Start-up ecosystems are emerging in urban areas across the world. Today, a technology-based start-up develops a functioning prototype with as little as $3,000, six weeks of work, and a working Internet connection.
Entrepreneurs are not seeking large investments in hardware or office space. Rather, they look for access to professional networks, mentors, interdisciplinary learning, and diverse talent. Cities are best suited to meet their needs, as they provide diversity and allow for constant interaction and collaboration. Thus, the shift caused by the so-called “fourth industrial revolution” makes cities the new ground for organic innovation.
The urban innovation model can be applied in cities in both developed and developing countries. The same trends are driving the urbanization of organic innovation ecosystems in New York City, London, Stockholm, Mumbai, Buenos Aires and Nairobi. This presents a great opportunity for developing countries to build innovation ecosystems in cities and create communities of entrepreneurs to support the creation of new sectors and businesses.
But while some cities have organically developed urban innovation ecosystems, nurturing a sustainable and scalable ecosystem usually requires determined action. Moreover, not all cities are building their innovation ecosystems at the same pace.
To support a local innovation ecosystem and accelerate its growth cities can promote collaboration through creative spaces and support networks, while also hosting competitions to solve local problems.
In the Northern tip of Mauritania lies the Nouadhibou Free Zone. Created in 2013 with financial and technical support from the World Bank, the first international partner to do so, it benefits from a 110-kilometer coastline on the Atlantic Ocean and an exclusive economic zone of 230,000 square kilometers. Its waters are among the most seafood-rich in the world, with a capacity of 1,500,000 tons per year.
The free zone offers investment opportunities in industries, logistics, tourism, retail business and tertiary sectors. However, creating a competitiveness hub in the fishing sector is one of the paramount objectives of the zone, given the importance of the sector for the Mauritanian economy. It represents 5.8 percent of the GNP, accounts for 18 percent of the total exports, and contributes to an estimated 40,000 jobs.
In March 2016, the World Bank approved the Nouadhibou Eco-Seafood Cluster Project (Projet Eco-Pôle Halieutique) with an International Development Association (IDA) grant of $7.75 million out of a total project amount of $9.25 million.
The objective of the project is to support the development of a fishing-sector hub in the Nouadhibou Free Zone aimed at promoting the sustainable management of fisheries and creating prosperity for the local communities.
While the Free Zone has already achieved critical results — such as the attraction of a few international investors in food processing and fish exports, the completion of commercial viability studies of the deep-seawater port and the airport, and the elaboration of a draft law on public-private partnerships (PPPs) — some constraints affecting more specifically the fishing sector remain. They include, among other things, the lack of productive diversification, an integrated value-chain, know-how about certification and international standards, and the octopus fishing quota system.
In addition, the lack of structured dialogue among the various public and private stakeholders in the fishing sector had been identified as a fundamental impediment to the development of the hub’s competitiveness.
Louise Cord, the World Bank Country Director, who recently visited Nouadhibou to officially launch the project with the President of the Free Zone, commended the Free Zone Authority for creating a Public-Private Dialogue (PPD) Task Force in 2015.
From Berlin to Cairo, from Medellín to New York City, new start-ups are flourishing in the heart of the city instead of occupying suburban areas or remote technology parks. This is the new model of start-up innovation ecosystems propelled by the so-called “fourth industrial revolution.”
Are these city-based start-up ecosystems generating new economic opportunities and jobs? If so, how are they doing it? To better understand this new model and its potential economic impact, we studied the evolution of the start-up ecosystem in New York City.
The city’s vibrant start-up scene is a recent phenomenon. With more than 14,500 start-ups and nearly $6 billion in venture capital investments, New York City today has one of the largest and most vibrant start-up ecosystems in the world. Just 10 years ago, the start-up community in the city was small, scattered, and disorganized.
The incredible transformation of the city’s start-up scene provides a few key insights on the characteristics and potential impact of the urban ecosystem model:
According to the World Economic Forum’s “Global Competitiveness Report 2016-2017,” Hong Kong dropped two notches to rank as No. 9 in its Global Competitiveness Index. The decline occurred mainly because the city faces challenges to “evolve from one of the world’s foremost financial hubs to become an innovative powerhouse.”
