The Political Economy of City Branding 2013030993, 9780415859455, 9780203782187

Table of contents :
Cover
Title Page
Copyright Page
Table of Contents
List of figures
List of tables
Preface
Acknowledgements
1 Introduction
2 Challenges of globalization
3 Global urban hierarchy and asymmetry
4 Underlying dynamics: city attraction hypothesis
5 Living in a branded world
6 City branding as a strategic tool
7 Economic profiles of post-industrial cities
8 From win-win situation to creative class struggle
9 New paradigm for urban management
10 Conclusion
References
Index

Citation preview

The Political Economy of City Branding

Globalization affects urban communities in many ways. One of its manifestations is increased intercity competition, which compels cities to increase their attractiveness in terms of capital, entrepreneurship, information, expertise and consumption. This competition takes place in an asymmetric field, with cities trying to find the best possible ways of using their natural and created assets, the latter including a naturally evolving reputation or consciously developed competitive identity or brand. The Political Economy of City Branding discusses this phenomenon from the perspective of numerous post-industrial cities in North America, Europe, East Asia and Australasia. Special attention is given to local economic development policy and industrial profiling, and global city rankings are used to provide empirical evidence for cities’ characteristics and positions in the global urban hierarchy. On top of this, social and urban challenges such as creative class struggle are also discussed. The core message of the book is that cities should apply the tools of city branding in their industrial promotion and specialization, but at the same time take into account the special nature of their urban communities and be open and inclusive in their brand policies in order to ensure optimal results. This book will be of interest to scholars and practitioners working in the areas of local economic development, urban planning, public management and branding. Ari-Veikko Anttiroiko is Adjunct Professor in the School of Management at the University of Tampere, Finland. His research areas include local governance, global intercity competition, e-government, public sector innovations and hightech centre research.

Routledge Advances in Regional Economics, Science and Policy

1. Territorial Patterns of Innovation An inquiry on the knowledge economy in European regions Edited by Roberta Capello and Camilla Lenzi 2. The Political Economy of City Branding Ari-Veikko Anttiroiko

The Political Economy of City Branding Ari-Veikko Anttiroiko

First published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business © 2014 Ari-Veikko Anttiroiko

The right of Ari-Veikko Anttiroiko to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patent Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data Anttiroiko, Ari-Veikko. The political economy of city branding / Ari-Veikko Anttiroiko. pages cm Includes bibliographical references and index. 1. City promotion. 2. Branding (Marketing) 3. Municipal government— Public relations. 4. Economic development. I. Title. HT325.A54 2014 659.2’930776—dc23 2013030993 ISBN: 978-0-415-85945-5 (hbk) ISBN: 978-0-203-78218-7 (ebk) Typeset in Times New Roman by FiSH Books Ltd, Enfield

Contents

List of figures List of tables Preface Acknowledgements 1

Introduction

3

Global urban hierarchy and asymmetry

2 4

19

Underlying dynamics: city attraction hypothesis

34

City branding as a strategic tool

61

Living in a branded world

7

Economic profiles of post-industrial cities

8

9

1

Challenges of globalization

5

6

vi vii viii x

From win-win situation to creative class struggle New paradigm for urban management

10 Conclusion References Index

26 47 97

142 153 163 168 197

Figures

2.1 4.1 4.2 5.1 5.2 6.1 6.2 7.1 7.2 7.3 7.4 8.1 9.1

Dynamic and institutional aspects of local–global dialectic Overseas offices and promotion desks of Osaka Prefecture Illustration of city attraction hypothesis Strategic brand management process The spectrum of branding alternatives The 7A destination branding process Touchpoints to deliver on the brand City profile typology by main economic sectors City profile pie: eight post-industrial economic city profiles Innovative clusters in Seoul From cluster identification to a brand: the case of Singapore Three dimensions of an attraction oriented policy trap Compromise-seeking procedure and optimal local solution

