37082 Guide to City Development Strategies Improving Urban Performance Guide to City Development Strategies Improving Urban Performance © The Cities Alliance, 2006 1818 H Street, NW Washington D.C., 20433, U.S.A. http://www.citiesalliance.org All rights reserved First printing June 2006 The material in this publication is copyrighted. Requests for permission to reproduce whole or portions of it should be directed to the Communications Unit of the Cities Alliance Secretariat at the address shown above. The Cities Alliance encourages active dissemination of its work. Permission to reproduce will normally be given promptly and, when the reproduction is for non com- mercial purposes, without asking for a fee. Cover photo: The city of São Paulo, Brazil, South America's largest economic and technological hub Design: Naylor Design, Inc. Printing: York Graphic Services Contents ACKNOWLEDGEMENTS v ABBREVIATIONS AND ACRONYMS vii EXECUTIVE SUMMARY 1 PART ONE 1. Introduction 9 2. The Role of Cities 11 2.1 Urban Regions as Poverty Alleviation Mechanisms 11 2.2 Emerging Challenges 14 3. Guidelines Orientation 15 4. The Role of City Development Strategies 21 4.1 Why Undertake a City Development Strategy Process? 24 PART TWO 5. Approach 27 6. Themes (Substance) 28 6.1 Livelihood (Jobs, Business Start-ups, and Household Income) 28 6.2 Environmental Quality, Service Delivery, and Energy Efficiency 30 6.3 Infrastructure and Spatial Form 33 6.4 Financial Resources 35 6.5 Governance 37 7. Building Blocks (Process Methodology) 41 7.1 Initiating the Process 41 7.2 Establishing Initial Parameters 45 7.3 Initial Assessment 46 7.4 Formulating a Vision 49 7.5 SWOT Analysis 51 Guide to City Development Strategies | iii 7.6 Setting Strategic Thrusts 52 7.7 Awareness Building 54 7.8 Implementation 54 APPENDICES Appendix A: Livelihood Themes 58 Appendix B: Improving Environmental Quality, Service Delivery, and Energy Efficiency 61 Appendix C: Infrastructure and Spatial Form 64 Appendix D: Financial Resources 68 Appendix E: Governance 71 REFERENCES 75 BOXES Box 1: Missed Opportunities in Tunis, Tunisia 18 Box 2: Glasgow, Scotland, Reinvents Itself as a Cultural Centre 19 Box 3: Improving Linkages between Government and Informal Businesses in Karu, Nigeria 22 Box 4: A Bold Transformation Plan for Mumbai, India 23 Box 5: Mainstreaming CDS in South Africa with the Help of the Cities Network 25 Box 6: An Aggressive Strategy Pays Off in Penang, Malaysia 26 Box 7: Economic Strengthening in Santo André, Brazil, through Small Business and Informal Service Sector Development 30 Box 8: The Service Delivery Monitoring System in Johannesburg, South Africa 32 Box 9: Capital Investment and Administrative Modernisation are Key to Local Economic Development in Aden, Yemen 34 Box 10: Sofia, Bulgaria--Institutional Development for a Transition Economy 39 Box 11: Restructuring Municipal Management and Governance Under Stress in Greater Amman Municipality, Jordan 40 Box 12: Collecting City Data in Bamako, Mali 49 FIGURES Figure 1. Stylised Urban Development Trajectory 17 Figure 2. Strategic Focus: Pro-Poor Development 19 Figure 3. Cities in the Post-Petroleum World 33 Figure 4. Finance and the City 35 Figure 5. Financing City Building: The Case of Bangkok, Thailand 36 Figure 6. Stylised City Development Strategic Planning Process 42 Figure 7. Four-Level Spatial Definition and Scoping: Xiamen, China 45 Figure 8. Key Economic Clusters: Xiamen, China 50 Figure 9. Visions of Ulaanbaatar, Mongolia, and of Xiamen, China 51 Figure 10. SWOT Analysis: External and Internal Environments 52 Figure 11. CARE's Household Livelihood Security Approach 74 Photo Credits 79 iv | Guide to City Development Strategies Acknowledgements T hese guidelines were prepared by Doug Webster and Larissa Muller in close collaboration with the staff of the Cities Alliance. Pelle Persson, Senior Pro- gramme Officer, managed the process on behalf of the Cities Alliance Secretari- at. The report also benefited from the useful contributions of: Peter Palesch, Mark Hildebrand, William Cobbett, Rajivan Krishnaswamy, Pascale Chabrillat and Chii Akporji of the Cities Alliance Secretariat; Deepali Tewari, Christine Kessides, Dave de Groot, Gwen Swinburn, of the World Bank; Julia Crause of UNEP and Professor Om Prakash Mathur of the National Institute of Urban Affairs, India. The Alliance gratefully acknowledges the contributions of stakeholders in the over 100 cities which have undertaken CDSs sponsored by Cities Alliance, as well as from the members of the Cities Alliance Consultative Group and the Policy Advisory Board, all of whom shared invaluable knowledge of the CDS process, which have both informed and enriched these guidelines. Chii Akporji managed editorial, design and production of the Guide, and Erika Puspa provided web design and support. Guide to City Development Strategies | v Abbreviations and Acronyms ADB Asian Development Bank BMA Bangkok Metropolitan Administration CDS City Development Strategy EUR Extended Urban Area FDI Foreign Direct Investment FTZ Free Trade Zone GDP Gross Domestic Product GEF Glasgow Economic Forum GAM Greater Amman Municipality GoM Government of Maharastra, India GDP Gross Domestic Product HLS Household Livelihood Security [CARE approach] IDP Integrated Development Plan IMF International Monetary Fund JBIC Japan Bank for International Cooperation NGO Nongovernmental Organisation OECD Organisation for Economic Cooperation and Development PDC Penang (Malaysia) Development Corporation PSDC Penang Skills Development Centre SACN South African Cities Network SWOT Strengths­Weaknesses­Opportunities­Threats UMP Urban Management Programme--UN-HABITAT WDR World Development Report WTO World Trade Organization Guide to City Development Strategies | vii Executive Summary CONTEXT The Role and Potential of Cities T he premise of city development strategies the world's energy and commodities, including (CDSs) is that well-positioned and well- intercity flows). And because they account for timed public, private, and civil society strategic more than 80 percent of global economic growth, interventions can significantly alter a city's devel- cities will determine the economic fate of nations opment path. If national urbanisation policy and continents. Because cities are so productive frameworks complement local strategies, change --a result of density and high-transaction envi- is likely to be deeper and quicker. Empirical evi- ronments--cities drive much higher levels of dence indicates that the performance of cities can household income than nonurban areas, consume change enormously within a short time--certain- less energy per unit of economic output as they ly within a generation, that is, 10­20 years. Dor- develop, have lower per capita costs for environ- mant cities, such as Shanghai and Glasgow, have mental infrastructure, and so on. returned to health in a fairly short time as a result of focused strategies incorporating policies, polit- These positive impacts of urbanisation are being ical will, and catalytic investment. In contrast, leveraged by the rapidly increasing global urbani- cities lacking coherent city development strate- sation. By 2030 at least 61 percent of the world's gies, such as Lagos and Manila, have had prob- population will live in cities, and by 2060 the lematic track records. world will likely be fully urbanised (that is, more than 80 percent of the world's population will The performance of 21st century cities is of glob- live in cities). However, some cities are perform- al concern. Urban regions will be the most impor- ing far below their potential, particularly those in tant mechanisms of poverty prevention and alle- Sub-Saharan Africa, resulting in lost opportuni- viation--the front line in the adjustment to a ties for their populations and in unrealised devel- post-petroleum world (cities consume most of opment benefits for their region. Guide to City Development Strategies | 1 Nearly three- Emerging Challenges al warming is also expected to cause rising sea lev- quarters of els, threatening many large industrialised and Developing cities, like their industrialised coun- developing cities. In short, many developing cities Africa's urban terparts, face considerable uncertainty. Most cities clearly face a perilous future unless better strate- are confronted with the tasks of managing residents reside gising, incorporating anticipation and foresight, unprecedented population growth rates and are becomes the norm. Indeed, resilience is becoming in slums. already unable to cope with existing backlogs. as important as competitiveness in urban per- The decentralisation of responsibility to the local formance. level--an imperfect and uneven process at best-- is often not matched by the allocation of resources or authority. As the numbers of urban Why do a CDS? poor grow, inequalities in opportunity and Given a competitive and uncertain economic income deepen--nearly three-quarters of Africa's environment, developing cities need discipline to urban residents reside in slums, often unrecog- most effectively use their limited financial and nised and unserviced by their local government. human resources to achieve targets. The capital Furthermore, as we have seen in Casablanca, Dar available to any given city is also highly elastic and es Salaam, London, Madrid, and New York, no only flows to cities that show potential and have city is immune to terrorism. Poorly performing well-thought-out urban futures. An effective and failed states make life in cities perilous. Glob- CDS process can both attract capital and disci- pline its use. An effective CDS is designed to shock the sys- tem, albeit under controlled conditions. The Mumbai First strategy, driven by the business community, although not accepted by the overall community, did just that. It catalysed new think- ing about Mumbai and raised the possibility of a completely different future. Using the best domestic and international resources available, an effective CDS assesses a city frankly and objec- tively, enabling the city to see its future more clearly and to identify the best routes forward. Local governments alone cannot turn a city around. They control a minuscule portion of the capital available for city building and often have an even smaller proportion of the available talent in urban innovation. Although important as cata- lysts and as representatives of the public interest View of Kisumu, Kenya (in theory, at least), local governments should work in partnership with private interests and civil society to change a city's developmental direction--CDS processes are based on private, public, and civil society partnerships. 2 | Guide to City Development Strategies GUIDELINES of economic clusters, rather than traditional eco- An effective nomic sectors. CDS is designed To assist in the design of a CDS process, these guidelines are organised around five substantive Human resource development, especially over the to shock the themes and eight methodological steps to set the medium run, is critical to competitiveness. CDS system, albeit building blocks. processes should identify ways to improve access under controlled to education and training, particularly for the poor, enhance the quality of training programmes conditions. Themes (Substance) and align local educational curricula with the The five important themes are: emerging urban economy. · Livelihood, such as job creation, business Environmental Quality, Service Delivery, development, and sources of household and Energy Efficiency income; In the past, CDS processes tended to view envi- · Environmental sustainability and energy ronmental and energy concerns in two ways: (i) as efficiency of the city and the quality of its "add-ons" to overall strategies driven by econom- service delivery; ic and spatial concerns; and (ii) as a subject for · Spatial form and its infrastructure; conventional environmental infrastructure pro- · Financial resources; and, gramming. Given the rising cost of energy, the · Governance. vulnerability of freshwater sources, urban sprawl and related mobility costs, and the increased fre- Livelihood (Jobs, Business Start-ups, quency of natural hazards in many cities, environ- and Household Income) mental and energy considerations should become Virtually every CDS has to address the question of part of the core CDS strategic process. Although livelihood--the bottom line in every city is house- programming of infrastructure services, such as hold income. In most developing cities, the cre- sewer trunk and feeder networks, is obviously an ation of jobs will not absorb all the additional peo- important routine task for cities, CDS processes ple in the urban labour force. Thus, livelihood should incorporate innovative thinking; for exam- enhancement is as much about support for indi- ple, addressing types of technology to be used, vidual entrepreneurs and small business start-ups and the role of demand management. as it is about formal employment in existing firms. The poorer the city is, the more important the The extent to which a city addresses looming informal sector will be. Because it is difficult to energy and water cost/supply squeezes may sig- sustainably reduce poverty unless poor house- nificantly determine its future competitiveness. holds can increase their income, economic growth Energy costs affect virtually every product and is essential to improving the lot of the urban poor, service a city sells, as well as influencing the stan- especially new migrants to the city. dard of living of households, particularly poor ones. An effective CDS would suggest incentive Livelihoods in developing cities are inextricably structures to induce more efficient use of energy bound up with the business climate. Local gov- in industrial processes, building construction and ernments can do much to help small businesses: use (green buildings), household consumption, for example, they can minimise nuisance taxa- and urban form. tion, offer training, and support start-ups. In terms of service delivery, the CDS should focus The competitiveness of cities (how they perform on coverage (geographic), accessibility and afford- vis-à-vis other cities in a given activity) is becom- ability (price), and quality versus cost (often, ing more important than comparative advantage. tradeoffs need to be made, depending on the An analysis of competitiveness and strategies to socioeconomic status of the neighbourhoods). enhance it would best start from the perspective Guide to City Development Strategies | 3 CDS processes Spatial Form and Infrastructure prevent poverty by effectively absorbing migrants Recent extensive research in East Asia has should include an into housing, transportation, and livelihood sys- stressed the importance of infrastructure in sup- tems than to deal with the problems later. The understanding port of both pro-poor development and urban number of rural­urban migrants to developing that it is the competitiveness (ADB, JBIC, and World Bank cities over the next 30 years will exceed the flows 2005). The neglect of infrastructure investment of the previous 30 years. Thus, prevention is as role of local in most developing cities over the past 15 years important as alleviation, if not more so. Peripher- government to has greatly inhibited their performance. Infra- al communities need to be connected to employ- mobilise financial structure assessment and investment planning are ment nodes by affordable, efficient transportation complex and require careful attention in CDS systems. Fortunately, developing cities are becom- resources, both processes. Often, tradeoffs are required (and syn- ing more multinodal, making concentrations of from within and ergies may exist) between equity objectives (pro- employment more accessible to the poor. viding basic services to all members of urban soci- from outside ety at affordable rates) and economic objectives, Financial Resources the city. which may be facilitated by expressways, ports, Many CDS processes have emphasised the impor- airports, and so on. tance of local government budgets, giving less con- sideration to the nonpublic resources of society. Cities should be concerned about their spatial Local government financial management is very form. However, urban form should not dominate important and it is essential that it be done effec- the content of a CDS. Land-use and physical tively, as outlined in Appendix D. However, CDS plans would flesh out the physical implications of processes should include an understanding that it the CDS and be deliberately linked to it. Spatial is the role of local government to mobilise finan- form, from a strategic perspective, is of particular cial resources, both from within and from outside concern on three counts: (i) the close relationship the city, as well as from public (national govern- between urban form and energy efficiency; (ii) ment programmes, for example), private (domes- the close relationship between attractiveness of tic and multinational companies), and civil society cities (amenity) and economic performance (it is (voluntary organisations) sources. Over the medi- virtually impossible for an unattractive city to um term (10 years), the amount of capital that a move into higher value economic activity); and city can raise to improve its public and private (iii) the critical importance of land (availability, environments is highly elastic and potentially very location, tenure) in addressing the challenges of large, given the right policy frameworks, market- slum communities. ing, and promotion, and so on. City planners should not treat slums as unique, Governance outside the land market. Rather, they should Like finance, governance far transcends the role of recognise the market value of slum community local government. However, local government has land (very valuable, especially if it is in the city key roles to play: representing the public interest, core) and orchestrate win­win outcomes being a stimulus to urban innovation, and taking through the use of market-based techniques, responsibility for delivery of key services (either such as land readjustment, that have the poten- directly or indirectly through innovative mecha- tial to leverage enormous amounts of capital nisms, such as build­own­transfer). from slum communities. An effective CDS programme needs to develop Accessible land must be available for a wide range national policy frameworks, both explicit ones, of actors, ranging from formal developers to new- such as urban infrastructure grants, and implicit comers themselves, to provide housing and com- ones, such as the effect of changes in tariff struc- munities for new migrants. It is much easier to tures on key firms in the urban economy. Often, other agencies will already have assessed the national urban policy framework. 4 | Guide to City Development Strategies It is important that CDS processes address the changing role of urban government under condi- tions of decentralisation, a worldwide trend. With devolution of powers, local governments have much more control over, and responsibility for, urban futures. Unfortunately, in many developing cities, decentralisation has lowered the level of performance because of local capacity constraints, corruption, and inadequate resources to meet the increased responsibilities and is often compound- ed by the unclear assignment of functions. Nonetheless, decentralisation clearly makes rapid changes in city performance more feasible, Aerial view of Dakar, Senegal although its effects on city performance may vary within nations, creating winners and losers. Decen- tralisation makes CDS processes more important: the potential gains from implementing a CDS are much The methodological sequence to be used in a higher in decentralised governance environments. CDS is well understood, and a broad consensus now exists on the appropriate methodology, as CDS processes need to take into account the Figure 6 and section 7 describe. Over the past 25 question of metropolitan governance. Virtually years, several handbooks, both by Cities Alliance every large city in the world suffers from ineffi- and by outside authors, have described the ciencies and lost opportunities because of the process. On the basis of feedback, the process is fragmented, uncoordinated urban governance improving. that occurs in metropolitan areas with a prolifer- ation of local governments. There is a long and The key methodology of a successful CDS, varied worldwide experience of metropolitan derived from experience, includes the following. governance--best-practice learning should pro- vide a filter through which to identify appropri- Initiating the Process ate metropolitan governance structures in CDS There is a need for high-level guidance and coor- cities. dination. If the mayor or equivalent political fig- ure is not seriously involved in the CDS process, it should be abandoned. The process should be Building Blocks (Process Methodology) guided by a Key Stakeholders Group, or equivalent The eight building blocks of the CDS process are: body that represents key interest groups in the city. Although open-access input from town · Initiating the process; meetings, radio call-in shows, and so on is useful, · Establishing the initial parameters and the collaborative approaches to strategy development scope of the CDS; require a small but representative group (the key · Making an initial assessment; stakeholders group) to negotiate hard content. · Formulating a vision; One cannot merely create "wish lists" designed to · Identifying strengths­weaknesses­ please everybody. opportunities­threats (SWOT analysis); · Setting strategic thrusts; · Building awareness; and · Starting the implementation. Guide to City Development Strategies | 5 Building for the future in Lima, Peru CDS processes would not result in new institu- Defining the breadth of issues is difficult (the tions or offices. Instead, one powerful office in the "where do you enter?" question). Normally, if a city, normally the mayor's office, would oversee a city has not done high-quality CDS work, a wide wide spectrum of functions. However, a CDS spectrum is best. However, in cities where the process might recommend, as an output of assess- opposite is the case, a more focused substantive ment and strategising, institutional changes in the field of action may be appropriate. In all cases, the governance of the city. The initiation process CDS technical team and key stakeholders group needs to result in agreement on the spatial scale should openly and innovatively consider the of the analysis (extended urban region, metropol- whole process, always thinking creatively to rec- itan region, or city proper?) and the breadth of ommend better strategies and ways to intervene. issues to consider in assessment and strategising. Initial Assessment For spatial definition, there is an obvious trade- The city should be assessed initially by a team led off between geographic area (coverage) and by leading domestic and international urban ana- depth of understanding. Therefore, a scan­scope lysts and supported by local urban researchers. approach, starting spatially with at least the The speed of an initial assessment should, howev- metropolitan area, as section 7.3 describes, is er, strike a balance between quickly meeting usually very effective. political processes and expectations and gathering enough relevant information. 6 | Guide to City Development Strategies The initial assessment employs a scan­scope Identifying Strengths­Weaknesses­ A CDS is of methodology, zeroing in on spatial areas and sub- Opportunities­Threats (SWOT Analysis) no value unless stantive issues of particular concern. The initial The strengths­weaknesses­opportunities­threats assessment should, with a futures-oriented per- (SWOT analysis) is undertaken in the context of implemented. spective, identify and assess core change drivers, the Vision, rather than in an open-ended manner. such as demographics, technology, and the inter- The results of the SWOT analysis enable a city to national economic environment. Clusters should build on and leverage its strengths and opportu- be the basis of economic analysis, as traditional nities. Equally important, it enhances a city's abil- sectoral analysis is not geared to identifying trends ity to avoid threats or to take actions to minimise and opportunities or understanding the informal them. sector and the "new" economic activities in tech- nology and high-end business, professional, and Strategic Thrusts design clusters. A useful assessment need not be Strategic thrusts are the heart of the CDS. They very specific; more important is understanding are cross-cutting, interlocking actions, delivered in the overall magnitude, direction, and rate of many ways (for example, through direct invest- change. Benchmarking is an important compo- ment by government or private­public partner- nent of the initial assessment. Once the analysts ships), almost always involving more than one understand the city, they compare its perform- agency. Strategic thrusts deliver maximum ance with comparable, competitor, and "aspira- impact cost-effectively. Because a city cannot tional" cities (those performing at the level to focus on too many initiatives at one time, strate- which the analysed city aspires). gic thrusts are normally limited to five. Each strategic thrust contains, in turn, several actions. Formulating a Vision A Vision is a statement of where a city wants to Strategies are based on hypothesised causal rela- be, usually 10­15 years in the future. The Vision tionships between interventions and outcomes statement needs to be specific, internally consis- and are informed by international experience and tent, and realistic but challenging. It should stress the SWOT analysis. Identifying strategic thrusts is what is unique about the city and be short (expe- an iterative process. Once the strategic thrusts rience shows that 60 words is enough) and easy to become clearer--for example, a decision is made read. A Vision is important because it aligns stake- to pursue a convention-based tourism strategy-- holders' energies so that the stakeholders work specialised technical expertise is needed to help cooperatively and for the same goals. A Vision is formulate them. Strategic thrusts always need to not normally changed over the medium run (10 be paired with a few powerful indicators: usually years); it is like a lighthouse, with a fixed position. one composite flagship indicator and several (fewer However, in today's fast changing and uncertain than 10) priority indicators. world, tactics need to change regularly to ensure that the city achieves its Vision. Successful cities Awareness Building are flexible and adaptive in pursuing their Visions, A successful CDS process needs the support of recognising that traditional, especially rigid, static, most of the community, especially the key stake- or top-down, planning can be harmful. Many sys- holders. Total consensus is never possible; in fact, tems in a city are self-organising, yielding positive it would be a sign of a weak CDS. The most effec- outcomes if set within appropriate visions and tive ways of disseminating a CDS vary from city policy frameworks, and prompted by strategic to city and rely on a mix of media, such as Inter- thrusts. net sites and radio. Certain media--such as news- paper inserts, videos, posters, and models--work well across a wide spectrum of cities. Guide to City Development Strategies | 7 Implementation ing systems are unsustainable because they have A CDS is