One might argue this is an unfounded worry: After all, as a developed economy with a GDP per capita of US $42,000, Hong Kong has recorded an impressive GDP growth rate, over the last five years, of about 3 percent annually. This growth rate is higher than many developed economy.
However, if we look at the economic figures more closely, some worrisome early warning signs are already emerging – especially in terms of the factors that will drive Hong Kong’s future economic growth.
Apart from finance and insurance, the majority of Hong Kong’s GDP growth nowadays is contributed by “non-tradable” sectors that have less knowledge and innovation content, such as the construction and public-administration sectors.
According to the World Bank’s latest research on “Competitive Cities for Jobs and Growth,” long-term economic success and job growth in cities are usually driven by “tradable” sectors – economic sectors whose output could be traded and competed internationally. Firms in tradable sectors are exposed to fierce competition which, in turn, exerts pressure on them to invest in research and knowledge-intensive sectors so that they become more productive and innovative in order to remain competitive internationally. Hong Kong is now lagging behind its Asian and world peers in the critical features of knowledge and innovation.
Although the urgency to act to increase the knowledge-driven content of the economy is obvious, there seems to be a limited number of actions taking place here on the ground in Hong Kong. How can Hong Kong forge ahead and start making changes?
Staying competitive in today’s global economy is like sailing against the current: Either you keep forging ahead, or you will fall behind.
The World Bank’s Smart Cities Conference – held in Yokohama, Japan last month – presented some good examples from around the world on how to use a bottom-up approach with active citizen engagement to increase the chance of success in implementing changes. The audience was interested in learning about the successful transformation of Yokohama through the cities many initiatives, such as the development of the Minato Mirai 21 central business district.
Do you want to take a walk through a competitive city? Since today, October 31, has been designated as World Cities Day by the United Nations, today is an especially good day to explore that idea.
Have you ever noticed how mayors and city leaders experience life alongside their citizens? It forces them to be more focused on the local manifestations of their policy decisions. They connect with what their citizens see and experience on a day-to-day basis. Numbers are crucial, because policies need to be supported by evidence – but what if the numbers and experiences could be brought to life? What does a 5 percent annual GDP growth rate look like? For that matter, what does a “competitive city” look like?
Members of the Competitive Cities team at the World Bank Group traveled to Bucaramanga, Colombia to find out. Here, amid the city’s famously rugged topography – with no ports or railroads nearby, and almost 10 hours away from the nation’s capital, Bogota – economic development seemed to be a tough proposal. Bucaramanga, however, managed to reinvent itself and become a globally competitive city – with the fastest rates of GDP growth and job growth in Colombia, and one of the fastest growth rates in the Western Hemisphere. As part of the Competitive Cities for Jobs and Growth initiative, we had already looked at Bucaramanga’s success in numbers and had analyzed qualitatively how they managed to get things done. Now we wanted others to experience how it felt to walk through a secondary city that blossomed into a dynamic economic center.
Thanks to a donated helicopter, the use of hobbyist drone technology, a motorcycle and a hugely enthusiastic local chamber of commerce, the team captured images and videos of the places that were central to Bucaramanga’s growth story. Bucaramanga’s transformation began with the creation of a regional competitiveness commission, a public- private alliance spearheaded by the private sector. As you’ll see in the accompanying video, one single block within the city hosts the chamber, an industrial university, the enterprise center, the commerce association and important regional banks.
In Bucaramanga, Colombia, Erick Ramos Murillo (left) and Rómulo Cabeza (right) prepare to fly a 3-D camera rigged to a drone.
Housing is a numbers game: The more people there are in any city or town, the greater the need is for housing. The number of people living on the planet is rising every second, as the World Population Clock shows, while the amount of habitable land (what housing specialists call “serviced land”) remains limited.
It is critical that additional affordable, decent dwellings be developed, as today’s world population of about 7.38 billion (increasing by more than 80 million per year, at the current population growth rate of about 1.13 percent per annum) approaches about 9 billion by 2030 and a projected 11 billion by 2050.
Urbanization intensifies the need for city-focused housing: By 2030, nearly two-thirds of the world’s population will be urban – and, even more daunting, nearly half of that urban population will be living in poverty, in substandard housing or in slums. , with intensifying urban congestion making it an urgent priority in Asia and Africa.
