7 101719 COMPETITIVE CITIES FOR JOBS AND GROWTH COMPANION PAPER 7 PUBLIC-PRIVATE DIALOGUE FOR CITY COMPETITIVENESS Dmitry Sivaev, Benjamin Herzberg, Sumit Manchanda December 2015 2 TABLE OF CONTENTS Background and Acknowledgements 5 Executive Summary 7 Introduction 8 What do We Know about Public Private Dialogue (PPD) 9 Why Public Private Dialogue is Needed for City Competitiveness? 10 What is special about PPD for cities? 12 1. Area 12 2. Scope 13 3. Institutionalization 15 4. Leadership 17 5. Ownership 18 6. Participation 19 7. Focus 20 Conclusion 22 Checklist for City PPD 23 3 4 BACKGROUND AND ACKNOWLEDGEMENTS I nterest in studying city competitiveness has sector, region and so on. And we have buttressed these skyrocketed in the last few years, although the topic findings with econometric “deep dives” and case studies in itself is far from new. Mayors and city leaders have long selected countries and cities. We are now able to inform the worried about the obstacles to job creation, competitiveness continuing debates on what really matters for economic out- and economic growth that plague their cities. comes in cities with an analysis of over-arching trends and associations, supplemented with rigorous analyses to identify This paper is part of a broader research initiative, causal relationships. We also try to “stand on the shoulders of the “Competitive Cities Knowledge Base” (CCKB) giants” where possible: We use and refer to existing resources project, managed jointly by the Trade and Competitiveness (research, analysis, toolkits and experts). Global Practice and the Social, Urban, Rural and Resilience Global Practice of the World Bank Group. Its objective is to The summary findings of the overall research are presented create a knowledge base on competitive cities, to improve the in the framework paper, “Competitive Cities for Jobs and understanding of job creation at the city level, and to serve Growth.”1 as a foundation for a Community of Practice on this topic for World Bank Group staff, academia, donor partners and The objective of this paper is to review and analyze practitioners. existing literature on Public Private Dialogue (PPD) and the way it can be applied to address the issues of Our attempt in this initiative has been to focus our competitiveness at the city level. The paper aims to energies on bringing a robust body of knowledge to explain how traditional PPD approaches and tech- our clients — to address their questions on benchmarking niques should be adjusted for application at the city their performance, on understanding what has worked else- level. where and what has not, and on how to organize for delivery in different contexts. This note was prepared by Dmitry Sivaev, with significant support, guidance and editing from Benjamin Herzberg and Sumit Man- Our approach has focused on using different meth- chanda. Steve Utterwulghe provided valuable comments and odologies to tackle these questions, based on best contributed case examples. Additionally, Syed Mahmood, Anja practices, data availability, replicability and sim- Robakowski-Van Stralen, Etienne Raffi Kechichian, Stefano Negri, plicity. In many cases, we have leveraged new and existing Austin Kilroy, Megha Mukim and Drilon Gashi provided valuable data sources to shed light on some unanswered questions; in advice. The co-TTLs of the CCKB project are Austin Kilroy and others, we’ve conducted primary research, since the available Megha Mukim. Overall guidance on the project has been provided data were inadequate. We have looked at global and regional by Stefano Negri, Sameh Wahba, Ceci Sager and Somik Lall as trends, comparing different typologies of cities – by income, senior advisors. 5 6 EXECUTIVE SUMMARY • City competitiveness is defined largely by the • City PPD approaches are still not widely used, and competitiveness of local firms. On the assumption there is a lack of codified knowledge on the specifics of that constraints to growth are best known by firms designing and implementing PPD initiatives at the city themselves, it can be inferred that effective competi- level. tiveness interventions are best identified and designed through collaboration between public and private actors • This paper looks at the available literature and in cities. Public-Private Dialogue (PPD) is a useful ap- examples of city-level PPD initiatives to un- proach to facilitate this process. derstand whether the PPD process at the city level should be different from the national-level • The potential of PPD to drive reforms and im- process. It also develops a list of recommendations for prove business conditions at the city level has practitioners designing and running a PPD process in been recognized in the PPD literature. The 16 cities. examples of city PPD initiatives reviewed in this paper confirm that PPD can be a powerful driver of change and • The analysis is structured along the seven-point can lead to improved private-sector performance. framework of PPD characteristics: area coverage, scope, institutionalization, leadership, ownership, focus -- In Barcelona, PPD initiatives helped develop the and participation. For each of the characteristics, a com- cruise tourism segment of the economy and make bination of theoretical and case-study evidence is used to Barcelona the second-most-visited cruise destina- figure out the adjustment that the city conditions require tion in the world. from the PPD practitioner. -- In Dhaka, two separate initiatives helped limit the • The results of the analysis are summarized in a environmental damage from leather tanneries and checklist for a city PPD practitioner. The check- garment makers, the main drivers of Bangladesh list offers guidance on how to approach designing and economy, while improving the competitive position managing a PPD initiative. However it doesn’t provide all of those industrial clusters. the answers. -- In the small Catalan town of La Bisbal, PPD helped • This note aims to start the conversation about upgrade traditional ceramics producers by introduc- city-level PPD and the way it should be approached. ing them to new marketing practices and helping There is a need for more evidence collection and further them reach markets as far away as New Zealand. research into the subject. -- In the Turkish city of Gaziantep, a long-term PPD process underpinned the city’s rise to becoming the #1 global exporter of machine-made carpets. 7 Introduction Box 1: Twelve essential elements of PPD Public-Private Dialogue (PPD) has been applied wide- ly to design competitiveness reforms, build coalitions ü Assessing the optimal mandate and relation- and overcome gridlock in policy implementation. ship with existing institutions This approach has been used frequently by the World Bank Group(WBG) and other development institutions, which ü Deciding who should participate and under have accumulated experience, knowledge and technical ex- what structure pertise about the PPD process. ü Identifying the right champions and helping More recently, PPD has been applied more frequently them push for reform at the city level. The potential of local PPD at the subna- ü Engaging the right facilitator tional and city levels has also been widely recognized in PPD literature. But well-studied and codified examples of city-level ü Choosing and reaching target outputs PPD are few, and there exists a knowledge gap on the specif- ü Devising a communications and outreach ics of running a city-level PPD initiative. strategy As cities around the world are confronting the chal- ü Elaborating a monitoring and evaluation frame- lenges of expanding their economies and creating work jobs, the need for collaborative work between public ü Considering the potential for dialogue on a and private stakeholders in cities has become more sub-national level apparent. A World Bank Group study into competitiveness of cities2 shows that public-private coalitions were behind ü Making sector-specific dialogue work turnaround stories in a number of successful cities. PPD is ü Identifying opportunities for dialogue to play one of the tools that can help build coalitions that may play an international role an important role in defining a city’s growth trajectory. PPD can thus be a valuable addition to the toolbox of city competi- ü Recognizing the specics and potential of dia- tiveness practitioners. logue in post-conflict or crisis environments ü Finding the best role for development partners This note offers a review of the literature and select- (aka donors) ed project implementation experiences of WBG teams on organizing the PPD process at the city level. It Source: Herzberg, B., & Wright, A. (2006). The PPD Hand- makes the first step toward aggregating and codifying the book. knowledge accumulated on city-level PPD. We start from ac- knowledging the achievement of PPD processes at the nation- al and sectoral levels, and we then refocus our spatial lens on cities in order to understand to what extent the specifics of a city environment should be reflected in running and organiz- ing PPD initiatives. The key question explored in this note is: “What is the main difference, if any, between running an effec- tive PPD at the national level and running it at the city level? ” 8 What Do We Know About Public- reflect local conditions, which is why flexibility is its essential Private Dialogue? feature. It also ensures that PPD can be used at the city level, and adapted to different city-level conditions: different stages Public-Private Dialogue (PPD) refers to the struc- of development, different levels of administrative centraliza- tured interaction between public- and private-sector tion in the country, different levels of capacity of public and stakeholders to promote the right conditions for private actors, and different local endowments and economic private sector development, improvements to the structures. The framework in Figure 1 shows 7 dimensions business climate, and economic development. It is that define the characteristic of a specific PPD process. This about stakeholders coming together