Despite unique identities, geographic spread and differing economies, cities all over the world are being tested by the same mega trends. With 60% of the world population predicted to live in cities by 2030, PricewaterhouseCoopers sets out to identify the principle challenges and trends influencing city leaders all over the world in formulating sustainable strategies for the future.
In the course of the year long research for ‘Cities of the future – global competition, local leadership’, senior figures from over 40 cities around the world were interviewed but what has emerged are key themes which cut across the experience of all cities: globalisation, individualism, merging, acceleration, hi-tech, hi-touch, demographics, urbanisation and migration
The 44 city leaders were asked about the challenges their cities face; international and national, external and internal, how they are responding to them and what their plans are for the future. There are two key areas of focus. The external and social intelligence perspective looks at the effects of the mega trends in a global, regional and local perspective. The internal leadership and organisational approach considers the demands on executive leadership, organisational structure and process improvement. Participating cities include Frankfurt, Madrid, Gothenburg, Johannesburg, Sao Paulo, Toronto and Yokohama.
Jan Sturesson, partner, PricewaterhouseCoopers said: “Cities are the engines for developing the society of the future and the urban population explosion which is forecast means we are at a defining point in how our future unfolds. Civic leaders the world over need to be addressing the mega trends we have identified because they affect all areas of civil, business and public life.”
These trends create both opportunities and threats so the strategic agenda of tomorrow is a unique interpretation of them and their impact on cities:
Globalisation / glocalisation - the global economy is becoming truly integrated and there is simultaneous global and local focus known as glocalisation. Global companies and economies work in local competition but within global structures so the movement of a multinational company from or to a city affects many areas of life.
Individualism – an increasingly important social trend which impacts the dialogue between the city and its demanding citizens who need to be viewed as consumers.
Merging – many areas of life are merging together in new ways: work and leisure, culture and values, public and private sectors in public private partnerships.
Acceleration – speed is increasing in all areas of life, often driven by information and communications technology.
Hi-tech – technology has implications for the delivery of all existing services and many more in the future.
Hi-touch – the hardware of technology must go together with the software of emotions, nostalgia, architecture and design.
Demographics – the ageing population will have a major impact across the globe.
Urbanisation – ‘metropolitansiation’ means that large cities have a growing influence on the economic health and prosperity of wider regions and in some cases nations.
Migration – increased migration presents major challenges around social cohesion, integration and employment.
Jan Sturesson, partner, PricewaterhouseCoopers added: “We have identified fresh perspectives on cities, their dreams, knowledge, creativity and motivation in order to find new ways to develop strategic city management. The future requires a strategy that moves from city intelligence to an intelligent city which understands today’s trends, developments and needs.”
In addition to identifying the mega trends city leaders also identified significant challenges that have to be taken into account when creating a strategic plan for the future:
Intellectual and social capital – to compete in the international knowledge economy means ensuring the appropriate people, skills and capabilities are developed.
Democratic capital – city administrations need to be accountable and transparent in dialogue with citizens.
Culture and leisure capital – a strong city brand is a potent visibility. The Barcelona Olympics propelled the city on to the world stage but competition for sporting or cultural events like this is intense.
Environmental capital – cities have to provide a clean, green and safe environment. Oslo’s municipal plan emphasises the importance of maintaining its “blue green” distinctiveness arising from its proximity to both the fjord and the forest.
Technical capital – technology must be able to support the changing needs of citizens. This includes basic needs like transport, housing, water and energy as well as new demands for effective communication like broadband and electronic networks.
Financial capital – growing demand on diminishing revenue bases need creative and flexible financial strategies and increasingly partner with the private sector.
Strong leadership which is both highly consultative and directional is required to manage all these capitals together. Values are a critical element of good leadership and there is an increasing implementation of a value based leadership operating on a number of specific, shared values that are communicated clearly throughout an organisation and used by the leaders daily. Developing accountability is also key to engaging citizens. Disclosing targets and recording performance against them, creating collaborative forums for specific interest groups and arranging services around the needs of citizens all contribute towards cities positions as CSR compliant administrations.
Disasters including natural catastrophes, terrorism and epidemics have also become an important point on the strategic agenda for the future. Individual cities can even influence the financial performance of their nations. The national economy of Canada shrunk by approximately 1% as a result of the SARS outbreak in Toronto and as David Miller, Mayor of Toronto says: “When Toronto was sick, the whole country caught a cold.”
Jan Sturesson, partner, PricewaterhouseCoopers concluded: “City leaders across the world are going to face further challenges and difficulties if they don’t address these issues in their strategic planning for the future.”
City authorities inteviewed on the occasion of the report were those of Kraków and Warsaw.
Warsaw based Profesor Witold Orłowski, chief economic adviser to PricewaterhouseCoopers, said: 'The economy of a big city such as Warsaw, for example, is comparable to the economy of a reasonably sized country. In today's complex world, constantly striving for global competitiveness, big cities must face up to many difficult challenges to be able to fully realise their great potential'.