of no value unless implemented. Imple- too many or unrealistic indicators and allocate no mentation Task Forces need to be established, money for their ongoing operation. Thus, sustain- responsible for each strategic thrust. The imple- able indicator systems are essential. mentation task forces formulate more detailed action plans, clearly indicating responsibilities, An important role of the implementation task timelines, milestones, and expected inputs, out- forces is to identify, assess, and chase down puts, and outcomes (results or impacts). Indica- sources of finance. To get the CDS off to a good tors may need to be refined. Most important is a start, emphasis should be on early implementa- sustainable monitoring system to gauge success tion of low-risk, high-profile initiatives. based on the identified indicators. Most monitor- What Constitutes a Good City Development Strategy? Effective CDS processes, outputs, and outcomes have the following characteristics: · They are internally consistent. For example, strategic · Responsibility for implementation is clearly defined, thrusts follow from the Vision and SWOT analysis; against definitive targets and timelines; · The CDS has only a few strategic thrusts, the products · Incentives are in place to drive performance. These of tough choices. Nothing is of equal importance; can take a variety of forms such as financial, awards, and community recognition; · The CDS is realistic but challenging; · The strategic framework is flexible enough to adapt to · The CDS has a high probability of success; changing conditions and tactics, but the Vision nor- · Achievement is measurable and measured with lean, mally remains constant over the medium run. powerful, results-oriented indicators; · CDS priorities are reflected in budgeting and invest- · Strategic thrusts are cross-cutting, relying on a variety ment strategies. of activities and agencies; 8 | Guide to City Development Strategies P A R T O N E 1. Introduction T he purpose of these guidelines is to improve ward guidelines, such as the recently completed the usefulness and positive impact of City guidance framework for design, integration, and Development Strategy (CDS) processes support- application of monitoring and evaluation in CDS ed by the Cities Alliance. CDSs should sustain- processes (Econ Analysis 2005) and the Asian ably enhance urban performance, measured in Development Bank guidelines on CDS (ADB terms of: (i) economic growth, linked to improved 2004). Many cities around the world, whether livelihood opportunities; (ii) poverty prevention industrialised, transitional, or developing, have and alleviation; and (iii) improved environmental also produced innovative CDS outside the Cities and public health, inclusive of poor and informal Alliance; examples are Glasgow, London, Mum- urban communities. bai, and Prague. The target group for these guidelines is primarily Much has changed in the external context in cities in the developing world that are about to which cities have been operating since the 1990s, start a city or city-region strategising process particularly rising energy prices (for a review of involving local actors (in government, in the pri- this literature, see Roberts 2004; Kunstler 2005), vate sector, and in civil society), as well as their natural disasters and environmental accidents, international partners (development agencies, global economic imbalances, security and terror- international investors, and nongovernmental ism threats, and declines in urban social capital. organisations [NGOs]). The uncertainty is putting a premium on resilience and increasing returns to cities that can These guidelines have taken into account the con- handle uncertainty. siderable bank of experience built up by develop- ing-country cities carrying out CDSs funded by There has been new learning in urban strategis- the Cities Alliance over the past five years. A wide ing, mostly because of networking between cities. range of such activities have been evaluated. These Within the academic community, research (and evaluations include those of CDSs for specific associated output) on the relationship between cities (available at www.citiesalliance.org), those the characteristics of urban strategic processes of experience to date, or those that have put for- and those of urban performance has been disap- Guide to City Development Strategies | 9 Increased commercial activities in a well functioning city like Singapore pointingly limited. Our literature searches have The goal of these guidelines is not to prescribe revealed almost no academic research over the but to inspire improvements in city development past five years on urban strategising, local eco- and strategising processes. Your use of the guide- nomic development, and the like, especially lines could be selective (as modules), depending research related to urban areas in developing on the developmental circumstances of your city. regions. This is a serious loss, given the potential See the Cities Alliance homepage (http://www. value of reflective, objective research on such an citiesalliance.org) for further details on concepts important topic. and for examples (ranging from best practice to failures) to deepen your knowledge of diverse aspects CDS. 10 | Guide to City Development Strategies 2. The Role of Cities 2.1 URBAN REGIONS AS POVERTY tive urbanisation, a result of overall population ALLEVIATION MECHANISMS decline. Urban areas there will lose 12 million people by 2030, mostly in the Russian Federa- T he importance of urban regions in driving tion, creating new urban challenges. In the indus- economic growth, poverty prevention and trialised cities of the world, population growth alleviation, and energy and natural-resource con- will be slow, with the exception of those in servation has never been greater. In part, this amenity regions in North America, such as reflects the fact that the majority of the world's Phoenix and Las Vegas in the southwestern Unit- people will be urban by 2007. ed States, and cities that attract large flows of international migrants, such as Toronto, Canada. The urbanisation process will continue at high Cities in Western Europe and Japan will have speed throughout the first half of the 21st centu- more stable populations. ry. The United Nations forecasts that 61 percent of the world's population will be urban by 2030. The policy implications are obvious. Because Before 1850, the urban population of the world most African urbanisation to 2030 has yet to never exceeded 7 percent. In absolute numbers, occur, productive migration absorption strategies Asia is the epicentre of the current urbanisation are particularly important. But urban growth in surge. China will add at least 342 million people Latin American cities will represent only 39 per- to its cities by 2030; India, 271 million; and cent of current urban population, indicating that Indonesia, 80 million. In Latin America, which is in situ poverty alleviation strategies should be nearing the end of the rural­urban transition, given more emphasis there. The highest absolute "only" 169 million people will be added. Howev- national increase will be in China, but India and er, in Sub-Saharan Africa, 395 million people will Indonesia are earlier in their rural­urban transi- be added to the cities over the same period, 112 tion processes. Urban growth in India to 2030 percent of its current population, a larger will be equivalent to 86 percent of current urban absolute increment than China will experience population; in Indonesia, 74 percent; and in (United Nations 2004b). Transitional (Eastern) China, 64 percent. Europe will be the only world region with nega- Guide to City Development Strategies | 11 Cities are proven The fact that Africa is the poorest continent but capital they create can be mobilised to help alle- poverty fighters. also the one earliest in the urbanisation process viate poverty. In 2005, emerging economies grew presents enormous city-building challenges, but by $1.6 trillion1, more than the industrialised at the same time provides significant economic countries did. Most of this $1.6 trillion increment opportunity. If urbanisation is productive, that is accrued to the cities that are relevant to these migrants are productively absorbed, rural­urban guidelines. The economic underperformance of migration is associated with immediate, large India, compared with China (until recently), may jumps in national economic performance, as the be partially a result of India's much lower urban- urban trajectories of China and North America isation level--28 percent in India versus 39 per- clearly indicate. Although urbanisation rates and cent in China (41 percent in 2005) (United absolute increases in urban population will be Nations 2004b)--India has 221 million fewer highest in Africa, it is the region with the most urban residents than China. limited resources to deal with rapid urbanisation, a process requiring high levels of capital invest- São Paulo, which has 10 percent of Brazil's pop- ment and technical resources. ulation, accounts for 25 percent of the gross domestic product (GDP). In China, by 2020, the Cities are proven poverty fighters. For example, three leading coastal EURs (each containing urban incomes are, on average, four times higher more than one metropolitan area)--the Pearl than rural ones in countries such as China and River delta, the lower Yangtze River delta, and Thailand, and significant income differentials the Bohai Bay region--will be home to more remain after controlling for higher education lev- than half of China's population, but they will els in cities. Metropolitan areas--even larger account for 80 percent of GDP. With metropoli- Extended Urban Regions (EURs), which often tan regions as the metric, the 53 metropolitan contain several metropolitan areas--account for regions in China anchored by a city with more enormous income and wealth creation, and the than 1 million people are currently home to 370 million people, or 29 percent of the country's population, but account for more than 62 percent of China's nonfarm GDP. Cape Town, eThek- wini (Durban), and Johannesburg account for some 50 percent of South Africa's GDP but represent only 20 percent of the national population. Lagos produces 60 per- cent of Nigeria's non-oil GDP. This urban dominance in economic pro- ductivity often shows up in fiscal performance as well. For example, the Bangkok metropolitan region accounts for about 53 percent of public sector revenue in Thailand but is home to less than 20 percent of the population. 1. All dollar amounts are in US dollars. Aerial view of Johannesburg, South Africa 12 | Guide to City Development Strategies Of course, we should treat official data with great bulk of progress in Asia. Africa in particular will African cities caution, especially in Sub-Saharan Africa, where need to devise strategies at the local level, sup- need to provide the informal sector dominates and where ported by national frameworks, to make urbanisa- researchers often undercount its contribution to tion a more effective tool of economic develop- their residents livelihood and economic development. Estimates ment and poverty prevention and alleviation. and migrants for Africa indicate that the informal economy with ladders to workforce accounts for an extraordinary 78 per- African cities need to provide their residents and cent of nonagricultural employment, 61 percent migrants with ladders to escape poverty. The abil- escape poverty. of urban employment, and 93 percent of all new ity of African cities to become powerful agents of jobs. The recent improvements in Chinese statis- poverty alleviation and economic development tics (based on the economic census of 2002) illus- depends on two factors: (i) whether institutions trate the economic value of undercounted urban and policy conditions liberate or hamstring a employment, much of it informal. As a result of city's potential to create jobs; and (ii) whether more accurate counting of service activities, pri- city residents have access to land and housing, marily urban, the service sector was 48 percent education, health care, and security, even if they larger than previously indicated, accounting for have erratic incomes, few powerful connections, 41 percent of national outcome, not 32 percent. and no recognised status in the city. In Sub-Saha- The recount increased China's GDP by 17 per- ran Africa, with a few exceptions, cities have not cent, making it the fourth largest economy in the been able to move beyond a limited role as trad- world by the end of 2006. Similar discrepancies ing and commercial and administrative centres, likely affect data in other developing urban serving only the local populace. They have not economies (Huang 2006). developed manufacturing or high-end service economies, which would support poverty allevia- How can policymakers maximise the benefits of tion across the continent. In fact, in most Sub- the urbanisation process? How can developing Saharan African cities, formal employment is countries mobilise urban capital to increase liveli- actually decreasing. hood opportunities and standards of living for all citizens, not just the most successful? Latin America, which is nearing the end of its rural­urban transition, illustrates the dangers of China, with its pro-urbanisation policies (acceler- hyper-urbanisation: the potential of urbanisation ated productive urbanisation), has removed 220 to alleviate poverty has been blunted because million people from poverty in less than 25 years meaningful livelihood opportunities (employ- (but 100 million remain in poverty, including ment creation and opportunities for households 26.1 million farmers in absolute poverty). With to create their own jobs) have not occurred rap- economic growth highly correlated with poverty idly enough. Although economic growth is virtu- reduction, especially if coupled with pro-poor ally always beneficial in reducing and preventing policy frameworks, the continued economic suc- poverty, some types of growth are more pro-poor cess of cities bodes well for poverty reduction. It than others--much of the East Asian urban also bodes well for the achievement of Millenni- growth in countries such as China, Malaysia, and um Development Goal 7, Target 11, established Thailand has effectively reduced poverty. by Cities Alliance, the one most relevant to urbanisation: "By 2020, improving substantially the lives of at least 100 million slum dwellers, while providing adequate alternatives to new slum formation" (United Nations Millennium Declaration, GA/55/2 of 8 September 2000 [para. 19], United Nations 2005, p. 3). But the achievement of the goal will be the result of high- ly skewed global geographic outcomes, with the Guide to City Development Strategies | 13 2.2 EMERGING CHALLENGES of cities will be the result of proactive policies, rather than the result of harsh feedback generat- The fact that cities make people richer and pre- ed by market prices. vent or alleviate poverty has a flip side, namely, environmental and natural resource challenges. The world has consumed half the available petro- Richer societies generally consume more energy leum (Deffeyes 2001). Energy, especially for vehi- and commodities and generate more waste, cles, is likely to be in short supply before mid-cen- although not necessarily more pollutants (they tury because alternative fuel systems are not also consume less energy and fewer commodities expected to be widely available until later on. The per unit of economic output). Translated into result could be slower economic growth and a global dynamics, this hastens the day when many slowing of globalisation (which is dependent on nonrenewable commodities and energy sources inexpensive energy). This situation will bring will become scarce. High urban consumption is urban environmental and resource consumption not directly associated with urban lifestyles-- issues centre stage. Most of the world's largest rural people with the same levels of income as cities are located along coasts, so the risks of nat- city dwellers would consume more energy for ural hazards, especially those related to ocean lev- transportation, for example--but is explained by els and surges, are becoming real threats. Water the fact that cities are highly successful in raising supply is a critical issue facing urban regions from household incomes. Sub-Saharan Africa, to northern China, to the southwestern United States. (Semi-arid regions This relationship between urbanisation and are the most common climatic type on Earth.) resource consumption, particularly of products Social disorder and security risks in cities are needed for city building, has been clear from the increasing in many parts of the world, be it from experience of industrialised countries for more terrorism (Jakarta, London, Manila, and New than a century. For example, in 2004, China con- York), insufficient social capital (Kinshasa, New sumed 40 percent of the world's cement and 27 Orleans, Paris), or disputes over urban land, espe- percent of its steel, primarily to build cities cially disputes about the transformation of rural (China Republic 2002). Again, as the United to urban land (China). States' urban population expanded by 124 mil- lion during its urban transition from 1900 to And infectious diseases, such as SARS and avian 1970, per capita steel consumption increased six- flu--often bred in peri-urban areas where fold. Similarly, as Japan's urban population humans come in contact with both domesticated increased by 70 percent between 1950 and 1970, and wild animals--may threaten the viability of its per capita steel consumption increased eight- cities. These challenges and risks will be especial- fold. Goldman Sachs, an investment bank, indi- ly strong for the African urbanisation process cated that oil could reach $105 per barrel in the because the continent is so early in its rural­urban next few years, an outcome essentially fuelled by transition. Yet Africa will have to complete the the massive urbanisation processes described transition under much more trying external con- above (Pesek 2005). ditions than experienced by the industrialised world and Latin America, which have essentially This means that cities will need to function dif- completed their rural­urban transitions. In short, ferently. Buildings, which are the biggest con- the risks urban regions face are becoming more sumers of energy in most developing cities, will problematic, despite the enormous potential of need to be built differently. Urban form will cities to generate wealth quickly and prevent or become even more important, given the close alleviate poverty. Environment, energy, social, and relationship between urban form and energy con- security issues will have to play a central role in sumption for transportation. It is to be hoped that CDS processes. At the urban scale, resilience is dramatic improvements in the energy efficiency now as important as competitiveness. 14 | Guide to City Development Strategies 3. Guidelines Orientation T he goal of these guidelines is to help differ- Key themes to be explored include the following: ent actors make the most of CDSs to enable cities to maximise their performance (ultimately · Mainstreaming urban poverty alleviation and measured by the standards of living of their resi- prevention--To date, urban poverty has been dents, especially the poor), their resilience, and compartmentalised, both in analysis and in pol- their competitiveness. Given the tough and icy. Slums have been targeted as if they were a increasingly uncertain environment in which discrete form of settlement, rather than part of cities operate, strategies need to be hard-nosed, a broad spectrum of physical development, using limited financial and human resources in highly integrated into urban communities. As the most effective ways. Financial resources going the recent groundbreaking book by Neuwirth into and out of cities are highly elastic; capital (2005) points out, squatter settlements are a responds quickly to opportunities in urban normal part of the urban transition: London, regions with positive business environments. New York, Paris, and Toronto all had large Conversely, capital, whether generated locally or swaths of squatter and slum neighbourhoods. externally, rapidly flees cities where the future is Thus, poverty prevention and alleviation, not too unclear. Often, tough tradeoffs are needed; slums per se, should be the focus of an urban talent and fiscal resources need to be focused for strategy. In some cities, such as Lagos, Manila, or maximum leverage. Mumbai, slums constitute close to half the res- idential structure of the city, containing a wide These guidelines recognise that CDS processes spectrum of residents from poor to wealthy; to supported by the Cities Alliance vary widely in spotlight them as unique or separate makes no quality and effectiveness (as do urban strategies sense. However, because slums are so visible, without Cities Alliance support) and that the addressing their problems can be catalytic in nature and characteristics of the CDS process can overall urban development. Slums can be an very much affect the performance of cities. extremely effective entry point into the wider structural issues in a given city or country, mobilising a wide spectrum of groups. Further- more, it is often possible to build widespread Guide to City Development Strategies | 15 Slums cannot be consensus in support of slum upgrading. The people) will be in developing urban regions. right of the political spectrum has historically This dynamic, combined with the fact that treated separately viewed slums as eyesores and inappropriate in large increases in urban population will occur from the overall modernising cities (not acknowledging that in very poor countries, particularly in South development they are economically critical to the function- Asia and Sub-Saharan Africa, means that pre- ing of cities), whereas the left often associates venting urban poverty will need to be a leading trajectory of the slums with poverty (to some extent, incorrect- policy priority in developing countries for the city, or from ly). Thus, both sides of the political spectrum next 25 years (this is separate from addressing urban land want to "do something" about slums. Strategies in situ urban poverty). Migrants who are poor to improve opportunities for the poor need to but highly economically motivated and well markets. recognise that slums cannot be treated sepa- educated (compared with educational attain- rately from the overall development trajectory ment norms in their source regions) need to be of the city or from urban land markets, and absorbed productively so that they do not add their development should be consistent with to the stock of poverty within urban areas. Oth- the city's overall Vision. Such a perception is erwise, the task of urban poverty alleviation needed to mobilise capital on a large scale. becomes overwhelming. Migrants need access Win­win outcomes can be generated by releas- to financing to purchase housing affordably ing the very large amounts of capital that slum close to employment (no longer necessarily in dwellers control (directly or indirectly): land central business districts [CBDs], given the readjustment, for example, enables the poor to ongoing shift to a more multinodal urban form enter the urban mainstream,. Such principles in most cities). Migrants also need access to underlie Rio de Janeiro's Favela-Barrio pro- basic services (such as water), appropriate train- gramme. ing, and good-quality, relevant education for their children, to enable intergenerational · Preventing Potential Urban Poverty--The cur- mobility. And they need access to microfinanc- rent (2005) urban population of the world is ing, particularly for small-business creation. 