and Urban Development Secretary Henry G. Cisneros entitled Teamwork: How Cities and Suburbs Develop Metropolitan Economic Strategies to Innovate and Prosper in the Global Marketplace - is that cities and the metropolis - urban regions - are the fundamental building blocks of prosperity and quality of life, both for the nation and for families and communities.

In countries all over the world, national economic competitiveness in the international marketplace is highly dependent on urban regions, which are the key centers of productivity and innovation. This is increasingly so in the so-called New Economy that is knowledge and information-based, technology and communications-intensive, and globally oriented. Industrial and commercial activities in cities now account for between 50 and 80 percent of the Gross Domestic Product (GDP) in most countries of the world, and the proportionate value of economic output generated by urban areas is often much larger in percentage terms than the urban share of the total national population. For example, the United States population is 80 percent urbanized, and metropolitan regions account for as much as 93 percent of the nation's total employment, incomes, production of goods and services, exports, and technology development.

The city of Prague is the main economic engine for the Czech Republic: it has one-tenth of the national population, yet generates more than one-fifth of the nation's GDP. Prague has an unemployment rate of 3 percent, much lower than the national jobless rate of 9 percent. Similarly, the city of Budapest has 18 percent of Hungary's population, yet generates 35 percent of its GDP and 60 percent of Foreign Direct Investment (FDI). Warsaw has a 2 percent jobless rate versus 11 percent for all of Poland. Bangkok has 12 percent of Thailand's population and contributes 38 percent of its GDP, while Shanghai has 7 percent of China's population and contributes 12 percent of its GDP. Lima generates 44 percent of Peru's GDP, Sao Paulo generates 37 percent of Brazil's GDP, Manila generates 25 percent of the Philippines' GDP, and Karachi generates 18 percent of Pakistan's GDP.

The vital economic contribution of urban regions is anchored by the major cities they encompass, which provide the constant stream of creative activity, interaction, specialization, and diversity that is essential for innovative ideas, methods, and products to develop and thrive. In the global economy of the 21st century, cities function primarily in seven distinct and essential ways to generate regional and national prosperity. They are:

* centers of innovation and services, including advanced and highly specialized services
* centers of culture, sports, entertainment, conventions, and tourism
* centers of education, research, and health care

* centers of transportation and trade
* centers of manufacturing and technology development
* market centers
* workforce centers

Individual communities, including cities, towns, and suburbs, can thrive only as an integrated part of a larger metropolitan economic dynamic, with the entire region becoming a center of advanced innovation and technological excellence in the production and distribution of various goods and services. The competitive advantage of a metropolitan region comes from successfully mixing highly skilled and high-value specialization together with economic and social diversity, and by strategically investing in, improving, and sustainably utilizing the region's fundamental assets - its physical, financial, and human capital. Metropolitan Economic Strategy is the essential mechanism for accomplishing this, and for creating and strengthening a cooperative regional identity. By emphasizing the interwoven economic destinies that bridge across families and communities within metropolitan regions, people can begin to see themselves as "citizens of a regional economy" - players on the economic "home team" competing with other regional economic teams all over the world. Creating this common regional identity is vital for enabling and encouraging everyone to work together for a better collective future based on a sense of shared interests.

Metropolitan regions are the most economically organic components of local geography and demography affecting people's daily lives. They are the main access points for individuals trying to thrive in the global economy. Yet the greatest barrier to regional coordination, cooperation, and collaboration is the lack of a common regional consciousness and citizenship. This is especially true in rapidly urbanizing developing countries where many urban dwellers have only just moved from their former villages and small towns. Therefore, policies which promote regional identity and "teamwork" by encouraging households and families to begin reaching beyond local political boundaries in pursuit of their common goals - increasing prosperity and enhancing quality of life - are essential for individual and collective success.

Metropolitan Economic Strategy is not the same as uncoordinated regional economic growth or decline. Even if a region is growing, it may be missing significant opportunities to enhance competitiveness and to generate prosperity and quality of life because there is no explicit guiding vision or overall coordinated strategy. Every metropolitan region experiences economic growth or decline, regardless of whether or not there are comprehensive plans and initiatives. Indeed, lack of such coordinated efforts is often a key factor contributing directly to economic decline, such as when infrastructure subsidies promote suburban sprawl and overbuilding, thus depleting the inner city areas of jobs, population, and vitality. Metropolitan regions function as fully integrated economies in terms of the production and distribution of goods and services, and they will function as such with or without a coherent economic strategy. A critical determinant of their success is the decision-making process of private sector executives, investors, entrepreneurs, and consultants making facility location commitments in the global marketplace. Such decisions are made on the basis of the synergy and attractiveness of metropolitan regions as centers of innovation that can provide businesses with a competitive advantage.

