clustering for competitiveness: urban patterns for a green economy

8/12/2019 Clustering for Competitiveness: Urban Patterns for a Green Economy

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URBAN PATTERNS FOR

A GREEN ECONOMY

CLUSTERING FOR

COMPETITIVENESS


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URBAN PATTERNS FORA GREEN ECONOMY

CLUSTERING FOR

COMPETITIVENESS


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URBAN PATTERNS FOR A GREEN ECONOMY: CLUSTERING FOR COMPETITIVENESS

All rights reserved

United Nations Human Settlements Programme (UN-Habitat)P.O Box 30030 00100 Nairobi GPO KENYATel: 254-020-7623120 (Central Office)www.unhabitat.org

HS/045/12EISBN (Series): 978-92-1-133398-5ISBN (Volume): 978-92-1-132460-0

DISCLAIMER

The designations employed and the presentation of material in this report do not implythe expression of any opinion whatsoever on the part of the Secretariat of the UnitedNations concerning the legal status of any country, territory, city or area or of its authorities,or concerning the delimitation of its frontiers or boundaries, or regarding its economicsystem or degree of development. The analysis conclusions and recommendations of thispublication do not necessarily reflect the views of the United Nations Human SettlementsProgramme or its Governing Council.

Cover photo: Thousands of young employees work in shifts covering 24 hoursat this call centre in Uberlndia, Brazil, answering customersscattered across the globe and strengthening the citys positionas a logistics hub UN-Habitat/Alessandro Scotti

ACKNOWLEDGEMENTS

Project Supervisor: Rafael TutsProject Manager: Andrew RuddProject Consultant: Mark SwillingCoordinating Author: Blake RobinsonPrincipal Author: Sara GrobbelaarCase Study Authors: Sara Grobbelaar, Sumetee Pahwa-Gajjar, Angie Reeve, Alexis

Schffler, Mari Tomita, Pieter van Heyningen, Nick WrightLead Reviewer: Philip Monaghan, Gulelat KebedeGeneral Reviewers: Daniel Irurah, Gordon PiriePublication Coordinator: Ndinda MwongoGraphic Contributor: Richa JoshiEditor Victoria QuinlanDesign and layout: Godfrey Munanga

Printer: UNON, Publishing Services Section, Nairobi

ISO14001:2004-certified


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Foreword

The city is one of the highest pinnacles ofhuman creation. Concentrating so manypeople in dense, interactive, shared spaceshas historically provided distinct advantages,that is, agglomeration advantages. Throughagglomeration, cities have the power to

innovate, generate wealth, enhance qualityof life and accommodate more peoplewithin a smaller footprint at lower per-capita resource use and emissions than anyother settlement pattern.

Denver

25

GreenHouseGasemissionsper

capita(MtCO2eq)

Metropolitan region containment index (1995 - 2005)(difference in population growth rates between core and belt)

20

15

10

0

5

Washington

HoustonFrankfurt

Portland

London

HelsinkiBrussels

Chicago

Minneapolis

Dallas

Baltimore

Philadelphia

Prague

San Francisco Hamburg

Berlin

Paris

Oslo Stockholm

1%0%-1%-2%-3%

Rsquare=0.503

Figure I: Greenhouse gas emissions and containment index for selected metropolitanregions

Philipp Rode


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Or so they could. Increasingly, cities areforfeiting many of the benefits thatagglomeration has to offer. Two meta-studies of urban land expansion have shownthat over the last two decades most cities

in the world have become less dense rather

than more,1,2and are wasting their potentialin ways that generate sprawl, congestionand segregation. These patterns are makingcities less pleasant and equitable places inwhich to live. They are also threatening the

earths carrying capacity. And they are most

Figure II: Average Built-up Area Densities in Three World Regions

Source: Making Room for a Planet of Cites, by Shlomo Angel, Jason Parent, Daniel L. Civco, and

Alejandro M. Blei. 2011. Lincoln Institute of Land Policy, Cambridge, MA.

2005

Eastern Asiaand the Pacific

Southeast Asia

South and Central Asia

Western Asia

Northern Africa

Sub-Saharan Africa

Latin Americaand the Caribbean

Europe and Japan

Land-RichDeveloped Countries

1780

1400

1200

1000

800

600

400

200Density(personsperhectare)

0

-2001805 1830 1855 1880 1905 1930 1955 1980

ManilaAlgiers

Mumbai

Mexico City

WarsawBeijing Shanghai

Cairo

Tel AvivTeheranIstanbul

BangkokMoscow

AccraLondon

Paris

Lagos

Sydney

Los Angeles

Johannesburg

SantiagoChicago

Kuwait City

Guatemala CityBuenos Aires

Source: Making Room for a Planet of Cites, by Shlomo Angel, Jason Parent, Daniel L. Civco, and

Alejandro M. Blei. 2011. Lincoln Institute of Land Policy, Cambridge, MA.

Figure III:The General Decline in Built-Up Area Densities in 25 Representative Cities,1800-2000

200

180

160

140

120

100

80

60

40

20

0DevelopingCountries

Built-upa

rea

density

(personsperhectare)

Europe and Japan Land-RichDeveloped Countries

Global sample, 1990

Global sample, 2000

Universe of citiesi, 2000

i This refers to 3,646 large cities with a population of over 100,000 or more.


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acute in fast-growing cities, particularlythose with the lowest institutional capacities,weakest environmental protections andlongest infrastructure backlogs.

Increasingly, city managers wish to learnby example. Rather than more theory andprinciples, they want to know what hasworked, what has not, and which lessonsare transferrable to their own contexts.There is much information available, butlittle time. UN-Habitat has developed thesequick guides for urban practitionerswho need condensed resources at theirfingertips. The aim is to suggest patternsthat can help cities and city-regions regainthese inherent advantages in a time ofincreased uncertainty and unprecedenteddemographic expansion.

More than half the global population nowlives in towns and cities. By the year 2050,UN-Habitat research projects that thatfigure will rise to two-thirds. This rapid,large-scale concentration of humanity in theworlds cities represents new challenges for

ingenuity, and numerous opportunities toimprove the way in which human habitatsare shaped. Most of this population growthwill be in the cities of developing countries,which are expected to grow by an additional1.3 billion people by 2030, compared to 100million in the cities of the developed worldover the same period.3

While urban population growth rates are

stabilizing in regions which are alreadypredominantly urban (such as Europe,North, South and Central America andOceania), regions with a higher proportionof rural population (such as Asia and Africa)are likely to see exponential rates of urbanpopulation growth in the coming years.4Most urbanization is likely to occur in citiesrelatively unprepared to accommodatethese numbers, with potential negative

repercussions for quality of life, economicdevelopment and the natural environment.

Although the percentage of the urbanpopulation living in slums worldwide hasdecreased, the absolute number of peopleliving in slums continues to grow.5No lessthan 62 per cent of all urban dwellers in

sub-Saharan Africa live in slums, comparedto Asia where it varies between 24 percent and 43 per cent, and Latin Americaand the Caribbean where slums makeup 27 per cent of the urban population.6If these growing cities are to be sociallysustainable, new approaches will berequired to integrate the poor so thatthe urbanization process improves inter-generational equity rather than entrenchingsocio-spatial fragmentation. Privatizedmodels of service delivery that discriminatebetween consumers based on their abilityto pay threaten to worsen inequalities,7andrequire carefully considered parameters toensure that the poor are not disadvantaged.