3.2 billion, of which 0.9 billion live in industri- Enabling mobility, not only from rural to urban alised countries. By 2030, the developing areas but also from regions with poor opportu- world's urban population will have grown by nities (such as northeast China) to those with 75 percent. More than 1.8 billion people will greater opportunities (such as the coastal and have been added to the world's cities, and more amenity regions in China), can do much to alle- than 93 percent of this increment (1.7 billion viate poverty while greatly improving national economic efficiency. Such flows have also occurred across borders, as has been the case with Johor (Malaysia), Riau (Indonesia), and Singapore. Because preventing poverty is less expensive than alleviating in situ poverty, pre- vention strategies should be a key element in a CDS; very high returns on investment are pos- sible. For example, for young migrants, training is relatively easy to effect and cost-effective; and less expensive land on the periphery of cities can be made accessible to the poor. · Environmental Quality, Public Health, and Energy Efficiency will increasingly matter-- Given the challenging environment in which cities will have to develop and function, envi- ronmental, energy, and public health perform- Aerial view of Lanzhou along the Yellow River, China ance will become increasingly important. Such 16 | Guide to City Development Strategies considerations need to be integral to the CDS tems according to conventional civil engineer- process, driving strategy. For example, to date, ing standards, using conventional technologies urban form has been largely the product of to supply urban communities wherever they market forces and, to a lesser extent, planning evolve, accepting the energy demands of frameworks. That is, it is the product of urban spread settlement, or allowing the construc- economic function, motorisation, land mar- tion of buildings with scant attention paid to kets, and access to financing for city building their energy performance. Now energy consid- (particularly residential). Future planning and erations need to be reflected in spatial form policy frameworks should consider and incor- and building design, driven by appropriate pol- porate market signals to generate more effi- icy frameworks, and supported by strong polit- cient urban forms. Similarly, in most CDS ical will. Buildings consume more energy than processes, environment and energy considera- transportation in cities, and this energy con- tions have been "add-ons," for example, pro- sumption should be an important point of gramming water supply and wastewater sys- focus (Fry 2005). Systems that rate green and FIGURE 1. STYLISED URBAN DEVELOPMENT TRAJECTORY · Soft governance · More efficient Stress Response · Stronger metropolitan · Global image making In · Delivery of basic needs governance orientation · Performance based High Lag nance · Global intermediation · Heavy investment in government ver capabilities urban infrastructure Go Potential to Eliminate Slums · Water pollution · Air pollution · Environment improves · High quality · Address sanitation needs · Urban environment worst · Heavy investment (3­6% environment essential onment early­middle of this stage GDP) needed in environ- to competitiveness vir ($2­3,000 US per capita) mental infrastructure & En improvement · Monocentric · Peri-urban driven · Stronger business · Edge cities · Small CBD, then uniform · Trunk infrastructure services CBD · Highly attractive relatively high density shapes form · Suburban modes · Culture/tourism CBD Spatial · ± 50% informal settlement · Informal economy · FDI & Domestic · Consumer demand · High tech y dominates investment fuel high increases rapidity · High design growth in Mfging · High-end services · Culture & Hospitality Econom (busines producer) · World class talent attracted Trading Manufacturing Oriented Services Amenity (Late Services) Leap frogoption,e.g., Bangalore, Accra(callcentres) Urban Development Trajectory Source: Webster (2005) Guide to City Development Strategies | 17 sustainable development include the Leader- · Address Causes, Not Symptoms of Poverty-- ship in Energy and Environmental Design sys- Making cities look good and function well is tem, developed by the US Green Building important, but that doesn't provide real oppor- Council. Environmental quality, including tunity for less advantaged people. The focus of effective and sustainable delivery of environ- policies and scarce investment needs to be on mental services, is important at all points along significantly reducing intergenerational pover- the urbanisation trajectory (see Figure 1), from ty, primarily through changes in education, the delivery of economic benefits through health, and livelihood (jobs, business creation). improved population health in poorer cities Intergenerational thinking is particularly and the provision of basic services at one end important in very poor cities. Turning a city of the trajectory to the attraction of talent, around takes 10­20 years, corresponding to investment, and high-value economic activities one human generation. The Tunis CDS process at the other. (Box 1) failed to gain the support of the busi- ness community. It failed to leverage support from probably the most important agent of poverty alleviation, the business community, BOX 1. MISSED OPPORTUNITIES IN TUNIS, TUNISIA which is instrumental in employment creation. The focus of these guidelines is on CDS process- T unis is in an enviable situation. It has the largest concentration of businesses in the country (its economic weight is 2.5 times its es in developing cities. Developing cities differ share of population); one out of five workers has a university educa- from industrialised ones, as Figure 1 indicates, tion; and only 4 percent of its households are officially below the and therefore they require different strategic poverty line. Yet a quarter of Tunis's population live in informal settle- responses, as Figure 2 indicates. Furthermore, the ments, and nearly a third work in the informal sector. The govern- conditions in developing cities vary enormously, ment was already spearheading several poverty redistribution pro- from those of very poor cities in inland Sub- grammes (in actuality, slum upgrading) when the city began its CDS Saharan Africa typified by Bamako, through process. The city subsequently incorporated these programmes into those of transitional-economy cities such as its vision and development strategy and outlined the latter in the Prague and Sofia, to those of soon-to-be-rich White Book, a publication for public dissemination and validation. To cities such as Chengdu, China. some extent, the White Book has successfully galvanised several stakeholder groups to organise activities around central strategic Industrialised cities also use CDSs to enhance concepts. For example, it gave rise to `Re-appropriate the City,' a their competitiveness, liveability, and so forth. women's movement to make coffeehouses and other locations in They may also use CDSs to correct reversals in the city safe for women in the evening. But the strategy formulation fortune, as in the Glasgow case (Box 2). In fact, missed key opportunities to capitalise on the city's strengths. Most industrialised cities actually have a long history notably, the business community lost interest because it felt that the of deploying strategic planning to achieve com- White Book lacked targeted strategies for economic development. munity goals. This may partially account for the The business community's disengagement severely limited the abil- generally higher technical quality of strategic ity of the city government to catalyse and leverage private invest- plans produced by industrialised cities than pro- ment to orient development along new directions. The city lost an duced to date by CDS cities. Although the sub- opportunity to improve the employment and housing prospects and stantive content of CDSs will obviously vary incomes of its current and future residents, including those in the widely between industrialised and developing rural areas, who, lacking economic opportunities, continued to cities, there is no inherent reason why the tech- migrate to the capital and into these informal settlements. nical quality of such processes and products should vary, given the access of all world cities to Source: UMP/UN­Habitat (2002). funding; comparative urban experiences; and knowledge resources, such as consultants, univer- sities, and international organisations. By the late 1980s, the methodology was highly developed, and many cities had implemented CDSs, often 18 | Guide to City Development Strategies FIGURE 2. STRATEGIC FOCUS: PRO-POOR DEVELOPMENT · Health & educaton · Inter-generational mobility Trading/Informal · Community infrastructure--water --sanitation · Enterprise enabling actions Urban · Allocating accessible land for migrants Development · Land adjustment · Housing finance Manufacturing · Wide coverage lean social service delivery (economically feasible) · Access of poor to quality technical education Trajectory · Technical education aligned with emerging clusters · Sustainable social programs open to all (contributions by employers & employees) Services · Geographically accessible city · Enable creative activity · Address poverty caused by social/psychological factors & slowing of middle class opportunities Amenity · Ensure equal access to education (student loans, etc.) · Affordable housing policies BOX 2. GLASGOW, SCOTLAND, REINVENTS ITSELF AS A CULTURAL CENTRE W hen Glasgow's traditional industries, particularly ship- tain growth and improve international competitiveness. It calls building, fell into permanent decline--a casualty of a for the redevelopment of Kelvingrove Art Gallery and Muse- new global division of labour that favoured other locations-- um, the creation of new visitor areas (such as Merchant City), this former economic powerhouse had to reinvent itself. With and the development of high-quality business locations along factories closing and unemployment levels soaring, the district the River Clyde, Glasgow's key territorial asset, according to council set about recasting Glasgow's image from that of a the OECD. Riverside development projects include the Digital polluted, rust-belt industrial city to one of a cultural city, with a Media Campus, the international financial services district, focus on the arts, media, and business services. The district and the Glasgow Harbour Project. The development of City council was following the lead of local community groups, Science will position Glasgow as the largest science and tech- which had started an arts festival and opened a new museum, nology centre in Scotland for business and research develop- the Burrell Art Collection, in 1983. When the Scottish Devel- ment. Another key objective of the city's economic strategy is opment Committee hired McKinsey & Co., an international to improve the link between the unemployed Glasgow resi- consulting firm, to prepare a redevelopment plan for the city, dents and opportunities in job-rich and growth sectors. The the firm proposed building on these initiatives to promote strategy calls for improving and creating innovative training or Glasgow as a cultural centre.The plan called for attracting inter- retraining and employment linkage programmes and enhanc- national companies, encouraging creativity among city resi- ing transportation connectivity between disadvantaged neigh- dents, and reinvigorating the city centre by converting old bourhoods and key centres of employment. Finally, recognis- warehouses and factories into lofts and building new luxury ing the need to compete in the place market, Glasgow housing in the docklands.i These efforts resulted in an eco- continues to strengthen its brand recognition with a new city nomic renaissance for Glasgow.To sustain Glasgow's success, marketing plan and is working on increasing direct and indirect the Glasgow Economic Forum, a public­private partnership of international air services from Glasgow Airport. economic stakeholders, prepared an economic strategy for 2003­2005.ii The strategy builds on existing strengths to sus- i OECD (2002), UN­Habitat (2004). ii GEF (2003). Guide to City Development Strategies | 19 Between 2000 with considerable success, as summarised by (such as economic development agencies) and and 2005, the Bryson and Einsweiler (1988), Kemp (1992), and public­private consortia (such as innovation Bryson (1999). councils) often undertake CDS processes without Cities Alliance external support or funding. Although more com- supported CDS The Cities Alliance is the most important mon in industrialised cities, this approach is resource supporting CDS processes in developing becoming a trend in developing cities as well. For processes in cities. However, other groups are getting more example, a citizens' consortium, led by the busi- about 140 cities. involved, particularly in middle-income and tran- ness community, initiated the Mumbai First sition cities. For example, the Shui On Corpora- development strategy, in Mumbai. tion, based in Hong Kong and Shanghai, produces complete CDSs in partnership with municipal Between 2000 and 2005, the Cities Alliance sup- governments and key stakeholders before under- ported CDS processes in about 140 cities, con- taking property development in Chinese cities. To tributing $22.5 million.These guidelines abstract date, Shui On has completed CDSs for Chengdu, from lessons learned from those processes and a Chongqing, Fuzhou, Kunming, Wuhan, Xiamen, variety of similar ones, including locally driven and Xi'an. Consortia in Europe, including the processes and those supported by other interna- European Union, support CDSs in that region, tional bodies or private corporations. In some especially in transitional cities, such as Prague. cases, Cities Alliance activities have inspired CDS Last, but not least, public agencies within cities efforts it has not officially supported. 20 | Guide to City Development Strategies 4. The Role of City Development Strategies CDSs DO MATTER Some other cities that were shocked never recov- ered. And some cities, such as Manila, forecast in I ncreasing evidence shows that urban perform- the early post­World War II period to become ance is not based on maintaining existing roles, economic leaders, have been trapped in vicious economic structures, and institutional status quo. cycles. Rather, it is based on adaptability. Almost all cities will be shocked by 2050, especially by external The evidence is clear: cities can and do suffer forces. The success of a city is largely determined major reversals in fortune. These reversals can be by how it responds to shocks generated by rapid positive or negative, with turnarounds and break- changes in its external and internal environments. downs generally taking 10­20 years. Evidence This quality is known as resilience, and it will indicates that performance turnarounds are fre- become even more important in future. quently the result of a city's having a clear strate- gy, as was the case with Curitiba, Shanghai, and Bangkok lost much of its comparative advantage Singapore. as the factory of Southeast Asia in the 1997 financial crisis and had its economic output (in The role of a CDS process is first to shock an US dollars) more than halved in one month. But urban system under controlled conditions, caus- by turning to high-end services, such as advertis- ing stakeholders to be truly objective in assessing ing, medical services, and spas, Bangkok reposi- their situation, and then to strategically deploy a tioned itself to become a higher value economy limited number of actions to enable the city to than before. During this transition, poverty rates dramatically change its performance. The Mum- were kept much lower than forecast because bai First case (see Box 4) is an excellent example households adapted, supporting less successful of a bold, shock-inducing strategy. A good strate- family members and taking advantage of deep gy is a prerequisite to performance change, but social capital (Webster 2004). The World Bank implementation is what ultimately counts. Suc- forecast that the Thai poverty rate would rise to cessful CDS processes almost always have key 18 percent from the pre-crisis rate of 11.9 per- stakeholders acting with intent, chasing the same cent (1996); it peaked at 15.9 percent. vision, within a framework of effective policies. Guide to City Development Strategies | 21 CDSs are civic The process works best when outsiders help in public and private investment, including innova- or public assessing the city's situation and in subsequent tive financing mechanisms; (iii) demonstration strategising. Cities need to learn from other cities, and ripple effects from catalytic projects and pro- processes in particularly those in similar circumstances or sub- grams; and (iv) public­private initiatives. which the local ject to the same types of shocks. This learning needs to include not just best practices but also CDSs are not public sector programmes or docu- government cases in which events did not go according to ments like local government's physical plans or plays an plan. In both developing and industrialised cities, long-term budgets. Rather, CDSs are civic or pub- important perceptive outsiders without vested interests can lic processes in which the local government plays often see the reality of a city more clearly,. Strate- an important enabling role. The city authority in enabling role gies are generally ineffective if they are mostly Karu, Nigeria, found that a consortium of local internally driven and ignore outside forces and informal businesses had the potential to organise learning. itself and play a leading role in driving the city's development, given that their economic activities It is unanimously agreed that CDSs should not be constituted a substantial part of the GDP of a city comprehensive plans. Rather, they should identi- dominated by the informal sector (Box 3). fy a few strategic thrusts (usually five to seven of these). The purpose of these thrusts is to lever the Local governments are important for their ability system through a variety of mechanisms: (i) to catalyse, to represent the public interest, and to changes in national and subnational (such as met- fix market gaps and failures. However, the official ropolitan or municipal) policy frameworks; (ii) budget of a city anywhere in the world is minus- cule compared with the total financial resources that a city's stakeholders can catalyse. For exam- ple, expenditure by the Bangkok city govern- IMPROVING LINKAGES BETWEEN GOVERNMENT AND BOX 3. ment, the Bangkok Metropolitan Administration INFORMAL BUSINESSES IN KARU, NIGERIA (BMA) accounts for less than 1 percent of urban investment. However, the city administration and L ike the economies of most African cities, that of Karu, a fast grow- budget can be vital signals of intent and commit- ing satellite town on the outskirts of the capital of Nigeria, Abuja, ment, thereby acting as powerful factors in relies predominantly on the informal sector. So when Karu wanted to investment decisions. For example, the BMA formulate a local economic development strategy to reduce poverty attracted investors to develop Bangkok's 23-kilo- and maximise economic growth, it focussed on establishing a partic- metre elevated heavy-rail transit (BTS) system on ipatory framework to enhance the interaction between state and a Build­Own­Transfer (BOT) basis. The system local governments and informal businesses. The result was the Busi- has completely transformed the city over the past ness and Economic Development Committee, a consortium of local five years. Similarly, those with talent and knowl- Karu businesses. As the CDS moves into implementation, the con- edge of urban innovation are widely distributed sortium continues to serve as a crucial link for information exchange within urban systems, with local governments and feedback, priority setting, economic strategy development, employing only a small percentage of them. Key resources, and joint action within the business community and strategies identified through CDS processes may between this community and the government. or may not be actions that local government can or should take. But almost invariably, local gov- Source: Cities Alliance (2003a, p. 14). ernments need to play a catalytic role in making the project happen, for example, by organising innovative financing and providing signals to the private sector. Even if large segments of the community reject a CDS, a strategy like Mumbai First may lead to action catalysing alternative responses (Box 4). 22 | Guide to City Development Strategies BOX 4. A BOLD TRANSFORMATION PLAN FOR MUMBAI, INDIA T he redevelopment plan for the city of Mumbai is bold. Its congested city. The redevelopment of such a large and prime goal is to transform Mumbai into a world class city by location in a city strapped for land is an important keystone 2013, equalling or surpassing Shanghai. A core principle of in the planned transformation of Mumbai. It is intended to be the strategy is that incremental change doesn't work-- an achievable "fast win" to catalyse a positive cycle of reform comes in leaps. The Government of Maharashtra's change and "transform the texture of life" in this city.i The plan builds on a report by McKinsey & Co. on the future of redevelopment plan calls for private developers and investors Mumbai, originally commissioned by the citizen's group Bom- to build new upscale business and residential areas, with bay First, which felt frustrated with urban development in one land set aside as part of the land readjustment scheme to of Asia's most dysfunctional cities. The report called for a $40 provide affordable housing for displaced low-income Dharavi billion 10-year redevelopment plan for Mumbai, including a residents. $1.2 billion plan to redevelop Dharavi, a slum community with To realise the transformation plan, the Government of the unenviable reputation of being among the largest in Asia. Maharashtra formed a Citizens' Action Group, comprising cit- Covering an area of 220 hectares and home to about 1 mil- izens from academia, the private sector, and the slums, and lion residents, Dharavi is also one of the most entrepreneur- the government approached international agencies, including ial communities in India. Hundreds of microfactories operate United States Agency for International Development, the within the slum, generating $500 million in annual sales of World Bank, and the Cities Alliance, for financial and techni- pottery, leather, jewellery, and much more. Ideally situated cal assistance. But bold moves invite controversy. Already near the international airport and the new Bandra-Kurla busi- highly contested, the development became especially con- ness district, it also attracts white-collar workers, who troversial following the decision of the Government of Maha- choose to live here among the rural migrant manufacturing rashtra in 2005 to undertake a slum demolition programme workers to be closer to their place of employment and to in 2005 in which 30,000 post-1995 homes. The strong public avoid the horrendous daily commutes endemic to this highly outcry halted the evictions, but not before the demolition programme had severely jeopar- dised the support of a range of local and international actors and damaged Mumbai's international reputation for flexible, pro-poor development. As the transforma- tion initiatives go forward, some slum residents remain sceptical about the government's intentions and are calling for more incremen- tal approaches, whereas others remain hopeful that the project will bring about a better quality of life for themselves and for Mum- baikars as a whole i Government of Maharastra (2004). Source: Sharma (2002), Cities Alliance (2005, pp. 36­37), The Economist (2005), Stewart (2005, pp. F4­F5). Guide to City Development Strategies | 23 4.1 WHY UNDERTAKE A CITY The prime motivation for the instigation of CDSs DEVELOPMENT STRATEGY is the stakeholders' awareness that the current sit- PROCESS? uation is unsatisfactory. Cities have often had dra- matic reversals in their fortunes. For example, Why should a city undertake a CDS? Why not conditions in most Sub-Saharan cities, such as in allow the market and day-to-day bureaucratic Harare, Lagos, and Nairobi, are judged unsatisfac- forces to determine its fate? tory and are often inferior to conditions of the past. This is equally true in many industrialised A strategy has several advantages: cities; for example, Glasgow was the second most important industrial city in the British Empire in · It encourages stakeholders to invest and the Victorian era, but it has degenerated to the behave according to a vision, effectively point of becoming dysfunctional, and many areas pulling in one direction--getting priorities of the city became derelict. But the city is mas- right is crucial to success; sively reversing its fortunes through a strategic · It cost-effectively allocates resources to a few plan to reinvent itself as a cultural and scientific key strategic areas; centre, as described in Box 2. · It helps a city anticipate future shocks and rap- Shanghai is a similar case. Along with Tokyo, idly changing contexts (the risk environment) Shanghai was the leading city of East Asia in the and raises its understanding of how stakehold- early decades of the 20th century, but it was in a ers would respond under various scenarios; state of disrepair and economic malaise by the · It enables a city to anticipate the rate, type, early 1980s. Subsequently, the national govern- and physical direction of growth and to devel- ment declared it the Gateway to China. Now, op infrastructure ahead of growth. locally driven strategic initiatives, such as the new Pudong CBD, started in 1992, are restoring the Given the potential benefits, some countries have city to its former glory. Shanghai is re-emerging as institutionalised CDS concepts nationwide. The the dominant city of East Asia. Penang, Malaysia, best example of this is South Africa, where all is another city that successfully remade itself with cities must now produce a strategic plan based on a well-thought-out strategy for responding quick- the success of CDSs in larger cities, such as ly to a global market. In the 1970s, it turned itself Johannesburg (see Box 8). Box 5 describes how into one of the most important electronics manu- CDS principles are being used to guide strategic facturing centres in Asia, riding the incipient elec- planning in urban areas throughout South Africa. tronics boom at that time (Box 6). Cities do have choices in their future develop- In other cases, cities are performing reasonably ment directions and outcomes, albeit circum- well but want to reposition themselves to excel. scribed. Their path of development is by no Examples would include Curitiba, Brazil, which means predetermined. As a general principle, a is well known for excellence in urban manage- CDS is a `trend breaker'. It is designed to moti- ment; Chengdu, China, which is becoming the vate key city decisionmakers and stakeholders to dominant high-end financial services and elec- think and operate differently; otherwise, there tronics centre in western China (Motorola, Intel); will be no change. Strategies should be designed and Las Vegas, United States, which constantly for high leverage and be deployed where the repositions itself to reinforce its role as the enter- highest developmental leverage is possible. tainment capital of the world. 