Unfortunately, regional economic growth most often occurs in an uncoordinated and haphazard fashion, and consequently may be missing opportunities to produce greater investment, higher incomes, and more equitable distribution of the benefits of prosperity among people and places. Most regions have no viable mechanisms for promoting metropolitan economic development, in terms either of developing a common vision, of formulating a collective strategy, or of jointly cooperating to implement such plans.

Metropolitan Economic Strategy, on the other hand, is a proactive organizing principle that depends on regional teamwork and citizenship. It is explicitly designed to bring together the public and private sectors across the entire region to formulate and carry out a coordinated set of targeted investments in people and places, consciously designed to enable businesses to thrive, jobs to expand, incomes and wealth to rise, and quality of life to improve. Each of the major constituencies - business, government, and community leadership, must closely collaborate for the region to thrive economically, socially, and physically. In just the same way that towns, cities, counties, provinces, states, and other governmental jurisdictions use economic development plans to guide their actions, so also must the communities that constitute a metropolitan region farsightedly engage in such comprehensive planning and united action if they are to compete effectively and win in the global economy.

Formulating and implementing an effective Metropolitan Economic Strategy requires focusing on two key elements. The first element is investing in the fundamental assets and activities that will help fuel productivity and innovation. Among these are:

* transportation and infrastructure
* education and workforce development
* research and technology
* venture capital and other forms of business financing
* services and amenities
* economic development incentives
* trade promotion and market expansion
* business and employment attraction and retention
* entrepreneurial culture and business-friendly institutions
* regional coordination and civic leadership
* taxation and regulatory policy
* environmental preservation and restoration
* community and family development
* quality of life

The second key element of Metropolitan Economic Strategy is promoting modern and dynamic industry networks that accelerate the pace of innovation and growth. These broad-based groups of interconnected firms and organizations, also called industry clusters, are best able to fully capitalize on the mix of specialization and diversity in the region's firms and assets, and to foster a climate of innovation in business process, technology, and the design and production of goods and services that can enhance global competitiveness and generate substantial growth in jobs and incomes.

Metropolitan Economic Strategy must be home-grown and tailor-made in order to succeed. The fundamental assets and the key dynamic industry networks will vary from region to region. One size definitely does not fit all. Every region must find the right mix and most important assets that work best in their particular circumstances for generating innovation and prosperity. For example, in 1996 we identified 18 key industry networks in the United States that, in different combinations and with wide variations from one region to the next, played major roles as export-based economic generators in 114 metropolitan regions. These 18 key industry networks are:

* Business and Professional Services
* Health Services
* Entertainment and Tourism
* Financial Services
* Housing and Construction
* Medical Products
* Transportation and Trade Services
* Industrial Supplies
* Printing and Publishing
* Electronics and Communications
* Transportation Equipment
* Materials Supplies
* Aerospace and Defense
* Agriculture and Food Processing
* Natural Resources
* Industrial Machinery
* Consumer Goods
* Apparel and Textiles

Comprehensive and effective Metropolitan Economic Strategy necessarily requires fully involving the core city in order to maximize the urban contribution to regional prosperity. Industry networks operate across regions and always include significant business operations located in cities. The smooth functioning of regional economies, with their highly interrelated business activities involving numerous private firms and public sector organizations, requires healthy cities to serve as focal points for regional identity in the global marketplace, and to engage in many key aspects of the production and distribution of goods and services. Cities are the major sources of creativity and innovation, and they will continue to play a vital role in ensuring that regional businesses and job opportunities can compete in international markets.

Metropolitan Economic Strategy is the best way for cities to prosper in the new global marketplace. Cities and their surrounding regions simply cannot survive and thrive in isolation from each other. Urban economies increasingly extend far beyond traditional city boundaries. Many cities, even large and fast-growing ones, are often physically constrained by artificial boundaries that divide them from the rest of their natural urban economic growth area, and they can only revive or continue to thrive by directly linking their futures to the overall prosperity and competitiveness of the surrounding metropolis. The best way for cities and older inner-ring suburbs to succeed is by working collaboratively with their regional neighbors, organizing coordinated public-private partnerships to develop and carry out a Metropolitan Economic Strategy that includes, at a minimum, three major sets of policies.

The first set of policies involve closely linking the city's and region's key strengths to promote economic growth for the inner city and the outer suburbs. Growing the city's key industry networks inherently means improving metropolitan economic vitality. Cities both currently possess, and can create, fundamental assets to increase their competitiveness. By doing so they necessarily expand the overall metropolitan economic pie, even as they work to capture a larger share of that pie for city-oriented business activities that utilize to best advantage the existing transportation and communications infrastructure, accessibility of the central location, the urban-oriented lifestyle attractions, the diversity and depth of expertise and specialization, and the quality of major knowledge-based institutions.