According to a recent World Bank study,urban population growth is likely to resultin the significant loss of non-urban landas built environments expand into their

surroundings. Cities in developing countriesare expected to triple their land areabetween 2005 and 2030, with each newcity dweller converting an average of 160metres2 of non-urban land to urban land.8Despite slower population growth, cities inindustrialized countries are likely to see a2.5 times growth in city land areas over thesame period due to a more rapid decline inaverage densities when compared to their

developing country counterparts.9 As builtenvironments become less dense and stocksof built up land accumulate, the amountof reproductive and ecologically bufferingland available for ecosystems and foodproduction is diminished, reducing the abilityof city-regions to support themselves.10

While international trade has made itpossible for cities to meet their demands for

food, water and energy with imports fromfaraway lands, it is becoming increasinglyapparent that the appetite of the worlds


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2

0

1,000900800700600500

6

8

10

U.S.A

San Francisco

Oslo New Zealand

Australia VancouverToronto

Canada

Hong KongShanghai

IndiaNairobiKenya

Human Development Index (HDI)

Sustainability target

EcologicalFootprint(gha

/capital)

Bangkok

Norway

Germany

Berlin

Melbourne

Wellington

LondonUK

ChinaDelhi

Thailand

growing and increasingly affluent populationis coming up against limitations in theplanets ability to support human life onthis scale. It is estimated that our addictionto oil will result in a peak in oil extractionwithin the next decade, leading to dramaticincreases in the costs of fuel, mobility, foodand other imports. Greater demand forpotable water, combined with changingrainfall patterns, the depletion of aquifers

and pollution of groundwater, is likely tosee increasing competition for scarce freshwater resources, raising the possibility ofconflict in the near future.

The ability of ecosystems to continueproviding biotic resources like wood, fishand food, and to absorb manmade wastes- commonly referred to as the earths bio-capacity - is also diminishing. Comparing

global ecological footprints to the earthsavailable capacity shows that, at currentrates of resource use, we are exceeding bio-

capacity by 30 per cent,11and approximately60 per cent of the ecosystems we depend onfor goods and services are being degradedor used in an unsustainable manner12. Weare living off the planets natural capitalinstead of the interest from this capital, andthere are already signs of the devastatingeffect this will have on our societies andeconomies in depleting fish stocks, loss offertile soil, shrinking forests and increasingly

unpredictable weather patterns.13

The global population is reaching a sizewhere cities need to start thinking beyondtheir immediate interests to consider theirrole as nodes of human consumption andwaste production in a finite planet that isstruggling to keep pace with humanitysdemands. If cities are to survive, theymust acknowledge the warning signs of

ecosystem degradation and build theireconomies in a manner that respects andrehabilitates the ecosystems on which life

Figure IV:Ecological Footprint and Human Development Index for selected countriesand cities

Philipp Rode


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depends. If cities are to prosper, they mustembrace the challenge of providing shelterand uninterrupted access to water, food andenergy and improve quality of life for all oftheir citizens.

The way in which city spaces, buildingsand infrastructural systems are planned,designed and operated influences theextent to which they encroach on naturalecosystems, and locks them into certainmodes of consumption from which theystruggle to deviate. Urban activities havedirect and indirect consequences for thenatural environment in the short, mediumand long term, and their scale of influencetypically extends far beyond the boundariesof what is typically considered to constitutethe city. Managing the indirect, distantand sometimes obscured impacts ofcity decision making in an increasinglyglobalized world requires appropriategovernance mechanisms that improve citiesaccountability for the resources they rely on.

As nexuses of knowledge, infrastructure

and governance, cities represent a keyopportunity to stimulate larger scalechange toward green economies. In a worldwhere cities are increasingly competingagainst each other economically, whereweather patterns are unpredictable and lowresource prices can no longer be assumed,cities need to proactively shape theireconomies and operations in preparationfor an uncertain future. To manage risk in

a democratic manner, a balance will needto be struck between deliberative decisionmaking processes and centralized masterplanning. This can be done by empoweringplanning professionals to respond quicklyand effectively to evolving developmentswithout compromising longer term sharedvisions of a better city14.

This guide is one of a set of four aimed at

inspiring city managers and practitioners tothink more broadly about the role of theircities, and to collaborate with experts and

interest groups across disciplines and sectorsto promote both human and environmentalprosperity. The guides are based on theoutputs of an expert group meeting hostedby UN-Habitat in February 2011 entitled

What Does the Green Economy Mean forSustainable Urban Development?Each guidefocuses on one of the following cross-cutting themes:

Working with Nature

With functioning ecosystems forming thefoundation for social and economic activity,this guide looks at how built environmentscan be planned to operate in collaborationwith nature. It looks at how to plan citiesand regions for ecosystem health, focusingon allowing sufficient space for naturalsystems to continue providing crucial goodsand services like fresh water, food, fuel andwaste amelioration.

Leveraging Density

This guide looks at the relationship between

built and natural environments from theperspective of cities, and considers how theirimpact on ecosystem functioning might bereduced by making best use of their landcoverage. Planning the growth of cities toachieve appropriate densities and providingalternative forms of mobility to privatevehicles help to slow urban expansion ontoecologically sensitive land, and can reducecitizens demand for scarce resources by

sharing them more efficiently.

Optimizing Infrastructure

Considering urban infrastructure as thelink between city inhabitants and naturalresources, this guide looks at howinfrastructural systems can be conceiveddifferently in order to help all city residentsto conserve resources. It introduces new

concepts and approaches to the provision ofinfrastructural services, such as energy, waterand waste treatment, and demonstrates


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how infrastructure investments can act ascatalysts for urban sustainability.

Clustering for Competitiveness

Taking a broader perspective, this guidelooks at city regions and how they canbe more optimally planned to achieveeconomic objectives in a manner that doesnot waste local resources. It looks at how

competitive advantage can be achieved at aregional scale by encouraging cooperationbetween cities with complementary areasof specialization. It also considers howinnovation for green economic development

can be encouraged through the clusteringof industries, and through collaborationsbetween government, the private sectorand academia.


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Agglomeration economies: Advantagesthat arise from increased density of

economic activity.

Decentralization: The spread of poweraway from a major centre to other cities andregions.

Externality: Side effect or consequenceof an industrial or commercial activity thataffects other parties without this beingreflected in the cost.

Globalization: The technological, politicaland economic changes resulting fromthe increasingly global nature of the wayactivities are carried out.

Infrastructure: The physical andorganizational structures needed for theoperation of a society or enterprise, orthe services and facilities necessary for aneconomy to function; this includes transport

infrastructure, universities, airports, ports,healthcare infrastructure.

Innovation: Innovation is the creation andsuccessful implementation of new ideasand inventions that make a real differencethrough the generation of tangibleoutcomes with social and/or financial value.

Polycentricism: Principle of developingmultiple centres within a region to be

complementary in role through cityspecialization.

Strategic facilities: Facilities such asgood harbours, an international airport,universities and a financial centre strengthenthe competitiveness of a city-region andsupport value chains throughout the area.

Triple helix collaboration / innovation:Triple helix collaborations / innovation referto collaborations / innovations where threehelixes namely government, industry andacademia play their specific roles.

Urbanization: Urbanization is the processin which the number of people living incities increases compared with the numberof people living in rural areas.

Glossary


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Contents

Foreword iii

Glossary ixChapter 1: Introduction 1Chapter 2: Green Development Challenges and Trends 5

2.1. Climate change is a serious risk to poverty alleviation 5

2.2. Urbanization, especially in developing countries, puts pressure on resources and

infrastructure 5

2.3. Decentralization policies have limited success 6

2.4. Economic growth: The economic crisis is seen by many in the developed

world as an opportunity for green growth

2.5. Globalization has had profound impact on the role of cities in regional

development 62.6. Implications of global trends for green economic development 6

Chapter 3: Importance of Competitiveness for Green Development 93.1. The importance of transitioning to a green economy 9

3.2. Is competitiveness important and what plays a role in achieving a sustainable

competitive advantage? 12

3.3. The importance of inter-city networks and polycentric urban development in

achieving competitive advantage 14

Chapter 4: Achieving Competitive Advantage 174.1. Approaching the design of initiatives for green economic development 18

4.2. Mechanisms for developing competitive advantage 19Chapter 5: Implementing Competitiveness 295.1. Organize and mobilize the stakeholders 29

5.2. Analysis 30

5.3. Develop the strategy and implementation plan 30

5.4. Implementation 31

5.5. Monitor and evaluate 31

Chapter 6: Case Studies 336.1. Collaborating for innovation at 22@Barcelona, Spain 33

6.2. Fostering innovation at Newcastle Science City, United Kingdom (UK) 35

6.3. Developmental Green Economy Strategy for Gauteng, South Africa 38

6.4. Delhi post Commonwealth Games: worldcity or urban fiasco? 42

6.5. The Zurich Cleantech Innovation Park: Dbendorf a contested space 45

6.6. Clustering solar energy industries in Dezhou, China 49

6.7. Randstad: a polycentric urban region 53

6.8. Building a recycling industry at the Kitakyushu Eco Town Project 56

Chapter 7: Conclusion 61End Notes 63


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Passengers gather at Tetouans central bus station, which is the hub for public transport in this region

of Morocco UN-Habitat/Alessandro Scotti


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CHAPTER 1: INTRODUCTION

1

Introduction

1This quick guide develops an argument thatthrough strategic investment in physicalinfrastructure, in combination with thediversification of economies, cities willstart to play a specialised role in polycentricurban development. It is argued that a

number of green economy outcomes maybe reached through efficiencies and sharedinfrastructure, rather than duplication. Thecentral concepts to this strategy are citycompetitiveness and local and regionaleconomic development. Furthermore,it is suggested that green economicdevelopment can be achieved through thedevelopment of green clusters and greenjobs. The guide mainly grapples with the

perceived trade-off between economicdevelopment and environmental protection.This is a key issue addressed in the guideand it explores pathways of how both ofthese goals may be achieved in union.