24 | Guide to City Development Strategies BOX 5. MAINSTREAMING CDS IN SOUTH AFRICA WITH THE HELP OF THE CITIES NETWORK T he Department of Provincial and Local Governments gies based on competitive advantages, plus outcomes- (DPLG) in South Africa has recently announced that all based planning, monitoring, and spatial development frame- five-year Integrated Development Plans (IDPs) must include works, to coordinate public sector spending and other devel- a long-term strategy. Accordingly, by the end of 2006, all 284 opment efforts. Despite a rapid expansion of services, the South African local governments will need to develop a cities see a need for more effective mechanisms--strategic CDS. Several of the larger cities already have a CDS, includ- actions focusing on few points of leverage for maximum ing Johannesburg, with a model CDS; Tshwane, which is impacts--to tackle the major issues affecting the overall expanding the scope of its CDS in a groundbreaking way quality of life in South African cities, such as unemployment, with a new citywide housing and upgrading strategy and crime, poverty, and HIV­AIDS. Many of these concerns financing plan; and eThekwini, Cape Town, Ekurhuleni, and could be addressed within a CDS. Buffalo City, which are each in the process of finalising and To facilitate the process, the South African Cities Net- tendering a CDS. But the vast majority of South Africa local work (SACN), an organisation with a mandate to collect, governments have yet to put effective CDSs in place. Few analyse, and disseminate experiences of large city govern- of the IDP action plans take a long-term perspective involv- ments in South Africa, has developed a programmatic ing collective visioning and strategic planning. At a recent framework to assist cities in formulating a CDS (see inset). national workshop to evaluate the impact of integrated Using the SACN framework, cities can formulate long-term development planning, mayors and city managers of South strategies that promote intergovernmental and intersectoral African cities identified a need for economic growth strate- approaches to planning, focus on points of leverage, and mobilise city partners. The city analysis framework has SACN Framework for Analysis of City Performance received overwhelming support from public, social, and private Productive City Inclusive City sector stakeholders in member Key Issue: Can the local Key Issue: Do residents economy provide a have the opportunities cities. It is regarded as an City majority of residents and capacities to share Development essential instrument of analysis with a means to earn equitably in the social Strategy that, in allowing all stakeholders a reasonable living? benefits of city life? Key Issue: What to participate in a critical analy- long-term, inter-sector, mobilization, inter- sis process, draws on the dis- governmental and tributed knowledge within soci- Sustainable City leveraging issues is Well­Governed City ety to develop a city strategy Key Issue: How is the the city grappling with Key Issue: Is the city impacting on the toward meeting its political & institutional while enhancing networking envelope of natural vision? context stable, open and between city stakeholders. resources that sustains dynamic enough to the settlement and accommodate all Source: SACN (2004, pp. 1­7). makes it livable? interests? Guide to City Development Strategies | 25 BOX 6. AN AGGRESSIVE STRATEGY PAYS OFF IN PENANG, MALAYSIA T he story of how Penang became one of Asia's major of production (for example, through affordable worker hous- electronics manufacturing hubs offers many valuable les- ing). Although Penang Island had only 778,000 people at the sons for urban strategists. Penang, the second smallest time, infrastructure was built to accommodate the 2020 fore- state in Malaysia, prospered as a free port under British rule cast of 2.5 million. and in the early independence period, but it suffered eco- To execute the vision, the state set up the Penang Devel- nomically when the federal government revoked its free port opment Corporation (PDC) as a semiautonomous entity. status, in 1969. To reinvigorate the island's economy and Staffed with top talent and given considerable autonomy, respond to growing unemployment, Penang state, under the PDC became a highly respected and valued partner to the visionary leadership of Dr Lim Tun, adopted an export-orient- global electronics industry, responding flexibly, quickly, and ed industrialization policy, which many considered radical at effectively to the shifting needs of investors in this rapidly the time--import substitution was in vogue. The corner- changing industry. By holding regular meetings with top stone of the strategy was the creation of a free trade zone industry leaders, PDC officials not only ensured good lines of (FTZ) at Banyan Lepas, outside the island's main city of communication and a forum for joint problem solving, but Georgetown. By creating an enclave outside the customs also contributed to the creation of strong industry networks and other federal administrative domains, the state could to increase knowledge spillovers and innovation. In one of its bypass many inefficiencies in the Malaysian system while many supporting roles, PDC helped to pair local suppliers offering investors attractive export incentives. The first major with major investors. When local universities, which fell international firms to locate there, in 1972, were National under the federal mandate, failed to respond to the severe Semiconductor and Hewlett-Packard, two leading American skill shortages hindering industry expansion, a joint council of semiconductor firms; others soon followed. Within a year of PDC and the major manufacturing firms established the these firms arriving, the electronics and electrical equipment Penang Skills Development Centre (PSDC), in 1989. Its industries accounted for one fifth of all manufacturing jobs in unique organizational structure, with industry directly the state and accounted for 28 percent of Penang's manu- involved and holding the chair position in the centre, ensured facturing value added.i that PSDC would have demand-driven courses to meet the Public investment was the main driver of Penang's eco- evolving needs of the industry. And in a much-emulated best nomic development. The state government invested in practice, the PSDC has helped Penang to move up the elec- essential supportive industrial infrastructure, ahead of tronic industry value ladder and stay competitive by continu- demand, to guide and promote economic development and ally enhancing the pool of qualified human resources. shape desirable spatial outcomes. Early public sector invest- As more of the labour-intensive electronic assembly pro- ment focussed on constructing the FTZ--developing the land duction relocates to emerging low-cost locales in the region, and facilities and providing roads and utilities--well before especially China, Penang has shifted into higher value activi- the first investor was secured.The state government forecast ties, including wafer production and the design and prototyp- future land needs and banked sufficient land next to the FTZ ing of products and pro- to expand the zone and keep the industry spatially clustered, duction processes, which served to promote interaction between firms and to thereby retaining its support a close-knit business community. It built new cargo prominence as an elec- facilities at the airport before the old ones reached capacity. tronics manufacturing As employment grew and attracted a large number of hub of Asia. migrants from other states, the state government created a new town to relieve pressure on the main city, Georgetown. i Haggard, Li, and Ong (1998, p. Situated next to the FTZ, the new town was able to leverage 22). the extensive infrastructure investment the state had put in Source: Muller and Saxenian place to service the industrial base and to subsidise the costs (2005). 26 | Guide to City Development Strategies P A R T T W O 5. Approach T hese guidelines are organised around themes A city's perspective on these issues and its priori- (substance) and building blocks (methodolo- ties will very much depend on (i) its place on the gy). The objective of the guidelines is to have development trajectory (some cities are primarily worldwide applicability in the development of informal economies, such as Maputo, Mozam- CDSs to enable cities to reposition themselves. bique; some are just entering large-scale industri- This is a tall order, because, as noted, developing alisation, such as Ho Chi Minh City, Vietnam; cities vary widely in social features (economic sys- others are becoming high-end service-oriented tems, culture) and resources (finances, knowl- economies, such as Hyderabad, India); (ii) its geo- edge, governance capacity). Therefore, what fol- graphic context (some are land locked; others are lows in sections 6 and 7 necessarily generalises coastal; some have highly attractive settings; oth- across these differences. ers lack natural amenity); (iii) its culture; (iv) its governance system; and (v) its openness to glob- Section 6 discusses the substantive focus of the alisation. CDS. Although each city's strategy will be unique, experience has shown that virtually all The building blocks (methodology), described in successful cities deal, albeit in different ways, with section 7, sequentially outline the technical steps (i) livelihood enhancement (making a living [get- of any successful CDS process. Worldwide expe- ting a job, starting a business], competitiveness, rience has refined the approach taken in these and human resource development); (ii) environ- guidelines, which offer advice on each stage that mental quality, service delivery, and energy effi- experience has shown to underlie a successful ciency; (iii) spatial form and infrastructure (sup- strategic city development process. plying land for shelter and livelihood, enabling transaction-rich environments, and optimising mobility through cost-efficient and environmen- tally sound transport systems); (iv) financial resources; and (v) governance. Guide to City Development Strategies | 27 6. Themes (Substance) T he following themes are useful in structuring (HLS) approach as the basis of its work (Figure the CDS processes of identifying a city's 11); the HLS approach is useful in understanding issues and assessing its capacity. Appendices A to livelihood issues (Sanderson 2002). E are menus of specific elements for each of these themes. A city's place on the urban trajectory Unless the incomes of lower income households should determine which elements of these menus can be increased, it is difficult to sustainably it should focus on. Although these thematic cate- reduce poverty. Widespread increases in the gories are central to the assessment, strategic incomes of low-income households require eco- thrusts (as discussed in section 7.6) normally cut nomic growth; growth is good, if not essential, for across more than one theme. the poor (Dollar and Kraay 2000). And unless the value of urban output can be increased, it is very difficult to generate the fiscal resources needed for public facilities, which, in turn, improve the 6.1 LIVELIHOOD (Jobs, Business health and knowledge of local people and attract Start-ups, and Household Income) private investment, creating a virtuous circle. The bottom line of virtually every CDS is an CDS designers need to assess and consider issues improvement in livelihood opportunities for the and formulate strategies in three areas to create a city's population. For the adult population livelihood-enhancing environment: (i) the busi- (labour force), the measure of livelihood is nor- ness climate and enabling policies for small-busi- mally employment (that is, working for a compa- ness creation; (ii) urban competitiveness; and (iii) ny or for someone else) or creation of one's own human resource development. work (for example, starting a business or provid- ing services as an individual). The formal and the APPENDIX A puts forward a menu of thematic informal sectors both offer employment and busi- issues related to livelihood enhancement. Relevant ness creation opportunities. CARE, the Atlanta, menu items and policies may vary widely, depend- United States-based humanitarian organisation, ing on a city's place on the urban trajectory. In the has developed a household livelihood security poorest of cities, policies would focus on estab- 28 | Guide to City Development Strategies lishing basic literacy; enabling informal businesses tions can assist people in creating their own Local governments to start up with a minimum of hassles; and creat- small businesses by providing training, minimis- can do much to ing supportive, non-nuisance environments to ing nuisance taxation, supporting small-business allow existing businesses to become more effi- licensing, and the like. help organise and cient and grow. Businesses with potential to strengthen small export, both to other parts of the country and 6.1.2 Competitiveness businesses and internationally, should have access to information and support for their efforts to market these prod- The competitiveness of cities can be assessed rap- especially the ucts. In middle-income cities, at the other end of idly. Webster and Muller (2000) prepared a man- informal sector. the developing city trajectory, policies will be ual that covers competitiveness assessment quite different. They may be designed to support modes. A CDS should identify a city's compara- research and development, to attract high-end tal- tive advantage (that is, its endowments, such as ent, to deepen economic clusters, and so on. climate, geolocation, factor availability, and the price of land and labour). At the same time, the CDS should assess the city's competitive advan- 6.1.1 Business Climate tage (that is, how competitive a given industry or Business climates vary widely between urban economic cluster, such as automotive assembly, is areas, but cities with more attractive business cli- vis-à-vis a similar cluster in a competing city). mates are much more likely to attract invest- ment. The World Bank's (2004) recently pub- Unfortunately, we have few urban economic lished global assessment of business climates is of data, even for the formal sector, in most develop- considerable value in formulating a CDS. ing countries, especially in the medium-size and smaller cities whose boundaries do not coincide Enabling policies for small-business creation and with provincial or municipal boundaries. Also, the growth are important in cities worldwide, but data tend to be organised traditionally, by sectors, they need to vary, depending on a city's position whereas economic development is best under- on the urban development trajectory. In poorer stood through cluster analysis. To the extent pos- cities, such as Jakarta and Nairobi, the formal sible, a CDS should focus on key economic clus- sector obviously cannot create enough jobs to ters in assessing a city's competitiveness. meet the employment needs of labour force entrants and migrants, let alone clear up employ- 6.1.3 Human Resource Development ment backlogs. Therefore, in such cities, many, if not most, people will have to create their own Human resource development is key to efforts to jobs. If not, social instability is almost guaran- prevent or alleviate poverty and is the prime teed, as is economic performance that falls far agent of upward mobility in developing cities. It below potential. Local governments can do contributes to overall urban productivity and much to help organise and strengthen small competitiveness by developing a stock of spe- businesses and especially the informal sector. In cialised, technically skilled labour. It involves Karu, Nigeria, the local government helped to short-term training, formal training leading to organise the informal sector into a business net- certification (such as university or vocational pro- work (see Box 3). In the case of Santo André, grammes), and other modalities of training (such Brazil, the regional development plan focused on as apprenticeships and informal adult literacy the service sector, which was dominated by small courses). Key concerns in assessing human and informal enterprises. Because there were no data on this sector, a CDS process was initiated to collect data and develop a strategy to enable the tertiary sector to drive development (Box 7). Local governments and tertiary sector organisa- Guide to City Development Strategies | 29 ECONOMIC STRENGTHENING IN SANTO ANDRÉ, BRAZIL, THROUGH SMALL BUSINESS AND BOX 7. INFORMAL SERVICE SECTOR DEVELOPMENT T he Santo André CDS was an elaboration of a larger by respondents' reluctance to share information about rev- regional economic development plan. The greater ABC enue and profits with the government. Better media cover- region, in the south-eastern part of Greater São Paulo, pre- age could have helped. However, the survey process itself pared a regional economic development plan in 1999, setting raised awareness about the broader strategy and the gov- out a planning and institutional framework for the region's ernment's desire for stakeholder participation. For this rea- economic revitalization. The strategy called for a focus on the son, Santo André had to ensure that the people conducting tertiary economy. However, because small-scale and informal the surveys were capable of describing the regional strate- enterprises dominated this segment of the economy, infor- gy and its participatory frameworks. The process also mation about business and other service sectors was scant. required striking a balance between outside consultants Thus, Santo André, the second largest of seven municipali- and insider inputs. Outsiders could facilitate the process, ties in the ABC region, initiated a process to deepen the gather sensitive information more easily than the local gov- knowledge base of this sector through a set of interviews ernment, and provide helpful viewpoints, but creating data- and, based on the results of this survey, a detailed action plan bases, interpreting results, and developing feasible to develop the service sector. detailed plans required local knowledge of processes, poli- Santo André discovered that interview-based surveying tics, and history. is a lengthy process, especially when the database for In the end, the Santo André CDS got the local community sampling is incomplete, as in the city's informal sector. It involved in the regional strategy, and it added value to the took 20 weeks to collect surveys from small businesses overarching strategy with better defined programmes and and 15 weeks to collect surveys from the informal sector projects, with the local stakeholders' political support. in Santo André. The process was hindered by a lack of awareness about the regional plan and its importance and Source: Cities Alliance­ABC (2002). resource development at the urban scale are: (i) 6.2 IMPROVING ENVIRONMENTAL access to training or education opportunities; (ii) QUALITY, SERVICE DELIVERY, the quality of training programmes; and (iii) the AND ENERGY EFFICIENCY alignment of educational programming with the emerging urban economy. CDS processes in the past have tended to view environmental initiatives as add-ons to strategies. Short-term training can be particularly important Often, the so-called environmental strategies as an adaptation mechanism when cities are found in CDSs are: (i) conventional civil engi- shocked. For example, immediately after the neering programming, such as wastewater or 1997 financial crisis in Thailand, the Bangkok landfill systems mechanistically developed on the government (the BMA) trained more than basis of demographic and economic forecasts; and 100,000 people in occupations in demand. The (ii) proposals to minimise emissions, again on the trainees were then able to set up small businesses basis of forecast conditions. What is needed is a with minimal requirements for start-up capital, changed paradigm to totally reframe the environ- such as hairdressing, motorcycle repair, home ren- mental and energy content of a CDS. For exam- ovation, or bookkeeping. The capability of a city ple, the question could be; which city develop- to rapidly gear up short-term training is an impor- ment vectors would minimise environmental tant element in the assessment of an urban infrastructure costs, substantially improve energy region. efficiency, and maximise returns on public health and other social service investment? To what extent can demand management reduce the need for additional environmental or energy facilities? 30 | Guide to City Development Strategies Environmental assessments should also capture Of course, each city is unique and will move Environmental the important relationships between cities and through the trajectory at its own pace. For exam- assessments their surroundings. If cities do not take into con- ple, atmospheric inversions in the locales of some sideration the impacts of urban production and cities make air pollution worse; cities in countries should also consumption outside the city's boundaries that import oil or electricity to meet a high pro- capture the (impacts on forests, rivers, watersheds, biodiversi- portion of their energy requirements may need to important ty, coasts, climate change), they will seriously introduce energy-saving interventions earlier on; deplete the natural resources they depend on and and basic needs may be met more effectively relationships hinder future development. The area covered by under capable, transparent local government, between cities a CDS should also take into consideration natural especially if local civic groups apply pressure. The and their resource boundaries, such as watersheds and purpose of a CDS is to target cost-effective inter- coastal reef zones. ventions that make the most difference in those surroundings. areas most important to local public health and CDS designers need to assess system perform- well-being, environmental quality, and energy ance, consider issues, and formulate policies and efficiency. strategies in three areas to improve environmen- tal performance: (i) environmental quality; (ii) 6.2.1 Environmental Quality service delivery; and (iii) energy efficiency. Air and water quality are of prime concern early Appendix B puts forward a menu of thematic on in the trajectory. To ensure water quality, care issues related to environmental performance and should be taken in choosing technologies, espe- service delivery. Relevant menu items will vary cially for wastewater treatment. Most wastewater widely, depending on a city's position on the systems fail in developing cities because there is urban trajectory. As in the case of livelihood, the no provision for sustainability: financial resources environmental and public health conditions will for chemicals, energy, and maintenance are lack- vary according to a city's position on the urban ing. Simply blanketing a city with a conventional development trajectory, as will its energy con- (high-cost) wastewater system is often not the sumption. This trajectory, known as the environ- strategic solution, especially in poorer cities. mental trajectory, is well understood. Environ- mental pollution generally worsens with 6.2.2 Service Delivery industrialisation and is often at its worst during early industrialisation (lower middle-income city In service delivery, the prime concerns are cover- status). Environmental conditions then improve age (geographic), accessibility and affordability as initiatives are taken, often in response to citi- (price), and the quality/cost ratio (often a trade- zen demands. Mass motorisation, the usual prime off). As in the case of environmental quality, serv- source of air pollution in middle-income cities, is ice delivery systems need to be sustainable. Thus, increasingly occurring at the earlier stage of the tariff structures need to be developed both to be trajectory. Because the populations of cities tend affordable to the poor and, in aggregate, to enable to grow fastest early on in the urbanisation trajec- the system to function without operating subsi- tory, a CDS usually stresses capital and human dies. Start-up subsidies are justifiable under cer- resources needs for basic services; backlogs, even tain conditions. Much literature exists on service for basic services, may occur at an early stage in delivery, especially from the World Bank, to assist the trajectory. Energy consumption per capita cities in assessing service delivery and in develop- tends to increase until cities reach a high level of ing strategic thrusts to make it more effective. development; then it levels off or drops. Energy consumption per unit of production or in relation Johannesburg, South Africa, uses modern infor- to GDP usually drops much earlier, especially if mation technology, including geographic informa- proactive policies are in place to encourage ener- gy efficiency. Guide to City Development Strategies | 31 tion systems, to innovatively monitor service trial processes, household consumption, building delivery in slum neighbourhoods. Through better construction and use, and urban form. Demand monitoring of these neighbourhoods, the city can management is as important as supply manage- identify the need for planning or management ment, but because it is obviously much less capi- and can quickly ascertain progress towards envi- tal intensive, it is often more cost-effective. And ronmental and service objectives such as coverage cities often have more control over demand (as (Box 8). distributors), because the supply side is often con- trolled by national-scale state enterprises, corpo- rations, and so on. The environmental impacts of 6.2.3 Energy Efficiency energy use are another area of high concern. As As has been argued, energy efficiency will dra- cities around the world have shown, curtailing the matically affect the well-being of a city's resi- use of coal in urban areas can deliver enormous dents, particularly lower income residents. Figure improvements in air quality, as can using vehicles 3 shows the major areas in which a city's energy that have been converted or manufactured to use efficiency may need improvement. As the figure alternative fuels, such as liquefied natural gas or indicates, energy efficiency can be improved by hybrid sources of power, for example, electricity incentives to change behaviour related to indus- and fuel cell. BOX 8. THE SERVICE DELIVERY MONITORING SYSTEM IN JOHANNESBURG, SOUTH AFRICA T o improve decisionmaking related to service delivery to the to city officials and other stakeholders in user-friendly for- urban poor, the City of Johannesburg established a service mats, and the city is now planning to install the database on delivery monitoring system, integral to its CDS, with the support its website for public use. of the World Bank, the Netherlands, and the Cities Alliance. This initial mapping of poorly served areas is an important The underlying idea was to give political representatives step towards establishing a system to monitor the delivery and communities access to information relevant to annual of essential services, particularly to the poor. The effective- budgetary allocation decisions and empower the city's poor ness of the monitoring system rests on several important through better information. The monitoring system, based on factors, including the kinds of information collected through up-to-date information on the status of service delivery to surveys, how various stakeholders use the information, how poor households, has enabled the city to target poor neigh- monitoring builds accountability to improve the delivery of bourhoods for sectoral expenditures. By linking budget allo- essential services to the poor, and how its impacts (that is, cations to their impacts on poor households, the monitoring changes in the status of service delivery on the ground) may system should keep municipal officials and the citizens of in the future help to improve the fiscal efficiency of the city's Johannesburg abreast of the city's progress towards Johan- service delivery. nesburg's goal of becoming a world-class city by 2030. The City of Durban is now implementing systems pio- Simplicity, affordability (time and financial costs), user neered through Cities Alliance support in Johannesburg; the friendliness, and fiscal accountability were important criteria Cities Learning and Support Network expects to spread for the design of the monitoring mechanism. Using a Geo- these systems to the other seven large cities in South graphic Information System (GIS), poorly served areas where Africa. Lagos, Nigeria, Africa's largest city, with more than 12 households received less than basic services were identified million people, has also expressed interest in adopting the and mapped. Hand-held computers, programmed with con- Johannesburg service delivery monitoring system. sistency checks to reduce errors, were used to record infor- mation. The data were then transferred to a server every other day for immediate use. The Excel database is available Source: Cities Alliance (2002, p. 9). 