Seeking an antidote to the gloom-and-doom bombast of this election year? Try a dose of optimism about urban“hotspot hustle and cutting-edge cool” – with a book that champions smart public policy, delivered through a shrewd approach to Competitiveness Strategy.Gazing into the rear-view mirror is a mighty reckless way to try to drive an economy forward. Yet backward-looking nostalgia for a supposedly safer economic past – with voters' anxiety being stoked by snide sloganeering about “taking back our sovereignty” and “making the country great again” – has infected the policy debate throughout this dispiriting election year, in many of the world’s advanced economies. Scapegoating globalization and inflaming fears of job losses and wage stagnation, populists have harangued all too many voters into a state of passivity, lamenting the loss of a long-ago era (if ever it actually existed) when inward-looking economies were, allegedly, insulated from global competition.
Optimism has been in short supply lately, but an energetic new book – co-authored by a prominent World Bank Group alumnus – offers a hopeful perspective on how imaginative economies can become pacesetters in the fast-forward Knowledge Economy. Advanced industries are thriving and productivity is strengthening, argue Antoine Van Agtmael and Fred Bakker, now that many once-declining manufacturing regions have reinvented their industries and reawakened their entrepreneurial energies.
“Welcome to the brainbelt,” declares “The Smartest Places On Earth: Why Rustbelts Are the Emerging Hotspots of Global Innovation” (published by Public Affairs books). Now that brainpower has replaced muscle-power as the basis of prosperity in an ever-more-competitive global economy, the key factor for success is "the sharing of knowledge." Longlisted for the Financial Times/McKinsey Business Book of the Year Award, “Smartest Places” is receiving well-deserved attention among corporate leaders and financial strategists – and it ought to be required reading for every would-be policymaker.
The era of “making things smart” has replaced the era of “making things cheap” – meaning that industries no longer face a “race to the bottom” of competing on costs but a “race to the top” of competing on creativity. Knowledge-intensive industries, and the innovation ecosystems that generate them, create the “Smartest Places” that combine hotspot hustle and cutting-edge cool.
Those optimistic themes may sound unusual to election-year audiences in struggling regions, which are easy prey for demagogues manipulating populist fears. Yet those ideas are certainly familiar to readers at the World Bank Group, where teams working on innovation, entrepreneurship and competitiveness have long helped their clients shape innovation ecosystems through well-targeted policy interventions that strengthen growth and job creation.
“Smartest Places,” it strikes me, reads like an evidence-filled validation of the Bank Group’s recent research on “Competitive Cities for Jobs and Growth.” That report, published last year, offers policymakers (especially at the city and metropolitan levels) an array of practical and proven steps that can help jump-start job creation by spurring productivity growth.
Clearly, a lot of what has gone wrong with cities is related in one way or another to housing. The future of urbanization will therefore depend on how countries and cities position housing as a priority in the public debate around sustainable development.
From slums to gated communities, from overcrowding to sprawl, from homelessness to the vacant houses, there is much evidence that housing is shaping cities worldwide, regretfully, in many cases, by producing fragmentation and inequalities. The resulting models are leading to social, environmental and financial costs far beyond what the majority of cities can afford.
While the most common problem is the shortage of adequate and affordable housing and the unprecedented proliferation of slums, other important challenges lay in the poor quality and location of the stock usually far from job and livelihood opportunities, lack of accessibility and services. The housing challenge the world is facing today is likely to persist with six out of every ten people expected to reside in urban areas by 2030. Over 90 per cent of this growth will take place in Africa, Asia, Latin America and the Caribbean. It is estimated that within a decade.
We cannot overlook this reality. This is why, towards Habitat III, UN-Habitat has increased efforts to re-establish housing as a priority in the debate around sustainable urbanization. We are proposing the 'Housing at the Centre' approach to shift the focus from simply building houses to a holistic framework where housing is orchestrated with national and urban development in a way that benefits all people.
Natural attractions, clean streets and modern high-rise buildings: Kigali, Rwanda.