Michał Mastalerz, vice-director in the consultancy services department at PricewaterhouseCoopers in Warsaw added: 'Cities are the engine of social development. Bearing in mind the foreseeable demographic growth of urban areas, we find ourselves in a crucial point along our development path. City authorities should look closely to identify trends because they will undoubtedly have an influence on all areas of urban dwellers' lives - their economic conditions and public life'.
Warsaw
The capital of Poland and its largest city, is located on both sides of Vistula river, approximately 350 kilometres from both the Carpathian mountains and the Baltic Sea. Its population is estimated at almost 1.7 million with an urban agglomeration of approximately 2.4 million people. The city, also the capital of Masovian Voivodship, is home to many industries (manufacturing, steel, electrical engineering, automotive), and comprises 73 higher education institutions and over 30 theatres.
PricewaterhouseCoopers talked to Sławomir Skrzypek, then the Deputy Mayor of Warsaw about the future challenges and their consequences on the city.
His motto for the coming years is making Warsaw not only an open and friendly city but also a city that is comfortable and full of prospects, and one that people want to live and work in. Global and international trends The event that has and will have the greatest impact on Warsaw is the enlargement of the European Union. Poland’s accession to the EU in May 2004 not only made Warsaw face new challenges but has also created unprecedented opportunities for the city. For Warsaw – a city chaotically rebuilt from ruins – the financial possibilities offered by aid funds are enormous. Furthermore, the use of European aid funds offers a major chance to resolve many infrastructural and transport problems, and Warsaw has already embarked on some of these initiatives. Our long-term aim is to increase Warsaw’s role in Europe. The capital city of Poland should be one of the ten most important European cities, but to achieve this will be a long and difficult process. Currently, we compete with local centres, i.e. Prague and Budapest.
The Warsaw's authoritiesare also carefully observing what is going on to the east of Poland. All the former USSR Republics represent an enormous market for Poland and the European Union. The city of Warsaw sees its future role as a bridge between the EU and Eastern Europe, as a gateway for operations in the east, including the Ukraine.
Furthermore, global events are developing in such a way that it seems necessary to consider strengthening the security measures in the city. This relates primarily to preparing the citizens of Warsaw for crisis situations which are related to global terrorism. Internal trends Demographic processes will probably have the largest impact on the future development of Warsaw. In Warsaw we can already see the processes typical for large cities taking place, e.g. deurbanisation.
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The most recent Central Statistical Office forecast to the year 2030 states that the number of people living within the boundaries of Warsaw will decrease. At the same time, there is increased migration to Warsaw of people seeking to make a new life. Currently, Warsaw is a city where it is relatively easy to find a job, therefore people from all over the country are trying to make the most of the situation and move in. On the basis of the census, the Department of the Chief Architect of the City tried to calculate how many people live in Warsaw. It transpired that there was a significant number of people working in the ‘black economy’. At the same time, other research shows that every day over half a million people come into Warsaw, including 300,000 who come in to work. This shows that there are certainly more than 2 million people in Warsaw. The decrease in population connected with de-urbanisation, together with a simultaneous increase in the number of people coming into Warsaw or temporarily using its services may in future lead to many problems, the first and foremost being financial problems, as nearly 30% of personal income taxes are consumed by the budget. Thus, there is a significant difference between the number of people actually using the city’s infrastructure and the number of taxpayers financing it.
Additionally, the “equalising subsidy” has a large impact on the capital city’s budget. Due to high taxes, Warsaw pays an enormous contribution to the state budget for the development of the poorer regions, amounting to roughly, PLN 470 million per annum. This type of “Robin Hood” contribution significantly reduces the city’s investment capabilities. The population structure by level of education has a significant impact on the city’s future character as well. The share of people with a university-level education in Warsaw is the highest in Poland (24%); it is also rather high compared to other European cities. Therefore we are counting on the local population to enable Warsaw to draw investors looking for highly qualified staff. The comparatively good situation in the Warsaw labour market is deepening the already huge differences in the standard of living in the Mazovian Voivodship. Warsaw and its direct vicinities are developing more and more intensely, becoming more affluent, while the boundaries of the province are increasingly feeling the backwash effect that ‘washes’ the development resources from the region into the city. On the positive side, changes in financing the city investments as a result of European accession are providing a boost to the city. The city is counting on the absorption of EU funds to accelerate local development and to enable several investments to be completed which could not otherwise be realised or would have to be suspended.
The major external challenges of the city concern the construction of the road and highway system (realised by the General Directorate for State Roads and Highways), including the Warsaw ring road.
The major internal challenges are addressing the land ownership issues in Warsaw and using the well-developed train communication network in the city. A SWOT analysis is the next step after preparing the Report on the State of the City in developing the Strategy for the Development of Warsaw until 2020.