32 | Guide to City Development Strategies FIGURE 3. CITIES IN THE POST-PETROLEUM WORLD Lag in Delivery of FossilFuelPrices Alternative Energy, Much Higher e.g.,Hydrogen Urban Form Urban Infrastructures · High densities · Maximised use of rail infrastructure · High activity modes along (7­10% as efficient as autos) transport corridors · Demand management of energy Firms · Social & Community facilities · Alternative electrical generators, Households · Fuel efficient near residences e.g., wind, nuclear · Energy conserving production processes · Closer alignment jobs: housing appliances · Green buildings · Contiguous development · Green buildings · Optimal transport routings ­smaller living spaces · Resource minimisation · Fuel saving lifestyles ­Minaturisation ­minimize hearing, ­Lean packaging air conditioning ­minimise trips · Fuel efficient vehicles Energy Efficient City Source: Webster (2005) 6.3 SPATIAL FORM AND structure investment. Infrastructure investment INFRASTRUCTURE has been neglected over the past 15 years in most developing cities, as reflected in both public and Spatial form and infrastructure are becoming private investment. There is now a consensus that increasingly important in city development. more attention needs to be given to urban infra- Appendix C outlines a menu of urban form and structure to absorb rapid growth and to enable infrastructure issues areas to be considered in developing cities to meet their economic poten- rapid assessment of cities. tial. The evidence is clear that infrastructure bot- tlenecks greatly reduce economic efficiency by raising the cost of goods and services, reducing 6.3.1 Infrastructure public health, and robbing people of their time. Recent research that the World Bank summarised in its flagship report on infrastructure in East Asia 6.3.2 Urban Form (ADB, JBIC, and World Bank 2005) stresses the importance of infrastructure in support of urban Cities should be concerned about their spatial economic competitiveness and human well- structures. Congestion can impose high econom- being. However, assessing infrastructure effective- ic costs; sprawl is associated with energy ineffi- ness is difficult, and allocating public funds ciency; and attractive environments--such as among competing infrastructure needs is even areas of high vitality intermixed with high-quali- more so. Often, tradeoffs, as well as synergies, ty public spaces--are conducive to inward migra- exist between equity objectives (providing basic tion of talent, investment, and so forth. Afford- services to all members of urban society at afford- able, accessible land is essential to absorbing able rates) and economic objectives (which may migrants productively as part of large-scale pover- be facilitated by expressways, ports, airports, and ty prevention programming. the like). A good CDS carefully considers infra- Guide to City Development Strategies | 33 In many developing cities, slums, including squat- All land uses in cities shift, even central business ter settlements, constitute a large percentage of districts (CBDs), as the case of Manila illustrates; the land area; in some cities, the majority. Slums thus, all forms of land use should be assessed as cannot be viewed in isolation, as separate from the dynamic, not static. For this reason, time-series "modern" or "permanent" city. Nor can they be analysis of data from remote sensing is very viewed as being outside the land economy. important in the initial assessment. Fortunately, Acknowledging their economic value can help in such data sets are becoming more affordable. either getting new housing built elsewhere or improving the settlements in situ. If there is The Aden, Yemen, CDS process clearly identified enough confidence in local institutions (unfortu- the need for specific infrastructure to enhance nately, a condition that often does not exist), land the economic competitiveness of the city and readjustment can deliver the most effective better link investment zones to the wider econo- win­win outcomes, as the East Asian case indi- my (Box 9). The process led to significant invest- cates. Slums and squatter areas should be assessed ment, which unleashed considerable economic as integral components of a city's spatial structure, potential and was influential in shaping the spa- and like all land uses, as dynamic. Land uses can be tial form of the city. significantly changed by appropriate policy, investment, and awareness initiatives. CAPITAL INVESTMENT AND ADMINISTRATIVE MODERNISATION ARE KEY TO LOCAL BOX 9. ECONOMIC DEVELOPMENT IN ADEN, YEMEN T he city Vision that emerged from CDS workshops in Aden, Yemen, with local par- ticipants not only informed the formulation of a local strategy to strengthen the city econo- my, but also sparked a wider infrastructure investment programme for the city and the region. Aden's CDS strategy focused on strength- ening the economy through (i) improving the operational efficiency of the seaport, airport, and free trade zone; (ii) linking key economic areas to the wider city economy by investing in roads to the industrial estate; and (iii) improving the overall business environment. The latter focused on strengthening the delivery performance of insti- tutions and on making policy improvements to increase investor confidence. Measures included streamlining business regulations and modernising the administration's information and communica- tion technology. These local economic development initiatives received a major boost when the CDS process led to initiation of the regionwide Port City Development Project, a 12-year, $96 million investment pro- gramme financed by the World Bank to improve transportation infrastructure, commercial areas, and capital investment plans and to provide resources for building local capacity and modernising local administrations. Source: Cities Alliance (2003a, pp. 10­11, 2005, pp. 59­63). 34 | Guide to City Development Strategies 6.4 FINANCIAL RESOURCES Assessments should accurately determine the An effective financial status (operating and capital budgets) of CDS supplies a Appendix D outlines a menu of key thematic a city's government. Appendix D provides the issues pertaining to financial resources for a CDS details. In some middle-income cities, municipal reader-friendly to consider in its assessment. ratings agencies do this, but less economically financial report developed locales may not have such data. Once with stylised As Figure 4 indicates, local public sector budgets the CDS assessment has determined the current constitute a only small stream of financing for city financial status of the city, analysts should forecast facts to enable development. However, this is not cause for alarm. its future financial status on the basis of expected stakeholders Even the poorest of cities can use a myriad of cap- revenue and committed capital spending, as well ital sources to improve its performance and the to more easily as expected routine spending. Best practice living standards of its residents. Lack of public sec- includes the development of future financial sce- understand the tor fiscal resources, although obviously making the narios, often based on low-, medium-, and high- city's financial situation more difficult, need not constrain a suc- revenue forecasts. With this information, the city cessful strategy. can borrow and make future commitments with position. a better understanding of risk. An effective CDS Figure 5, derived from the Bangkok case, shows supplies a reader-friendly financial report with that much, if not most, public infrastructure can stylised facts to enable stakeholders to more easi- and should be financed by those who use it--the ly understand the city's financial position. The private sector and so on (consumers). main strategies of the CDS have to be directly tied to the means of financing them, including FIGURE 4. FINANCE AND THE CITY Innovative Finance, e.g., BOT, BOO Borrowing from Commercial Banks Transfers Bonds (Credit Rating) · general Borrowing from Pooled & On-Lending Facilities · specific ­ national bonds Local Revenues Public Sector: Public Spaces - including off-budget Public Private Ventures Exports Goods & Services Goods & Services Foreign Direct Investment Economic Formal Informal Remittances Production Communities Communities Domestic Investment $ Savings from Employment & Small Micro Credit Reinvestment of Earnings $ Businesses Firms Raise Equity Property Mobilise Finance Through: - stock markets Developers 1) Land tenure + micro and conventional credit Consumer Credit 2) Land tenure--sell - funds housing + 3) Land readjustment: win-win local infrastructure (special assignments) Source: Webster (2000) Guide to City Development Strategies | 35 FIGURE 5. FINANCING CITY BUILDING: THE CASE OF BANGKOK Innovative Finance e.g., BOO Off Site Supply Infrastructure Concessional e.g., Power Generation Finance Resenders Privatisation e.g., JBIC e.g., IPO East Water Innovative Finance Network Trunk e.g., BOT e.g., Toll ways, (arterial roads) Private-Public trunk water, rapid transit Catalytic Partnerships Privatisation [Utility Delivery] Development · Bond Community Scale · Equity (Preferred Development Areas) e.g., Distributor Roads Local Community Parts, Social Facilities Government Land Readjustment User Pays Capital Finance Expenditure · Special tex assessment · L.G. Bond Property Developer Scale · Up-front payment · Revenues e.g., Local water telecommunications, sanitation infrastructure User Pays Operating Costs Commercial Bank e.g., Metering Mortgage Finance Source: Webster (2005) city government financing. If the city lacks a The financial analysis examines the likely future medium-term financial planning process (incor- strength of the city's primary revenue sources, porating capital spending), the CDS would likely expenditure trends, operating results, and liquidi- recommend such a mechanism. Financial analysis ty. Particularly important are scenarios for future of the city's government will set the stage, of revenue streams. Normally, financial planning and course, for determining how to finance needed budgeting would be done over rolling five-year infrastructure, public facilities, and the like. Clear periods; however, analysis of past performance financial statements, including forecasts, are a pre- would span the last full economic cycle. requisite for obtaining private sector funding, issuing bonds, or pursuing innovative financing, The CDS process should establish indicators (see including public­private partnerships. section 7) to track the financial health of the city. Financial stocktaking provides a baseline for The ability of the city to service its current debts assessing the performance of future financial and borrow additional funds is critical to deter- management and for making comparisons with mining the future financial role of the local gov- other cities, including benchmark cities. ernment(s). The important considerations are revenue diversity, autonomy to raise taxes, ability As mentioned earlier, quick gearing up of train- to change financial commitments over the eco- ing systems is important during times of crisis. nomic cycle, willingness to control expenses, And a city's financial systems need to be flexible cash-flow management, and the level of commit- enough to respond quickly to economic, natural, ted capital investment. and other crises. At such times, increased trans- 36 | Guide to City Development Strategies fers from national governments are likely, but city authorities often require immediate action. The CDS process should assess the city's ability to act quickly and flexibly during times of stress. 6.5 GOVERNANCE Just as in the case of finance, governance far tran- scends the role of local government. Government is important because it represents the public interest. Local government is especially relevant in city development: it is closer to the main stake- holders, it can become the knowledge hub for urban innovation, and it plays an important role in delivery (directly or indirectly through subcon- Bangkok, Thailand tracting, concessions, and the like) of facilities and services that are the responsibility of local gov- ernment or the equivalent publicly accountable tially deploy a scan­scope approach (discussed in bodies. Furthermore, local government can and section 7.2.1). As strategic thrusts become clear- should undertake catalytic projects (alone or er, more focused policy analysis targeting a partic- through public­private ventures) to bridge mar- ular thrust (such as affordable housing) should be ket gaps, especially when they negatively affect undertaken. low-income people or seriously constrain the overall performance of the urban economy. 6.5.2 Institutional Structure and Processes of Local Government (administrative and political) Appendix E presents a menu of thematic issues in governance for a CDS to consider. CDS work on Although it seems obvious, stakeholders may governance is normally structured around the fol- not be aware of the structure and processes of lowing themes: (i) national urban policy frame- local government, such as its ways of electing or works; (ii) institutional structure and processes of appointing councils, recruiting and hiring staff, local government (administrative/political); (iii) establishing the mandates of major committees, role of local government in the context of decen- ensuring transparency and appeal safeguards, tralisation; (iv) metropolitan governance; (v) assigning roles and mandates, and so forth. It is capacity; and (vi) relationship to the private sec- important that those preparing a CDS obtain tor and civil society. this information and present it in a brief, stylised form. 6.5.1 National Urban Policy Frameworks 6.5.3 Role of Local Government in the Context Often, the analysis of urban policy frameworks of Decentralisation will already have been done at the national level. It is difficult work because cities are often as All local urban governments, with the possible much affected by implicit urban policies (such as exception of those in failed states, share powers, energy pricing or housing finance rates) as by including fiscal powers, with other levels of gov- explicit policies (such as establishment of metro- ernment (for example, national and provincial). A politan structures and specific investments in the worldwide trend towards decentralisation has urban area). As with all CDS assessments, the provided greater autonomy to local governments, focus would be on those policy areas most perti- nent to the strategy. A CDS would therefore ini- Guide to City Development Strategies | 37 which may lead them to become more efficient, 6.5.5 Capacity responsible, responsive, and transparent. In reali- The capacity of local governments varies widely ty, results have been mixed at best, with decen- and generally speaking increases with the level of tralisation contributing to poorer quality local economic development. This capacity includes governance in some cases and unleashing local skilled employees, equipment, corporate culture, capacity and energy in others. To date, most training opportunities, and so forth. The CDS decentralisation has been on the expenditure assessment process needs to cover the capacity of side, with less on the revenue side; that is, cities local governments. have more expenditure powers, but their revenue generation mandates are increased at a slower rate, creating unfunded mandates or a depend- 6.5.6 Relationship to the Private Sector and ence on transfers. Civil Society Urban governments also vary widely in the extent The CDS assessment should take it into consid- of their relationships with the private sector and eration the highly dynamic and usually stressful civil society. Their relationship with the private governance situation that decentralisation cre- sector vary from one of virtual isolation, through ates. From the CDS perspective, decentralisation consultation, to private­public ventures, to pri- is an opportunity. Stakeholders should ask how vatisation of key services, and so on. There is a this changed role for the local government can vast literature on the topic, documenting many best be used to advance the strategic thrusts. Of successes and failures. Local government relation- course, if such changes have not occurred, the ships with civil society vary similarly over a wide mandate of local government vis-à-vis senior gov- spectrum, depending on national governments ernments still needs to be made explicit. and ideology, as well as local factors. Again, the vast literature on this topic indicates that civil 6.5.4 Metropolitan Governance society can play a positive leadership role in turn- ing cities around, or they might play a negative A major constraint to performance is the frag- one. mentation of local governance in a metropolitan area or the even larger EUR (which may contain The case of Sofia (Box 10) describes urban gover- several metropolitan areas). CDS assessments nance and management restructuring in a transi- should determine whether there are mechanisms tional economy. Facing financial restrictions and for inter-jurisdictional cooperation within the the need to compete for global investment, espe- metropolitan area. And if so, how effective are cially with other eastern European cities, Sofia these mechanisms? A wide variety of mecha- used a strategic approach to quickly effect major nisms exist, such as metropolitan governments, urban institutional change. regional districts, councils of local governments, and bilateral and multilateral voluntary coopera- tion, which may be motivated by matching grants from senior government. 38 | Guide to City Development Strategies BOX 10. SOFIA, BULGARIA--INSTITUTIONAL DEVELOPMENT FOR A TRANSITION ECONOMY S ofia is facing challenges common to many cities with transi- tions. To facilitate this process, Sofia developed a city strat- tion economies: egy to introduce new institutional frameworks to open chan- nels of communication and streamline business and devel- · The economy has rapidly transitioned from an industrial opment approval processes. First, the strategy calls for manufacturing economy to a predominantly service-ori- forging new partnerships with various stakeholder groups, ented one. Public enterprises are being restructured, but primarily through the creation of public­private organizations they still account for 40 percent of urban employment (in to enable the government to (i) inform its citizens about 2000); municipal affairs and services; (ii) solicit regular feedback, · The urban spatial structure is poorly suited to the new ideas, and suggestions; and (iii) develop joint responses to economy. A large amount of the inner city is industrial issues and concerns. Second, to reduce red tape for busi- land, and more than 50 percent of the population lives on ness approvals and planning and building development, the the periphery in high-density, poor-quality housing devel- city plans to introduce one-stop approval services and make opments with inadequate access to infrastructure. This application forms and information available online. The strat- structure contributes to severe air pollution from energy- egy also recommends that the city release more land for generating activities and vehicles; development and assist in consolidating land where owner- · The city is facing a severe shortage of housing and office ship is highly fragmented. The third strategic measure is to space; develop a master plan for Sofia to guide private investment · The urban public infrastructure is decaying and in need of in support of a more compact urban form. The master plan renewal and expansion; encourages the creation of business and residential clusters · The municipal governance structure is top down; along existing transportation corridors and of more mixed- use developments to encourage the efficient use of infra- · Municipal finances are centrally controlled, and revenue structure and reduce future capital spending.The plan is also transfers from the national government to the city are designed to strongly protect valuable urban green spaces declining. The city receives back only a small portion of from redevelopment pressures. Sofia has an unusually large what it contributes in taxes and fees. amount of urban green space for a European city, which it A clear priority for the City of Sofia is to improve the qual- recognises as a unique asset improving the quality of the ity of business and residential locations and services to make urban environment for its citizens and attracting upscale the city more competitive, efficient, and livable for its resi- investment and tourism. Through the implementation of dents and for investors. However, Sofia, like many other tran- these three measures (new partnerships, streamlined sition economies, needs to shift its public sector role in city approval processes, and the master plan), Sofia hopes to building and social services from delivery to guidance as it create a more efficient and participatory governance struc- moves towards a more market-driven process. This transition ture capable of responding effectively to a rapidly changing is being driven by severe municipal financial constraints, economic and social environment. which necessitate the involvement and mobilisation of resources from the private sector and third-party organiza- Source: Cities Alliance (2003b). Amman, Jordan, is another city that used a CDS upgraded and modernised their planning capacity to restructure its municipal management and to better cope with rapid population increases governance. Box 11 describes how Amman reor- generated by refugee movements due to ganised local government departments and Amman's status in the region as a safe haven. Guide to City Development Strategies | 39 RESTRUCTURING MUNICIPAL MANAGEMENT AND GOVERNANCE UNDER STRESS IN BOX 11. GREATER AMMAN MUNICIPALITY, JORDAN A mman, the capital of Jordan and home to more than 2 mil- in low-density areas, minimise sprawl, and better accommo- lion residents, has undergone rapid expansion in the past date and service the recent influx of new residents. A series decade. This increase reflects Amman's status as a safe haven in of workshops is planned to unveil the revamped manage- a region of conflict--following the first Gulf War in the early ment and urban planning approaches and to encourage par- 1990s, for example, there was a sudden influx of about 300,000 ticipation. In addition, the CDS has led to the adoption of a refugees. This influx has placed extraordinary pressures on the citywide upgrading strategy for squatter settlements and city to plan and deliver municipal services. refugee camps. To achieve its growth potential and more efficiently deliv- er services to city residents, the Greater Amman Municipali- ty focussed its CDS on strengthening municipal manage- Source: Cities Alliance (2005, pp. 58­59). ment and governance, participation, and urban planning capacity. It used CDS funding to recruit a municipal management specialist to streamline the organizational structure, revamp management systems, and strengthen urban planning processes: (i) functional departments were reorganised and aligned with defined service delivery targets and standards; (ii) the information system, previously consisting of 15 dif- ferent outdated database platforms, was overhauled and consolidated into a single integrated enterprise system. (iii) partici- patory planning processes were imple- mented; and (iv) land-use planning, zon- ing, and building regulations were strengthened to increase the population 40 | Guide to City Development Strategies 7. Building Blocks (Process Methodology) T his section outlines the steps involved in amount of time initiating the process and consid- preparing a CDS. Although much is drawn ering the assessment of the city that would be from worldwide experience over the past 15 produced, the whole process should be aban- years, examples are presented throughout the sec- doned. A strategy produced in conjunction with tion from the recently completed CDS for Xia- middle-level bureaucrats who have little real men, China, which is based on the approach power or influence is unlikely to accomplish its described below. Figure 6 shows key steps in the objectives. process, described in more detail below. 7.1 INITIATING PROCESS AND PROCESS PRINCIPLES Careful and effective initiation of a CDS process is essential to its success. Principles associated with successful CDS initiation include: (i) a strat- egy; (ii) a key stakeholders group; and (iii) guide- lines for the process. 7.1.1 Strategy A strategy, by definition, implies high-level guid- ance and coordination. Thus, senior officials must Riga City Council, Latvia­Key Stakeholder business meeting agree to contribute time and political capital to the CDS process. If a mayor (or equivalent senior official) is not willing to spend a significant Guide to City Development Strategies | 41 STYLISED CITY DEVELOPMENT 7.1.2 Key Stakeholders Group FIGURE 6. STRATEGIC PLANNING PROCESS A successful CDS requires a key stakeholders group, chaired by the mayor and representing key developmental constituents. Although its composition may vary and needs the backing of the mayor (or an equally senior official), the · Relate to existing institutional Initiate Process structures and process committee normally includes representatives of · Define role of strategy local government (the mayor), the knowledge community (a leading academic in a related pol- Establish Initial · Define region icy field), large-scale domestic business (normal- Parameters · Scan ­ scope ly the CEO or manager of a leading, fast-growing · Identify areas of substantive interest based on past processes cluster anchor firm), the informal business com- and context munity (such as the head of the street traders' association or taxi cooperative), the foreign busi- ness community (the manager of one of the lead- Make an · Proceed "detective style" Initial Assessment based on quickly following leads ing multinationals anchoring a cluster), informal · Do not rely on secondary data: · Drivers communities, public health and the environ- "somebody knows" - demographics ment, and labour (or workers' associations). It is Scan / Scope · Spatial imagery expected that each member of the stakeholder · Secondary data committee will be truly representative of a large · Field observation · Interviews (formal & network of the people of the city and reflects informal actors) their concerns. If the group is larger than 10, it is too large and will tend to be ineffective in deal- · Actionable content · Based on unique attributes making, as well as being too unwieldy to con- Develop a Vision and advantages vene. The CDS process is essentially based on collaborative planning; extensive literature on collaborative planning indicates the need for Undertake a · Undertaken in small-group strategic development, with careful- SWOT Analysis context of vision ly chosen members who truly reflect their con- stituencies and can speak and bargain on behalf of these constituencies. Identify Strategic · No strategy without anindicator Thrusts · No indicator without a strategy 7.1.3 Guidelines for the Process · Establish Results Based Indicators An initial meeting with the Key Stakeholder Group, chaired by the mayor, should establish Awareness guidelines for the process. These would include · Print, internet, electronic media Building the following. 