to define and analyze note will use this framework to structure the analysis of how problems, to discuss and agree on specific reforms, and to the specific city context might be reflected in the design of work to ensure that the suggested solutions are implement- the PPD process. ed.3 This approach has gained traction in the last several years and is widely seen as an essential component of competi- The World Bank Group and other development part- tiveness interventions. The international community of PPD ners have significant experience in delivering PPD practitioners has made a major effort to collect and codify the projects, including knowledge relating to implementation experiences of initiating and supporting the PPD process.4 and tools that can help inform and structure engagements. Today there are several key documents widely recognized as These include: frameworks for stakeholder mapping (Stake- important references for those designing or implementing a holder matrix, PPD diamond etc.),6 tools for structured analy- PPD process. The key principles have been summarized in the sis of stakeholder networks (NetMap tool),7 sets of checklists PPD handbook (see Box 1). for practitioners,8 and approaches for mitigating risks.9 Following the principles and guidelines should help At the same time, PPD is an art as much as a science. mitigate the risks that can emerge from an improp- The PPD principles, tools and guidelines offer a solid founda- erly designed PPD process. The most commonly men- tion for the design of new PPD initiatives and the adaptation tioned risks include reinforcing vested interests, over- and of PPD to different contexts, including cities. They are not a under-representing various actors, and becoming a talking guarantee of success, however. Most successful PPDs take shop that breeds conflict rather than consensus and that fails place organically, driven by existing social cohesion, without to deliver results.5 following a guidebook. The guidelines can help structure dialogue; they have proven particularly useful where an PPD principles offer general guidelines on how to underlying basis of trust is missing; and they can also help avoid the common pitfalls, but at the same time to practitioners interested in starting the process. allow for great flexibility. A good PPD process should Figure 1. 7 dimensions of adaptability of PPD. National Area Local Economy-wide Scope Sector-specific Permanent institution Institutionalization Temporary initiative Public-driven Leadership Private-driven 3rd party brokerage/support Ownership Locally driven/sustained General orientations/Many goals Focus Specific changes/Specific goal Many actors Participation Few actors Source. Herzberg B.; “A typology for Public-Private Dialogues”; World Bank; 2013 9 Why is Public-Private Dialogue Needed City governments play an important role in creating for City Competitiveness? the conditions for economic growth driven by the pri- vate sector, and firms know the constraints they are A “competitive city” is a city that successfully helps facing better than anyone. This makes a natural case for its firms and industries create jobs, raise productiv- the importance of the exchange of information between pri- ity, and increase the incomes of citizens over time.10 vate and public actors in a city. In addition, city governments While there are many dimensions to successful and attractive often struggle with fewer resources and lower capacity than cities – including strong social and human development, en- national or regional authorities, and the private sector can vironmental sustainability and political freedoms – the focus often provide the resources and the capacities that are needed of this paper (and the Competitive Cities Knowledge Base to implement competitiveness interventions. The case studies project overall) is on economic outcomes of cities: output of successful cities in different regions of the world reveal a and employment growth; labor productivity; and household number of occasions when productive collaboration between disposable income. (See Box 2 for the definition of “City” and local businesses and public-sector stakeholders was the main ”City PPD” used in this paper.) reason for a city’s economic success.12 Logical reasoning and case-study evidence suggests that the best way to design and City leaders are often grappling with difficult ques- implement competitiveness interventions is through collabo- tions: What do I need to do to create more jobs for ration between public and private actors. PPD offers a useful my citizens? What are the interventions I can make, and and pragmatic framework in which to pursue it. in which sequence, to obtain the highest return on economic growth and sustainable employment? How do I make this PPD can be a powerful tool for city competitiveness happen? City leaders realize that their task is no longer because it helps cities create five conditions that are associat- limited to providing services to their citizens: It also includes ed with successful competitiveness policies: making sure that firms in their cities become competitive in the global market. Cities need to create and support jobs and • PPD helps build trust among local stakeholders. opportunities for their citizens, which in turn generate tax Meeting on a regular basis builds trust and understand- revenues to fund service provision. ing between stakeholders. A failure to communicate is likely to lead to a failure to understand each other’s Fortunately, cities can be particularly well-suited to concerns, which in turn may breed mistrust and non-co- solving economic development challenges. The ad- operation. Non-cooperation tends to lead to inefficiency ministrative scale of cities most closely matches the natural and waste, inhibiting growth, investment and economic scale of economic development – with sub-national clusters development. of firms and industries. Policy implementation is also more manageable at the city level, with a range of policy levers and a pragmatic approach to problem-solving 11. Box 2: Defining a City and a City PPD In economic terms, a City is a densely populated a process that engages business at the city level, metropolitan area which is not restricted by ad- and aims to target issues specific to businesses in ministrative boundaries: It is rather defined by the a city. In most cases, this would mean that city govern- limits of the business agglomeration (the area where ment will be the relevant counterpart, but, as shown fur- businesses can interact face-to-face on a daily basis) and the ther in this paper, depending on the type of the problem travel to work area (the spatial definition of a local labor and local circumstances, national and regional authorities market within which people can commute to work daily). In may be the proper counterparts. For this reason, this some cases, this definition is equal to the local authority’s paper doesn’t limit the discussion of local PPD to the administrative boundaries, but in most cases it goes beyond subject areas that are most usually within the remit of the municipalities’ borders and is closer to metropolitan regions city government. We acknowledge, howrver, that city-lev- and NUTS 3 regions in the EU. el PPD can be more effective in addressing some types of issues (particularly those traditionally within a city This view of the city also means that city PPD is not defined government’s remit: planning, infrastructure, business by administrative boundaries, but rather by the nature of permits, housing, service provision etc.) than others. the business community involved and its needs. City PPD is 10 • PPD is a way to establish “growth coalitions.” A • PPD can be used to make tradeoffs explicit, and city’s competitiveness is influenced by its ability to com- thus to prioritize policies according to local polit- bine the capacity and leverage of private- and public-sec- ical-economy and technical merits. PPD facilitates tor actors to improve the business environment and use the search for mutual understanding and the prospects help businesses use growth opportunities offered by the of a compromise among civic and economic actors and marketplace. PPD can help private- and public-sector helps them develop a shared vision for the city economy actors work together, combining their resources and ex- and the actions needed to achieve it. ploiting synergies in experience, knowledge and political power, thus making a city more capable of taking action, In summary, if used well, PPD can play a central or asserting “the City Wedge.”13 PPD helps build the role in the decision-making process at the city level. capacity of public- and private-sector to work jointly on Analytical exercises and diagnostic tools are essential for making the city more competitive.14 providing information on the performance of the city’s economy, the opportunities for growth and the barriers to • PPD can ensure that interventions are aligned competitiveness. However, only open dialogue among various with the needs of local businesses. PPD offers stakeholders can ground the analytics in the local context businesses an avenue for communicating their needs to and define solutions that are aligned with local capabilities, government and acts as a process of self-identification political realities and institutional structures. PPD produces through which actors may capture the issues and the solutions that reflect local knowledge and conditions and that important aspects of local environment that are hard to are owned by local actors.17 discern through formalized analytical exercises.15 While the value of “local” PPD has been recognized in • PPD is a potential avenue to gain private-sector the literature there still relatively few reported cases support for reforms. Entrepreneurs and business of city PPD available.18 Is there anything specific at the owners who understand what government is trying to city level in terms of the political economy, the policy levers achieve are more likely to support reforms and take part available, the nature of institutions and informal networks, in their implementation, thus increasing the chances of or anything else that requires any tweaks to the methodol- overall success.16 ogy that is commonly used at the country level? Or can one simply apply the standard PPD framework? 