For example, the City of Shanghai's Lujiazui Central Finance District and Trade Zone, especially the Pudong New Area, is designed to serve as a world-class financial services center for Asia, ultimately competing with and surpassing Hong Kong. It is the central city's role as part of a massive regional economic development effort that includes the Three Gorges Dam that will bring electric power and industrialization to the Yangtze River Delta that feeds into Shanghai and promotes export activity through the East China Sea. Indeed, the two key political and governmental leaders of China, Jiang Zemin and Zhu Rongji, both served as Mayors of Shanghai during the 1980s when their national predecessors, Deng Xiaoping and Li Peng, made Shanghai's Metropolitan Economic Strategy a major priority. Administratively, the City of Shanghai has considerable authority over a wide area of the surrounding metropolitan region, as do other major cities in China.

Another example is the Strategic Economic Development Plan for Washington, DC, which I coordinated in 1998. As part of that plan, we created a dynamic new economic growth center within the city which we called NoMa, shorthand for North of Massachusetts Avenue. Based on the implementation of our plan, NoMa is fast-becoming a technology, media, and arts district, home of Cable News Network, XM Satellite Radio, Qwest Communications International, National Public Radio, and other media and technology companies, as well as art studios and galleries. This economic initiative was also known as Action 29, based on development of the New York Avenue Metrorail Station that is a key part of the overall project. To many people's surprise, the NoMa strategy won considerable support from information technology and telecommunications industry executives as well as government officials in Virginia and Maryland, because we convinced them that the type of creative activities that we would attract and incubate in NoMa would otherwise go to urban neighborhoods in New York, Chicago, San Francisco, Los Angeles, Miami, or Toronto, not to Washington suburbs. Such an unusual "win-win" consensus in a highly contentious multi-state urban region led to further cooperation in Washington's economic plan when the city wholeheartedly endorsed extending the Metrorail system farther into Maryland and Virginia. We recognized that expanding Metro not only will reduce suburban traffic congestion, but it will also make the city's business activities more accessible for commuters, visitors, and tourists, and make suburban jobs more readily available for low-income Washington residents.

The second set of key policies is reinvesting in the city's downtown and neighborhoods. This must be based on marketing the city's potential appeal to a wide range of businesses and residents from throughout the region and around the world, with coordinated public and private investments, and concentrated efforts to create or bring back commerce and jobs, high quality stores and services, safe streets and good schools, better housing and environment, and amenities that will attract and retain not just corporations and enterprises but a critical mass and greater diversity of mixed-income population. An example of a comprehensive initiative in the U.S. is the HOPE VI and Homeownership Zones programs we created in the Clinton Administration, that have used the planning and design ideas of the new urbanism, sustainable development, livable communities, and smart growth movements to eliminate the worst public housing in America and replace it with new mixed-income, mixed-use neighborhoods that integrate low-income families into the wider fabric of urban social life and economic opportunity. Baltimore, Boston, Buffalo, Cleveland, Louisville, New York, Philadelphia, and other cities have demonstrated considerable skill and ingenuity in rebuilding and revitalizing communities through affordable homeownership and more sensible planning and development.

The third set of key policies is connecting urban residents to regional jobs. These initiatives necessarily include targeted job training and placement, transportation, child care, and other incentives that eliminate barriers to the smooth functioning of the metropolitan labor market and expand employment opportunities for the low-skilled, low-income population living in and near cities. Such public-private investment in education, workforce development, infrastructure, and human services should include fully utilizing the social capital provided by community organizations, civic groups, and other non-governmental organizations (NGOs). At HUD we created the Bridges to Work program, which provided training, transportation, child care, and other services to move thousands of unemployed inner city residents to jobs throughout metropolitan regions across the United States. A good example of this approach is Focus:HOPE, located in the inner city of Detroit at the heart of where the 1967 riots began. Focus:HOPE, originally a civil rights advocacy organization headed by a Catholic priest, has successfully educated thousands of disadvantaged low-income youth from the most troubled neighborhoods in advanced automotive and aerospace engineering technology skills and placed them in high-paying jobs with manufacturing companies located in suburban communities throughout the metropolitan region.

