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Pick us! We’ll do anything you want. That’s one way of paraphrasing Maryland’s Transportation Secretary, Pete Rahn’s recent blank check offer to lure the retail giant, Amazon. Maryland’s Montgomery County, Northern Virginia, and Washington D.C., are thrilled to have made it through to Amazon’s reality-show-esque short listing of 20 possible locations for its second headquarters (HQ2). After all, it’s a $5 billion investment that may generate 50,000 jobs! Despite all three being part of the same Washington metropolitan region, known as the DMV, there is little evidence of a coordinated bid. For those of us who hail from the DMV, lack of coordination comes as no surprise. The lack of real cooperation across these local governmental entities is evident since they haven’t been able to find a stable financing solution for the Metro-rail system – the mobility backbone of the metropolitan area. Yet Washington’s metropolitan governance challenges pale in comparison to those faced by less wealthy metropolises who don’t play host to one of the world’s main geopolitical centers.
Globalized commerce has elevated metropolises. They have become the forefront of the battle for nation states’ economic survival and success. The scale of production that it demands is no longer matched by the offerings of a single city, but rather by the combined labor, services and housing markets that broader metropolitan areas provide. When investors -like Amazon- contemplate London, Mumbai, Shanghai, Sao Paulo or Mexico City for their next venture, they are not limiting their scoping to the core city, but to the strategic advantages and limitations of the larger agglomeration. What’s the quality of the nearest port infrastructure? Are the regulations governing business expansion and land use predictable and efficient? Do I have a ready supply of skilled workers and does the quality and cost of living in the metropolitan area help me to attract and retain them? These are the kinds of questions that they are asking.
The cities that are thriving are the ones who are increasingly equipping and branding themselves in ways that ensure their metropolis fits the bill – think Greater London. Sometimes they go even further by highlighting the advantages of the larger industrial corridor in which their metropolitan area sits – Chennai-Bangalore-Mumbai Industrial Corridor and Pearl River Delta Region are familiar examples. By contrast, inter-jurisdictional competition for attracting investments can create perverse incentives. A race to the bottom if you will – that harms the overall competitiveness of the metropolis.
Latin America and Caribbean (LAC) metros are nowhere near the top of the game. The highest ranked LAC metropolis in terms of employment and GDP per capita growth in 2014 was Medellin, Colombia, all the way down at number 46 out of 300! This according to a Brooking’s Institution analysis. That’s consistent with a McKinsey finding that the region’s 10 most populated cities (Sao Paulo, Rio de Janeiro, Buenos Aires, Mexico City, Guadalajara, Lima, Bogota, Belo Horizonte, Porto Alegre and Santiago) have seen their per capita productivity drop. A decline that occurred in both absolute terms (since the 1970s) and relative to other metropolitan areas in developing countries.
Something seems to be hindering the full realization of agglomeration economies – the synergies associated with firms locating close to each other. That ‘something’ may well be related to the way LAC metropolises are governed. A 2015 OECD cross- country study found that metropolitan areas with fragmented governance structures tend to have lower levels of productivity. Yet despite having an average of 16 municipalities, a recent study showed that only about half of LAC metros with populations of one million or more have any metropolitan level coordination mechanism. In more than a third of those cases, the arrangements are ad-hoc.
And what about aspects of metropolitan well-being beyond investment and productivity? While metropolitan growth is expanding the size of labor and consumer markets in many cities, it is creating new demands for the effective management of basic services, mobility, housing, social interaction and a shared environment. Environmental functions such as watershed and flood management, for example, require inter-municipal coordination as their land use footprints do not typically coincide with administrative boundaries. In LAC, these challenges are especially acute because of the very rapid increase in urbanization levels during the latter half of the twentieth century. Urban population growth from 50% to 80% in a mere 60 years far outpaced the responsiveness of land use planning institutions and infrastructure investments. About a third of the region’s population now live and work in the larger metros. Trends suggest that by 2025, 100 million will reside in only six mega-cities.
These issues are at the heart of a new book, Steering the Metropolis – Metropolitan Governance for Sustainable Urban Development , that the IDB launched at the 9th World Urban Forum in Kuala Lumpur earlier this month. Recognizing the critical role of metropolises in the successful realization of the Sustainable Development Goals and the New Urban Agenda, the book, developed with a range of IDB partners including UNHABITAT, University of Guadalajara, CIPPEC and CAF, offers the perspectives of many leading scholars and practitioners. In the words of Bruce Katz, Centennial Scholar at the Brookings Institution, “the papers contain our best understanding of the why and the how of metropolitan governance.” Its 37 Chapters, authored by over 60 contributors, focus upon core concepts and rationales, sectoral applications, and case study illustrations from four continents. Each case study has at least one locally resident author so that political, administrative and cultural nuances are not overlooked.
Putting together this publication was a high priority. As Tatiana Gallego Lizon, IDB’s Division Chief for Housing and Urban Development, said at the launch, we need these reflections to keep our policy advice and interventions relevant to the new demographic, spatial and political realities. But this work, as substantial a volume as it is, merely stokes the fire. The real progress will come as we increasingly put our minds together to figure out how best to engage metropolitan areas in the development agenda – especially those who don’t have the luxury of throwing blank checks at their challenges -be it the Amazon bid or climate change. The IDB bank-wide Metropolitan Governance Thematic Group launched last fall, is a valuable forum for this ongoing exchange to occur.
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