11 What is Special About PPD for Cities? 1. Area The city context is different from the national con- text, and this should be reflected in the way PPD is National Area Local carried out. There are several obvious differences: The level The reach of a city economy doesn’t necessarily match of authority and control over the business environment is its administrative boundaries. Indeed, city economies usually lower; local public-sector resources are more restrict- are often considered as “city regions” (the city plus its sur- ed; local networks are usually more tightly bound and more rounding area of interlinked industries, firms and commut- informal, and thus interventions might be more sensitive; ers). Similarly, the geographical scale of city PPD does not issues that matter are more nuanced. And, of course, cities need to be restricted to city boundaries. The best scale of can be wildly different from one another. All of this contrib- operation depends on the location of the problem that PPD is utes to the need for applying “tweaks” or “caveats” to the PPD aiming to solve. methodology that is commonly used at the national level. We use the seven dimensions of PPD to discuss the way specifics This means that effective PPD at the city level can of the city context may change the various elements of the involve one local government or can include many PPD process, and we illustrate it with available examples of bordering jurisdictions.20 The selection of actors in a city- PPD from cities around the world, drawing on World Bank wide PPD process should reflect the actual geographic scale resources, secondary literature and case studies of economi- of the city economy. If the local economy extends beyond the cally successful cities.19 Box 3: Greater Manchester Local Enterprise Box 5: Cluster relocation in Dhaka Partnership (GMLEP) A PPD process facilitated by the Asia Foundation started GMLEP is a collaborative private sector-public sector to take shape in 2013 and brought together the Bangla- body that is in charge of defining strategic development desh national government and the representatives of the priorities for the metropolitan area that spans across leather industry of Dhaka to address the issue of relocating 10 local authorities. Formation of such a structure was the cluster from the Savar area of Dhaka to a new, envi- a result of 25 years of voluntary collaboration between ronmentally compliant industrial zone. The move was dis- local government in the Manchester region that led to cussed for more than a decade due to increasing concerns the establishment of the Greater Manchester Combined over environmental damage and poor working conditions, Authority in 2011 and of the GMLEP soon after. The but it was stalled due to disagreements over ways to fund longstanding collaborative process helped the city devel- the cost of relocation. The issues became more urgent and op the best “City Deal” offer, which led to the delegation the political economy remained complex. The engagement of additional powers in 2013. Strong cross-boundary of senior national officials was vital in reaching a con- collaboration can also be seen as one of the core reason sensus on the conditions of the move, which addressed for Manchester’s revival over the last 25 years. environmental concerns as well as opened new growth opportunities for the industry. Source: http://www.gmlep.com/about/ Source:. http://asiafoundation.org/in-asia/2013/11/13/reloca- tion-a-boon-for-bangladeshi-leather-sector/ Box 4: 22@ Barcelona Box 6: Indonesia’s Private Sector Forum In 2004, after several years of unsuccessful public-sec- Indonesia’s Private Sector Forum operated for seven years tor-driven regeneration attempts, a series of sector-fo- at the national level and was supervised by the World Bank. cused PPD processes (in ICT , education and medical After a national devolution reforms took place, explor- technology) were used to encourage a critical mass of atory forums were organized at the local level. These local technological firms and research institutions to relocate consultations helped identify major flaws in the way the to a derelict site near Barcelona’s Olympic Harbor. This devolution process was implemented. Local businesses became the foundation of 22@ tech cluster, which by 2009 strongly criticized local governments for using new regula- included 603 companies and contributed to the more than tory powers to improve revenue generation, rather than to doubling of the number of businesses located in the area. promote a favorable business environment. Source: The World Bank. (2011). Public-Private Dialogue for Sector Source: Herzberg, B., & Wright, A. (2005). Competitive Partnerships. Competitiveness and Local Economic Development: Lessons from the Building and Maintaining Public-Private Dialogue to Improve the Invest- Mediterranean Region. ment Climate, Policy research paper. The World Bank.. 12 local authorities’ administrative boundaries, then the pos- 2. Scope sibility of a successful city-wide PPD process will depend on the ability of neighboring local governments to form work- Economy-wide Scope Sector-specific able partnerships. Manchester City Region offers an excellent example of cross-boundary collaboration (see Box 3). A city PPD can work at both the sector- and the econ- omy-wide level. The choice between industrial-sector and City-level PPD, however, doesn’t necessarily need to citywide PPD will dictate the range of issues, the number of cover the entire span of the city economy. The appro- actors involved, and the possible scope of agendas and opin- priate spatial scale for an effective PPD should primarily be ions. Both sectoral and economy-wide dialogue is possible at driven by the scale of the issues that PPD is aiming to resolve. the city level, and both have certain benefits and limitations. Cluster-specific PPD initiatives, initiatives linked to the In a city, sectoral dialogue may offer the benefits of working regeneration of a particular part of the city (see Box 4 for the with a smaller and more homogeneous group of businesses, 22@Barcelona example), or specific infrastructure issues may targeting more specific issues and producing results faster. A occur at the scale of a neighborhood or a different sub-city citywide process can address broader strategic issues and can spatial unit, in which case the city administration and the lo- have a greater impact on city’s economy in the long run. cal community groups or business associations (e.g., Business Improvement Districts) will be key participants of the PPD Sector-level initiatives usually target more specific process. issues, and thus may be faster and easier to organize. This is largely because businesses within a sector have more A city-level PPD engages city businesses, but their in common from the start. This is particularly true at the city needs can often only be addressed at the regional level, where all business within an industrial sector are likely or national level. In cases where city government lacks to operate in the same local market and in the same institu- capacity or authority to address issues that matter for the tional context. Clusters can make up a significant proportion local business community, national or regional actors should of local and regional economies, and thus using PPD to target be directly approached and engaged in the PPD process. The specific barriers that a given cluster is facing can bring signif- relocation of the leather-tannery industrial cluster in Dhaka icant benefits.22 (Box 5) offers an example of national government driving PPD that, by its nature, targets a city-level issue. Sector-focused PPD in a city can pursue different agendas: PPD, on the other hand, can be seen as a way for • PPD can introduce a transformative change to an local actors to make their voices heard at the nation- existing industrial sector. Interventions can include indi- al level. Building a powerful local coalition and reaching vidual skills upgrading, can promote knowledge-sharing consensus on key elements of the reform agenda put the city and can introduce new practices that may change the in a much stronger position in negotiations with the national development trajectory of an industrial cluster. This was government. the case with the ceramics cluster in La Bisbal – a small town in Catalonia. (Box 7). National and city dialogue should not be seen as mu- tually exclusive or antagonistic. In the experience of a World Bank Group project in Indonesia (Box 6), local dialogue revealed new dimensions of challenges of policy implementa- tion that were not spotted at a national level. Box 7: Ceramic cluster in La Bisbal City PPD is always more geographically restricted than national PPD, but it doesn’t have to be purely local, and it doesn’t have In the Catalonian town of La Bisbal a PPD process to match municipal boundaries. The geographical coverage and begun in 1996 targeted a traditional ceramics cluster, the selection of actors for a city PPD should be driven by the encouraging artisans to break from the traditional challenges that the PPD initiative is trying to address. Dialogue view of their craft by helping them identify new mar- that targets a small cluster or specific infrastructure issue can ket segments and making them less reliant on state be contained in a small geographic space and can include city support. Through training, mentorship and advice, officials, local business and communities. PPD aiming to define the initiative helped turn a static cluster into a small strategic priorities for a city-region would have to cover appro- industry with a global outlook reaching markets as far priate economic geography and would have to include several away as New Zealand. Unfortunately, after a change local authorities as well as businesses from across the metropoli- of government in 2004, the progress of the cluster tan area. Finally, for issues that span beyond local governments’ was stalled due to a policy U-turn. remit, the involvement of national or regional authorities should be sought. Source: The World Bank. (2011). Public-Private Dialogue for Sector Competitiveness and Local Economic Development: Lessons from the Mediterranean Region. 