22 39 42 59 60 74 79 99 108 123 140 146 160

Tables

6.1 7.1 7.2

7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13

Global top 10 city brands Structure of 2012 NAICS Examples of service and high-tech clusters derived from US economic statistics of 2002 Top 20 headquarter cities by total revenues Office presence of international companies by city Major financial centres in the world Top 10 global cities for business activity in 2010 Top 10 global cities for human capital in 2010 Cities with high intellectual capital and innovation City innovation ranking, 2012–13 Airports ranked by international passenger traffic International meeting cities, 2009 Top 20 shopping capitals by food and non-food sales Top 10 global cities for cultural experience in 2010

84 102

103 110 111 112 113 116 117 118 125 127 130 137

Preface

Thematically the first seeds of this book were planted in the early 1980s in the sense that my interest in marketing arose when I studied this subject in the Business College in Kokkola, Finland. While working for the municipality of Himanka in the first half of the 1980s, I got first-hand experience of marketing in the rural town context. While an undergraduate in Municipal Studies at the University of Tampere a few years later, I was still interested in applying marketing to local government, which actually became the topic of my Master’s thesis. Broad interest in the political economy of local government and also in comparative local government studies together with numerous visits, especially to East Asian cities in the 2000s, increased my interest in the global view of local governments. My teaching on global governance relations of local and regional governments at my alma mater provided a good chance to deepen my understanding of global intercity competition and its implications for local government. Visiting lectures on this topic in the Chinese University of Hong Kong (CUHK), the National Academy of Public Administration (NAPA), Hanoi, Ritsumeikan University, Kyoto, and in some workshops and conferences in different parts of the world provided opportunities to learn more about this topic and to get feedback on my ideas from colleagues and students. One such occasion was the session ‘Innovative cities in global competition’, which I organized with Professor Nicos Komninos in the ‘Knowledge cities summit’ in Shenzhen in November 2009. The core topic of this book, city branding, came into the picture more recently. My presentation ‘City branding as a response to global intercity competition’ at the third global conference on economic geography in Seoul in summer 2011, was an important turning point serving to fuse my interests with Routledge’s ‘Advances in Regional Economics, Science and Policy’ series. The idea turned quickly into a book project, resulting in the book at hand. My focus in this book is on branding in the context of the economic development policy options of post-industrial cities. This is not a textbook on city branding, but rather a book that points out how branding relates to economic development policy. In the post-industrial context this dilemma relates first and foremost to service sectors, which is sector-wise the primary focus in this book. This part of the book, even if not particularly practical in all respects, in any case closely resembles the normative or ‘government-advising’ approach to city

Preface ix

branding. This approach has its roots in my twenty-year involvement in local government research, through which it became habitual to consider economic, administrative, political and social issues from the point of view of local government and even of the perspective of the top management of local government. The other side of political economy is more contextual and critical, relating to such topics as the city attraction hypothesis, global urban asymmetry and critical remarks on city branding and creative city developments, which are good to keep in mind when considering industrial profiles and brand management issues. My personal orientation towards city branding is positive. I see it as an essential step in the sophistication of city marketing and local industrial policy. Yet I also acknowledge that it should be based on sufficient understanding of local governments as locally rooted institutions of local choice, in which local people should be given a voice and in which local reproductive functions must be given high priority. In this sense, increased professionalism should develop hand in hand with community orientation. This journey has been intensive and exciting. While writing the book I worked mostly in the pleasant environment of my university, working probably more in the main library than in my office. I had already made several visits to most of the cities I write about in this book. However, I organized a special visit to Singapore in November 2012 to learn more about such issues as design in urban development policy. At that time I had a discussion with representatives of the DesignSingapore Council about Singapore’s approach to design as a part of creative city development. On the branding side I had a chance to benefit from the collections and pleasant environment of two libraries, The Lee Kong Chian Reference Library at the National Library Building in Singapore and Thomas J. Long Business Library of Haas School of Business, University of California, Berkeley. I also followed branding guru and Haas Professor Emeritus David Aaker’s presentation on branding at the Haas School in April 2013. I had an opportunity to discuss this topic with Professor Saskia Sassen and many other colleagues at the 43rd Urban Affairs Association Conference in San Francisco in April 2013, where I gave a presentation on ‘City attraction hypothesis and global intercity competition’. That occasion provided an opportunity to learn more about San Francisco’s economic development policy with Sean Randolph, President and CEO of Bay Area Council Economic Institute (BACEI). Discussions on postindustrialism and high-tech development on various occasions with Professor John Zysman of BRIE, University of California, Berkeley have been of special importance to my project. It is my sincere hope that my readers find this book inspiring and find at least some points useful for their teaching or studying this topic or for working in the challenging field of the promotion of local economic development.