A vital aspect of these three key sets of policies and the equity agenda of Metropolitan Economic Strategy is dealing with urban poverty. This is its own particular challenge, especially in developing countries and transitional economies. It is critically important to recognize the potential to convert the activities of the informal economy - squatting and bartering - into productive assets and genuine wealth creation for families and communities. Establishing secure tenure, viable property rights, and full citizenship for low-income settlements, providing adequate infrastructure and services that directly involve the people in job creation and problem-solving, investing in education and training that fully recognizes the human capital contribution of low-income families, creating cooperative financial institutions that enable people to borrow and save, and supporting small business entrepreneurship and homeownership through microfinance and microenterprise programs and initiatives are among the many vital tasks that must be part of a comprehensive Metropolitan Economic Strategy. The work of the Cities Alliance through the World Bank, UN Habitat, and its many other national and international partners, led by Nelson Mandela as patron of the Cities Without Slums action plan, has been strongly reinforced by the United Nations Millennium Declaration signed by 150 countries that commits "By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers as proposed in the 'Cities Without Slums' Initiative." This should serve as a major impetus to incorporate urban upgrading and poverty alleviation as key elements of Metropolitan Economic Strategy, that promotes growth, investment, job creation, human and community development, and entrepreneurship as essential for efforts aimed at improving prosperity and quality of life for low-income families and communities.

An essential starting point must be the provision of basic infrastructure and services that will turn "slums" into neighborhoods, where people can invest in their own housing, families, and business ventures with dignity, security, health, and opportunity. Urban upgrading programs can make an enormous difference at relatively modest public cost, and pay for themselves through the private improvements and increase in values brought about by the residents themselves. Indonesia's Kampung Improvement Program, a partnership of local and national government with international support, successfully served 15 million people in a period of 30 years and demonstrated its worth many times over. In Ahmedabad, India, a partnership among the local government, a major private textile employer, Arvind Mills, and two grassroots non-governmental organizations, SAATH and SEWA (Self-Employed Women's Association), pulled together the Slum Networking Project, called Parivartan (meaning "transformation"), as a mixed public-private financing package that mobilizes poor people to work for and even help pay for residential improvements and maintenance of low-income communities, as well as for commercial economic development. The World Bank and the United Nations also provided some assistance. The financing package includes paved roads; individual household connections for fresh water, indoor plumbing, underground sewerage, and sanitation facilities; storm water drainage; solid waste management; street lighting; and landscaping. Ms. Mirai Chatterjee, a local leader of SEWA and the SEWA Bank, wrote a letter to the World Bank explaining a vital economic rationale for investing in low-income people and their communities: "Slum upgradation is poverty alleviation. For a poor family in a slum, their home is a productive asset - it is their workplace. Hence if a home and its environs are upgraded and secured, it is a major contribution to their employment."

Mirai Chatterjee's letter also referred to the issue of secure tenure, as the global campaign of the UN Habitat Agenda is called. Freeing people from the fear of eviction if they are renters or owners, and providing them with clear and legal title, along with other rights of citizenship that will enable them to securely invest in and improve their property and their livelihood, is an essential element of metropolitan economic strategy that can substantially reduce poverty. Studies have consistently documented 20 to 60 percent increases in property values after informal settlements are formalized and legalized, and private investment rises ten-fold when urban upgrading is combined with secure tenure. Hernando de Soto's new book The Mystery of Capital draws on his experience in Peru, where a $37 million initiative financed through the World Bank enabled nearly seven million people to obtain secure land title in less than a decade. According to Elena Panaritis, who helped coordinate Peru's Urban Property Rights Program, it introduced "more than $4 billion of previously informal real estate assets to organized capital markets. Since the beginning of the program, property values for the newly formalized urban land increased by more than $1.7 billion."

Several years ago the Hungarian town of Nagykata (60 miles southeast of Budapest), with a population of 13,000 and an unemployment rate of 25 percent, sought financial help from the U. S. Agency for International Development and the Canadian International Development Authority in preparing a strategic economic development plan with a great deal of citizen participation, along with technical assistance from the Canadian Urban Institute. Through this process, Nagykata attracted Clarion, a Japanese-owned electronics assembly factory that provided over 1,000 new jobs, promoted tourism and quality of life, successfully cut its unemployment rate to 8 percent, and reduced its dependency on national government funding from 95 percent in 1995 to less than 80 percent today, with greater self-sufficiency through increased local revenue sources. Clearly strategic planning makes a difference for job creation and economic development. In the war-torn villages, towns, and cities of Bosnia Herzegovina, the World Bank funded the Local Initiatives Project to promote microfinancing, including offering unsecured credit for small entrepreneurs combined with technical assistance, encouraging pro-business legal and regulatory changes, and providing support for independent, community-based financial institutions. In just the past three years, 80,000 micro-loans to small entrepreneurs have helped create or sustain over 100,000 jobs, with a loan repayment rate of nearly 99 percent. Clearly the successful large-scale experiences with microfinancing and microentrepreneurship in Bangla Desh, Bolivia, India, Indonesia, and many other countries have demonstrated their value for employment creation, income generation, and poverty reduction, particularly when combined with good strategic planning so that small enterprises will grow to serve markets that maximize the fundamental asset base of the community and region.