13 • PPD initiatives at the city level can support de- veloping new types of economic activity, through Box 8: Cruise tourism in Barcelona helping existing businesses overcome major barriers that stop them from substantially scaling up their operation, Following the 1992 Barcelona Olympics, a coalition or through initiating diversification into new subsectors. that included the Barcelona Port Authority (a public Development of cruise tourism activity in Barcelona body) and Tourisme de Barcelona (a body jointly run offers a good example (Box 8). by the city council and the chamber of commerce) and Carnival Corporation was formed to develop An economy-wide PPD may be more difficult to run, cruise tourism in Barcelona. The coalition developed a but it has the potential to address bigger challenges. shared vision for sector development, raised substan- It can evolve as a citywide process targeting large-scale issues tial funding to upgrade the port, and improved the that the city economy is facing, including the development city’s entertainment offer ( for example, by establish- of a vision for the city’s future, the definition of strategic ing hop-on/hop-off bus routes). Today Barcelona is priorities for the city and the identification of key projects the #2 cruise port in the world. that the city should focus on. Most of the methodologies for Local Economic Development strategies have very strong Source: The World Bank. (2011). Public-Private Dialogue for Sector PPD components, and can be interpreted as specialized forms Competitiveness and Local Economic Development: Lessons from the Mediterranean Region. of city level PPD (Box 9). Sectoral and citywide approaches can be combined in a city PPD process that has a longer planning horizon. Sector-level PPD is a better entry point that allows for quick wins and trust-building between businesses and authorities. Box 9: LED primer by WBG Later, individual-sector-focused PPD can be integrated in a joint citywide dialogue that reconciles the sector priorities The LED methodology developed by the World Bank and builds a consensus for a shared vision of city develop- Group suggests that, “by its nature, local economic de- ment in the long run. velopment is a partnership between the business sector, community interests and municipal government. . . . Both focused and economy-wide PPDs are possible at the city level, LED is usually strategically planned by local government just as they are at the national level. However, sector-specific PPD in conjunction with public- and private-sector partners. might have higher potential, particularly in cities with limited ac- Implementation is carried out by the public, private and tor capacity and a limited tradition of public-private collaboration. non-governmental sectors according to their abilities Within one sector in a given city, businesses involved are likely to and strengths.” Essentially, this means that LED can be have a similar agenda and thus they are more likely to reach con- interpreted as a city-level PPD exercise. sensus and deliver results. Citywide dialogue can be a powerful tool for strategic planning and prioritization, but it requires a mature Source: Local Economic Development: The Primer, World Bank (2006) business community and a great deal of organizational effort. Sector-specific dialogues can be seen as a preparation for citywide engagement. 14 3. Institutionalization • Implementation of this approach starts with the identification of champions who are able to drive Permanent institution Institutionalization Temporary initiative the PPD agenda based on their standing and rec- ognition. This requires a high level of personal engage- The institutional design of PPD should be tailored ment by these individuals, because they are expected to to circumstances and should account for the issues PPD become the face of PPD in the city. it’s the PPD’s success is aiming to target, the nature of local stakeholders and the will largely depend on their leadership, legitimacy and relationships between them, and the resources and capacity organizational skills. available to run PPD. Choice between designing a permanent institution and a temporary activity for a city dialogue should depend on a long list of factors that define local conditions and PPD objectives. Arguments can be made both for a rigidly structured temporary activity targeting specific results, and for a permanent process that may move slowly but that can Box 10: Bucaramanga’s private-sector-driven become integrated into local institutional structures and that coalition can deliver great benefits over time. In the Colombian city of Bucaramanga, a private-sec- One viewpoint suggests that, in cities, preference should be tor-driven coalition led the broad effort for revitalizing given to a permanent PPD process and to structures that are the economy of the city region. The dialogue among embedded in the existing institutional context and that rely private and public actors was initiated by the Chamber substantially on developing informal networks and leaders of Commerce and, overall, relied on the fact that, in a who act as nodes within them. There are several arguments to relatively small city, key actors were well acquainted with support this point: one another and there was no need to create a formal institutional structure in order to sustain dialogue. The • The capacity of stakeholders at the city level is Chamber made sure that the PPD process was politically usually restricted. With the exception of major cities neutral: For instance, before a mayoral election, Cham- or national capitals, city-level civil servants generally are ber representatives met with each of the candidates. The not as technically qualified as their peers at the national growth coalition managed to achieve significant results level. Local budgets are often restricted and city gov- by improving infrastructure, opening industrial zones, ernments rely on national transfers and grants, which and helping the local economy diversify into service may come with limits on how they can be spent.23 SMEs industries, making Bucaramanga one of the most rapidly are likely to play a greater role in city PPD than they developing cities in Columbia. do at the national level, but SME managers are usually Source:. Kulenovich Z., Cech A. (2014) Competitive City Case Study: more directly engaged in operational activities, and thus Bucaramanga, Colombia: World Bank they have little time to devote to dialogue with the civic administration. • The restricted capacity of actors at the city level often means that there is no benefit to creating a new institutional structure, such as a steering Box 11: Gaziantep City Council boards that are often established to facilitate national PPD process. This suggest that city PPD, while it should Gaziantep, a city in southern Turkey, offers an exam- still have structure and clear leadership, should rely more ple of a city where efficient collaboration between the on building networks and establishing informal mech- public and private sectors was one of the key drivers of anisms of collaboration within existing institutional extraordinary export-led growth. Since the mid 1980s, arrangements. The PPD literature suggests that strong local businesses had the ear of the government. Al- informal networks can create conditions for permanent though informal relationships remain important, the PPD process.24 The example of Bucaramanga shows the institutional framework for PPD is provided by the City power of informal networks (Box 10). The example of Council. It is a sort of metropolitan parliament, in which Gaziantep (Box 11) shows that, in some cases, local con- government and businesses and other local stakeholders ditions may support permanent institutional structures come together to discuss issues and to formulate recom- for city PPD, yet informal contacts still remain import- mendations, including ideas on economic development. ant. The partnership was particularly efficient at reaching out to the national government and at securing national • For the practitioner, this means that priority infrastructure investment, Industrial Zone allocation should be given to identifying existing capacities and other forms of support. and rerouting them toward the PPD process. This approach requires a thorough understanding of the insti- Source: Kulenovich Z. Kilroy A. (2015) Gaziantep Turkey: A city Ex- ports Its Way to Prosperity: World Bank tutional environment, as well as of the individual actors within the private and public sectors and of the relation- 15 ships between them. • Champions can be either from the private or the • Formal structures should be prioritized in order public sector. However, in practice a third-party PPD to speed up the organization process and to guar- broker (like someone from the World Bank Group or antee the visibility of PPD. The activity of a formal another development partner) would find it easier to steering committee can be covered in the local news identify such champions within the city administration. media, which will make PPD politically attractive for city Private-sector champions are more likely to emerge leaders. Clearly defined targets mean that success can be through a gradual organic process, which was the case registered, reported and converted into political capital. in Bucaramanga and in several cases of national-level dialogue in Latin America.25 That fact suggests that prac- • It is also much easier to attract funding to sup- titioners shouldn’t disregard the opportunity to iden- port a formal PPD structure that targets a specific tify private-sector