In Section 2, this guide provides a briefoverview of key challenges facing city-regions and cities that are aiming to achievecompetitive advantage. The forces of

globalization are found to have an immenseeffect on the basis and level on which city-regions are competing. This increases the

need for regional planning and strategiccompetitiveness initiatives to position regionsto achieve green economic developmentand attract international investment.

In Section 3, the concept of the green

economy is explained and the key risks andchallenges, especially for developing nations,are clearly articulated. The section providesa rationale for competitiveness as a strategyand also highlights clusters and polycentricurban development as key mechanisms forachieving competitive advantage.

The key design principles that aredeveloped in Section 4 suggest a systems

and network approach coupled withthe adoption of supply-side, as well asdemand-side considerations for the designof interventions. The key mechanisms thatare suggested for the development ofcompetitive advantage are:

Clustering, as this will provide a frameworkfor focused support for innovation activitiesand creating a competitive advantage.

These clusters need to be stimulated toexhibit self-exploration activities for greeneconomic development.


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CLUSTERING FOR COMPETITEVENESS

Strengthening the knowledgeinfrastructure and linkages betweeninnovation role players to support growth

in clusters for economic development.

Discovering new areas of competitiveadvantage through cooperation andcomplementary activities on a regionalscale; for this purpose polycentric urbandevelopment principles should beadopted.

The design principles also provide keyprinciples for a governance frameworkthrough which capacity will be developedand creative governance and transitionmanagement principles will be implemented.

Section 5 of the document provides astep-by-step process outline for the variousphases to be implemented for developing acompetitiveness and innovation strategy thatis cognizant of city-level and regional interests.

The following case studies will be discussedin-depth in Section 6 and aim to providepractical examples of the implementation ofthe principles discussed in this guide. Belowis a short summary of each of these cases.

In Barcelona, Spain, 22@Barcelona: 22@provides a good example of how triplehelix partnerships were created in thedevelopment of an innovation region.

In Newcastle, England, the NewcastleScience City project approach was tofocus on triple helix collaborationsand supply-side interventions such asthe training and mentoring of youngentrepreneurs to approach theirbusinesses from a demand-led approach.

In Gauteng province, South Africa,

the Gauteng Green Economy Strategyclearly illustrates the green economic

development principles adopted in thisquick guide as the strategy suggested afocus on non-traditional sectors and the

development of green clusters for greenjobs.

The DezhouSolar Valley, China, clearlyillustrates the development of greenclusters for green jobs in the DezhouSolar Valley. Also highlighted is thebenefit of stimulating the demand sidethrough the implementation of solartechnologies for the citys energy needs.

In Delhi, India, the Delhi CommonwealthGames case study shows how, witha lack of strategy and poor planning,opportunities to build competitivenessbrought about by large infrastructureinvestments in preparation for hostingthe third largest multisporting event inthe world were not fully realised.

The study of the Cleantech Innovation

Park explores how stakeholder conflicthas affected the establishment of aninnovation park in Zurich, Switzerland.The aim is to highlight the need forstakeholder management if newinitiatives are implemented.

The case study on Randstad, theNetherlands, shows that through thecreation of synergies between cities in

a region, the region could indeed bemore than the sum of its parts throughcomplementarity and cooperation.

In Kitakyushu, Japan, the KitakyushuEco-Town Projects aim was to achievezero emissions and zero waste byusing all waste as materials in otherindustries. Close collaborations betweenuniversities, government and industry,

clustering mechanisms, utilization ofexisting industrial infrastructure and


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CHAPTER 1: INTRODUCTION

3

good communication are amongst thefactors that have led to huge successesfor this project.

Lastly, Section 7 provides a short keysummary of the findings and suggestedapproach.


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Shipping containers arranged in the newly built PTP commercial harbour in Johor Bahru, Malaysia

which overlooks the Malaysia-Singapore Strait UN-Habitat/Alessandro Scotti


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CHAPTER 2: GREEN DEVELOPMENT CHALLENGES AND TRENDS

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2This section provides a broad outlineof global macro-trends and what theirimplications are for cities and regions tocompete on the global stage. It highlights arange of global challenges, their impact oneconomic development and the implications

for competitiveness strategies.

2.1. Climate change is a seriousrisk to poverty alleviation

Climate change and shifting weatherpatterns have a global impact as they maycause:

Threats to continued food production

with potential implications for creatingethnic tension, political conflict and civilunrest;

Rising sea levels potentially causingflooding;

Climate change-induced migrationleading to displacement of individuals;

Reduced bio-diversity in plants andanimals which in turn will affect therobustness of ecological systems;

Threats to continued economicdevelopment in those developingcountries that are heavily dependent onnatural resources, especially agriculture,and that have constrained capabilities toadapt to the changing climate.15

2.2. Urbanization, especiallyin developing countries,puts pressure on resourcesand infrastructure

The urbanization trend may result in anumber of difficulties, such as:16,17,18

Inadequate infrastructure and planning

of infrastructure to cope with growingpopulations in cities;

Emergence of slums and sub-standardhousing;

Increased traffic and commuting times;

Difficulties with the timely access ofessential services; and

Administrative difficulties.

Green DevelopmentChallenges andTrends


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These difficulties may negatively impact oncities abilities to attract investment and onnew industries ability to establish themselves

in these areas; thereby negatively impactingon economic development prospects inthese locations.

2.3. Decentralization policieshave limited success

Many countries in the world are engagingin processes to decentralize functions frommajor centres. This process was originallyinitiated to have more equitable and efficientservice delivery by spreading functions suchas administration, political control andfinance throughout a region or country. Theintention was also to improve policy-makingthrough increased public participation. Theeffectiveness of this policy may, however, bequestioned because capacity building andeffective management practices are lackingin many cases.19,20

2.4. Economic growth: The economiccrisis is seen by many inthe developed world as anopportunity for green growth

Many administrations in the developed anddeveloping world see investment in a greeneconomy as an opportunity for renewedeconomic growth on environmentally andsocially sustainable grounds. Examples

include the United States, which includedenergy-saving technologies and greenactivities as part of their stimulus package.21Similar measures have been implementedin countries such as South Korea and SouthAfrica, where economic developmentstrategies increasingly include sustainabilitypractices and the establishment of non-

traditional sectors for a green economy.

2.5. Globalization has had profound

impact on the role of citiesin regional development

Globalisation has resulted in increasedinterconnectedness of cities across the globeand is increasing economic competitionbetween cities and regions. Cities need toreact to the trend by effectively managingand mitigating risks associated withglobalization.22,23

2.6. Implications of global trends forgreen economic development

The combination of urbanization andglobalization and increased pressure foraccountability means that local governmentshave additional responsibilities. Questionsare asked about how to developeconomically in relation to the internationalcommunity, while governments are pushed

to think about social justice and equity.24

The importance of location is nowcentre stage in the debate on economicdevelopment. Contrary to some who believethat the effect of globalization and theimprovements in telecommunications willmake location, and therefore the city, lessimportant, many economic geographers,economists and policy-makers think that

the importance of location has actuallyincreased with globalization. It is generallybelieved that regional distinctiveness, andthus regional economic development, isincreasingly seen as the focus for increasedwealth creation and world trade.25,26,27,28


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In a global economy which boasts rapidtransportation, high speed communicationsand accessible markets one would expect

location to diminish in importance. But theopposite is true. The enduring competitiveadvantages in a global economy are oftenheavily localized, arising from concentrationof highly specialized skills and knowledge,institutions, rivalry, related businesses andsophisticated customers. (Porter, 1998:90)

It is also increasingly acknowledged that byrelying on market forces alone the world willnot be successful in making the transition

to a green economy. The literature widelyacknowledges the various roles that willneed to be played by governments, industry,financiers, academia and society. Manycountries have, therefore placed balancingeconomic growth with sustainabilitypractices and environmental protection ontheir development agendas.