7.1.3.1 Duration and Logic of the Process · Commitment from specific actors Successful examples show that an initial assess- · Time defined results commitments ment, described below (section 7.3), could be Implement · Operationalise sustainable monitoring system limited to three weeks in the field and one · Specific Cross- month of follow-up research and documenta- Cutting Actions tion. However, initial behind-the-scenes work will be required to set up interviews, think-tank sessions with the knowledge community, and so forth. Normally, the setting-up activities would commence six to eight weeks before the start of 42 | Guide to City Development Strategies the field assessment, depending on the city's 7.1.3.2 Relationships to existing institutions CDS processes administrative efficiency. Not all interviews and and processes should work with other assessment activities should be firmed up Because the Cities Alliance CDS process is very before the assessment begins. In fact, some meet- limited time wise, it becomes unsustainable if it existing city ings required during the second and third week works on a separate track from that of the city's planning, of the rapid assessment will not be identifiable institutional framework or establishes its own economic during the setting-up stage, given the iterative CDS institutions and processes. Rather, it should detective-like nature of the process. However, work with existing city planning, economic devel- development, meetings with key agencies responsible for eco- opment, environmental, public health, energy, environmental, nomic development, spatial planning, environ- and social planning institutions. This does not pre- public health, ment, public health, and labour do need to be clude the initiation of new institutional processes firmed up. and structures as a result of the CDS process; energy, and however, the point of departure would be the social planning Following the assessment process is stakeholder existing processes and institutions. It is important involvement. This would normally involve meet- that one of the city's institutions act as the CDS institutions. ings with each of the stakeholder groups and the process anchor. The institution should be enthusi- key stakeholder group to facilitate Vision formu- astic about the process and connected to political lation (see section 7.4) and identification of and coordinative power, including the mayor, and Strategic Thrusts (see section 7.6). Once the it should take responsibility for coordinating and group and the stakeholders have identified the catalysing the process. This institution is often the strategic thrusts (through an iterative process), mayor's office. experts in the technical areas will refine them and make them operational. Very importantly, the 7.1.3.3 Community Involvement experts need to develop powerful indicators to All major interest groups in the city should have monitor the progress of implementation, espe- a chance to participate in the process. The pre- cially outputs and results. Normally, stakeholder dominant channel would be through the organi- involvement would last for six months. Aware- sations represented in the key stakeholders group. ness building (see section 7.7) follows, a continu- That group will, in most cases, have already iden- ous process that extends over several years, tified their constituents' interests. However, the including an initial intensive campaign to ensure CDS process should involve at least one open that every citizen of the local community and key meeting (a town hall meeting) to provide infor- members of the global community are aware of mation about the process and the opportunity for the strategy. Implementation (see section 7.8) any group or person to speak up. In cities where extends over several years, with detailed five-year access to the Internet is available to a significant strategies in place involving about five interlock- percentage of the community, an interactive web- ing, cross-cutting strategies. This arrangement site could be set up. Such a website has been provides space for a change in tactics in response established for urban development issues in Thai- to feedback or changing internal and external land (http://www.plannerthailand.com). This conditions. website acknowledges visitor input (a senior offi- cial in Thailand responds to comments and In total, the whole process from initiation to com- queries on a weekly basis). mencement of implementation, should take no more than one year. Energy and enthusiasm may A good CDS will not have 100 percent buy-in. dissipate if the assessment, stakeholder involve- Although searching for as much buy-in as possible ment, and strategising phases take longer. It is should be an underlying principle, expecting to important that the energy of the key stakeholders achieve consensus is a sure recipe for a strategy be compacted. Furthermore, the experts needed with no content. Searching for complete consen- to produce a first-rate strategy will be expensive sus often leads to cosmetic participatory process- to hire, and their work should therefore be con- es, such as town meetings where real dealing centrated over a short period. among interest groups does not occur and people Guide to City Development Strategies | 43 in the community quickly realise that they are identified. It is essential that targets and indicators being manipulated, or they feel they are wasting be directly linked to the strategic thrusts. their time and become alienated. 7.1.3.5 Implementation Commitment A good CDS is fair (just) to all groups and plots Although there is a need at the outset of the the best means to achieve the city's vision on the process to obtain a commitment to implementa- basis of a realistic reading of the city's internal and tion, detailed implementation planning will need external environments (see assessment in section to await the identification of strategic thrusts. 7.3 and strengths­weaknesses­opportunities­ threats [SWOT analysis] in section 7.5). This will 7.1.3.6 Assessment Team Composition mean commitment and compromise by all key The assessment team should include the highest groups, and that all hard-edged negotiations will quality domestic and international experts and precede the deals cut with interest groups through have support from the very best young enthusias- the Key Stakeholder Group. If the CDS is to be tic researchers in the community (those likely to meaningful, it will involve considerable contesta- be future community leaders)--probably local tion, hard work, and stress within the Key Stake- university students. As argued above, outsiders holder Group. If the CDS process is easy and bring a very valuable perspective to the process, uncontested, it has no content and has no chance and involving outsiders is virtually always prac- of leading to meaningful change. tised in preparing CDSs for industrialised cities. The senior team will normally consist of no more 7.1.3.4 than two domestic and two foreign people. The A CDS does not set development targets or goals team members should not require more than six at inception. The essence of the CDS process is to to eight weeks of time each to undertake the develop a Vision; only later are strategic thrusts assessment and document it to world-class stan- dards (using high-quality graphics, spatial imagery, and the like). The underlying principle would be to hire the best available national and international talent for limited amounts of time, rather than hiring mediocre talent for longer peri- ods. Effective assessment requires conceptual breakthroughs, knowledge of international best practice, and keen insight. These requirements are not normally met by off-the-shelf teams provided by consulting firms, although some international firms such as McKinsey are building up world- class CDS teams, operating globally. If a high- quality assessment team cannot be put together, the CDS process should be abandoned, rather than wasting the city's time. Even worse, poor assessment, SWOT, and strategic thrust identifica- tion can mislead a city, causing significant dam- age, especially if a poor-quality product is taken seriously. 7.1.3.7 Strategic Thrust Technical Team Although one or more members of the assess- ment team might be involved in technical sup- View of `Ger' area in Ulaanbaatar, Mongolia port to identify strategic thrusts and formulate indicators for the monitoring, team composition for these latter stages of the process cannot be 44 | Guide to City Development Strategies predetermined. Again, it is important that the FOUR-LEVEL SPATIAL DEFINITION AND FIGURE 7. best personnel available provide the technical SCOPING: XIAMEN, CHINA inputs needed to formulate the strategic thrusts and indicators. Normally, these latter processes need people with different sets of skills. 7.2 ESTABLISHING INITIAL PARAMETERS Establishing initial parameters involves two main factors: (i) spatial definition; and (ii) substantive focus. 7.2.1 Spatial definition Defining the spatial domain for a CDS is a diffi- cult task because there is a tradeoff between the amount of territory (and usually the number of local government jurisdictions) covered, and the depth of a strategy. As experience indicates, scan­scope approaches are the best way of han- dling this tradeoff. The context is scanned widely at the regional (EUR plus hinterland) level, but the actual strategising is applied at the metropol- itan level. Then, within the metropolitan area, the team assesses specific areas in much more detail, using scoping, because they are key to the future of the city for a variety of reasons--absorption of migrants, employment nodes, high-value transac- tion environments, social and economic malaise, and so on. Figure 7 shows this four-level spatial definition in the case of the urban development opportunity assessment study commissioned by Shui On Land Limited. Areas to be zoomed in on for scoping (detailed assessment, including street-by-street fieldwork) cannot be identified at the start; instead, they are identified iteratively, during the initial assessment stage. Spatial definition involves the use of remote-sensing imagery, preferably along with time-series images dating back 10 ­15 years. Such images are becoming inexpensive; however, if funds are not available to purchase such images, remote-sensing imagery of almost Source: Webster et al (2005) Guide to City Development Strategies | 45 every city on Earth is now available on the Inter- field and are known to work well under almost net, particularly through Google Maps (by tog- any conditions. Manuals on these techniques are gling on the maps at http://maps.google.com) and readily available (ADB 2004; United Nations Google Earth (http://earth.google.com)--albeit 2004a; Frye 2005). the detail varies from city to city. 7.3.1 Drivers 7.2.2 Areas of Substantive Focus Initial assessment starts with identification of This is often referred to as the "Where do you "Drivers", that is, what is driving the city's econo- enter?" question. Cities vary widely in the extent my and its national and global roles. Essentially, to which they have assessed their situation and why does the city exist? And what is driving its identified strategic priorities. Thus, although in growth (or stagnation or decline)? Drivers are of principle those involved in CDS processes should two types: (i) internal (such as local human have few preconceived notions, some cities may resource capabilities); and (ii) external (such as have already identified key priorities and even foreign direct investment, trading environments, formulated a vision. In such cases, the city and the national policy frameworks for urbanisation, key stakeholder group will need to decide to what demand for exports). Driver assessment is as extent the CDS process could be narrowed down much an art as a science. It is itself driven more by by past work. For example, they may decide that content analysis of media and by unconventional the CDS should focus on productively absorbing sources of information (such as futures studies) migrants, establishing the city as an information than by secondary data and other conventional communications technology leader, or restructur- sources of information. The driver assessment ing the urban form to meet accessibility and ener- should have a futures-oriented perspective; that gy efficiency targets. However, even if the sub- is, it should focus on emerging drivers (trends, stantive area of the CDS is narrowed, the potential shocks, cycles, and random events). As assessment, within that frame, could be Kaplan and Norton (1996) indicated, the driver approached with a clean perspective. That is, analysis should determine which performance assessment and conceptualisation should become drivers are directly associated with future per- attempts to reframe both the problem and the formance, not those associated with past out- solutions (thinking outside the box) to come up comes. Futures-oriented publications, such as The with the most effective strategies. If CDS strate- Futurist, can sensitise analysts to the issues and gies are narrowed, the technical assessment team can give them ideas of where to look for relevant should obviously reflect the new substantive information about the city. Also useful are region- focus. However, in no case should a narrow CDS be ally oriented publications, such as the Far Eastern undertaken unless a broader one, based on high- Economic Review. quality assessment and strategising, has first been undertaken. A major driver of urbanisation is demographic change. Thus, the driver analysis should identify demographic dynamics, including at the intramet- ropolitan scale. Where are migrants settling? 7.3 INITIAL ASSESSMENT Which parts of the city are growing fastest? Slow- est? In many cases, demographic assessments are Initial assessment techniques to provide an infor- difficult because some censuses are of poor qual- mation basis for identifying a city's strengths­ ity or some jurisdictions count people only where weaknesses­opportunities­threats (SWOT analy- they are registered (which may be a town they sis) have been well documented and tested in the migrated from), rather than where they actually live. Fast-growing cities tend to undercount their populations. 46 | Guide to City Development Strategies 7.3.2 Scanning effectiveness of their treatments. More detail on the delivery of basic services can be found in sec- The next step in the initial assessment is to scan tion 6.2 and Appendix B. the city's in terms of its economy, public service delivery, environment, spatial and built form, and Environmental scanning involves the review of social conditions. existing time-series data on aspects of the envi- ronment most important to public health, such as Economic scanning involves a review of key avail- air pollution and surface-water quality. Develop- able time-series economic data, enhanced with ing cities see environmental issues from a public simple indices, such as shift­share and location health viewpoint, in contrast to the perspective of quotient. This analysis by itself often yields a lim- Western industrialised cities. Fortunately, elec- ited understanding of the urban economy, given tronic monitoring equipment is becoming less the poor quality of urban-scale data in most expensive worldwide, so monitoring of environ- developing cities. Also, in fast-growing and fast- mental conditions is improving in many cities. changing urban economies, knowledge of the Another focus of environmental scanning is a existing situation and even of trends is less useful city's environmental and public health infrastruc- than it would be in slower growing ones. ture and delivery of services, such as coverage of water supply and wastewater systems. More important is cluster analysis based on in- depth interviews with leaders of the local eco- Spatial scanning focuses on (i) elements; and (ii) nomic development agency, chambers of com- dynamics, as shown in Figure 7. Time-series merce, trade associations, informal economic remote sensing imagery discloses changes in the associations, and so forth. The objective of the spatial form of urban areas. However, a deep cluster analysis is to determine (i) the order-of- understanding of spatial elements and dynamics magnitude importance (in employment and requires in-depth briefings by local physical plan- value-added terms) of diverse economic activi- ners, real estate agents (or their equivalents), ties; (ii) emerging activities and future potential; property developers, and transportation planners. and (iii) key anchor firms or leaders of informal Key probes, as described in Appendix C, are based economic groups, such as vendors' associations. on international experience and are used to iden- Cluster analysis almost always produces insights tify spatial elements. Spatial imagery examined in missed by traditional sectoral analysis (Porter isolation reveals very little about spatial change. 1988). For example, a cluster scan of the local But combined with on-the-ground iterative field- economy of Xiamen, China, revealed the exis- work and triangulation with other data sources it tence of a world-class aircraft refurbishing cluster, can be a powerful tool for understanding the spa- which would not have been found in the second- tial dynamics of a city. ary data, where the activity was buried in the machinery category. Service sector data are often Identifying spatial dynamics depends on identify- even more deficient. For example, cluster analysis ing the drivers of change. Particularly important is readily identifies Bangkok's vibrant advertising the transportation infrastructure, such as new industry, whereas it is buried in the traditional expressways and rapid transit systems (complet- sectoral data. ed, committed [date of completion], or planned). Also important to spatial dynamics are intraurban Scanning of basic services delivery focuses on the differentials in the dynamics of both formal and quality, quantity (including coverage), fiscal and informal real estate markets, changes in the per- ecological sustainability, and affordability of the services. For example, scanning would determine accessibility to primary health centres (where and how costly they are and their wait times) and the Guide to City Development Strategies | 47 ception of areas (signalled by "trendy" activities, and the competitor cities, and emerging econom- movement of neighbourhood status up and ic activities. Data requests should be sharp, lean, down, and the like), and changes in spatial invest- and limited. Comprehensive data lists (fishing ment and employment creation patterns. It is expeditions) turn off the people at the agencies, important not to confuse spatial dynamics with who will correctly decide the assessors don't official city plans. As indicated by the case of know what they are doing and may give them no Chengdu, China, cities often take off in directions data, or at least not the most important data. different from those the planners advocate. In a city assessment, the lack of formal data, espe- Social scanning could focus on access to basic cially in many Sub-Saharan African cities, may services and education, the prime levers of not be as big a problem as it initially might seem. upward mobility in most cities of the world. For- By definition, "somebody always knows", and mal unemployment rates tell little in many cities. Bamako illustrates how data can be collected in More useful are data on real household income, the absence of strong statistical databases (Box access to services, and education enrolment. Data 12). on access to education and to its facilitating mechanisms, such as student loans, are particular- 7.3.3 Scoping ly important. As is the case with economic and spatial scanning, time-series analysis is imperative. The next step in the initial assessment is to scope Knowing the changes in the social condition of in on key issue areas and dynamics. In the case of populations is more important than having a the economy, scoping involves interviewing man- description of static conditions. agers of anchor firms in rapidly growing clusters, obtaining their views on the future of the econo- In scanning a city, it is important to consider a my. A simple template of key information could diversity of views from a representative set of be prepared before each interview and sent to actors, such as multinationals, small to medium- the interviewees before the visit. Figure 8 identi- size enterprises, NGOs, labour unions, associations fies clusters that were subject to more detailed and leaders representing the informal economy, analysis in the preparation of the Xiamen city trade associations, and property developers. In evaluation study commissioned by Shui On Land cities where use of the Internet is common, the Limited. CDS anchor institution could establish a site to solicit input on the dynamics of the city; in other Specific problems related to public health and contexts, call-in lines could be set up. Also useful the environment (such as respiratory disease or are radio talk shows soliciting calls from a variety increases in traffic deaths and injuries) would be of residents. assessed in more detail for causality. In a spatial sense, scoping involves walking the streets and Interviews are most effective if data needs are back alleys of targeted areas, interpreting the well-documented and lists are left with priority details of imagery, and field-checking new devel- agencies for technical follow-up. This frees up the opment corridors and areas (is construction really interview time for probing questions, such as, under way?). Scoping in on the most important what are the issues? Which aspects of the system social challenges may involve meetings with lead- are performing poorly? Which are performing ers of advocacy groups, labour agencies, educa- well? Good interviews probe to find the biggest tors, and others. The most important principle in problem, the identities of the important players scoping is to work iteratively: one key informant is likely to recommend a second, and so on. Inter- views or visits can also be politely dropped when it is determined that the dynamics involved are not critical to the future of the city. 48 | Guide to City Development Strategies BOX 12. COLLECTING CITY DATA IN BAMAKO, MALI hen Bamako, Mali, decided to embark on a CDS process, W shop itself was conducted in the local language and effectively it was met with enthusiasm by various city stakeholder used moderators to explore, discuss, and debate positions dur- groups. The stakeholders placed great hope in the process to ing a face-to-face forum of city stakeholders. This highly partici- deliver desperately needed social programmes and infrastruc- patory process resulted in a much richer understanding of the ture. Given the weak statistical base and lack of city indicators, city's situation and development needs and led to an agreed-on the CDS team organised a public workshop to gather information set of objectives for the CDS, as well as the much-needed buy- on the city and to elicit public input for the CDS. The workshop in and commitment of a broad cross-section of stakeholders to brought together stakeholders from a broad cross-section of a development strategy. business people, community groups, and local organizations, Afterwards, the difficult challenge facing the CDS team ranging from refuse collectors and women's rights groups to was to convert the workshop results from a wish list to a commercial interests and government agencies. These individu- truly strategic development plan. Unfortunately, consulting als were able to provide information not elsewhere documented support and funding had run out shortly after the public about the city's conditions, spatial dynamics, and trends, and workshop, before the CDS team could translate the strate- they helped to identify important issues and objectives for the gy into concrete actions. This loss of momentum is disap- city's development. pointing in light of the interest and participation of so many With a substantial portion of Bamako's population poorly edu- stakeholders, which if effectively coordinated and directed, cated and illiterate, the standard written forms of information represented an important resource for achieving the city's gathering and dissemination--such as questionnaires, reports, journals, newspapers, texts, and statistical data--could not be development potential. used. Instead, the CDS team used direct contact and public radio to raise awareness about the CDS and the workshop. The work- Source: Koby (2002). Scoping is even more important if data sources 7.4 FORMULATING A VISION are limited. Scoping should be detective-like until it has uncovered the information needed for A Vision is a statement of where a city wants to understanding the dynamics of the city. be, usually in 10­15 years. A city's Vision needs to be specific, internally consistent, and realistic but Assessment is not dependent on great specificity. challenging. It has to not only inspire and chal- More important is determining the overall magni- lenge, but also be meaningful to all the residents. tude, direction, and rate of change within key the- The key stakeholders group creates a city's Vision matic areas so that SWOT analysis can be used to in brainstorming sessions, using information from make a diagnosis. As Lord Keynes noted, "It is bet- the initial assessment (described in section 7.3). A ter to be roughly right, than precisely wrong." Vision should reflect the unique attributes of the urban region: (i) its comparative and competitive advantages; (ii) its values and preferences of its 7.3.4 Benchmarking residents; (iii) its relationship to the global, Another important component of the initial domestic, and subnational economies (especially assessment is benchmarking. How does the city's its hinterland and competitor cities); (iv) its his- performance compare in key thematic areas with tory and culture; and (v) its physical characteris- other similar cities, with competitor cities, and tics, such as location, climate, terrain, water sup- with "aspirational" cities (those performing at the ply, and scenic attributes. level to which the analysed city aspires)? Several measures can be used for benchmarking: income, social service coverage and effectiveness, unit costs of infrastructure delivery, growth rates, or energy consumption. The key thematic areas that are the subject of the scoping could be included as well. Guide to City Development Strategies | 49 A Vision creates FIGURE 8. KEY ECONOMIC CLUSTERS: XIAMEN, CHINA an identity for a city, enabling it to stand out in Logistics-- the world. COSMOPOLITANISM Customer Oriented CONNECTIVITY Manufacturing Aircraft Tourism Port Machinery Maintenance & Refurbishing Airport MICE Logistics Chemicals Amenity Property Financial & Electronics Amenity Economy Business Services Manufacturing Economy LOCAL GOVERNMENT SUPPORT Source: Webster (2005) The Vision should be oriented to the outside conditions change, but the Vision should remain world, as well as to the city's own residents. It constant, like a lighthouse. (Only in rare cases should have a positive tone, saying, for example, would the external or internal conditions change "making high-quality housing available to all", so significantly as to make a rewrite of the vision rather than "eliminating slums". necessary.) A Vision is important because it aligns stakeholders' energies so that the stockholders A Vision should be short (no more than 60 work cohesively, facing in the same direction, for words) and easy to understand. It creates an iden- the good of the city and its region. Although ori- tity for a city, enabling it to stand out in the ented for the long term, a Vision should motivate world. Figure 9 presents the visions developed in short-term action. As the environment facing the Ulanbaatar, Mongolia, and Xiamen, China, cities worldwide becomes more uncertain, their CDS processes; they are based on the unique visions become more important, providing conti- characteristics of these cities (their economies, nuity when tactics change rapidly as a result of location, amenity endowments, and so forth). anticipation and foresight techniques. Although short, a Vision can be a powerful uni- As noted, the key stakeholders group or an equiv- fying force in a community. Normally, it should alent body, chaired by the mayor and representing stay the same over the 10-year period; tactics to the executive leadership of a city, should develop implement the Vision may change regularly as the Vision. It is critical that the Vision not be pre- pared in isolation by the local government or technocrats. Often, the Vision can and should 50 | Guide to City Development Strategies FIGURE 9. VISIONS OF ULAANBAATAR, MONGOLIA, AND XIAMEN, CHINA Ulaanbataar Vision 2020 Vision of Xiamen Vision 1: The City to be a well-developed · To become a globally connected capital city of international level; to have a city, based on Xiamen's historic vibrant economy; to be a world-class busi- international role and world class ness center having a competitive position in logistics capabilities. the areas of education, information, science · Supporting time sensitive and and technology. customer oriented manufacturing Vision 2: The City to have an appropriate pol- · A unique urban island paradise, icy for land management and urban develop- destination for business and leisure ment, including developing the "Ger" Area travel, conventions, talent and with appropriate infrastructure, and for amenity seekers. improving