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Forging our Urban Future

The Brookings Institute and ESADE present “An Economic Agenda for Cities and Metropolitan Areas” Barcelona, 8th June 2011: Across the world, the rate of urbanization is rapidly increasing. This is a good thing for the economy as cities are far more efficient generators of GDP. Yet urban growth brings with it new challenges; those of inequality, environmental sustainability, talent attraction, competitiveness. What’s more, the question of where these initiatives should come from remains unanswered and largely without a best practice model.
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Grappling with these issues and more, the one-day event held by the Brookings Institute at ESADE Business School in Barcelona this week, brought together public and private city leaders, who are working to implement new business models for their cities. Hailing from seven different metropolises, (Barcelona, Paris, Minnesota, Basel, Sao Paulo, Cape Town and Istanbul) the speakers addressed a wide range of issues on strategic urbanization, its results and challenges. “The path to take depends on us, citizenship begins in the city” Kicking things off, Professor Javier Solana of the ESADEgeo-Center for Global Economy and Geopolitics, reminded participants that we are living in an “uneven, uncertain and unsustainable world” a world that has undergone drastic changes which would not have foreseen as recently as January of this year and a world where growth is generated by cities. Public private partnership and innovation are essential to finding solutions for better cities In his opening address, Francisco Belil, CEO of Siemens SA, considered the impact of cities, noting that although they only cover 1% of the world’s surface, they consume 75% of the world’s energy and generate 85% of the world’s greenhouse gases. Their economic importance should also not be underestimated, with output of just ten cities contributing 20% of the world GDP. He also looked at the role of efficient energy technology in attracting innovative talent through increasing the quality of life in cities. “Energy consumption is directly related to quality of life” he stated, “we must be capable of building energy efficient structures… many of the technologies needed for this already exist, but we need to implement them as soon as possible.” He highlighted the need for new disruptive technologies in this area, “innovation must shape the future” he noted. “We need to get back to basics” Dr. Joan Clos, of UN Habitat focused on the paradox of the huge number of city dwellers living in slums and the discordance caused by inequality as their neighbours enjoy the likes of balconies with swimming pools. He noted that such situations are caused by urbanisation without industrialization, a trend particularly evident in countries relying on extractive industries and agriculture. He highlighted that although huge megacities are emerging, they are not cities as we know them: a large percentage of their population is unemployed, there is no public transport and there is a great divide between the formal city and the slums. Dr. Clos called for a “back to basics” policy, where simple urban planning tools must be applied and developed by home-grown institutions. “In Europe we have forgotten about urban planning” he said, “we have lost the technology and now do urban refinement.” “We must build the economy by unleashing America’s metropolitan engines” Next up, Bruce Katz of the Brookings Institute, considered the issues facing US cities, highlighting the need for them to “re-find their

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innovation Mojo”. He described how the US still sees itself as a small-town nation despite being mostly metropolitan. Three quarters of US GDP is generated in cities and 47 states generate more than half of their GDP from cities. “We must move from a macro to metro point of view” he stated. He called for a redefinition of the US economy based on the pillars of exports, low carbon emissions and innovation. “The US must get really smart, really fast” he said, referring to innovation as the “backbone of the move from a consumption based economy to a production based economy.” Cities must understand why they are different, find their competitive advantage, nurture it and compete, not with their neighbours but with the rest of the world. The polarization of US politics has led to stagnation and solutions should not be expected to come from Washington D.C. but from the ground-up. “This has to be done the hard way by “Pragmatic Caucus” through democracy, but also using many other actors at the same time… We need to flip the federalist pyramid” he said, “business plans must be created at city levels, then states can support them, and finally the federal government can get involved.” “We need to rethink the way we look at the world” Professor Javier Santiso Academic Director of ESADEGeo put these changes within a macro contest of the shifting wealth of nations, where OECD counties no longer exclusively hold onto the world’s financial, talent or innovation resources, and South-South relations are becoming increasingly powerful. In this multi-polar panorama, cities, as key economic drivers, must work hard to attract investment and talent. “Europe needs switch from North-focused shipping infrastructure to more sustainable Southern options” Santiago Garcia Mila, Strategy and Development Deputy Managing Director of the Barcelona Port Authority looked at the changes in shipping over the last 50 years which evidence this shift in trade, through the massive reduction of transatlantic shipping and the increase in China’s output. He noted that Europe is still not ready for this shift with its largest ports based in cities in the North (such as Rotterdam and Hamburg) ready to receive goods from the Atlantic but not well positioned to deal with Eastern trade. García Mila underlined the role of the Mediterranean ports (such as Barcelona), as the most sustainable route for Eastern trade, and importantly the shortest route between Brazil and China. The panel discussion involving Vincent Gollain, Chief Economic Development Officer, Paris Region Economic Development Agency; Christophe Koellreutter, Founder and Managing Director, Metro-Basel; Hakan Kodal, President and CEO, Krea Group; Andrew Boraine, Chief Executive, Cape Town Partnership and Mayor Chris