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Highly dense, competitive urban spaces allow for specialization, as is the case in this informal

neighbourhood in Onitsha, Anambra State, Nigeria UN-Habitat/Alessandro Scotti


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CHAPTER 3: IMPORTANCE OF COMPETITIVENESS FOR GREEN DEVELOPMENT

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Importance ofCompetitiveness forGreen Development 33.1. The importance of transitioning

to a green economy

The concept of the green economy isappealing because it aims to respond to thewide range of crises the world has faced

recently, namely climate change, food crisesand economic crises.

Although the perception may exist thatthe developed world has a large focus ontechnology for developing green economies;it has been increasingly acknowledged thatgreen economic development need not onlyfocus on high technology. Possibilities are alsoprogressively being sought to consider low

technology and high job creation industries.The frameworks for planning green economiestherefore now aim to include not only a focuson skills and technology development, butalso on factors for poverty alleviation.29,30TheWorld Economic and Social Survey 201131provides insight into this line of reasoning:

A global green technological transformation,greater in scale and achievable within a much

shorter time-frame than the first industrialrevolution, is required. The necessary setof new technologies must enable todays

poor to attain decent living standards, whilereducing emissions and waste and endingthe unrestrained drawdown of the Earthsnon-renewable resources.

Staging a new technological revolution at

a faster pace and on a global scale will callfor proactive government intervention andgreater international cooperation. Sweepingtechnological change will require sweepingsocietal transformation, with changedsettlement and consumption patterns andbetter social values.32

Green economic development sets out toprovide a solution to the perceived opposing

objectives of economic growth and povertyalleviation, and the protection of the worldsecosystems. Core to this concept is therealization that the world needs a transitionfrom the current systems that caused crisesto an integrated system that proactivelyaddresses and prevents crises.33

Much work has been done to understandwhat the pathways towards the green

economy may look like. Certain key enablingconditions are:34


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Establish sound regulatory frameworks;

Focus government investment on areas

that will stimulate the greening ofeconomies and the further developmentof labour intensive industries;

Limit government spending on industriesthat deplete natural capital;

Promote taxes and market-basedinstruments to promote investmentin innovation and the greening ofindustries;

Invest in skills development and capacitydevelopment and

Strengthen international governance.

Useful ResourcesUNEP. (2011). GREEN economy: Pathwaysto Sustainable Development and Poverty

Eradication - A Synthesis for Policy Makers.Available at:http://www.unep.org/greeneconomy/Portals/88/documents/ger/GER_synthesis_en.pdf

UN. (2011). Working towards a Balancedand Inclusive Green Economy: A UnitedNations system-wide perspective, preparedby the Environment Management Group.

Available at:ht tp : / /www.unemg.org /Po r ta l s /27 / Documents/IMG/GreenEconomy/report/GreenEconomy-Full.pdf [Accessed on 27February 2012.]

3.1.1. What are green jobs?

Although no single and official definitionfor green jobs exists, general agreement is

that green jobs are those that contribute

to the preservation and restoration ofenvironmental quality. These may include:35

positions in agriculture, manufacturing,construction, installation and maintenance,as well as scientific and technical,administrative, and service-related activities,that contribute substantially to preserving orrestoring environmental quality. Specifically,but not exclusively, this includes jobs thathelp to protect and restore ecosystems andbiodiversity; reduce energy, materials, andwater consumption through high-efficiencyand avoidance strategies; decarbonisethe economy; and minimize or altogetheravoid generation of all forms of waste andpollution.36

A wide array of skills, educationalbackgrounds, and occupations comesunder the heading green jobs. Theymay exist in research and development;professional fields, such as engineeringand architecture; project planning and

management; auditing; administration,marketing, retail, and customer services;and in many traditional blue-collar areassuch as plumbing or electrical wiring. Greenjobs may also exist outside the privatesector, for example in government offices(standard setting, rule-making, permitting,monitoring and enforcement, supportprogrammes, etc.), in science and academia,professional associations, and civil society

organizations (advocacy and watchdoggroups, community organizations, etc.).37

The quality of these jobs is emphasized witha focus on adequate wages, safe workingconditions, limited travelling time to andfrom work (time, money, fuel and emissions)and access to organized labour.38Althoughno precise definition for green jobs exists yet,the United Nations Environment Programme

(UNEP) provides some guidance on these.(See Figure 3.1).


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As far as green jobs in the developed worldare concerned, analyses has focused onfactors such as changes in the total numberof jobs, underlying job movements fromone job category to another (e.g. changein job specifications) and the quality of jobsthrough the transition to a green economy.40

There is a lack of this kind of information fordeveloping countries, which poses difficulties

for developing effective policy to transition toa green economy. This problem forms the basisof projects such as the International LabourOrganisations Global Green Jobs Programmethat is currently also investigating what thepolicy options for transitioning to a greeneconomy will mean for developing countries.41

3.1.2. Challenges for transitioningto the green economy

Green economic development also entailsrisks and challenges, particularly for

Figure 3.1:Examples of green and decent jobs

Source: Figure copied from UNEP39, (2008). Green jobs: Towards decent work in a sustainable, low

carbon economy.

developing countries. For these countrieseconomic development is feared to becomemore challenging. They are concerned thatgreen economic development would be usedto reinforce protectionist trends, it wouldhave additional restrictions and conditionsfor international financial cooperation,and it may unleash new forces that couldreinforce inequalities.42

A key risk for this approach is also that aone size fits all strategy may be adopted.Care should be taken to identify and dealwith trade-offs that need to be made invarious stages of development for a country.Environmental endowments and challengesdiffer widely between countries and shouldalso be considered.43

The risks associated with the trade regime

include using the environment for tradeprotection; gaining market access underthe guise of green economic development;


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Figure 3.2:Key factors that play a role in city competitiveness

and subsidized production in the industrialworld without corrective measures fordeveloping countries. Other fears are that

developing countries may find it difficult topromote domestic green economy sectors,or that technical standards are too high fordomestic exporters to meet.44

3.2. Is competitiveness importantand what plays a role inachieving a sustainablecompetitive advantage?

As globalization and the transitioning toa green economy is causing cities andregions to increasingly compete witheach other, much academic and policyattention has been focused on the notion ofcompetitiveness45,46.

Attempts have also been made tograpple with the perceived trade-offbetween economic development andenvironmental protection.47 The paradigm

of competitiveness has also seen amarked shift over the past few decades.Sustainability considerations in industrialpolicy and economic development have been

highlighted by some authors; for example,with the introduction of frameworks forsustainable competitive advantage.48,49

The literature treats the definition ofcompetitiveness from two points of view:

The spatial scale: This treatscompetitiveness on the geographicalscale, for example city, regional ornational competitiveness; 50,51,52,53,54and

The specialized functions space: Thisfocuses on the competitiveness of citiesor regions in terms of their functions,such as tourism, agriculture, finance ortechnology.55

Factors that contribute to a locationscompetitiveness can be referred to aslocation factors. The following figureprovides an overview of a synthesis fromthe literature of selected factors that havebeen identified as playing a role in the

development of a locations competitiveness.