Priorities for the next decade The city of Warsaw is in the process of preparing a development strategy. The document will comprise the period up to year 2020. Five strategic goals have been set:
• Improving quality of life and security of Warsaw citizens;
• Strengthening the citizens’ sense of identity by cultivation of tradition, culture development and stimulation of social activity;
• Development of metropolitan functions reinforcing Warsaw’s position at the regional, national and European level;
• Development of modern economy based on knowledge and scientific research; and
• Establishing sustainable spatial order in Warsaw.
When discussing the vision for Warsaw today, we see a future financial centre in our part of Europe, a city with hi-tech industry, attractive to investors and citizens.
Kraków, a city with a population of 760,000 people and 170,000 students, is the centre of Poland's cultural and scientific life and a dynamic centre for the region's economic development. Benefiting from its location and historical inheritance, Kraków aims to become a Central European metropolis and the biggest tourist city in Poland.
PwC talked to Tadeusz Trzmiel, the Vice President of the city of Kraków, about the external and internal trends and their influence on the city in the near future as well as in the longer term. His priority is to promote Kraków as an excellent place to invest, visit and live.
One of the most important trends is globalisation. One aspect of that process that will affect the city of Kraków to a great extent over the next 10 years is the expansion of the European Union. By allowing new states in, the EU has become a very powerful, widespread and competitive (both internally and externally)organisation. The extension of the EU will stimulate international and interregional cooperation. It will also give a chance for less developed countries to achieve the required level of development in a much shorter period of time. Poland, and Kraków in particular because of its location and attractiveness, should openly welcome the bigger market as it brings more opportunities than threats. Internal trends The major internal trends effecting Kraków are inward investment, the increased importance of suburbs and the improvement in infrastructure. Inward investment is seen as a very important tool, which ensures economic development and links Kraków to the common EU and global markets. The importance of the suburbs has grown rapidly during the last 10-15 years mainly due to the development of shopping centres, leisure facilities and housing, which significantly increased the number of people leaving the city to live there. An improvement in infrastructure is a crucial internal trend and a precondition for the city’s prospects.
One of the major external challenges the city faces is the growing competition from other European cities. The changing legal environment (mainly caused by Poland’s accession to the European Union in May 2004) is also an important external trend. A major internal challenge the city faces is the lack of updated special development plans. In some city districts this represents a real barrier to growth and development. Other challenges include ineffective co-operation between the education system and business and the slow transfer of technologies. There are also insufficient attractive employment opportunities for young people. This has resulted in the migration of a number of skilled and talented young people to Warsaw or other European Union cities.
Another important internal challenge is the poor quality of housing estates built in the 1960s and 1970s. Consequences for the city The city of Krakow needs to work out a long-term programme for sustainable and balanced growth. Kraków is updating its vision and strategy. The vision for Krakow for the next 10 years is as follows: "Kraków, a city encouraging civic pride, guaranteeing its inhabitants a high standard of living and demonstrating sustainable development - a European metropolis and competitive hub of a modern economy based on scientific and cultural opportunity"
The vision has been developed as a result of a diagnosis of the current situation in the city and an analysis of its strengths, weaknesses, threats and opportunities. We have also consulted widely with a range of organizations and of course citizens to develop this vision. Local politicians, staff and representatives from the business community were invited to update the Strategy of Kraków, providing expertise and input on the issues that matter most to them.
In view of the increasing global competition between regions and cities, Kraków needs to promote itself more effectively. The intention is to create a modern brand for Kraków that will be associated with a good place for investment, visiting and living. Apart from being a city of national inheritance and culture, some of Kraków’s most important strengths are: a high level of education at the universities, highly qualified people and the high credit rating of the city (BBB+) which enables access to domestic and international financial markets. The strengths should continue to be developed to the benefit of the city and its citizens.
Although in Kraków there is a relatively low level of unemployment, there is still a lack of attractive employment offers for young people. Therefore Kraków will emphasise bringing in new investment and consequently creating new, attractive jobs.
As specified in the updated strategy for the city in the next 10 years the priorities of Kraków will include the following tasks and projects:
• Promotion of Krakow as the biggest tourist centre in Poland: Kraków will cooperate with local and foreign advertising agencies and media houses to effectively promote the city. These activities will encourage tourists to come to Kraków and to extend the time they spend here;
• Development of stronger relationships between the city authorities and the local community;
• Addressing key social issues: building the feeling of safety among citizens through limiting crime, supporting local entrepreneurs in investing processes, and improving public transport;
• Enhanced cooperation between central government and local authorities in three main areas: infrastructure, culture and environmental protection to maximise the benefits available from accession to the European Union.
One thing the Kraków and Warsaw have in common with such cities as Belgrade, Nizhny Novgorod, Dar-es-Salaam, Sao Paulo or the City of Morón, Buenos Aires is that they still need radical improvement to their transport infrastructure to make sure that it can cope with the demands of the present and provide solutions to the visions that those cities have for their respective futures. Many of these cities are dependent on external financing and international donors to support their infrastructure development.
In many cases, the decision to move some facilities to the city centre asks cities to revisit their transport infrastructure.
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