Chapter 8: What can cities do to enhance competitiveness? Local policies and actions for innovation
City leaders worldwide often ask: ëWhat can be done to enhance my cityís economic competitiveness?í. The recommended policies on municipal actions to promote local competitiveness have typically focused on three areas: _ providing infrastructure, such as transportation, telecommunications, water, and sanitation; _ improving public services, including education, health, public security, and housing; and _ reducing the cost of doing business through simplifying regulations, making it easier to open businesses, pay taxes, hire workers, acquire land, and exit from businesses. These three broad areas of action are critical, especially in countries where infrastructure and bureaucracy have been identified as among the top constraints to economic competitiveness. However, theoretical advances and successful examples suggest that these three areas of action alone are not sufficient. To be competitive globally, it is not enough to simply offer lower-cost, or even superb infrastructure. Knowledge and innovation, which can be significantly enhanced by positive spillover effects among private firms and other players in the local economy, provide opportunities for a broader scope of local interventions. A more proactive role for local government may be warranted for cities to become and stay competitive in a global environment characterized by ever-increasing competitive pressures. This chapter focuses on possible courses of action in this area.
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