The literature acknowledges the centralrole that innovation, human capital and

Selected drivers of city competitiveness

Quality of Local governance

Capacity for self-explorationactivities

Infrastructure that support thevarious functions of the city(including strategic facilities)

Innovation

Human capital and skills

Historical legacy

Macro/nationalenvironment

Citycompetitiveness

Selected preconditions forthe formation of clusters

Trust

Critical mass of firms

Geographical proximity

Entrepreneurial culture

Clustering and knowledgespill overs


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the existence of competition on the localmarket plays in establishing competitiveadvantage. The same could be said for

local governance. Globalization and theopenness of economies have also resultedin a situation where these key drivers havebecome more important.56,57

History also matters because historicallegacy and agglomeration economies (i.e.advantages that arise from increased densityof economic activity) play an importantrole in driving competitive advantage. Twoways an agglomeration advantage could beachieved are:58

Clustering of companies and businessesin the same industry (localizationeconomies); and

Clustering of firms and businessesin different industries (urbanizationeconomies).

There is widespread acknowledgement ofand interest in the adoption of clusteringstrategies and policies to overcome internalshortcomings to enable firms to join effortsand resources with other firms, universities,research councils and other public sectororganizations. Mostly due to the growingappreciation of the importance of innovationby academics and policymakers, there existsa belief that clusters may be one of the most

effective means of creating an environmentwhere innovation can be stimulated.

Infrastructure is also an important factordriving competitiveness. Strategic facilitiessuch as universities, harbours, ports etc.are widely believed to play a role in thecompetitiveness of a city. Infrastructure hasa large impact on the cost of doing businessand the quality of life that, in turn, play a

role in attracting skilled labour and firms tothe region. Strategic planning of facilities in

cities may also feature in a more coordinatedapproach towards development on the

regional and national levels.66,67

A stable macro environment is also importantin establishing conditions for growth andcompetitiveness. Also, it is important toensure that synergies between cities andneighbouring cities are planned for, becausesynergy must form part of an overarchingnational development plan. Therefore, theroles of national governments and provincial

governments may also be important irrespectiveof how effective local policies are.68,69

When poor countries become richer thetendency is for their economies to becomemore diversified.70This expansion of activitiescarries on up to a relatively advanced level ofdevelopment. A countrys ability to expandthe number of activities in the economy is,therefore, key to development success in

developing countries, that is, its ability forself-exploration.71

Localization of economic growth: basisfor the argument to develop clusters

Criticisms of the cluster approach by someacademics address the pitfalls of blindlyapplying this mechanism without properunderstanding of its limitations. It is, however,widely recognized that cluster-like processesand structures play a major role in shaping andreshaping regional competitive advantage.59

There are few who do not acknowledge thepositive feedback about the existence ofclusters in a region and their ability to attractmore firms to the area.60 The literature isalso clear on the need to establish new,specialized facilities and infrastructure tosatisfy cluster participants. Much workis being done on how clusters emergeand on what determines their long runevolution.61,62,63,64,65


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3.3. The importance of inter-citynetworks and polycentric urbandevelopment in achieving

competitive advantage

As competition has shifted from the levelof the nation-state to the city-regionlevel, attention has also shifted towardsunderstanding spatial configuration andlinkages between cities within a region. It iswidely believed that the strategic planningand development of synergies and linkagesbetween cities may contribute to findingnew areas of competitive advantage and tomarketing city-regions internationally.74,75,76

Policymakers and planners have also startedto recognize that the coherent configurationof polycentric urban regions (PUR) may bean important focus area for policy makingand planning. If these activities are engagedin on a city-region level, this may counterbalance the negative impacts of citiescompeting with each other for high-level

services, hi-tech industries, skilled labour,tourists and a marketable image. There maybe opportunities within the larger systemthat will be unused or wasted through, forexample, duplication.77

The explicit design and planning of PUR hasbecome a feature in regional developmentstrategies in many European countriesthrough the inclusion of the polycentric

urban regions concept in the EuropeanSpatial Development Perspective.78,79 Theseregional clusters of cities are not alwaysreferred to as PURs but are sometimes calledurban networks or city networks. Thenetwork metaphor is often used to describethe complex nature and strong relationshipsthat exists between centres in PURs.80

Case study: Delhi post CommonwealthGames: worldcity or urban fiasco?

The hosting of mega sporting eventscan provide opportunities for strategicinvestments in infrastructure that allowcities to cater for increased visitors inthe short term while delivering ongoingbenefits to permanent residents overthe longer term. Delhis hosting of theCommonwealth Games in 2010 was notfully realized as an opportunity to build itscompetitiveness; and a combination of poorplanning, mismanagement and corruptionresulted in delays, cost overruns, ecologicaldamage and transgressions of humanrights. While some strategic facilities, suchas the upgraded airport and the extensionto the Delhi metro, have strategic benefits,the vast sums of money spent on the gameshave largely failed to address the severeand chronic gaps in the provision of basicservices to ordinary residents. (Full casestudy in Section 6.)

In developing countries however, it is oftenthe case that the returns on new activities aredifficult to gauge and therefore investmentin new industries or businesses is limited.Information externalities and coordinationexternalities are usually the main reasons forthis problem.72

Governments, therefore, could support the

process of self-discovery and, to make thisworkable, a carrot and stick strategy bygovernment is suggested. The carrot will beto support new activities and the stick willbe the processes to phase out bad projects;it is suggested that support is subject toperformance requirements and the closemonitoring of these projects.73


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The polycentric urban region concept andemergence of polycentric urban regions isdescribed by the following characteristics:81,82

Clustering and the existence of a setof urban centres, i.e. within a region anumber of cities will exist with a numberof industry clusters concentrated in andaround these centres.

Interaction among centres, the level ofeconomic interaction or linkage amonga given set of centres.

Centre specialization; the centres havespecialized economic structures.

A number of potential advantages may arisewith the emergence of polycentric urbanregions:83

1. Greater agglomeration or externaleconomies for businesses may beachieved from the potential to effectively

pool assets spread across the region.2. Functional specialization may arise from

encouraging interaction between centresin a region. If such specializations arecomplementary rather than competitive,the polycentric urban region may benefitbecause the region could host a broaderrange of higher quality, metropolitanservices to businesses, households,consumers, workers and tourists. This

larger variety of services availableto businesses and universities andother stakeholders may create furtherfavourable conditions for innovation andwould be an advantage in competing forinvestments in the region.

3. Regional planning may also result inan improvement in the quality of open

space and improved spatial diversity.Through planning, uncontrolled urbansprawl could be avoided and the green

(and blue) networks may be protected.This however requires a co-ordinatedpolicymaking process from a regionalrather than a local perspective.

Key challenges to this approach

Care should be taken with the potentialadvantages mentioned above that mayresult in attractive outcomes but may alsohave certain drawbacks. For instance, eventhough the coordination of the developmentof complementary facilities may result inhigher variety of services, it may also requireindividual cities or centres to make somesacrifices by subordinating their own intereststo the greater regional good.84An exampleof this is that a city may be asked from aregional level to lose a vocational traininginstitute or specialized medical service to anearby city. The risk is that the city will not

be compensated for the loss of this service.85

This makes the development and existenceof a regional framework for cooperationand coordination very important in dealingwith these kinds of trade-offs. Without sucha process or framework, local interests willprevail over the regional good which willblock the exploitation of regional potentialadvantages.86

Recommended readingMeijers, E. (2007). Synergy in PolycentricUrban Regions Complementarity, OrganisingCapacity and Critical Mass. PhD thesis. DelftUniversity. Available at http://repository.tudelft.nl/view/ir/uuid%3A983e9c4b-1cce-447d-bc56-9ca21ac46c21/


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The market area of Onitsha, Anambra State, Nigeria is strategically located at one of the only

bridges crossing the Niger River, in this case the Transafrican Highway

UN-Habitat/Alessandro Scotti


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AchievingCompetitiveAdvantage 4This section provides recommendations onthe approach, mechanisms and governanceframework that need to be implementedto develop a competitive advantage and/orfind new areas of competitive advantage.

Approach: This section provides guidanceon the analytical framework and approachto be adopted in designing initiatives todevelop and find new areas of competitiveadvantage.

Mechanisms: A number of mechanismsto achieve a competitive advantage aredeveloped. These include polycentric urbandevelopment, the implementation of green

Goal of Initiatives

City competitivenessinitiatives

Approach

Systems and network

approach

Supply and demand side

considerations

Regionalcompetitiveness

initiatives

Finding new areasof competitive

advantage

Principals for competitiveness

Mechanisms

Governance framework

Strategic investment in strategic

facilities and infrastructure

Support of innovation activities

Clustering for green economic

development

Strengthen triple helix

collaborations

Capacity development

Managing the transition

Creative governance

Figure 4.1:Framework for principles

jobs for green clusters and strengtheningof knowledge infrastructure and linkagesbetween helixes to support innovation.