Preserving and enhancing a good physical environment and quality of life is essential to the long-run success of a Metropolitan Economic Strategy. No region can compete globally and sustain itself as a center of innovation without attracting and retaining talented people. These highly skilled professionals are increasingly lifestyle-oriented and will only live, work, or visit places that offer a very good quality of life. Today's environmentalism and related movements for sustainable development, smart growth, and new urbanism are more than just compatible with economic growth. Environmental protection and restoration are fundamentally necessary for generating prosperity in the new global economy. There is a very strong case to be made for why a good environment and improved quality of life is now critically important for regional success in the global economy, and even mainstream economists such as Michael Porter and Lester Thurow support this point of view.

Preserving and enhancing the physical and natural environment of cities and metropolitan regions includes: cleaning up and redeveloping brownfield sites; renovating historic structures; improving clean air and water; maintaining the beauty of natural landscapes, the accessibility of pathways and open space, and the availability of agricultural land; curbing sprawl and traffic congestion; reinvesting in older towns and cities; expanding transit and other pedestrian and transportation alternatives; promoting ecological and heritage tourism; developing "green" infrastructure; increasing recycling and the use of renewable energy sources, while encouraging energy conservation; and generally strengthening community planning and design. This is especially important for high-poverty communities. Low-income people are generally the most harmed by air and water pollution and exposure to a wide variety of harmful substances and unhealthy conditions, which is why the global movements for environmental justice and healthy cities are so vitally important.

Finding the right mechanisms for governance is critical to the success of Metropolitan Economic Strategy. Each region must make its own way, navigating the complicated challenges of bridging across many levels of separate jurisdictions and governing units, including communities, towns, cities, counties, special districts, public authorities, provinces, states, and even nations. This challenge is made even more complex because the role of the private sector is absolutely essential. Forming the right kinds of partnerships, establishing the right types of leadership, creating the right forms of cooperative governance structures - these and many other issues must be resolved for Metropolitan Economic Strategy to make a visible and long-term difference. There is not one best solution, and one answer certainly does not cover every situation. The challenges of governance become increasingly difficult when metropolitan regions involve multiple layers of political jurisdictions. New regional governance mechanisms must be designed, legitimized, and granted genuine decision-making authority and resources to effectively enforce agreements and implement projects. It becomes especially tough when metropolitan regions cross national boundaries, as it happened when Barcelona needed to include jurisdictions in the south of France while planning for the 1992 Olympics, and in the evolving strategic economic partnership between San Diego, California in the U.S. and Tijuana, Baja California in Mexico.

The times when regions are most likely to come together and organize a Metropolitan Economic Strategy is when they are responding to a widely perceived crisis or when they are taking advantage of an apparent opportunity. In both cases, strong vision, leadership, and communication is necessary in order to mobilize people successfully. Generally, people are the most highly motivated to act collaboratively during times of perceived crisis. Thus, the threat of military budget cutbacks and base closures, downsizing or departure by one or more large private employers, an economic recession or precipitous decline in prosperity - all of these can serve as catalysts for regional leadership to join hands and work to create a brighter economic future.

Sometime opportunities can generate the same kind of cooperative energy as a crisis, such as the very aggressive and successful efforts by Atlanta to host the 1996 Olympic Games and use it as an opportunity for regional economic development, urban reinvestment, and neighborhood revitalization. Barcelona, Sydney, and Salt Lake City followed a similar path, and Beijing is using the 2008 Olympics to engage in large-scale economic development, to the point of building two new subway lines and planning numerous other strategic investments. Other regions can and should learn from these experiences in generating a powerful vision of new opportunities that view investment, employment, development, marketing, financing, design, tourism, transportation, and many other factors within the broader context of Metropolitan Economic Strategy.

A Tale of Two Regions: Metropolitan Economic Strategy in Akron, Ohio, and Johannesburg, South Africa

Metropolitan Akron

The recent economic transformation of metropolitan Akron, Ohio highlights the vital fact that the New Economy is much more than computers, software, and the Internet. Key to success in the global marketplace is to take full advantage of advanced knowledge and skills in every aspect of producing and distributing goods and services. Metropolitan Akron did not become another Silicon Valley, nor did it try to become something it is not. Instead, Akron wisely built upon its existing assets and strengths to create an innovative new technological edge in global competition.