leaders, despite the fact that finding agenda. International donors are often willing to support individuals with the necessary visibility, reputation and such initiatives, as was the case in the Asia Foundation’s commitment within the private sector might be harder. support for the initiative in Bangladesh An alternative approach suggests that the scarcity of • Transparency and inclusiveness are core compo- resources at the city level means that city PPD should be nents of success in the PPD process, and thus they arranged as a temporary, formally structured activity that are essential for its legacy. A formal PPD structure allows for a more organized and more targeted process where makes it easier to ensure transparency and to guaran- costs are easier to control and results are more predictable. tee that PPD delivers the desired change, rather than The development of permanent informal networks can be simply reproducing the established status quo (which viewed as a welcome side-effect. is highly probable when PPD relies on local champions and their informal connections). This has been shown to • If the capacity of an actor is restricted, it is hard be particularly true in the developing-country context, to expect them to commit to a long-term process. where institutions are less developed and where the level A much more pragmatic way to engage them is through a of trust is lower, which makes any informal coordination structured PPD initiative that targets specifically defined mechanism look suspicious.26 issues and that offers participants clear benefits. This is clearly seen in the examples of the leather clusters in • Establishing a formal structure does not replace Dhaka, Bangladesh, and Iguadala, Spain, discussed in building informal networks to support the city this paper. They offer good examples of efficiently target- economy in the long run. However, it suggests that ed PPD initiatives. getting the actors together to address a specific issue and to gain the experience of successful collaboration will contribute to the development of informal networks. Leaving a legacy of positive interaction is always an ambition for PPD. More evidence is needed, however, to Box 12: Coimbatore’s private-sector coalitions understand the ability of targeted PPD initiative to facili- driven by industry associations tate development of networks of local actors. Coimbatore is one of most dynamically growing cities City-level actors, by and large, have a lower capacity than do in southern India, and it has achieved success with- participants in national-level PPD, and informal connections have out a significant public-sector contribution. The city a greater importance at a city level. This doesn’t lead to a clear has no economic-development strategy for the city conclusion, however, about the institutional structure that will and, with the government’s limited role in economic best suit a city-level dialogue. Temporary, well-structured activi- development more generally, the private sector plays ties work better and deliver quick wins: They promote a culture of the leading role in Coimbatore’s economic develop- collaboration and they offer political leaders greater viability. A ment. Yet there is no structured forum or channel for permanent process that relies on existing institutions and informal dialogue among public- and private-sector actors. Co- networks can be more sustainable in the long run and may aim imbatore’s for-profit firms pool their (limited) financial for more transformative changes. It runs the risk, however, of low and in-kind resources to help market and promote the transparency, which is a particular concern in developing countries. city as a business and tourism destination. Industry associations play a prominent role in the process as the most organized and stable elements of the private-sec- tor networks. While mostly focusing on issues within their industries, they also come together to address issues of city-wide importance. Source: Kulenovich Z. Gashi D. (2015) Coimbatore India: A Pri- vate-Sector-Driven Success Story; World Bank 16 4. Leadership local government is limited, private-sector-led coalitions can be extremely efficient at leading the dialogue process and Public-driven Leadership Private-driven pushing for needed local reforms. That was the case in Coim- batore, where well-organized industry associations drove the The division of leadership in the PPD process between PPD process while the local government played a peripheral public- and private-sector actors should be based on role (Box 12). their relative capacity. Public-sector leadership in a city PPD can emerge The variation in the power of local government is, from higher levels of government. In our discussion perhaps, the most significant difference between the of the scope of city dialogue, we highlighted the fact that city context and the national context for PPD. At the dialogue may include regional and national public authorities. country level, national government hold ultimate control The cases of Dhaka’s tanneries and La Bisbal’s pottery cluster over legislation, regulations, macro-economic policy and show that both national and regional authorities can lead a other parameters that are pivotal for the private sector. In city-focused PPD process. most cases, the public sector thus leads PPD at the national level. City governments can also be very powerful: However, Evidence suggests that PPD leadership is not static there are plenty of cases when local authorities have limited throughout the lifecycle of the dialogue. As dialogue leverage to influence the conditions that matter for local busi- evolves, the capacities and the engagement of stakeholders nesses, and they often don’t have enough capacity to engage change, which can lead to the exploitation of the dialogue by with the private sector efficiently. Issues that may become one of the parties. Usually the PPD lifecycle can be broken stumbling blocks for the private sector at the local level in- down into four phases. It starts with the initiation by one or clude small-scale infrastructure investments or specific skill several stakeholders at the “Birth” phase. Then the support shortages. Such issues can often be addressed with limited structure for PPD and the capacity of the actors is gradually participation of public authorities, or they can require only built up through the “Develop” phase, after which “Maturity” the approval of the administration. When the capacity of the Box 13: The decline of the electronics cluster in Catalonia In the early 90s the electronics assembly industry technology center got behind the emerging private sector concentrated in the Valles region of Catalonia, was initiated dialogue process. They attempted to work closely struggling due to growing competition from lower cost with businesses in the cluster to help them step up the value countries in Eastern Europe. Realizing this the manag- chain. Unfortunately most of the early attempts to retain ers of multinational companies already located in the the industry failed and its presence in Catalonia declined region teamed up to convince their HQs to locate more substantially. However, even after most of assembly facilities higher value R&D activities in Catalonia, as it was clear were gone the institutions that were built to support their de- that the assembly plants will not survive for long. Over velopment have remained, and showed strong resilience and time government funded institutions including a new veering towards other areas where they can find funding. C C C C PrS PuS PrS PrS PuS PrS PuS I I I I Legend: PrS –Private sector, C- Champions, PuS – Public Sector, I - Instruments The PPD diamond framework (in the cart above) is used to assess capacity and maturity of four elements of the PPD pro- cess: Private Sector, the Champions, Public Sector and Instruments (infrastructure and institutional framework). On the diamond chart along each of the four axes the capacity and maturity of the component increases as we move away from the center of the diamond. The chart above uses PPD diamond, to show the evolution of Valles region electronics cluster PPD. Source:. The World Bank. (2011). Public-Private Dialogue for Sector Competitiveness and Local Economic Development: Lessons from the Mediterra- nean Region. Source:. Local Economic Development: The Primer, World Bank (2006) 17 – the most productive phase of the PPD life cycle – is reached. 5. Ownership Unfortunately, this state cannot be maintained forever. As key people change and as the external environment shifts, 3rd party brokerage/support Ownership Locally driven/sustained PPD needs to be reinvented and refreshed with a new agenda, One of the elements of a city PPD is in the ability to new champions and new ambition. If that doesn’t happen in identify and target specific obstacles that influence a timely way, the balance of the dialogue can deteriorate, po- the performance of local businesses. This implies that tentially leading to its exploitation by interested parties.28 As the process should have significant local grounding, which was the case with the Catalan electronics industry, that was can only work when local stakeholders own the process and initiated by private-sector leaders but, as the sector declined, are invested in it. However, breaking local gridlock may public-sector institutions started to dominate (Box 13). require an external voice as an “honest broker,” either in the When it comes to defining the leader, city PPD offers a greater form of inviting external facilitators or letting a third party variety of options than does national dialogue. On the one hand, structure and guide the PPD process. there is the potential to shift the weight almost entirely toward the City PPD should make the most of local knowledge private sector, which is less feasible at a national leve. On the other to develop actionable solutions and to design imple- hand, public-sector leadership can be driven by the city admin- mentable policies. This means that there is intrinsic value