Governance framework: Governance ofthese measures is important as this addressesthe framework from which government willstimulate and coordinate such activities.Capacity development, creative governanceand transition management principles aresuggested.

The following sections now carefully unpackthese principles and provide guidance onconcepts for planners and strategists.


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Elements Generic systems definition Innovation system

Components Operating parts of the system

and consists of input, process and

output

Organisations e.g. firms, government

departments, research councils, universities

Attributes Properties of the components

which characterise the system

Institutional environment - the character and

properties of the organisations e.g. absorptive

capacity, R&D capacity

Relationships The links between components

and attributes

Linkages between organisations

4.1. Approaching the designof initiatives for greeneconomic development

4.1.1. The systems and networkviews should be adopted asan analytical framework

The systems and network views havebeen widely adopted in current academicliterature on economics. This is alsotrue for the literature on local economicdevelopment (LED) or local and regionaleconomic development (LRED). A widerange of academic disciplines haveinfluenced this field of study and ideashave been adopted from disciplines suchas economic geography, urban planning,economic sociology, public administrationand decentralization, systems thinking andregional economics.87,88,89

The development of thinking along theselines shows how the understanding of

local and regional economic developmenthas evolved; it now acknowledges that aneconomy consists of networks and dynamicsystems of linkages that shape how peoplethat operate in these systems make decisionsand act. This has given rise to the concepts ofsystemic competitiveness and systems ofinnovation, which have become prevalentin innovation and economic developmentthinking and practice.90,91,92

Of particular importance is that the systemsapproach aids in directing the analysis anddetermining what type of support needs

to be set up at which level (local/regional/national/transnational) and what thepossibilities for inter-regional cooperationare. This approach also helps to developan analytical framework for identifying andanalysing systemic weaknesses.

Illustrating the concept: Systems ofinnovation

According to Blanchard and Fabrycky,93systems consist of components withattributes and relationships between them.By using the systems view of innovation, theelements of a system of innovation can bedefined by the following:

The systemic approach of innovation isbased on the perception that innovationsare ultimately brought about by the variousorganizations and the relationships between

them.

Recommended readingRcker, A., and Trah, G. (September 2006).Local and Regional Economic Development(LRED) Conceptual Framework, Challengesand Principles.Available at http://led.co.za/sites/led.co.za/files/documents/204.pdf

Table 4.1:Defining the elements of an innovation system


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Two hospitals are complementarywhen they provide for different medicalspecializations, or specialize in different

kinds of treatment for instance,standardized routine operations versusspecialized knowledge / intensive carewhile serving more or less the sameregion.101

Two or more residential areas arecomplementary when they offer differentresidential milieus, thus providingalternatives to match the differentpreferences of a regional population.102

In order to achieve synergistic relationshipsbetween centres or cities in a polycentricregion, connectivity between specializedcentres is important because the successof such a strategy hinges on the ability ofcitizens to gain access to the services.

The following key design principles forpolycentric urban development can be

summarized (Grant Thornton, 2010):

Functional specialization: For eachcentre a specialization needs to bedeveloped based on its key competences;

Ease of accessibility: Free flows ofpeople and goods between centresare important. Therefore connectivityin terms of transport and information

flows between nodes in the polycentricnetwork needs to be established;

Cooperation and interaction: Aregional cooperative capacity is of highimportance as key planning and designdecisions needs to be coordinatedbetween many parties. Cooperation,complementary in existence and synergyneed to be carefully defined and fostered

through the development of a regionalcooperative capacity on many levels.

of complementary functions in the citiesin a region, citizens will be able to haveaccess to a wider range of functions. This

is because the demand market for suchservices is the region, which is larger thanthe city, and will therefore give rise to asituation where more specialized, diverseand higher quality services and functionscould be developed. Because of the physicalseparation of urban centres and firms, suchadvantages could be described as regionalexternalities. Through this, new areas ofcompetitive advantage may be discoveredas complementarity is strongly linked toagglomeration economies.97,98

Although complementarity is a vagueconcept, (Meijers, 2007; Camagni andSalone, 1993), it is often cited in academicwritings and policy documents. It can bedefined as a result of supply and demand.For a number of centres to be consideredcomplementary, two preconditions need tobe satisfied (Meijers, 2005):

Differentiation: The cities or centresneed to be differentiated in terms ofurban functions or activities.

Overlap of geographical marketsof demand: The geographical marketsof demand for these urban functions/activities or places must at least partlyoverlap. Urban functions/activities in one

centre or city should provide services tobusiness or households also making useof functions/activities in other centres.

Examples of complementarity.99

Two universities are complementary ifthey offer different academic education,while at the same time they recruitstudents from more or less the same

region.100


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21

Policies%20Whitebook.html

Solvell, O., Lindqvist, G., Ketel, C. (2003).

The Cluster Initiative Green Gook.Stockholm: BrommaTryck. Available: http://www.cluster-research.org/greenbook.html

Each cluster is unique and the concept canbe applied differently in various situations.However, the White Book of cluster policiesoutlines seven elements for the notionof clusters. Not all the elements need tobe present in each cluster, nor are theynecessarily desirable. The central theme,however, is the importance of innovationand the stimulation of such activities:105

Geographical concentration: Hardfactors, such as external economies ofscale, as well as soft factors, such asa learning region and processes andsocial capital, make firms locate in ageographic location;

Specialization: There is a specializedcore activity to which actors in the clusterare related;

Multiple actors: Apart from firms,a wide range of actors form part ofa cluster, such as public authorities,academics, financiers, and institutionsfor collaboration;

Competition and co-operation: Theactors in the cluster are related toeach other through competitive andcooperative activities; for example,they compete in the market place butcollaborate on product development;

Critical mass:This is needed to achievethe inner dynamics of cooperation andcompetition;

The cluster life cycle:Cluster initiativesare not temporary phenomena but have

4.2.2. Clusters provide a framework

for focused support for greeneconomic development

Through the systems view, clusters ofinnovative activity that may have competitivepotential can be distinguished. If potentialstrong inter-firm clusters can be identified,public authorities are presented with aframework for focussed support efforts,alongside generic support actions.104

The following key readings may providedetailed overviews of various approachesand policies available to cluster policymakers and implementation professionals.

Recommended readingAndersson, T., Serger S., Srvik, J.,Hansson, W. (2004). The Cluster PoliciesWhitebook, International Organization

for Knowledge Economy and EnterpriseDevelopment (IKED). Available: http://www.iked.org/Publications%20-%20Cluster%20

The Randstad case study shows that through

the creation of synergies in a region, apolycentric urban region could indeed bemore than the sum of its parts throughcomplementarity and cooperation. The casestudy shows that:103

The first mechanisms through whichsynergy could be achieved (namelycooperation) is increasingly prevalent inthe Randstad region. Through formal andinformal networks, a regional organizingcapacity has been established;

The second mechanism through whichsynergy could be created (namelycomplementarity) reveals that keycities each perform distinct roles withinthe region specializing in commercialservices, manufacturing and transport,public administration, or trade andeducation. (Full case study in Section 6.)

Case study: Randstad, the Netherlands


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a life cycle and a long term survival goal;they continuously have to adapt andchange;

Innovation: Innovation is key tothe survival and continued existenceof clusters as there is continuedtechnological, commercial and/ororganizational change.

The following key principles for clusterformation for green clusters for green jobsis extracted from the literature:

1. Achieve consensus with stakeholdergroups and investors: Robuststakeholder management andconsultation needs to be done to ensurethat consensus is achieved regionallyon what is required for a fundamentaltransformation of the regional economyto a green economy.

2. Base strategies on robust calculations:

Robust cost-benefits analysis need tobe done to understand the concretecosts and benefits of pursuing a greeneconomy agenda in the full senseof the term. This step is key towardsachieving consensus and to motivateimplementation projects.