Akron's reputation and fortunes had rested for a century on rubber. The city and region became the world center for rubber tire manufacturing, home to the "big four" - Goodyear, Firestone, Goodrich, and General Tire. Yet in the 1970s and early 80s, Akron experienced the same type of wrenching plant closures and job losses that swept through much of America's industrial heartland - the northeast-midwest "rustbelt" - during this dramatic period of global economic change. Rubber tire manufacturing in metropolitan Akron declined so precipitously that by 1983 unemployment was over 12 percent, and more than 40,000 factory jobs had vanished.

Having hit bottom, and with the threat of widespread joblessness and poverty looming in the future for so many of its citizens, this once-thriving and resourceful blue collar mecca decided to fight back by planning for a new and different future. City and county officials, corporate executives from the Akron Regional Development Board and Akron Tomorrow, administrators of the University of Akron and other major institutions, and the Ohio government, led by Governor Richard Celeste and later by Governor George Voinovich working actively with executive branch agencies and the state legislature, together created a Metropolitan Economic Strategy for Akron. The foundation of this strategy was the recognition that while Akron companies would no longer be the world's leading manufacturers of rubber tires and related products, there was an enormous infrastructure of knowledge and skill, of physical capital and institutional relationships, that could enable Akron to compete more effectively in the global marketplace. Specifically, the region, having served as the innovator for developing synthetic rubber during World War II, contained within it a great deal of expertise in the design and production of polymer-based synthetic materials, including plastics and a wide variety of related products.

Thus the University of Akron's Rubber Research Institute was transformed into the large new College of Polymer Science and Engineering, and metropolitan Akron soon became one of the world's leading centers for polymer science and engineering. The major tire companies expanded their research and development laboratories and related facilities in the region, even as they downsized or abandoned factories. Foreign companies from around the world, such as Shanghai Tire & Rubber Company, quickly followed suit and established advanced corporate research centers in Akron. The State of Ohio created the Edison Polymer Innovation Corporation to facilitate transfer from the research labs to commercialization of new products by existing companies and new start-up ventures. The Akron Regional Development Board aggressively recruited polymer firms to help achieve critical mass. Other public-private partnerships focused on venture capital and business financing, education and worker retraining, rebuilding downtown Akron as a convention and entertainment center, connecting the metropolitan region's local government jurisdictions through commercial tax-base sharing, and creating stronger linkages to economic activity in Cleveland and the broader northeast Ohio area, including the Polymer Materials Department at Case Western Reserve University. Akron's new corporate symbols, rather than the tire companies, are polymer-based firms like Advanced Elastomer Systems, Rubbermaid, and Little Tikes. Polymers are a critical part of the fast-growing medical products sector - prosthetics, orthodontic, pharmaceutical, and surgical items - and an integral part of the major machinery and equipment industries of Ohio, Michigan, and Pennsylvania, including the production of cars and trucks.

Today there are over 500 polymer companies in metropolitan Akron and thousands of new, good-paying, polymer-related jobs. Perhaps the best symbol of this transformation is Canal Place, a once abandoned B. F. Goodrich Tire factory near downtown Akron that is now a thriving office complex, research and development center, and business incubator, the headquarters of polymer-based Advanced Elastomer Systems with hundreds of employees, as well as dozens of other growing ventures. Polymer-oriented entrepreneurs, scientists and engineers, and skilled production workers are just as "high-tech" as their counterparts in the computer industry. More importantly, they are much more likely to want to live and work near their colleagues and fellow polymer experts in the City of Akron and surrounding metropolitan region, which has strengthened its central core with a variety of cultural, recreational, and entertainment-oriented uses, and has also created an environmentally sensitive 23-mile heritage tourism biking and hiking trail along an old canal corridor that originates in downtown Akron. Fully capitalizing on the new attractiveness of the educational institutions and the quality of life is what made Akron's Metropolitan Economic Strategy so successful, in contrast to less well-conceived and effective efforts in many other places.

Metropolitan Johannesburg

The City of Johannesburg has for more than a century been the main urban economic center of South Africa. It is the capital of Gauteng Province, which accounts for more than a third of the nation's economic output. Indeed, Johannesburg itself, with eight percent of the national population, generates 16 percent of South Africa's GDP. The city is the headquarters for most of the country's large corporations, banks, insurance companies, mining companies, and other financial and business activities, such as the stock exchange. Yet in recent decades the metropolitan economy suffered because of the international isolation of the apartheid regime. In addition, global restructuring and deindustrialization has fostered its further decline, primarily in heavy manufacturing activity. While business, professional, financial, and government services and retail trade have continued to grow in investment and employment, many major companies increasingly decentralized their operations to suburban locations, especially during the 1990s, thus contributing to deterioration in the central business district and the surrounding inner city area.