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Coleman, City of St. Paul, Minnesota involved a lively debate on the similarities and differences between the challenges faced by the selection of very different cities. Mr. Gollain from Paris noted that his city’s biggest challenges arise from the need to reinforce competitiveness, compensate the large number of jobs lost in industry through supporting entrepreneurs, competition with emerging market cities and a need to be more sustainable. In contrast, Andrew Boraine from Cape Town, said his city was facing very different challenges: the urbanization without industrialization (mentioned previously by Mr. Clos), one of the worst Gini coefficients in the world, leading to a city plagued with drugs and poor health issues, while some members of the middle class have not even noticed the crisis; the absence of a common political agenda and too strong a focus on ad hoc events rather than proper economic strategy. Mayor Chris Coleman of St. Paul cited a lag in competitiveness as one of his once-very-innovative city’s key issues, “we came to think of South Dakota as our competition instead of South Korea.” He also noted that his city now suffers from one of the highest achievement gaps in the country. For his part, Mr. Kodal listed three main reasons for the change in Istanbul: Physical – a huge earthquake and exponential growth of the population; Economical – Turkey’s efforts to open up to the world have lead to change in the way Istanbul has been treated; and the Vision of the city – Istanbul has become the centre of the region, not just a tourist destination. Basel, in contrast, was propelled to change by its success, commented Mr. Koellreutter, “we are very small, but we have an enormous hub of brains” he said, “10% of metropolitan GDP is spent on R&D… we aim to the first Life Sciences destination.” Despite the wide array of issues propelling the need for change in these metropolitan areas, the city leaders found common ground on several key areas. One such area was the need for cities to work with private entities to drive development and innovation. Another, the need to move away from what Mr. Boraine called “a lot of churning without much traction”, that is a lot of discussion without anything getting done and linked with this, all agreed that better collaboration between the different levels of government was needed along with transparency on who should deal with what. Finally the panel called for more co-ordination between the fields of economics and urban planning, underlining that cities can no longer afford not to have a strategic plan in place. Following the questions and answers session, the closing remarks were made by the honourable Jordi Hereu, Mayor of Barcelona, who thanked the city leaders and participants for their interest in Barcelona and underlined the key role of cities going forward. The afternoon’s smaller scale events included and introduction to Barcelona’s strategic plan and the world bank’s urbanization and knowledge platform and break out workshops on green economy, entrepreneurship and talent attraction, internationalization and the modernisation of manufacturing.

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From International to Global

ESADE Business School’s alliance with Georgetown’s McDonough School of Business For today’s manager or entrepreneur being international is not enough, the challenge lies in being global, understanding each region’s socio-economic situation and how they interrelate. ESADE’s Director General, Eugenia Bieto, appointed in September last year, highlighted the move from International to Global

as the school’s key strategy under her mandate. She noted that intensification of activities in the US, Brazil and India was key to this move. The alliance with Georgetown University’s McDonough School of Business will become the cornerstone of ESADE’s activities in the US. Highly attuned to developing successful managers, the agreement brings together two world-class institutions. Eugenia Bieto said, “We have achieved a strategic alliance with a high level of complementarity between the institutions, allowing us to combine Georgetown’s global, interdisciplinary training with ESADE’s entrepreneurial spirit and expertise in social innovation, meeting the needs of international managers of today and tomorrow.” The two schools, along with Georgetown’s Walsh School of Foreign Service, have been running the Georgetown-ESADE Global Executive MBA for the last three years. They now have strengthened their ties and will continue train managers with new international programs that will offer similar global content and formats. They also will share best practices in the areas of international training, strategy, and research. The Global Management Research Initiative Center As one of the first steps of the new

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alliance, ESADE and Georgetown’s McDonough School of Business jointly will create the Global Management Research Initiative Center (GMRI). This center will synthesise new knowledge in the areas of globalisation and the role of the company in international development, particularly focusing on new the business models emerging around the world. Alfons Sauquet, Dean of ESADE Business School, assures us that faced with a return to economic growth through an increasingly global economy, “it is imperative for managers to understand the different voices that influence global change in order to make the right strategic decisions. To achieve this it is vital to understand the context we are moving in and know how different markets react depending on the part of the world they are in.” The GMRI will become a shared research center including professors from ESADE and from Georgetown, who together will try to better the understanding of the challenges faced by global companies. The center will be headed up by ESADE’s Associate Director General and Business Policy Professor, Xavier Mendoza, expert in business internationalization strategies. Exchange of Best Practices One of the many opportunities afforded by this new alliance is the sharing of best practices in management education. This point is particularly crucial, according to ESADE’s Dean Sauquet, in the areas of International Relations and Geopolitics, which are highly valued by participants and often overlooked by business schools. With Georgetown’s world renowned Walsh School of Foreign Service and ESADE’s increased focus on these areas, with

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the appointment of Javier Solana and creation of the ESADE Center for Global Economy and Geopolitics last year, the schools are in a unique position to develop best practices in this aspect of business education. Another area of increased collaboration will be in the exchange of students and professors between the two institutions. The agreement also covers the appointment of McDonough School of Business’s Dean, George Daly, to ESADE’s International Advisory Board. A committee comprising leaders of key multinationals and respected academics from around the world who advise ESADE on its international competitive strategy and debate the most important strategic options to be faced by the organization.