3. The stimulation of self-explorationactivities: It is important to keep in

mind that history matters and it takesconsiderable sustained investment forclusters to develop. For this reason itis suggested that to establish greenclusters for green jobs, existing clustersin regions should be assisted to performself-exploration activities to find newareas of competitive advantage.

4. Consider development of non-

traditional sectors: A strategy forgreen economic growth may consider

cluster development drives in non-traditional sectors to the economy fordeep structural transformation towards

green economic development.

5. Green finance and attraction ofinvestment into green clusters:Through attracting investment fromlocal municipalities, as well as largefinanciers, clusters may be developed tofeed into wider industrial supply chainsas a progressive conversion towards thegreen economy.

6. Stimulation of demand-side forgreen products: Illustrated throughthe Dezhou Solar Valley case study,the demand for solar products withinthe city provided the solar clusterwith valuable opportunities to testand implement their products fordemanding customers.

Clusters initiative designers and managers

also need to be cognisant of the risksand pitfalls with clusters. The followingsummarizes some of the key areas ofconcern and problems that may arise:106

Vulnerability: Through clusterspecialization, vulnerabilities may beinvoked because technological changes,shifts in the economy or customerneeds may undermine the competitive

advantages of clusters.

Lock-in effects:Risks may arise if thereis excessive reliance on existing contactsand networks and external linkages arenot maintained or developed. This mayresult in lock-in effects and a lack of newideas and practices into the cluster.

Rigidities:Dense existing networks and

structures make it more difficult to re-orientate the cluster and make structuraladjustments.


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Decrease in competitive pressures:Through cooperation between firms,the level of competition may decrease,

which may result in social inefficienciesor that stakeholders may block the entryof newcomers.

Self-sufficiency syndrome: If actorsin a cluster become accustomed topast successes they may fail to noticechanging trends.

Inherent decline:Because social capitalmay be the driving force for shapinga cluster, it may also be the factorthat destroys it. When a successfulcluster generates higher factor costs,the neighbourhood may experienceincreased property prices and outsidersmay be excluded.

4.2.3.Adopt the principles of knowledgecreation and continuous learning

to stimulate innovation

Regions are increasingly under pressure toadopt the same principles of knowledgeintensive firms namely:107

Pressure for continuous improvement;

Demand for knowledge creation andnew ideas; and

Support of organizational learning.

In order for regions to adopt theseprinciples they need to in effect becomelearning regions and develop a seriesof infrastructures to support the flow ofknowledge ideas and learning.

Recommended readingRutten, R., Boekema, F. (2007). The

Learning Region.Cheltenham: Edward ElgarPublishing Limited

The Kitakyushu Eco-Town Project is anindustrial park that has become known for itsexpertise in waste minimization. Since 1997,the park has aimed to achieve zero emissionsand zero waste by using all waste as materialsin other industries, thus closing resource loopswithin the park. Taking advantage of the factthat the eco-town is a cluster of different

recycling and reuse factories, residue fromone factory is, in turn, used as inputs forother factories. Unusable industrial wastesare processed for re-use or used to generateelectricity. The eco-town is characterized bystrong collaboration between government,industry and academia, and is used as a sitefor research and product development inwaste treatment and recycling technologies.(Full case study in Section 6.)

Case study: Building a recycling industry

at the Kitakyushu Eco Town Project, Japan

Case study: Clustering solar energyindustries in Dezhou, China

The development of the Dezhou Solar Valleyis an example of city scale clustering aroundgreen technology in this case solar energy.Driven largely by Himin the worlds largestmanufacturer of solar thermal tanks thedevelopment has transformed the localeconomy from agriculture to research,manufacturing and education in solartechnologies. It is currently the largest solarthermal research and development centre inChina, with over 120 solar energy enterprisesand annual renewable energy sales revenuesof USD 19 billion. As a showcase for solartechnologies, the city has also stimulateddemand for the products it manufactures;for example, 95 per cent of new homes inDezhous urban communities have solar waterheaters installed. (Full case study in Section 6.)


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Traditional mass production region design principles

Basis of competitiveness

Production systemMass production

Physical labour as a source of value

Separation of innovation and production

Manufacturing infrastructure Arms length supplier relations

Human infrastructureLow-skill and low-cost labour

Taylorist workforce

Taylorist education and training

Physical infrastructure Domestically oriented physical infrastructure

Governance system Adversarial relationships Command and control regulatory

framework

Learning region design principles

Sustainable advantage based on:

Knowledge creation

Continuous ImprovementKnowledge-based production

Continuous creation

Knowledge as source of value

Synthesis of innovation and production

Firm networks and supplier systems assources of innovation

Knowledge workers

Continuous improvement of human resources

Continuous education and training

Globally oriented physical andcommunication infrastructure

Electronic data exchange

Mutual dependent relationships Network organizations Flexible regulatory framework

Comparative advantage based on:

Natural resources

Physical labour

Policies need to be designed to address therequirements for the learning region andthe principles of continuous learning anddevelopment. The following figure, adaptedfrom Rutten and Boekema,108 provides asummary of the shift in focus for various

infrastructure development initiatives.

Regions are increasingly required to build andmaintain new regional infrastructures whichcan support knowledge-based productionsystems. The triple helix framework is a usefulparadigm for better understanding the roleuniversities, public sector and industry playin supporting innovation within a region.110

Universities have started to play amore important role in the incubationof technology-based firms and inknowledge exchange activities suchas consulting, contract research andexecutive education through whichinnovation in a region is supported. Thishas given rise to the entrepreneurialuniversity, which performs an activerole within a regional economy to make

productive use of academic knowledge.

As the private sector firms raise theiractivities to become more knowledgeintensive, these firms start to move closerto an academic model, through whichthey engage in higher levels of trainingand in sharing of knowledge which very

often strengthen their relationships withthe university sector.

In addition to its traditional role ofregulator, within a triple helix framework agovernment acts as a public entrepreneurand venture capitalist and providesassistance in the form of supply-side aswell as demand-side interventions tostimulate innovative activity.

Key to strengthening the knowledgeexchange activities in regions is therefore thestrengthening of triple helix collaborations,as is clearly illustrated in the 22@ Barcelonaand Newcastle Science City case studies.

4.3. A governance framework for drivinggreen economic development

Figure 4.3 provides a summary of the keygovernance principles to be implemented

Source: Figure adapted from Rutten et al109

Figure 4.2:Infrastructure design principles for a learning region


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for driving the development of a greeneconomy. The following sections shortlyexplain the rationale and provide insight

into each of these areas:

4.3.1. Creative governance canstimulate innovation andcreativity in a region

Key to development success is the ability of aregion to engage in self-exploration activitiesand to be innovative. The principles of creativegovernance may enhance the capacity of theregion to stimulate such activities.

The role of governments in fostering anenvironment for creativity and the supportof innovative activities could be achievedthrough the implementation of creativegovernance principles. Governments couldimprove their potential to foster creativityin social and economic dynamics and tocreatively transform their own capacities.A multi-level approach to the various

dimensions of urban governance issuggested, through which certain qualitiesof activities could be identified to encouragecreativity and innovation.

The basic principles of creative governanceare outlined in Figure 4.3 where a numberof categories of the multi-layer approach are

outlined. The following provides context tothese principles:113

Building blocks: The choice ofstakeholders and arenas wherediscourse takes place should be openand diverse. Stimulating and welcominginteractive processes should underpinthe mechanisms through whichnegotiations, planning, strategizing ordiscussions take place.

Governance processes: The principleof diversity and mutual awareness ofstakeholder groups and networks isimportant for fostering a creative milieu.Practices and regulatory processesshould be supportive of experimentationand self-regulation.

Governance culture: The governance

culture should speak to the openmindedness and openness to diversityand experimentation that underpins thegovernance processes mentioned above.