The arrival of the democratic government in 1994 brought a new public commitment to addressing issues of poverty, unemployment, opportunity, and inclusion for the majority population. The South African national government, led by President Nelson Mandela and Deputy President Thabo Mbeki, unveiled the Growth, Employment, and Redistribution (GEAR) economic plan in 1996 to expand jobs and incomes by improving business competitiveness and strengthening social equity. The economy of Johannesburg and Gauteng Province was key to these new efforts to promote global trade, attract foreign direct investment, and increase business and job growth in higher value-added production, including information technology, telecommunications, biomedical technology, financial services, and tourism. Central to the overall strategy was emphasizing the role of Johannesburg as an "African world city" or "gateway city." A vital aspect of this urban initiative was the revitalization and upgrading of communities both in the inner core and the outlying townships of the city and region, with better metropolitan coordination and integration.

In 1997 the Johannesburg Inner City Development Forum, with assistance from the Urban Management Programme sponsored by the United Nations Development Programme, the United Nations Centre for Human Settlements (UN Habitat), the World Bank, and various national governments, worked with the city, metropolitan, provincial, and national governments, the private sector, and community groups, to design an Economic Development Strategy for the Johannesburg Inner City. Then Deputy President and current President Thabo Mbeki initiated and strongly supported this landmark effort. The inner city area was soon designated as one of ten Priority Intervention Zones in the Greater Johannesburg Strategic Metropolitan Development Framework, while the City of Johannesburg itself was later expanded to incorporate the jurisdiction of the Greater Johannesburg Metropolitan Council and areas covered by several other local councils. The inner city economic development strategy became a key element of both of the high-profile "iGoli 2002" and "iGoli 2010" planning processes that focused on creating a Metropolitan Economic Strategy to make Greater Johannesburg "a world-class, globally competitive" city.

Another important piece of the puzzle involved the Central Johannesburg Partnership and other downtown business groups initiating five City Improvement Districts, supported by self-taxation of local property owners. The City Improvement Districts hired their own private staff to help clean up the streets, reduce crime, and market the area by promoting office and retail occupancy and new development in the "Civic Spine" and other downtown neighborhoods. This included bringing the Provincial Legislature to the old City Hall and encouraging nearby office construction and renovation. Some of the marketing and development-related responsibilities were later assumed by the newly created Johannesburg Development Agency, a public-private partnership of the municipal and provincial governments with the Johannesburg Inner City Business Coalition. Major projects involve building the Nelson Mandela Bridge to the Newtown neighborhood that will develop as a center of cultural activity, building the new Constitutional Court and redeveloping the historic Old Fort prison into a major tourist attraction at Constitution Hill, revitalizing community areas such as Ghandi Square and Joubert Park, developing incubator space to encourage small business "clusters" in the garment and jewelry industries, building new taxi stands and bus stations, establishing the Inner City Housing Upgrading Trust to help finance the improvement of dilapidated housing, and providing transitional housing and supportive services for homeless people.

Johannesburg's inner city area recently has become a magnet for new immigrants that earn a subsistence income by working as street traders in the "informal economy." These so-called hawkers have little or no access to financing, facilities, or services, operate without regard to taxes or laws, and are often victims of gangs and criminal activity. The Metropolitan Economic Strategy focused on formalizing such activities and enabling these microentrepreneurs to work in a more secure and orderly manner. It created the Informal Trade Management Programme that established designated trading places and facilities, collected taxes and fees, and enforced both consumer protection regulations and laws against trading in non-designated areas. The City of Johannesburg also established the Informal Trade Management Company (ITMC) to provide business training, technical assistance, financial counseling, security, and other management services. The ITMC also developed and maintains six indoor markets with 2,400 trading stalls, 600 production and storage spaces, and over 300 affordable apartments, enabling low-income entrepreneurs to obtain better working and living conditions in central locations.

Finally, Johannesburg's Metropolitan Economic Strategy did not just address urban redevelopment issues in the central business district, along with crime, unemployment, and physical deterioration in surrounding inner city neighborhoods like Joubert Park and Yeoville. A significant portion of the capital investment program also targeted installation or improvement of basic infrastructure, public facilities, and services in outlying "peri-urban" low-income squatter settlements such as Diepsloot. In addition, the regional investment plan involved improving education, job training, and transportation connections in Greater Soweto, Meadowlands, and other suburban township areas to enhance metropolitan economic citizenship for communities suffering from high unemployment and lack of business opportunities.