istration if the PPD agenda is within its remit, or by regional or in maintaining local ownership and control over the PPD. national authorities if the scale and the subject of PPD are beyond Examples from Bucaramanga, Gaziantep and Coimbatore the city government’s capacity and jurisdiction. It is important to show that self-sustained, locally owned process can lead to keep in mind that PPD evolves over time and that leadership might significant results, can last for a long time, and can motivate shift. Reinvention and reassessment of the PPD process should be stakeholders to contribute to the city agenda. performed in order to avoid exploitation scenarios. The reality of cities. however, is often such that key actors have a long history of interaction, more so than at the national level. While that may be a great benefit that simplifies the dialogue, it can also be a significant risk. At the city level, proximity encourages more frequent interaction among key actors than at national Box 14: Low-Carbon Zones in Chittagong Box 15: Introducing business-friendly regulations in Kabul In the industrial city of Chittagong, Bangladesh, the World Bank Group has led the process of reducing the In Afghanistan, the WBG is supporting a city-level and environmental impact of export processing zones. The issue-specific PPD to increase the efficiency and capacity textiles firms in the zones have been overusing non-re- of the Kabul municipality to issue construction permits. A newable energy and ground water sources, which lebel PPD mechanism has been put in place that brings togeth- area’s level of industrial pollution became a major cause er the Association of Afghan Builders, architects and the for concern. I Industry was resistant to switching to Kabul municipality. Given that Afghanistan is a fragile and more sustainable production practices. The engagement conflict-affected state, limiting the scope of PPD to the city of the World Bank was crucial for striking a deal be- level and to a specific issue allows the dialogue to solve the tween businesses and the zones authorities. The proj- issues of lower capacity and the lack of trust by limiting the ects generated nearly $3 million of private investment number of parties involved. The role of the WBG as an honest toward energy efficiency within a short time period, broker has been essential for re-establishing a sense of trust and they led to the development of the first co-genera- between business and local authorities. Once lessons have tion facility in Bangladesh along with wide adoption of been learned and one success has been achieved in relatively low-carbon- zone guidelines. PPD played a central role safe Kabul, the PPD mechanism will be rolled out to four in the process and helped promote and identify low-cost other major cities across Afghanistan. solutions that most firms could implement internally, including improving boiler efficiency and introducing Source: Interviews with World Bank Group staff steam condensate recovery. The zones offered a natural environment for conducting PPD, as it could easily be arranged within existing zone infrastructure. Source: Interviews with World Bank Group staff 18 level. In addition, at the national level, the changes in politi- 6.Participation cal and business elites can be more frequent. The implication of this reality for city-level PPD can be different. On the one Many actors Participation Few actors hand, this may mean that local actors are on the same page on the key issues, and it is easier to have a nuanced discus- Striking a balance between fair representation and sion to reach consensus. On the other hand, there might be a manageable number of actors is a crucial challenge various risks associated with a well-established stakeholder of PPD design. PPD with a smaller number of participants network, including the risk of developing a “groupthink” is usually easier to organize and produces results faster. mentality resistant to new ideas; rent-seeking and exclusion- Limiting the number of participants is advisable for creating ary behavior of established elites; and bad blood between the a more personal and informal dialogue, which also makes it parties that may limit their desire to sit at the same table. more sustainable.30 However, being overly selective in identi- These negative scenarios may lead to gridlock, which will fying PPD participants shouldn’t get in the way of achieving a make dialogue unproductive. On average, however, the po- fair representation of viewpoints. litical economy of city PPD tends to be less complicated than in national schemes, since there are usually fewer interests At the city level, the choice between inclusiveness to account for and since it is easier to find common ground and keeping the dialogue at a manageable size can be among local actors. even trickier. On the one hand, local scale offers a great op- portunity to reach high levels of inclusion by engaging a large Inviting an external facilitator or broker can help number of local SMEs and community organization that are mitigate the risks associated with the prevailing difficult to reach at the national level. On the other hand, ownership structure. The presence of a neutral party that also means that local dialogue can sometimes involve a should encourage the key stakeholders to enter the dialogue large number of participants and can thus be hard to manage. and to leave the past behind, or, on the contrary, to shake up the established dynamic through the introduction of new • SMEs tend to have a greater presence at the city participants and the search for new ways to look at existing level than at the national level. Small businesses issues. The facilitator should combine substantial knowledge tend to have a relatively larger role to play because their and understanding of the local conditions, along with having contribution to employment and output is significant, no extensive history of interaction with any of the key stake- because on a city scale their voices resonate louder, and holders.28 because they are often more concerned about conditions that can be changed locally than are large firms, which Development partners can efficiently play the role often care more deeply about the macroeconomic envi- of brokers, and they help overcome cases of gridlock. In ronment and national-level policy. A continuing WBG Chittagong, the World Bank Group-led project helped address initiative in Ivory Coast offers a good illustration of the a continuous issue of water overuse by firms in textile and prominence of SMEs in a city-level dialogue (Box 16). garment sector (Box 14). • In cases of very concentrated economies, where In some cases, the role of an external broker may be several firms contribute disproportionately to in initiating dialogue where it hasn’t been happening employment and output, the engagement of small before, or where it has been particularly complicated due firms is required to balance the dialogue. Other- to conflicts, disasters and political instability.29 Continuing wise, large players can exploit the PPD process to further World Bank Group work in Kabul offers a good illustration of their own interests, representing their own views as a that (Box 15). widely shared consensus. Compared to national-level PPD, city dialogue allows partici- • Civil society organization and groups often play pants to zoom in and identify specifically local issues and find a more prominent role at the city level. This is due the most efficient ways to address them. City-level PPD relies on to the greater engagement of individuals with their local local actors’ buy-in and on local ownership of the dialogue. En- context and to lower requirements for achieving visibil- gagement of external brokers and facilitators may offer a good ity locally for an organization. Sustainable and effective way to plant the seed of dialogue, particularly in fragile environ- city PPD should include civil society groups and should ments, and to mitigate the risks of groupthink, rent-seeking or make sure that they share the ownership of the decisions confrontation. made within the PPD process, thus helping develop public support for reforms. However, the introduction of such organization should be exercised with caution. They should be pre-screened carefully during stakehold- er-mapping exercises to avoid the inclusion of radical groups or groups backed by big donors, which can shift the focus of the debate and make it less productive. 19 Restricting the participation of small business and community organizations will significantly diminish 7. Focus the value of the local dialogue. PPD planning and design General orientations/Many goals Focus Specific changes/Specific goal strategies should simultaneously promote greater inclusion and mitigate the challenges associated with larger number of The thematic focus of PPD tends to be significantly participants: more detailed at the city level than at the national level. In a city, major obstacles for business in a PPD process • Use surveys, focus groups and online-participa- often include specific infrastructure, individual roads, bridg- tion tools to inform the PPD process. These tools es or power lines, or daily service issues like waste collection. help increase the reach and the inclusiveness of the Those concerns are far different from major macroeconomic process, without a dramatic increase of actively engaged policies, regulatory reforms or industrial policies that tend to participants. be the subject of the national-level dialogue. (Table 1 offers examples of specific issues and interventions that can be • Prioritizing sector-focused or spatially-focused subjects of local and national PPD.) This may be explained by dialogue would naturally limit the scope and the focus two main factors: of PPD and would thus limit the number of participants. • The nature of the leverage that the city government has • Empowering business associations and Chambers over service provision, small-scale infrastructure and of Commerce. These institutions represent the