A Tale of Two Competitive Cities: What Patterns Are Emerging So Far?

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As noted in a blog post earlier this year, the World Bank Group is pursuing a Competitive Cities Knowledge Base (CCKB) project, looking at how metropolitan economies can create jobs and ensure prosperity for their residents. By carrying out case studies of economically successful cities in each of the world’s six broad regions, the Bank Group hopes to identify the “teachable moments” from which other cities can learn and replicate some of those lessons, adapting them to fit their own circumstances.

The first two case studies – Bucaramanga, in Colombia’s Santander Department, and Coimbatore, in India’s State of Tamil Nadu – were carried out between April and June 2014. Although they’re on opposite sides of the globe, these two mid-sized, secondary cities have revealed some remarkable similarities. This may be a good moment to share a few initial observations.
 
Bucaramanga and Coimbatore were selected for study because they outpaced their respective countries and other cities in their regions, in terms of employment and GDP growth, in the period from 2007 to 2012. Faced with the same macroeconomic and regulatory framework as other Indian and Colombian cities, the obvious question is: What did these two cities do differently that enabled them to grow faster?

Historically, both Bucaramanga and Coimbatore have valued education and have aspired to be centers of higher learning. They established universities and technical colleges many decades ago, investing in human capital for economic development. Today both cities outperform their respective countries across a range of such socioeconomic indicators as literacy rates, educational attainment, public health, infant mortality and official poverty rates.
 
With workforces characterized by high levels of specialized yet transferable skills and know-how, they have an inherent advantage in today’s knowledge-based global economy. Higher levels of human capital and strong entrepreneurial traditions have enabled Bucaramanga and Coimbatore to adapt quickly to changing market trends and opportunities, diversifying into new but often related industry segments. In addition, those factors have helped them appear more attractive to outside investors, who could easily find locally the talent they needed.
 
The two cities are stellar examples of private-sector-led growth, whereby chambers of commerce, industry associations and individual companies have played a prominent role in the cities’ economic development. Alongside their efforts, government has provided public goods like infrastructure and public safety, as well as some industry support programs (mainly at the national and/or state level) such as workforce training or export assistance.

Neither city has a dedicated economic development agency. The chambers and associations perform economic development functions typically carried out by the public sector or a public-private partnership, such as market analysis, location branding and marketing, investment promotion, business recruitment and assistance with expansion, accessing incentive programs, export counseling, entrepreneurial training, industry capacity-building and investor aftercare.
 
Stakeholder engagement is a perennial theme in local economic development, and these two cities provide examples of successful partnerships for development. Bucaramanga developed a strategic plan for its economy through a process involving dozens of local stakeholders, from industry associations and government agencies to universities and research institutes. The focus was on implementation, clarity of roles, and accountability for results within agreed timeframes. Coimbatore does not have a formal planning document, although its business community did put together an ad hoc coalition to advocate for specific infrastructure upgrades, seen as the principal impediments to the city’s business activity and thus job growth and prosperity.
 
Ultimately, both cities have achieved economic success by focusing on what they are (or realistically could be) good at, leveraging their competitive strengths, in particular the transferrable skills of their workforces, core competencies within existing industry clusters, and accumulated relationship capital. Coimbatore’s firms have built on their tradition of engineering excellence to scale up activities and diversify into related industry segments; Bucaramanga’s firms and entrepreneurs skillfully used existing support programs to expand into entirely new industries in response to a changing domestic and global marketplace. Both cities have experienced strong growth across all three core pillars of economic development: the expansion of existing companies, the formation of new firms, and the attraction of companies from elsewhere.
 
There are also some differences between these two successful cities, of course. On a per capita dollar basis, Bucaramanga is almost four times richer than Coimbatore. Coimbatore is a manufacturing-intensive economy, whereas Bucaramanga has largely transitioned to a service-based, post-industrial structure. Bucaramanga/Santander has oil, while Coimbatore does not have any particular natural resource endowments or royalties from extractive industries.
 
The similarities clearly outnumber the differences between these two cities, and their respective ingredients of success show striking commonalities. It is too early to conclude which of these success factors could apply to what typology of city. But our work continues: In the coming months, the CCKB will be releasing observations from further city case studies, culminating in the publication of the project’s official findings.
 
So, keep watching this space, and let us know what sort of evidence and learning might be of interest and applicable to your own work.
 

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