housing conditions of all citizens. · Providing residents with a friendly Vision 3: The City to be healthy, to have a and relaxed way of life in a superior safe environment, a well-knit social life and a urban environment. progressive legal framework. Vision 4: The City to have a responsive and efficient public administration having a par- ticipatory approach involving the community and the private business sector in civil serv- ices. Vision 5: The City to be an attractive tourist destination in the Asian region. Source: Webster, et al (2005) incorporate the existing meaningful images of a 7.5 IDENTIFYING STRENGTHS­ city, such as slogans and icons, to provide continu- WEAKNESSES­OPPORTUNITIES­ ity with the past. The exception would be images THREATS (SWOT ANALYSIS) associated with past failed efforts. As noted, the group should base the Vision on the initial assess- With the initial assessment complete and the ment, paying special attention to the resources Vision agreed on, the key stakeholders group available for implementation based on an audit begins the SWOT analysis. Figure 10 gives the (see section 7.5). In formulating the Vision, the basic structure of a SWOT analysis. "Strengths" key stakeholders group can employ various tech- and "weaknesses" refer to the internal characteris- niques to solicit input, such as focus groups, radio tics of a city, especially: (i) its key public, private, call-in shows, Internet sites, contests, and letters to and third sector (nonprofit) institutions; (ii) eco- newspapers. International experts may be helpful nomic factors and endowments; and (iii) the sta- in ensuring that the vision captures the larger pic- tus of its physical environment. "Opportunities" ture, that it is realistic, and that it focuses on the and "threats" refer to the external environment, leading opportunities open to a city. This interna- including economic, technological, political, and tional input should include the expert opinions of social trends, cycles, shocks, and the like. the senior personnel who were involved in the ini- tial assessment. Guide to City Development Strategies | 51 SWOT ANALYSIS: EXTERNAL AND FIGURE 10. INTERNAL ENVIRONMENTS External Internal Environment Environment (factors outside control (factors under control of municipality) of municipality) Opportunities Strengths Threats Weaknesses SWOT analysis is done after the Vision is com- · Build on institutions with the most capacity, plete and in only some cases, simultaneously with potential, leadership, and enthusiasm--Building the development of the Vision. In other words, on existing institutions is very important in the analysis assesses how well the internal and implementing strategic thrusts (see section external environments of a city may contribute 7.8, below). Conversely, it enables strategic to, or hinder, achievement of the Vision. Large champions to identify and avoid low-capacity amounts of technical information, particularly in institutions that would thwart the strategy. Or the business, planning, and public policy litera- those institutions could immediately be ture, are available to assist in the undertaking of strengthened if they are central to the strategy. the SWOT analysts. Institutional contexts vary widely from city to city, and especially between nations; thus, key SWOT analysis enables a city to do the following: institutions should be selected carefully on the basis of their real relevance to the vision. · Build on and leverage strengths and opportuni- ties--A city's emerging clusters, strengths, and · Identify institutions that may oppose the strate- opportunities could be increasing world mar- gy--When it is known which institutions may kets for its products, and this additional wealth oppose the strategy, efforts can be put into could lower the national interest rates to convincing them of the value of the strategy, finance affordable housing. and if that doesn't work, the strategy could be implemented by "going around" them. · Avoid threats or take actions to minimise them, or even reverse their impacts--A city could derive an advantage from rising petroleum prices, for example, if it becomes more energy 7.6 SETTING STRATEGIC THRUSTS efficient than its competitors. The key stakeholder group identifies the strategic thrusts (Kaplan and Norton 1996). In essence, a strategic thrust is based on a hypothesis about cause and effect. The group should normally select no more than five strategic thrusts; other- wise, the strategy will lack focus and be less com- prehensible, and financial and knowledge resources will be stretched too thin. Strategic 52 | Guide to City Development Strategies thrusts are a set of means (actions), pursued with the fine-tuning, fielding personnel that are discipline and intent to produce results within a experts in the strategic areas identified. given period, as measured with key indicators against targets. Strategic thrusts are not wish lists, In many CDSs, the strategic thrusts identified are lists of projects, or comprehensive sectoral plans. not true strategies but themes or even objectives, If CDS processes are open ended and highly par- such as "improve the urban environment", ticipatory, it is challenging to come up with a few "improve accessibility through balanced trans- strategic intervention points--large meetings tend portation systems", or "eliminate slums". Imple- to generate wish lists; see Box 12, the case of mentation of a true strategic thrust should be Bamako. measurable; as such, it needs to consist of specif- ic actions. A given strategic thrust is rarely the responsibility of one institution; instead, it is a set of cross-cut- Indicators should be attached to every strategic ting, interlocking actions that will deliver the thrust to measure its achievement. The focus maximum impact while achieving its objective should be on output, outcome, and results cost-effectively. (impact) indicators, not on input indicators, although in a few cases, input indicators may be Strategic thrusts almost always involve capital useful (for example, students per classroom). If investment from the public and private sectors; results-based budgeting is introduced or required, changes to policy frameworks, affecting firms and for example, the monitoring system needs input households; modification of regulatory frame- indicators. Formulating operational indicators is works; awareness and education campaigns; and extremely difficult and requires technical expert- community action. For example, a strategic thrust ise. Normally, the experts would identify a com- might involve implementing significant pick-up posite flagship indicator for each strategic thrust, fees for garbage exceeding one bin weekly, encour- along with four to six key indicators measuring aging households to recycle and better manage the most important elements of achievement of waste; this action might be combined with an the strategic thrust (Flood 1999). In developing awareness strategy and support for a private recy- cities (this is also frequently true of industrialised cling service. A strategic thrust to revitalise a CBD cities), monitoring systems to measure strategic might involve a private developer being encour- performance are rarely maintained, and they aged to build a signature (icon) building, changes therefore tend to be unsustainable. So, an appro- in floor area ratios in the area, and rapid transit priately funded mechanism should be established service to enable high densities without conges- to ensure the continued operation of the moni- tion. A productivity enhancement programme toring system; otherwise, it will surely die. might involve new partnerships between leading multinational corporations and local technical col- leges, new curricula, greater interaction between the local government and leading firms, a new sci- ence park near the local university, and a campaign to attract talent to (or back to) the city. In designing strategic thrusts, further technical work will be necessary. More detailed studies will be needed of issue areas, economic clusters, geo- graphic areas, financing options, among others that are the focus of the thrust. Meetings with key actors, an examination of international best prac- tice and probes regarding financing possibilities will need to be undertaken. If the budget permits, Aerial view of Maputo, Mozambique the technical team should provide assistance in Guide to City Development Strategies | 53 7.7 AWARENESS BUILDING Implementation Task Forces should be estab- lished to implement each strategic thrust; that is, If a CDS is to be successful, it needs the support approximately five task forces will be needed. of most of the community, especially the key The action plan should identify and find the stakeholders. To achieve this, the Vision and infor- means to procure the resources for implementa- mation on the identified strategic thrusts needs to tion, backed up by financial and economic analy- be disseminated throughout the city. This cam- sis justifying the proposed resource allocation. paign can be mounted through a mix of media, Procuring financing is a key responsibility of these which will vary from place to place. In some task forces. They will need to identify, assess, and cities, an interactive Internet website (that solicits chase down sources of financing; and they should feedback) would be a powerful agent for dissem- be entrepreneurial and enable innovative financ- inating strategic concepts; in many African cities, ing, such as public­private partnerships. They the radio will be the dominant medium. Other should persuade property developers, bankers, media used successfully worldwide are newspa- and investors to finance catalytic initiatives. And per inserts, models, exhibitions, and video shows to be credible, the task forces need to be known in high-traffic areas (such as city bus terminals), for integrity (lack of corruption) and for transpar- on television, and at public meetings. ent processes. During the awareness building, buy-in campaign, The Action Plan will clearly indicate who (which strategic thrusts should be modified based on use- agency) is responsible for what; the timelines and ful feedback. Additionally, groups or individuals milestones; and the expected inputs, outputs and are likely to step forward to offer their energies or results (impacts). To minimise disruption, the capital to effect the strategy. Early stage of strate- CDS team will create conflict resolution process- gy dissemination processes can ask the question, es to deal with conflicts during implementation of "what did we miss that is important?" It is critical the strategic thrusts. Public disputes and the esca- that the citizens understand that the strategy is lation of conflict would undermine the whole important; that it means something; that the city CDS process. The specifics of the action plan leaders in the public, private, and third sectors are might require refinement of the key indicators for taking it seriously; and that it will lead to action. monitoring results. Importantly, the monitoring system to track strategy implementation would be initiated at this time. 7.8 IMPLEMENTATION To get the CDS off to a good start, emphasis should be placed on early, rapid implementation A CDS is of no value unless it is implemented. To of high-profile, low-risk initiatives. Riskier initia- do this an Action Plan for each strategic thrust tives can be implemented later. For example, needs to be formulated. The action plans will be Penang, Malaysia, in implementing its highly suc- based on cross-cutting actions, that is, sets of cessful CDS, used its own funds to set up an elec- actions involving several agencies or enterprises. tronics plant to train an initial set of workers to The action plans require technical input, but show that local people could do well at electron- within each strategic thrust area, task forces (see ic assembly (see Box 6). below) of local experts should be put in place to turn the action plans into rolling operations. 54 | Guide to City Development Strategies Aerial view of the port city of Aden, Yemen Guide to City Development Strategies | 55 APPENDICES The five appendices provide guideance to some important thematic issues asked by Cities Alliance partners during the city development strategy (CDS) process, particularly when doing initial assessments. The themes are clustered as in the main text, that is, around issues related to livelihood (Appendix A); environmental quality, service delivery, and energy efficiency (Appendix B); infrastructure and spatial form (Appendix C); financial resources (Appendix D); and governance (Appendix E). These appendices do not provide a comprehensive list; nor are they to be considered prescriptive. Rather, they give a sample of important questions to consider. Figure 11 illustrates CARE's Household Livelihood Security Approach useful in understanding livelihood issues as discussed in section 6.1 of this Guide. The improvement in livelihood opportunities for the city's population is the bottomline of almost every CDS process. Guide to City Development Strategies | 57 Appendix A. Livelihood A1. BUSINESS CLIMATE A1.3 Ease of Starting a Business The World Bank and analysts such as Hernando de A1.1 Incentives Offered by the Local Jurisdiction Soto (2000, chap. 2) have done a considerable Some incentives are wasteful. For example, business amount of work on business start-ups. Although service firms are more sensitive to personal income much of the red tape involved in business start-ups tax rates that help them retain and attract talent, is imposed by national governments (and is thus not whereas manufacturing firms are more sensitive to under local control), a big problem lies with local land costs and tariff structures (obviously a national governments that add their own bureaucratic hassles function). The CDS assessment would critically (for local permits, for example), local taxes with a examine incentives offered to businesses to relocate low cost­benefit value, and so on. There appears to to the locale, stay there, and expand, to ensure that be a direct correlation between urban economic suc- the most cost-effective approaches are being taken. cess and the amount of time required to start a busi- Location incentive programmes are expensive and ness: it is generally more difficult to officially start have to be targeted carefully to be effective; fur- businesses in poor cities (in many industrialised thermore, World Trade Organization (WTO) rules cities, a company can be legally established in a day, may limit the types of location incentives that can or even a few hours). In poor cities, particularly in be offered. Africa, the decline in formal employment can be partly attributed to difficulties in formalising a busi- ness: if the barriers to formally creating a business A1.2 Nuisance Taxation are substantial, there will be few business start-ups. Decentralisation, a trend in most developing coun- CDS assessment should document the time it takes tries, results in local governments having more lati- to start a business (de Soto has done this in his tude to tax, but such powers are often abused or research, thus, a methodology does exist), the num- applied counterproductively. Nuisance taxation ber of steps involved, and the cost (including costs (frequently bordering on illegal) will discourage of corruption). CDS analysts can work through the firms from relocating to the city, will drive others process with a local start-up case study to obtain away, and will discourage people from starting up accurate information. new businesses. Properly designed systems of local taxation and user fees that improve the business environment will have the opposite effect. 58 | Guide to City Development Strategies A1.4 Investment Approval Processes for Foreign Firms A2.4 Productivity Gains and Joint Ventures What is the city's labour and capital productivity Investment approval processes vary widely among record (returns to labour and capital)? cities worldwide. For example, in some Chinese eco- nomic zones one-stop service can result in approvals A2.5 Economic Mix and Change in less than a day. In other cities of the world such processes can take over a year, to the point where Is the city's mix of economic activity associated with multinational corporations give up and go else- fast-growing national and international activity? where. Simple measures such as shift­share can be used to measure a city's economic mix if data are available. How fast is the economy changing? Is it moving A1.5 Operating Environment of Informal Sector towards a higher value mix? In turn, controlling for What laws and regulations affect the operations of mix, is the economy performing better or worse small informal businesses (street vendors, repair than expected relative to national and regional services operating in residential areas, and so on)?. norms? A1.6 Government Attitudes towards the Informal Sector A2.6 Movement up the Value Chain and Cluster Deepening Is the local government supportive of the informal sector and livelihood expansion within it? Or does Are local firms and clusters moving up the value the local government view the informal sector as a change? How? Are clusters deepening--that is, are problem? Wuzhou, China, for example, has encour- more suppliers and more sophisticated suppliers aged informal sector activities while introducing emerging? Is the local, national, or provincial (state) human resource and small-business development government attempting to recruit firms to deepen programmes to upgrade those activities. Cities fol- local clusters? lowing this approach have often experienced posi- tive results. A2.7 Rate of Start-ups and Business Deaths At what rate are new businesses, formal or informal, being created? How conducive is the environment A2. COMPETITIVENESS to new firm creation? A2.1 Basic Economic Trends A2.8 Foreign Direct Investment Are there any available time-series data on employ- What is the track record for foreign investment ment and output by key sectors and clusters? What (FDI) over the last 10 years? To what activities is are the income trends (per capita and household)? FDI flowing: manufacturing? real estate? trade? A2.2 Diversity versus Specialisation A2.9 Innovation In general, smaller cities benefit from diversity What types of innovation are occurring in the city? because they are more vulnerable. Larger cities, on Innovation assessment would not be limited to so- the other hand, strive to specialise in activities in called high-tech firms. A garment industry can dis- which they are globally competitive. play innovation as easily as a software cluster; for example, high-value fashion clusters have developed A2.3 National and World-class Economic Activities in Milan and Bangkok. Without innovation, leading to productivity increases, a city cannot increase its Is the urban area a national or global leader in any competitiveness. Gains from additional application activities? Often cities with low profiles will be a of labour and capital in isolation will not translate world or national leader in a given activity. Such into greater competitiveness in the long run. Total activities may show up as clusters, which become factor productivity needs to improve. learning systems. Guide to City Development Strategies | 59 A2.10 Performance of Anchor Firms A3. HUMAN RESOURCE DEVELOPMENT Are leading firms that anchor clusters growing A3.1 Educational quality and quantity (enrolment at quickly? Or are they stable? Are they moving up the various levels). value chain? Are they encouraging growth of suppli- ers? Are anchor firms in industries and clusters Educational quality and quantity are measured using growing faster or slower than the international and key indicators. Quality is as important as quantity. national norms (shift­share)? Are any anchor firms threatened by oversupply of the product they pro- A3.2 Education­Economic Alignment duce? Might they soon be technologically obsolete (for example, firms producing chemical photo- To what extent are local educational curricula, par- graphic films)? In such cases, are new product lines ticularly technical, aligned with emerging economic being introduced to substitute for obsolescence in activities and clusters? other product areas? A3.3 Access to Education A2.11 Labour Market Efficiency Do the poor and migrants have access to education? How is information concerning labour opportunities Do financial problems, admissions procedures, lack disseminated? Does the local or national govern- of information, or local registration requirements ment operate efficient labour information centres? create barriers that make it difficult for children of Do private labour matching services operate? How migrants to enrol in schools (a common problem in efficient are these services, both public and private? peri-urban areas in some countries)? How many people do they place annually in absolute terms and as a percentage of the labour A3.4 Financial Support to Students force? Is financial support, including student loans, avail- able to lower income children to attend school? A2.12 Marketing and Promotion How does the city market and promote itself, given A3.5 Access to Entry-level Jobs that about 10 percent of advertising expenditure in middle-income and industrialised jurisdictions is for Are there courses, with few entry barriers, to place marketing? What attributes, clusters, or activi- respond to increasing consumer demand for drivers ties are at the centre of marketing efforts--Tourism? and barbers, for example? What are the conditions of Manufacturing investment opportunities? Location- access (cost, information, location) to these courses? al incentives? To what extent is this marketing tar- geting, for example, cold-climate tourist markets if A3.6 Geographic Accessibility to Labour Market the city has a subtropical or tropical climate? What media are used for place marketing? Marketing to What are the mean (average) time and financial whom? How successful is this marketing? costs of travelling from home to employment, par- ticularly for lower income residents? A2.13 Attracting Talent What policies are in place to attract talent? Have many talented individuals have these policies attracted to the city? Are national immigration poli- cies conducive to attracting international talent, or do they constrain such flows? 60 | Guide to City Development Strategies Appendix B. Environmental Quality, Service Delivery, and Energy Efficiency B1. ENVIRONMENTAL QUALITY B1.3 Pollution Sources What and where are key point sources of air and B1.1 Air Pollution water pollution? What would be the impact of clos- Is air pollution increasing or decreasing as measured ing the bottom x percent of polluters (for instance, by key indicators (for example, suspended particu- heavy-polluting industries)? lates)? What are the health implications of air pol- lution--respiratory disease, working years lost, mor- B1.4 Sustainability and Safety of Water Supply tality? What set of measures would most effectively and drastically reduce air pollution--Closing firms Is the water supply sustainable? Will abstracting the exceeding emission standards? Changing fuel and groundwater result in insufficient water to supply automobile standards (normally national govern- the forecast demographic and economic growth? ment functions)? Introducing polluter-pay policies? How safe is the water for human use? Is it subject to Banning certain fuels (for example, banning the toxic accidents? burning of coal at street level, as Beijing did)? B1.5 Loss of Agricultural and Environmentally Sensi- B1.2 Wastewater and Water Quality tive Land Is water quality improving or declining in key water What is the annual loss (and time-series trend line) bodies in the urban region? What is the wastewater of first-class agricultural land to urbanisation? What system coverage, including that from non-conven- are the implications for agricultural production (by tional community cisterns and septic systems? At value and key crop output) in the extended urban what percentage of capacity do existing wastewater region (EUR)? Have measures been taken to limit systems operate? If operating problems exist, which this loss--for example, establishing growth bound- is the norm rather than the exception in most devel- aries, setting land quotas, zoning urban expansion oping cities, is this the result of lack of sustainable away from first-class agricultural land? How effec- finance (energy for pumping, chemicals), technical tive have these measures been? If there's a problem, capacity, and so on? is it a result of poor policy design or a lack of enforcement? To what extent is land being removed from environmentally sensitive uses--for example, Guide to City Development Strategies | 61 wetlands, steeply sloped land, land with scenic or B2.5 Delivery of Services to Migrants heritage merit--through conversions to urban uses? Are services available to migrants in both city core slums and peri-urban areas? If not, what precludes B1.6 Amenity migrants from getting access? Local registration requirements? Lack of local facilities and pro- Particularly in the case of middle-income cities, how grammes? Lack of capacity at facilities? attractive is the city to residents, tourists, investors, retirees, students, potential in-migrant talent? B2.6 Public Health B1.7 Natural Hazards What are the key causes of sickness and death? How healthy are the city's residents compared with those What natural hazards threaten the city? Can land- in other cities of comparable economic develop- use policies, emergency preparedness, building ment? What are the rates of infectious disease, such codes, and so forth be used to lower the risk? as HIV­AIDS? How effective are programmes to address infectious disease? How could they be improved? How prepared is the city for new health threats (for example, an influenza pandemic)? What B2. SERVICE DELIVERY AND POLICY are traffic death and injury rates? What measures are FRAMEWORKS being taken to reduce traffic deaths of pedestrians, bicyclists and motorcyclists, and vehicle occupants? B2.1 Demand for Services What socioeconomic trends, particularly demo- B2.7 Efficiency in Delivery of graphic, underpin the demand for public services-- Environmental Infrastructure for example, population growth relative to the sup- ply of basic public services? Are appropriate technologies being used to deliver basic environmental services--solid waste disposal, provision of potable water, and so on--given the B2.2 Delivery of Basic Needs physical conditions and the level of economic devel- What percentage of the population (coverage) have opment? Are the unit costs of infrastructure delivery their basic needs--water supply, garbage pickup, (both capital and operating) higher or lower than in basic sanitation, electricity--met? Are low-income comparable cities? neighbourhoods served? What are the trend lines in terms of coverage? Are user fees charged? Are the B2.8 Maintenance user fees sufficient to ensure sustainable delivery of basic services? Are basic services affordable (what How well are environmental systems maintained, percentage of the population can afford a given serv- measured as a percentage of operating capacity? ice)? Are rate structures customised according to neighbourhood economic status, ability to pay, and B2.9 Energy and Environmental Policy Frameworks so forth? What policy frameworks are in place to encourage firms, households, and infrastructure providers to B2.3 Health, Education, and Literacy Status change behaviours affecting environmental quality What is the health, education, and literacy status of and resource and energy consumption (see Figure city residents as measured using key indicators? By 3)? Are they enforced? What changes in policy sub-area of the city? By household economic frameworks would have the greatest positive bene- cohorts (if data available)? fits, bearing in mind that greater economic benefits can often be realised by changes in policy frame- works (for example, user fees for garbage pickup B2.4 Quality of Basic Services above a certain weekly volume) than by capital What is the quality of basic services--for example, expenditure (for example, building additional land- primary education and health care--measured fills). against benchmark institutions in comparable cities? 