Creative governance principles

Building blocks

Groups: Diverse range of actors Arenas: Open and diverse arenas Interactive practices: Stimulating, welcoming, respectful and

knowledgeable ambiences; insurgent potentials

Governance processes

Networks and Coalitions: Diverse and mutually aware, looselycoupled and fluid

Stakeholder selection processes: Open and transparent Discourses: Open minded, inclusive and informative Practices: Facilitative and experimental practices supportive of

self regulation Principles: Laws, competences and resource flow principles that

value local initiative and encourage experiment

Appreciation of diversity, focus on performance not conformance Identity and open negotiation of values and ethics with

encouragement of open-minded tolerance and sensitivity Self-regulative and distributive, supportive and constraining

Governance culture

Capacity development

Strategic planning capacity: Develop capacity and master

techniques for developing strategies for competitive advantage

Regional organizing capacity: Develop a capacity to organize onall levels to foster ability to drive regional development agenda

Managing the transition

Analytical approach: Develop scenarios Inclusivity: Take a multi-domain view geared towards being

inclusive of the views of a number of actors Long term thinking: The approach enables policy-makers to

foster long-term thinking in short-term policy-making Focus on right level: Transition management enables processes

to be addressed on the correct level and solutions to be found onthe right scale

Actionable tasks: An actionable set of tasks to government on

how to stimulate, mediate, engage in brokering services, createthe right conditions, enforce its laws and engage in steering.

Figure 4.3:Principles for governance for creativity

Source: Principles adapted from Healy (2004),111Loorbach (2010)112


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Recommended readingHealy, P., (2004). Creativity and urbangovernance,Policy Studies, 25(2). pp. 87-104.

4.3.2. Development of a regionalorganizing capacity andstrategic planning capacity

Capacity development needs to take placeto be able to develop actionable strategiesand achieve agreement and coordination.

City-level competitive advantage:First and foremost, it is important todevelop a strategic planning capacity ifthe region wants to be able to exploitexisting competitive advantages andto develop new ones. It is thereforeimportant to have established strategicplanning capabilities and to masterstrategic planning techniques andmethodologies.

Regional competitive advantage: To

be able to exploit the theoretical benefitsof polycentric urban developmentthe active development of a regionalorganizing capacity is required. Toachieve synergies between centres, ahigh level of interaction will be neededbetween actors who should be able andwilling to adjust their internal profile andexternal behaviour. This means that theregion needs to develop the ability to

coordinate regional co-operation, debate,negotiation and decision-making.114

Key challenges in developing a regionalorganizing capacity were extracted fromevidence from four polycentric urbanregions in North-West Europe. These casesshowed that building a regional organizingcapacity is affected by a number of spatial-functional, political-institutional and cultural

factors. Major constraints in these caseswere institutional fragmentation and a lackof association with the region.

4.3.3. Managing the transitionand stakeholders

Greening economies are prone to resistancefrom many different actors; so effectivechange management of transitions isrequired. Transition management has beendeveloped as an interdisciplinary field andis believed to be an effective approachto deal with the governance of societalproblems that are complex in nature.115,116This approach has found traction especiallyin policy documents in the Netherlands,Belgium and the United Kingdom, and hasbeen used to address areas such as energy,building, health care, mobility and watermanagement.117

The fourth Dutch National EnvironmentalPolicy Plan provides guidance regardingwhat is required for the management of atransition:118

Make use of tools such as scenarios

to deal with uncertainties and tocommunicate potential outcomes119;

The approach takes a multi-domainview and is geared towards including theviews of a number of actors120;

The approach enables policy-makers tofoster long-term thinking in short-termpolicy-making121

Transition management enablesprocesses to be addressed at the correctlevel and solutions to be found on theright scale122; and

An actionable set of tasks togovernment on how to stimulate,mediate, engage in brokering services,create the right conditions, enforce its

laws and engage in steering123

.


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Central to transition management is the beliefthat change is dependent on the mechanismof co-evolution of society and technology.

A useful analytical framework for analysinghow these transitions occur is the Multi-LevelPerspective (MLP). Through this framework,three levels of transition are identified:124

Niche innovations: Niches refer toinnovations as well as socio-economicand political opportunities for deployingthe innovations. This means practicallythat for a transition to occur the nicheinnovations need to go through a processwhere learning-by-doing and price-performance improvements need to takeplace so that it becomes economicallyand politically feasible.

Regime:A regime change is required for atransition to occur which refers to factors

under the control of actors in the system.This practically implies that changes inrules, technologies and social networks as

well as behaviour will need to take place.

Landscape:The landscape level refers tofactors that are beyond the control of actorsin the system where transition needs tooccur. This may include macro-economicfactors, climate change, socioeconomictrends, macro-political developments aswell as deep cultural patterns. The factorson this level are the factors that putpressure on the system to change. Existingpractices in regimes may be destabilizedand also provide opportunities for nichesto become accepted.

The following table from Kern125 providesinsight into what this framework practicallywould mean for a transition in energy systems.

Niche learning processes

e.g. learning processes

have stabilized in a

dominant design

price-performance

improvementse.g. price-performance

improvements have been

made and are believed to

continue to improve

support from

powerful groups

establishing

market nichese.g. innovation

is used in market

niches

Regime Changes in rules

e.g. belief systems, problem

agendas, guiding principles,

search heuristics; relationships,

behavioral norms; regulations,

standards, laws

Changes in

technologies

e.g. in the case of

electricity: resources,

grid, generation plants

Changes in

social networks

e.g. new market

entrants gain in

importance compared

to incumbents

Landscape macro-economic trends

e.g. globalization, oil crisis

socio-economic trends

e.g. recessions,

unemployment

developments

macro-political

developments

e.g. the philosophy

behind policy making

deep cultural

patterns

e.g. trend towards

more individualization

Source: Copied from Kern126

Table 4.3:Summary of the multi-level perspective applied to energy systems


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Thousands of young employees work in shifts covering 24 hours at this call centre in Uberlndia,

Brazil, answering customers scattered across the globe and strengthening the citys position as a

logistics hub UN-Habitat/Alessandro Scotti


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CHAPTER 5: IMPLEMENTING COMPETITIVENESS

29

This section provides key action points forthe implementation of a green economicdevelopment strategy. Government couldadopt certain best practices through whichthe desired results of increased regionalcompetitiveness, innovativeness andtransition to a green economy could beachieved.

5.1. Organize and mobilize thestakeholders

The first step of the process is to identify themost important institutions that are directlyor indirectly involved in the competitivenessproject. This is the organisational element ofthe stakeholder management process of theproject and care should be taken to ensurethe group includes public, non-profit and

private sector representatives.

During this step, an information campaignshould be launched and stakeholdersshould be informed of the project. Widestakeholder inputs should be soughtto ensure that a variety of views areconsidered. This phase focuses on achievingcooperation and coordinating the partnersthat will be involved in the project.

Key questions that need to be asked are:

Can you ascertain that stakeholder

groups agree that there is a need forthe suggested proposal and that acompetitiveness strategy for a greeneconomy should be developed?

Are the various stakeholder groups willingand able to collaborate constructively?

Is there agreement on how intellectual

property issues will be dealt with in thecase of the development of new ideasthrough collaborations between theprivate sector and the public sector?

When identifying stakeholders, the followingpotential stakeholder groups should beconsidered:

Public authorities involved in regional

and economic development.

Specialists and associations withexpertise in competitiveness strategydevelopment, economic development,industry knowledge, sustainability andfinancing.

Representatives from local andinternational non-governmental

organizations whose work addresseslocal needs and challengesamongst marginalized groups.

ImplementingCompetitiveness 5


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Community organizations and unionswho might play a role in mobilizingsupport for the shared vision amongst

the public and workers.

The key competences that are requiredduring the first step include:

Networks and networked individualsshould be included to ensure stakeholdersare engaged with and involved;

Creative governance principles shouldbe adopted in setting up the stakeholdergroups to be inclusive and open todiversity; and

A regional organizing capacity is requiredat this stage as cooperation and buy-inshould be achieved for the initiatives.

5.2. Analysis

This phase will entail a systematic analysis

of sectors and areas where competitiveadvantages from a green economyperspective may be achieved. Through thesystems approach, the systemic weaknessesin the regional innovation system should beidentified and analysed as follows:

A project leader should be identified todirect the analysis and serve as a liaisonor coordinator.

The analytical framework for theanalysis needs to be developed, afterwhich researchers or consultantswill develop a detailed analysis andsuggested recommendations for thecompetitiveness strategy.

The resulting report needs to bedisseminated to stakeholders and

facilitators.

A workshop needs to be conducted todiscuss findings and get stakeholderinputs.

There should be a presentation,discussion and review o