The Necessity and Value of Grassroots Mobilization and Action: Cebu City, Philippines

For a metropolitan economic strategy to be truly effective and competitive over the long term, it must make the best use of the fundamental assets of a city and region, including all of its people and communities. In this sense, social equity, neighborhood improvement, and environmental quality are essential components for generating economic prosperity, growth, and development. The best way to ensure that equal opportunity is one of the key outcomes is to build equity into the planning process. In other words, "Productive Cities" are "Inclusive Cities" and vice versa. During the 1980s, a Metropolitan Economic Strategy for Pittsburgh, Pennsylvania was designed by a public-private partnership focusing mainly on innovations in computer software, biomedical research products, and other new technologies. At that time, I worked closely with community-based organizations to create a more inclusive high-technology economic development strategy that enabled low- and moderate-income families and neighborhoods to benefit from increased public and private investments, and this inclusive strategy helped make it possible for these grassroots NGOs to participate directly in official deliberations with government officials and corporate executives.

Political organizing and mobilization of low-income people is vital for such an empowerment and enfranchisement approach to succeed. A good example of this dynamic is Cebu City in the Philippines. With the return of democratic elections in 1986 after the fall of the Marcos dictatorship, low-income citizens organized in Cebu City for the 1988 municipal elections and helped put into office Mayor Thomas Osmena and numerous supportive City Councillors. Mayor Osmena, and his successor from the same political party, Mayor Garcia, have worked closely with low-income people and communities to improve their lives and economic circumstances. Cebu City and its surrounding area have experienced positive economic growth and foreign direct investment as an international trading center for Asia, a major seaport, and an industrial, service, and commercial center. The coalition of grassroots groups organized to gain assistance from local government officials is spreading the benefits of this growth to their neighborhoods.

A first key step was for low-income citizens to obtain access to power and resources at the local level through the Barangays, which under the post-1988 democratic reforms became municipal sub-governmental units that receive a share of national tax revenue plus one-third of the city's property taxes collected within their jurisdiction. There are 80 Barangays, each covering an average population of 8,000 citizens, represented by eight elected Councillors. The Barangays provide local security, sanitation, drainage, waste collection, and other services, and also engage in various forms of public development, regulation, and emergency relief for those in need. Cebu City's effective grassroots electoral mobilization enabled low-income residents to influence the type and quality of development and services and thus improve their communities. They also encouraged microentrepreneurship by permitting pedicabs (called trisikads) and other informal street traders to operate. Indeed, at the citywide level the Cebu City United Vendors Association - representing 5,000 predominantly female members - worked with other informal sector vendor organizations to obtain more favorable treatment from the local government, in terms of security, facilities, services, and regulatory permission to engage in business activities free from harassment and eviction.

Another vital citywide action was the creation by Mayor Osmena in the early 1990s of the Cebu City Commission for the Urban Poor, an official agency responsible for working with NGOs and other grassroots groups to coordinate implementation of programs improving access to land, housing, jobs, business opportunities, infrastructure, services, development, welfare, and other resources. For example, the Commission played a central role in greatly expanding the effective use of the nationally financed Community Mortgage Program for Cebu City citizens. Through this intervention, the application process was shortened from two years to six months, and more than 4,000 low-income families benefitted from CMP's subsidized loans to legalize their land and housing tenure and improve their homes and squatter settlements. Financial assistance from CMP helped initiate 65 major community improvement projects to install access roads, footpaths, electricity, fresh water wells and pipes, sewerage, drainage, and other basic services, with the government providing the funds and neighborhood residents doing part of the work. The Commission helped prevent evictions and demolition of informal settlements. With the help of CMP financing and other support from the local government and from private philanthropic foundations, the Commission also enabled residents to purchase their land, and through their own labor, to improve the communities they now collectively own, as well as their homes which they individually own.


There are two points I want to emphasize in conclusion. The first is that the problem of urban poverty can only be solved by involving low-income people in expanding the economy to raise their incomes and wealth, and to improve their basic quality of life. In other words, poverty alleviation is best addressed through equitable economic growth that directly integrates low-income people into the process and outcome, treating them as assets that contribute to overall growth with equity, rather than as liabilities that detract from general prosperity. The best poverty alleviation initiative is a very carefully designed economic development strategy that includes low-income people in planning and implementation, and highlights poverty alleviation as one of the most important goals.

Secondly, while many of the principles I have outlined apply to economic development strategy at any level of geographic aggregation, the best way to address the international problem of urban poverty is through Metropolitan Economic Strategy. This is because metropolitan regions are basic engines of economic growth in every country. Strategies targeted at any other level will miss important linkages and fail to generate the greatest amount of additional resources that can be brought to bear to raise people's income and standard of living. Addressing poverty solely at the community level, or even citywide, will not be nearly as effective as tackling the issue through a Metropolitan Economic Strategy. The growth prospects and economic development agendas of communities and cities will always be strongest when they are directly tied to a strategy that fully recognizes and utilizes the fundamental assets and the innovative industry networks of the entire metropolitan region.