62 | Guide to City Development Strategies B3. ENERGY EFFICIENCY delivery? What are the trends in and current levels of density and sprawl as measured by conventional B3.1 Energy Consumption urban density, sprawl, and form quantitative indica- tors (see Schneider, Seto, and others 2003)? Such What is energy consumption (latest year available indicators were used effectively in assessment work and time series) per capita? Per unit of GDP? By key for the Chengdu CDS. industrial processes in the city? By energy source? B3.3 Demand Management B3.2 Urban Form and Energy Consumption In managing energy consumption, what is the bal- Does the existing urban form conserve energy? ance between demand management and supply What financial savings would be realised through enhancement strategies? How is demand managed? changes in urban form, particularly if it meant lower How is new supply determined and financed? transportation costs and unit costs of infrastructure Guide to City Development Strategies | 63 Appendix C. Infrastructure and Spatial Form C1. INFRASTRUCTURE C1.5 Housing Supply and Demand How many new housing units (formal and informal) C1.1 Infrastructure Delivery Performance are produced annually (time-series data)? What are How, and by what institutions (public and private), the trends in property prices, building permits are key infrastructure services delivered? What is issued, and housing vacancies? their performance record in terms of coverage, reli- ability, and cost-effectiveness? How are infrastruc- C1.6 Affordable Land and Housing ture services regulated? Where is land available at a reasonable price for affordable housing? Is this the result of market C1.2 Infrastructure Delivery Modes forces, or is it the result of government subsidies? Is What changes are being considered for infrastruc- this land readily accessible by affordable transporta- ture delivery and maintenance? tion to key employment nodes in the city? How is it serviced? C1.3 Planned Infrastructure C1.7 Transportation Networks What important new civil and environmental infra- structure is coming on stream--Under construction? Identify major transportation infrastructure net- Committed? Planned? works (existing, planned, committed), particularly expressway and mass transit networks. Is the expressway network predominantly radial, or is it a C1.4 Trunk Infrastructure and Urban Form ring road? Which came first, radial or ring links? And How important is trunk infrastructure (for example, how did this sequence affect urban form? What has sewers, expressways) in shaping the city? been, is, and is likely to be the relationship between development of major transportation networks and land use? How do intercity routes (highways, rail) affect the structure of the city? Are road systems being managed proactively (intelligent highways, road pricing, high-occupancy vehicle lanes), or are they being left to laissez-faire use? 64 | Guide to City Development Strategies C1.8 Public Transportation Facilities and Services charge telecommunications services at extremely low rates (with laws in place to prevent abuse, such What types of formal and informal public trans- as unjustified hotel surcharges on telecommunica- portation exist--for example, heavy and light rail, tion services), realising their importance to compet- busways, traditional bus systems, flexible van sys- itiveness. At the other end of the spectrum, some tems often operated by the private sector (the cities, especially in Sub-Saharan Africa, have high- fastest growing form of public transit worldwide, in cost telecommunications systems that virtually both developing and industrialised cities)? Are infor- ensure that large-scale manufacturing will not mal public transportation operators, such as van develop, even if other factors are in place. operators that connect employment and residential How reliable are broadband and wireless high-speed nodes, harassed or encouraged? Are they regulated Internet services? Does the national government for basic safety compliance? What is the route net- block certain information or otherwise interfere work of public transportation systems? What is their with free transmission of information? What is the quality of service? What percentage of the popula- rate of mobile phone penetration among the popu- tion uses public transport (widely defined), especial- lation? (Mobile phones have extremely high rates of ly for travel to and from work? economic return, diffusing market and logistics information, and so forth, especially to the poor.) C1.9 Urban Nodes and Public Transport Demand Are there significant employment, commercial, and residential nodes that would justify rapid transit sys- C2. SPATIAL FORM tems to connect them? C2.1 Formal and Informal Spaces C1.10 Major Transportation Facilities Is the physical structure of the city essentially for- Identify major transportation facilities, particularly mal and modern? Or is it predominantly informal, airports, seaports, and rail terminals (including high with a small, modern downtown? speed rail, inland container terminals). What is the relationship between these facilities and past, pres- C2.2 Urban Density ent, and emerging land use? In particular, are high population and employment densities associated How dense is the city? Is there a steep density fall- with areas proximate to transportation facilities? If off to the periphery? Is the density slope flat? Or not, what can be done to encourage such a dynamic? does it have a U shape, reflecting higher densities on the edge as land values have risen in recent years? C1.11 Movement of Goods C2.3 Land and Property Value Gradients Can goods be moved to and from the nearest port and airport reliably and quickly? At what time and What is the slope of land and property value gradi- financial (per unit) costs? Congestion can deal a ents (for residential, commercial, industrial) from heavy blow to competitiveness, especially to manu- the centre of the city outwards? facturing firms using just-in-time processes. For example, the CALA (Cavite­Laguna) peri-urban C2.4 Land and Housing Markets area south of Manila has suffered considerable loss of competitiveness (relative to that of Bangkok and Describe the behaviour of land and housing mar- Chinese coastal cities) largely because of congestion, kets over time in the city. How efficient are these the product of a lack of EUR- and metropolitan- markets? scale planning and infrastructure implementation (see Webster 2002). C2.5 Monocentric versus Multinodal Form Does the city have a strong CBD, or is it multinodal C1.12 Telecommunication Services with a weak CBD? How reliable are telecommunications services? Are they priced competitively? Telecommunication costs and reliability are an important factor in urban competitiveness. Some cities, such as Singapore, Guide to City Development Strategies | 65 C2.6 Peri-urban Spatial Form C2.11 Location of Slums and Squatter Areas Is peri-urban development contiguous--that is, the Where are slum areas located? Is the pattern one of built-up area is continuous? Or is it patchwork in many mini-slums or a few vast slums? What is the nature? Or focused around satellite cities? What are absolute population living in slum areas? What per- the energy, congestion, and competitiveness implica- centage of the city's total population live in slums? tions of physical development on the fringe? Is the mean population size of slum areas increasing or decreasing? For example, is there a proliferation of mini-slums, or do large slum areas account for a C2.7 Location of the Service Economy high proportion of the slum population? Is the lead- Are high-end business and professional services (to ership of slum areas contested by ethnic groups and the extent that they exist) concentrated in the CBD, so forth? How secure is the tenure of residents? as in most developing cities? Or are they located in Which slum areas are being upgraded? Which have edge-of-city nodes, as in the United States and in deteriorating living conditions? Why? Are slums dis- some developing cities, such as Beijing? appearing in certain areas? How and why? What has happened to the former residents of these areas: did they move to other slums or "graduate" to middle- C2.8 Spatial Distribution of Employment and Economic income neighbourhoods? Output What and where are the major economic nodes C2.12 Land Readjustment (measured in terms of employment, economic out- put) in the city (for example, industrial parks, sci- Is land readjustment, which can generate win­win ence parks, office complexes, economic clusters)? outcomes, occurring in the city? Is there potential How is the spatial distribution of employment and for land readjustment either in the city centre or at economic output changing? the periphery? If not, why not? Is it because of a lack of trust in regulatory frameworks? Or do local gov- ernments lack the capacity to oversee such arrange- C2.9 Social Geography ments, guaranteeing the rights of all participants? Where do the richest people live? Where do the poorest? What neighbourhoods are in decline? C2.13 Destination of Migrants Which are in ascendancy, that is, becoming fashion- able? What social issues are associated with specific Where do migrants tend to settle? Why? areas of the city? Are certain areas of the city associ- ated with specific ethnic, religious, or linguistic C2.14 Geography of Investment groups? Which areas of the city are experiencing invest- ment? Which are experiencing disinvestment? Why? C2.10 Geography of Poverty How is the geography of poverty changing? For C2.15 Congestion. example, in many fast-growing middle-income cities (for example, in Southeast Asia), the geography of Which parts of the city are most congested? What poverty is changing dramatically: the poor are can be done to alleviate this congestion, bearing in increasingly found in peri-urban areas, where manu- mind that high densities and congestion need not be facturing enterprises locate, and less in inner city correlated? (Congestion is density that is poorly areas. Or is the geography of poverty relatively stat- managed; smart urban growth is high density well- ic, with poor neighbourhoods densifying, as is the managed.) case in many Indian cities? C2.16 The Knowledge Economy Where are the most important knowledge clusters in the city? Where are ideas exchanged (for exam- ple, universities, high-tech campuses, transaction- rich environments, key café and pub areas)? Have 66 | Guide to City Development Strategies universities spun off nearby science parks, knowl- C2.18 Street Life, Entertainment, and Recreation edge entrepreneurs, incubation facilities, and so Which parts of the city have the most active street forth? If so, are they geographically proximate to life? Where are the entertainment areas for families? universities and technical institutions? If not, why For individuals? By day? By night? Are recreational not (for example, lack of nearby land and facilities)? areas accessible to the poor? Are the accessible to residents of the core city, or are they concentrated C2.17 Expansion Vectors on the periphery? In which directions is the city expanding most rap- idly--that is, where are the key vectors of expan- sion? What is the relationship between land-use and urban-structure plans and actual on-the-ground physical development patterns? Guide to City Development Strategies | 67 Appendix D. Financial Resources 1. D LOCAL OVERNMENT G INANCIAL F 1.2 D Local overnment G evenues and Expenditures R ESOURCES R AND INSTITUTIONAL Over time, how have revenues and expenditures STRUCTURES changed? Has the source of revenues changed? This analysis would include description of each tax and 1.1 D Local overnment G Budgets of rate-setting powers; a description of user fees col- Over time, how have the size and composition of lected and of tax and other revenue arrears; and a the local government's budget changed? This would description of non-recurring revenue sources, such include tables of revenues and expenditures over the as asset sales and privatisations. last five years (or if more appropriate, the last full economic cycle) and forecasts of expected revenues 1.3 D Capital lanning P and expenditures based on various assumptions (scenarios). This analysis would distinguish between What are the capital improvement plans of the local new borrowings and debt repayment, as well as government, and what are its investment policies? between capital and current expenditure and rev- To what extent have past capital improvement plans enue. A statement of accounting standards would be been executed? attached. 1.4 D Off-budget evenue and Expenditures R To what extent (projects, programmes, monetary value) has the local government leveraged its How large are off-budget revenue (for example, rev- resources through innovative financing mechanisms enue from concessions, sales of land, and so forth not such as build­own transfer (BOT), build­own­oper- included in the formal budget) and expenditure ate, public­private ventures, and so forth? compared with the those of the formal budget? How is this money spent? Are off-budget revenue and expenditure transparent? 68 | Guide to City Development Strategies D1.5 Transfers D2. MOBILISING NONGOVERNMENT CAPITAL Over time, what has been the amount of transfers D2.1 Impact of Land Readjustment from national or other senior-level governments to the local government? What has been the relative How much capital could be attracted if land read- importance of these transfers? On a per capita basis, justment involving high-quality development were how does the amount of transfers compare with that undertaken in key well-located neighbourhoods, of other cities in the country? Is the city entrepre- especially slum areas? What policy measures, trust neurial in lobbying for transfers? Or does it prefer and awareness building, and other measures would self-sufficiency (for example, wanting to avoid con- be needed to unleash this capital through land read- ditions attached to specific grants)? justment processes? D1.6 Extent and Impacts of Decentralisation D2.2 Impact of Land Tenure Is the national government implementing decentral- How much additional credit would flow to informal isation (fiscal, administrative, political)? If fiscal housing areas if land tenure were ensured? What decentralisation is ongoing, is it based on changes to policy measures are needed to unleash this flow of both expenditure and revenue mandates or mainly capital? on changes to expenditure mandates (as is normally the case)? How is decentralisation affecting local D2.3 Housing Credit public sector revenues? Is it resulting in more or less local revenue generation? Many decentralisation Is credit readily available to low-income households frameworks facing developing cities offer little or no to buy housing? Is this credit available through the incentive to raise local revenues, and some may commercial banking system? To what extent is gov- actually discourage local revenue generation. How is ernment involved (for example, through special the city faring fiscally relative to other cities in the institutions such as housing banks or provision guar- nation as decentralisation proceeds? antees)? What is the monthly household income threshold that enables a household to purchase a basic house in the metropolitan area? D1.7 Debt What are the city's debt load and service? What is D2.4 Financing Local Infrastructure the city's repayment performance? What conditions constrain (further) borrowing by the local govern- Do consumers of housing and other buildings pay ment? for the cost of local infrastructure through special tax assessments (repayable through mortgages)? Or do buyers get a "free ride" or suffer from lack of local D1.8 Access to Credit infrastructure (see Figure 5)? Does the local government issue bonds? Does the local government have access to on-lended or D2.5 Microfinance pooled funds (through mechanisms such as munici- pal development funds)? Has the local government What is the amount of microcredit dispersed annu- borrowed from these facilities? If so, how much? ally in the city (most recent year for which data are Over what time period? available, plus time-series data)? What is the total amount of microcredit in circulation? In microfi- nance allocations, which groups are eligible or given D1.9 Credit Rating preference? For example, are women given prefer- Is there a credit rating service for local governments ence? For what can microcredit be used? Is microfi- operating in the country? If so, what is the credit rat- nance organised on a community basis or through ing of the city and how has it changed over time? different institutional mechanisms (for example, D1.10 Autonomous Bodies Within the city are there fiscally autonomous or semi-autonomous enclaves (for example, special economic zones, industrial parks, science parks)? Guide to City Development Strategies | 69 worker cooperatives or trade organisations)? How D3. PRIVATE SECTOR FINANCIAL FLOWS do levels of disbursement, repayment rates, and developmental impacts of microcredit compare D3.1 Foreign Direct Investment with those of best-case cities? What changes in pol- How have the size and the composition of FDI flows icy or public leadership would substantially enhance to firms operating in the city changed over time? the flow of microcredit? (For detailed information on microfinance, see Ledgerwood 1999.) D3.2 Domestic Investment D2.6 Credit for Small and Medium-size Enterprises How has the amount of domestic investment in pro- ductive enterprises changed over time, both in Do commercial banks readily lend to small and aggregate and by sector or cluster? Do companies medium-size enterprises that are creditworthy in operating in the city reinvest profits? Or do the terms of potential but possibly not in terms of col- profits leak out? What policy actions would increase lateral? Or is the commercial banking system biased the flow of capital into productive activity in the towards large businesses? city, including incentives to reinvest profits earned through economic activity in the city? D2.7 Voluntary Organisation Finance How successful are third-sector organisations (vol- D3.3 Commercial Banking Flows untary organisations, nongovernmental and nonprof- According to central bank data, does the city expe- it organisations, and so forth) in attracting funds? rience net inflows or outflows of capital through the Are these funds used effectively? Are such organisa- commercial banking system? What can be done to tions financially transparent? improve this performance? 70 | Guide to City Development Strategies Appendix E. Governance E1. NATIONAL URBAN POLICY FRAMEWORKS tion's share of the national population.) The larger and more economically and politically powerful a What are the national urban policy frameworks fac- city is, the greater its potential to exert pressure to ing the city? Undertaking this work is difficult modify national urban policies. because most national policy frameworks affecting urban areas are explicit (for example, grants for urban mass transit systems) or implicit (for example, international trade or corporate taxation policies). E2. INSTITUTIONAL STRUCTURE AND Of particular concern are national or other senior PROCESSES OF LOCAL GOVERNMENT government powers related to (a) financial and debt oversight; (b) service provision; (c) financial autono- E2.1 Local Government Structure and Processes my and debt issuance, including foreign currency or What is the structure of the local government debt restrictions; (d) environmental regulations; (e) (organisational chart)? How are decisions made? To privatisation; and (f) pending or proposed legislation what extent is this structure determined by nation- that affects revenue sources, issuance of debt, al laws? To what extent has it been and can it be pledged security, operation of utilities, or shifts in locally customised? If the latter, are the present service mandates of local governments. structure and process consistent with contemporary issues and needs? Or are they more a reflection of E1.1 Local Priorities and National Policies past realities? Later in the CDS process, what changes are needed in governance structures, How do local priorities align with national policies? processes, network enhancement, knowledge gener- Do these policies reinforce potential CDS strategic ation, and transfers to effect the strategy? thrusts or inhibit it? If the latter, should such nation- al policies be taken as a given, or should efforts be made to change them (through urban political E2.2 Appointment of Officials and Governing Bodies power, lobbying, and so forth)? (Urban areas virtual- Which officials are elected locally? Which are ly worldwide tend to be quantitatively underrepre- appointed? What are the electoral procedures for the sented in parliament relative to the urban popula- governing body and for the chief elected officers? Is the local government led by independent representa- tives, or are the leaders representatives of political Guide to City Development Strategies | 71 parties? Are these political parties nationally organ- E4. METROPOLITAN GOVERNANCE ised? If so, is the local leadership aligned with the rul- ing national party? Does this situation have implica- E4.1 Inter-jurisdictional Cooperation tions for implementation of the strategy? How are functional responsibilities assigned hori- zontally (between municipalities and constituent E2.3 Corruption. districts and counties) and vertically (between municipal, provincial or state, and national govern- What is the level of corruption in the local govern- ments)? Are measures in place to coordinate the ment? What can be done to reduce corruption? delivery of services on a metropolitan or EUR scale (for example, special districts, councils of local gov- ernments, voluntary agreements among local gov- ernments, voluntary agreements motivated by E3. ROLE OF LOCAL GOVERNMENT IN THE incentives such as matching grants from senior gov- CONTEXT OF DECENTRALISATION ernments). E3.1 Decentralisation Impacts on Local Government Determining the effects of the decentralisation framework on city finances requires information on E5. CAPACITY the following: E5.1 Capacity and Development Priorities · The size of the transfers and their relative share of the city's operating revenues; Are the staffing, power, and prestige of different · The degree to which the decentralisation municipal departments well aligned with the emerg- framework motivates or discourages local rev- ing economy and social issues? Often there is severe enue generation; misalignment. For example, tourism is the world's · The extent to which transfers are earmarked largest industry, and it's one of the few service indus- for specific purposes or can be used to fund tries in which developing countries enjoy compara- operations and debt service; tive, and often competitive, advantage. Yet, in many · Revenue sources that have been legally dele- cities, the government pays little attention to this gated to the city; sector, even when it's the most important one in the · Flexibility of the city to effectively adjust its urban economy. Similarly, the informal economy tax sources and levels in response to changing dominates in many developing cities, especially in economic conditions; Sub-Saharan Africa, many South Asian cities, and · Legal and political risks associated with the elsewhere, but few government agencies exist to fos- national revenue-sharing system; ter its performance. · The direction of any changes in the decentrali- sation framework (towards more or less decen- E5.2 Institutional Strengthening and Building Priorities tralisation); · Functions (mandatory and optional) delegated What specific changes in government structures and to the city; in institutional strengthening or building are needed · The size and type of mandated expenditures to improve performance? Later in the CDS process, (for example, public health, public education, the question will be asked in relation to implement- public transportation); ing specific strategic thrusts. · The degree to which operating expenditures may be funded by user charges, fees and taxes E5.3 Attracting and Retaining Talent delegated to the unit, or earmarked revenues from another unit of government; and Is the local government attracting talented creative · The city's ability to adjust its expenditure people? If not, why not? What could realistically be budget quickly under changing economic con- done to improve the situation? ditions. 72 | Guide to City Development Strategies E6. RELATIONSHIP WITH THE E6.3 Relationship with Civil Society PRIVATE SECTOR AND CIVIL SOCIETY How strong are local, national, and international third-sector organisations? How does civil society cooperate and interact with local government in E6.1 Relationship with the Private Sector shaping the future of the city? How important is the What is the relationship between the local govern- role of civil society? What is the character of the ment and the private sector (for example, leading relationship between the local government and the firms, property developers)? In many cases, large civil society? Enabling? Hostile? firms, particularly multinationals, have enormous resources, including problem-solving skills, which E6.4 Local Government Capture can be useful to the community, but they operate in isolation from the local government, having closer Have local government jurisdictions in the EUR relationships with the national government. been captured by special interest groups? Peri-urban area jurisdictions are particularly vulnerable to cap- ture by Mafia-type groups, business groups, and civil E6.2 Modes of Private Sector Cooperation society organisations. Does the local government engage in public­private partnerships, award concessions, participate in inno- vative finance (such as build­own­transfer), and so forth? Guide to City Development Strategies | 73 Figure 11. CARE's Household Livelihood Security Approach Household members use resources to meet basic needs and build assets over time Resources/ Basic Assets services needs Social Water, food Water Physical Health Shelter, Health Human Shocks and Education Shelter Pressure Financial stresses Education Natural Control of resources Food Political by structures and processes, Participation e.g., of water by authorities Resources used to Household Assets buffer households from meet basic needs shocks and stresses and improve household members access resources Barrier to Access to resources access of position through productive/exchange in society: activities: selling labour, goods... 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