collec- local regulations sets the scene for niche demands from tive views of business. Engaging them thus reduces the businesses. Higher-level, more general problems often number of participants without a reduction in the level need to be addressed by regional or national authorities. of representation.31 • SMEs tend to have a greater presence in city-level PPD, In cities, the voices of smaller firms and civil society groups are of- and SMEs tend to have a narrower view of the world ten more prominent than at the national level. It is thus important and shorter planning horizons than do large business- that they be given a prominent role in PPD. This may lead to an es. Their demands might often include issuing specific increase in the number of participants and may make PPD harder licenses or fixing particular piece of infrastructure. to manage. Solutions may include prioritizing focused PPDs and engaging business associations and Chambers of Commerce, using On the one hand, granularity and a relatively small surveys and online participation tools. scale and a high level of engagement makes local PPD initiatives more implementable than national. City PPD offers an opportunity to identify specific challenges and interventions, to address them and to track actual outcomes. The experience of World Bank Group practitioners suggests that the implementation of national-level PPD recommen- dations is often difficult due to their overall generic and Box 16: SME-focused dialogue in San Pedro, Box 17: Leather Tanneries in Igualada Ivory Coast In 2005, after the adoption of strict EU-wide environ- In Ivory Coast, a project is being designed by the WBG mental regulations, the leather tanneries cluster in the to develop growth poles in which cities will have key Catalan town of Igualada was facing extinction. The roles. San Pedro and its port, west of Abidjan, is at the industry came together and approached the regional heart of a mining ecosystem where SMEs will have a government, seeking subsidies. The government, in crucial role to play in the local mining supply chain. The response, initiated a PPD process that combined a search WBG is looking at developing a city-level PPD platform for a solution to the immediate threat with the search that will focus on different sectors (mining and tour- for a way to upgrade industry practices. In the end, a new ism). SMEs will be integral participants to the PPD water-cleaning facility was jointly funded by the tan- mechanism, as will civil society, given the impact that neries, even as some of them graduated from traditional such sectors will have on communities and the local leather-sole producers to supplying global luxury brands. supply chain. Sector-specific PPD at the city level will A PPD process that was initiated to address a specific allow for more tailored solutions to local constraints. issue thus helped the industry improve its long-term growth potential. Source: Interviews with World Bank staff Source: The World Bank. (2011). Public-Private Dialogue for Sector Competitiveness and Local Economic Development: Lessons from the Mediterranean Region 20 Table 1. Examples of issues and interventions targeted in national and city PPD Main levers National PPD City PPD Institutions and • National tax regime. • Land and property tax regimes. regulations • Trade regimes, customs regulations. • Local business regulations: taxi, trade, alcohol licenses and permits etc. • National level regulations: labor market regulations, immigration regimes. • Specific TIF and infrastructure levies. • Sector specific regulations: taxation • Business Improvement Districts. licensing for specific products and types of activities. • Control of safety standards implementation. • Safety standards for food, construction and other. Infrastructure • Major infrastructure investments: high- • Specific local infrastructure issues: road re- and land (and ways, ports, airports. pairs, water supply, sewage, etc. services) • Special economic zones and parks, and • Quality of public transport including accessibil- other special regimes. ity of specific areas. • Sustainability agenda, meeting emission • Other local services: garbage collection, street reduction targets, incentives for renew- cleaning, parking, signage etc. able energy investment etc. • Access to specific land plots and linking them to infrastructure. • Zoning and other planning and land use re- strictions. • Livability and quality of public spaces. • Safety and policing. Skills and • National funding programs for voca- • Facilitating contacts between businesses and innovation tional training institutions. local education and research institutions to adjust and improve curriculums and improve • Grants for R&D and R&D spending tax knowledge sharing. exemptions. • Building local business networks and asso- • Large scale innovation centers. ciations. Forums and events to support local • Patents and intellectual property policy. inter-trading and strengthen supply chains. • Training schemes targeting specific skills gaps. • Establishing contacts between local companies and national/global leaders in the sector. Enterprise • Investment promotion programs. • SME and entrepreneur training and support support and centers. finance • Export credit and support programs. • Small matching grants. • SME funding support schemes. • Access to finance advice. • Targeted investment promotion and investor retention programs. This table only offers examples of interventions. It is not a complete list ** The classification of types of interventions/levers is taken from the Competitive Cities framework of the World Bank Group. (For more details see World Bank Group, Competitive Cities for Jobs and Growth: What? Who? And How?) 21 high-level nature, as well as due to the difficulty of fitting This paper shows that the key characteristics of cities them to varied local conditions. need to be reflected in the design of the PPD process. The context of a city differs from the national context. In cit- On the other hand, granularity presents organi- ies, the spatial dimension matters much more, and it should zational challenges for citywide PPD. If a dialogue be considered when designing a dialogue. Proximity makes attempts to cover too many issues, it may be difficult to stakeholder networks much more dense and often more structure, and it may mean that reaching a consensus and informal, which changes the nature of interaction and which defining priority actions may be a severe challenge. All of this can make dialogue easier – but which can also lead to addi- may result in PPD becoming a talking shop that leads to few tional risks related to the retention of status quo, unbalanced interventions or results – a fact that will also undermine the representation or to a sense of hostility among established process in the eyes of local stakeholders and that may lead groups of actors. The restricted capacity and administrative to their disengagement. These challenges can be mitigated remits of municipal governments often mean that either through a well-developed structure of the PPD process – a private-sector or regional and national authorities can step in structure that breaks down thematic working groups and as drivers of change. The greater visibility of SMEs and civil offers a mechanism for the consolidation of results that indi- society groups at the city level creates an opportunity for a vidual groups achieve. truly inclusive process, but that may lead to thematic frag- mentation and greater difficulty in managing the dialogue. The two main approaches to addressing fragmenta- The way these and other factors should be reflected in the tion are: design of PPD in a given city will depend on the specifics of • Strictly defining the thematic limits of the PPD the local context. process, either through a sectoral or a spatial The important secondary ambition of this paper is to lens. This ensures that actors are more homogeneous start a debate about the nature of city-level dialogue and that the process is less “noisy,” with participants and the approaches needed to make it an effective finding it easier to agree on key issues and interventions. tool for practitioners. The evidence available to us today The example of PPD in the Catalan town of Igualada is fragmented: Thus, the analysis presented in this paper shows how sectoral PPD can be targeted at a specific should be seen as preliminary rather than conclusive. There issue yet can achieve significant competitiveness gains is a great need to collect more evidence from PPD initiative in for the industry (See Box 17). cities. When more evidence is accumulated through the client • Developing advanced coordination mechanisms projects of the World Bank Group’s Competitive Sectors team, and revisiting them throughout the lifecycle of and through the work of other development partners, the PPD. The wider the focus of PPD, the more complicated findings within this paper should be revisited. the coordination process will be, and the more rigid it The following list of questions should be further will have to be in order to produce results. It will always investigated amid continuing discussions among be difficult to arrive at the perfect process on the first attempt, so it is important to be open to changing the practitioners: structure of the dialogue along the way, responding to • What are the institutional structures that work best for the shifting roles and capacities of stakeholders. city-level PPDs, and what local conditions should be tak- The nature of the leverage of the local government and the diversity en into account when identifying the optimal design? of issues that concern businesses at the local level often lead to • What are some examples of interventions that can most much greater fragmentation of city PPD than at a national level. efficiently be delivered through a city PPD process to This should be mitigated by prioritizing industry or spatially deliver quick results and strengthen the dialogue? focused PPDs, or by regularly reconsideringthe PPD coordination structures. • How should PPD practitioners maintain the balance between maintaining a strong local grounding of the dialogue and breaking the status quo? Conclusion • What solutions can help city PPD practitioners maximize This paper used the existing PPD literature and inclusiveness without making the dialogue too fragment- examples of city-level PPD initiatives to explore how ed and unmanageable? the design of city-level initiatives should differ from more traditional national-level PPD. This paper uses • How should a PPD lifecycle be managed to avoid a deg- the seven dimensions of PPD characteristics to guide the radation and exploitation of the dialogue? What institu- analysis. The result of the analytical exercise is summarized, tional safeguards can be put in place? below, in a checklist of guidelines for practitioners who are designing and implementing a city PPD process. • What are specific examples of interventions and policies that can be successfully implemented through a city-lev- el PPD process? 