In mid-2014, the World Bank’s Competitive Cities team visited Kigali, Rwanda, the only national capital among our six case studies of economically successful cities around the world, representing the Sub-Saharan Africa Region. Kigali and Rwanda as a whole have enjoyed some of the continent’s fastest growth rates, in terms of both jobs and incomes, albeit from a comparatively low starting point. We aimed to understand the factors and specific interventions underpinning this success and to extract some lessons for other cities.
Rwandan society has made a remarkable recovery since the genocide and economic dislocation of the 1990s, when the country lost a significant share of its population and productive capacity. The process of rebuilding its infrastructure and institutions, and of creating an enabling environment for private-sector growth, has been a painstaking one.
Unlike some other countries in its region, Rwanda is a relatively small market, is landlocked and is without developed transportation infrastructure or significant natural-resource endowments. Key selling points to attract international investors have therefore included Rwanda’s recent stability, quality of life, improving human capital and natural beauty. In particular, its tropical mountain scenery, lakes and volcanoes, its biodiversity, and its gorillas in the wild have been major draws for leisure visitors, while improving convention and meetings facilities has been aimed at turning Kigali into a regional hub for business travelers.
Rwanda’s National Plans include strategies for the development of targeted sectors (such as tourism, ICT, financial and professional services, mining and agriculture). In the mid-2000s, the implementation of a national Land Tenure Regularization Program dramatically improved Rwanda’s land-registration process, enabling the functioning of land markets based on private ownership – and, by extension, Rwanda’s subsequent real-estate and construction boom, providing a strong boost to GDP growth and job creation.
- Sustainable Communities
Cites are the heartbeat of the global economy. More than half the world’s population now resides in metropolitan areas, making a disproportionate contribution to their respective countries’ prosperity. The opportunities and challenges associated with urbanization are quite evident in the world’s most populous country, whose cities are among the largest and most dynamic on Earth. To better understand what a thriving metropolitan economy looks like in the Chinese context, our Competitive Cities team selected Changsha, the capital of Hunan Province, for inclusion among our six case studies of economically successful cities, as the representative of the East Asia Pacific Region.
As recently as the turn of the millennium, Changsha’s economy was still dominated by low-value-added, non-tradable services (e.g. restaurants and hair salons) – an economic structure commonly seen today in many low- to lower-middle-income cities. Since then, Changsha has achieved consistently high, double-digit annual growth in output and employment, despite its landlocked location and few natural or inherited advantages, such as proximity to trade routes or mineral wealth. With per capita GDP surging from US $3,500 in 2000 to more than US $15,000 in 2012, Changsha has accomplished a feat so many other World Bank clients can only dream of: leapfrogging from lower-middle-income to high-income status in barely a decade, and an economy now comprised of much more sophisticated, capital-intensive industries.
Photos via Google Maps
We took a closer look at the success factors behind this city’s dramatic growth story, and what lessons its experience may hold for cities elsewhere, especially in terms of (1) how to overcome coordination failures and bureaucrats working in silos and (2) how to ensure a level playing field for all firms in the city (that is to say, competition neutrality), even in industries with a strong SOE presence – something still not commonly seen in China these days.
Changsha’s (and Hunan’s) growth has clearly benefitted from a highly conducive national macroeconomic and policy framework, including a plan entitled The Rise of Central China, aimed at spurring development in areas beyond the country’s booming coastal regions. This and other initiatives provided for the removal of investment restrictions, more favorable tax treatment, and enhanced infrastructure and connectivity to coastal commercial gateways. China’s massive stimulus plan in 2009 (in response to the global financial crisis and recession) jump-started construction activity in the country, providing further impetus to one of Changsha’s principal industries, construction machinery and equipment manufacturing. And national government interventions in earlier decades – especially the establishment of dedicated research institutes – provided a critical contribution to Changsha’s accumulation of expertise in such disciplines as machinery or metallurgy.
Notwithstanding these national initiatives, responsibility for local economic development in China is highly decentralized, with municipal government leaders directly tasked with achieving GDP growth and tax revenue targets. Municipal governments also have rights over almost all land in cities, which can be leased or used as collateral to fund local infrastructure. In Changsha, municipal authorities used these prerogatives to improve their city’s economic competitiveness.
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