22 Checklist for City PPD ü Choose institutional design based on the ambition of the dialogue and on thethorough study of local stakeholders This Checklist offers principles and approaches to and the institutional environment. consider in developing a city-level PPD initiative. Cities are complex and, while the may share certain charac- Leadership teristics, they are notable for their diversity. If we compare conditions in (for example) New York City and Mekele in ü Be flexible in considering private- and public-sector lead- northern Ethiopia – or Shanghai and Karaganda in Kazakh- ership of the PPD process; make sure that the leadership stan – it’s clear that there are more differences than common- burden is shared between private and public stakehold- alities between them. Cities differ in size, in their authorities’ ers according to their capacity. political and administrative remit, in the capacity of local ac- tors, in their economic structure and assets, in their position ü Consider that the private sector can accomplish a great in the national hierarchy of cities, in their histories and in deal at the city level with minimal public-sector engage- their cultures. The guidelines in the checklist are structured ment, and that regional and national authorities can step according to the seven defining dimensions of PPD: in if there is a shortage of capacity locally, or if the issues discussed are beyond the city’s administrative powers. Area ü Be aware that stakeholders’ capacity and engagements ü Define the optimal geographical scale for the PPD change throughout the PPD lifecycle, which has an process and select stakeholders accordingly. A narrow effect on leadership dynamics and which may lead to the cluster-specific issue may be addressed at a limited scale exploitation of the dialogue if it is mismanaged. Aim to with relatively few stakeholders involved; a city-region re-evaluate and redesign the institutional design of PPD economic strategy PPD would have to include businesses every few years. and local authorities from across the greater metropoli- tan area. Ownership ü If dialogue aims to address issues that are beyond the ü By default, prioritize strong local ownership of the PPD city government’s direct remit, include regional or na- process, which is important to get to the bottom of local tional authorities. growth constraints and to design implementable policies. ü Avoid contradictions and exploit synergies between ü In any case of gridlock, or amid any need to challenge local-level and national-level PPD. Consensus-building the status quo, consider bringing in external facilitators locally may be used to lobby for national policies, and as honest brokers. local implementation of national policies can be imple- mented via city PPD. ü Development partners with experience in implementing PPD have proven to be effective at breaking cases of grid- Scope lock and at initiating the dialogue process in challenging conditions. ü Where possible, start with sectoral dialogue. In most cas- es, it is more focused and less fragmented, it is easier to Participation manage, and it delivers results faster. Sectoral dialogue can lay the foundation for citywide PPD. ü Use surveys, focus groups and online-participation tools as a means to increase participation and inclusiveness. ü In places with mature business networks and a capable government, consider using citywide dialogue to iden- ü Engage SMEs and civil society organizations, since they tify long-term priorities and to inform strategic deci- are important for achieving fair representation at the sion-making for the city. city level. Institutionalization ü Limit the number of actors by using sectoral- or spatial- ly-focused PPDs and by engaging business associations. ü Anticipate that the capacity of city actors to engage in PPD will be limited. ü It is important to screen participants carefully to avoid the inclusion of radical groups or groups that will lobby ü Consider short-term PPD organized around formal for their narrow interests, thus reducing the chances of a institutional structures, which may draw in participants productive dialogue. thanks to the clarity of its goals and which may offer visibility, and which thus may be politically appealing. Focus ü Consider a more informal PPD embedded in existing ü Expect a fragmented agenda, and manage it by limiting institutional structures, which will not require new insti- the scope of PPD or by developing and constantly reas- tutions and thus can be integrated organically. 23 sessing coordination mechanisms. Notes 1 World Bank Group (forthcoming): “Competitive Cities for Jobs and 16 Herzberg, B., & Wright, A. (2005). Competitive Partnerships. Building Growth: What, Who and How?” and Maintaining Public-Private Dialogue to Improve the Investment Cli- 2 World Bank Group (forthcoming) Competitive Cities for Jobs and Growth: mate, Policy research paper. World Bank What, Who and How? 17 Herzberg, B. B., & Ahmed, F. Z. (forthcoming). Collaborative Devel- 3 Herzberg, B., & Wright, A. (2006). The PPD Handbook.. opment The art of private-private Dialogue for good – and competitive – governance, (June), 1–64. 4 The PPD portal http://www.publicprivateDialogue.org/ holds a major collection of case studies of PPD initiatives and other related literature. 18 The two most prominent sources of information on local PPD are: Herz- berg, B., & Wright, A. (2006). The PPD Handbook., which includes a chapter 5 Herzberg, B., & Wright, A. (2005). Competitive Partnerships. Building and on local PPD, and The World Bank. (2011). Public-Private Dialogue for Maintaining Public-Private Dialogue to Improve the Investment Climate, Sector Competitiveness and Local Economic Development: Lessons from Policy research paper. World Bank the Mediterranean Region, which offers detailed analysis of city-level PPD 6 Utterwulghe, S. (2014) Quick Guide to Integrating Public Private Dia- initiatives in Spain. logue, World Bank/ Herzberg, B., & Wright, A. (2006). The PPD Handbook 19 Kulenovic, Z.J, Cech, A (2015) Case Studies of Sic Economically Success- 7 https://netmap.wordpress.com/about/ ful Cities Worldwide: What have we learned? 8 Herzberg, B. B., & Ahmed, F. Z. (forthcoming). Collaborative Development 20 Herzberg, B., & Wright, A. (2006). The PPD Handbook The art of private-private Dialogue for good – and competitive - governance, 21 Schneider, B. R. (2013). Institutions for Effective Collaboration : (Octo- (June), 1–64. ber). 9 Herzberg, B., & Wright, A. (2005). Competitive Partnerships. Building and 22 Herzberg, B., & Wright, A. (2006). The PPD Handbook Maintaining Public-Private Dialogue to Improve the Investment Climate, Policy research paper. World Bank 23 Watkins J., Gashi, D. (2015) CCKB User’s Guide to Implementing City Competitiveness Interventions 10 The explanation of the origin of this definition can be found on page 6 of the forthcoming Competitive Cities Framework paper, World Bank Group 24 Devlin, R. (2014). Towards Good Governance of Public- Private Alliance (forthcoming): “Competitive Cities for Growth and Job Creation: What, Councils Supporting Industrial Policies in Latin America, (March). Who and How.” 25 Schneider, B. R. (2013). Institutions for Effective Collaboration, IDB. 11 WEF (2014). The Competitiveness of Cities; Edward Glaeser and Abha 26 Ibid Joshi-Ghani (2014). Policy Research Working Paper 6875; The Urban Imper- 27 The World Bank. (2011). Public-Private Dialogue for Sector Competitive- ative: Toward Shared Prosperity ness and Local Economic Development: Lessons from the Mediterranean 12 Kulenovic, Z.J, Cech, A (2015) Case studies of Six Economically Success- Region. ful Cities World Wide: What have we learned? 28 The World Bank. (2011). Public-Private Dialogue for Sector Competitive- 13 The “City Wedge” refers to the ability of the city to create conditions that ness and Local Economic Development: Lessons from the Mediterranean support competitiveness of local firms through using its administrative Region. leverage and implementation capacity of the city administration, creating 29 Utterwulghe S. (2015) Public-private Dialogue in fragile and conflict-af- growth coalitions with private sector and collaborating with national, fected situations : experiences and lessons learned, WBG regional and neighboring local governments. For more details see Watkins. J, Gashi, D. (2015) User’s Guide to Implementing City Competitiveness 30 Schneider, B. R. (2013). Institutions for Effective Collaboration :, (Octo- Interventions ber). 14 Herzberg, B., & Wright, A. (2006). The PPD Handbook. 31 Schneider, B. R. (2013). Institutions for Effective Collaboration :, (Octo- ber). 15 The World Bank. (2011). Public-Private Dialogue for Sector Competitive- ness and Local Economic Development: Lessons from the Mediterranean Region 24 25 Funding for the companion papers and the main report was provided by CIIP Competitive Industries and Innovation Program Financed by in partnership with www.theciip.org Find the companion papers and the main report at www.worldbank.org/competitivecities