Acknowledgements

The body of knowledge eventually condensed into a book is usually built up over several years. This is certainly the case with this book. I have received help and inspiration from many people long before this process began, as well as during the writing process. Numerous visits to various cities over the years – Athens, Barcelona, Beijing, Birmingham, Boston, Busan, Daejeon, Frankfurt, Glasgow, Hong Kong, Liverpool, London, Los Angeles, Manchester, New York, Osaka, Rome, San Francisco, Seoul, Shanghai, Shenzhen, Singapore, Tokyo, and many others – have been conducive to forming a general impression of global cities. In this respect the San Francisco Bay Area occupies a special place; I feel gratitude to the colleagues and experts with whom over the years I have had stimulating discussions, most notably with Professor John Zysman of University of California, Berkeley and Sean Randolph, President and CEO of BACEI, San Francisco. In addition, Professor Emeritus William F. Miller, Professor Emeritus Henry S. Rowen and Associate Director Marguerite Gong Hancock of SPRIE, Stanford University, have inspired me to think outside of the box, while my Tampere colleague Pekka Valkama and I were visiting scholars at SPRIE a few years ago. I have also had several enlightening discussions with Professor Emeritus Gerald Caiden of the University of Southern California, Los Angeles. I am grateful for the help of Professor Barney Warf of the Geography Department of the University of Kansas, a co-editor of Growth and Change, for his help in improving my article on the city attraction hypothesis to be published in Growth and Change in 2013/2014. I want to acknowledge also Professor Saskia Sassen for the tips of how to go further with the analysis of space of flows. Lastly, online discussions with James Heaton, President of the New York-based Tronvig Group, have been stimulating, concerning the nature of branding. Another direction of special importance to my work has for years been East Asia, especially Japan and South Korea. From there I would like to thank first and foremost three colleagues: Professor Hiroyuki Mori of Ritsumeikan University, Kyoto, and Professors Hiroshi Toki and Akira Anami of Daito Bunka University, Tokyo. Professor Mori’s help in organizing visits to Rinku Town, Osaka Bay Area, Osaka City (incl. Knowledge Capital), Kobe Biomedical Innovation Cluster at Port Island of Kobe, City of Kyoto, Nagano and other places in Japan has been especially invaluable for a city branding book project and for many

Acknowledgements xi

other projects in which I have been involved during the past few years. In the same way I wish to thank my friend Tadakazu Nakamichi, a visiting associate professor at Digital Hollywood University (Graduate School), Osaka, who as an officer of Osaka City Government taught me about the new developments in the city, such as the Knowledge Capital project. A person worthy of special mention is my friend and colleague, Sang-Chul Park, Professor at Graduate School of Knowledge-Based Technology and Energy, Korea Polytechnic University and Visiting Professor at Graduate School of Business, Economics and Law, Gothenburg University. He kindly contributed to this book by writing a section on the industrial policy of Seoul Metropolitan Government. I am also grateful to other Korean colleagues I have met in Seoul, Daejeon, Daegu and New Songdo City in Incheon, including long-serving President of the National Information Society Agency (NIA) and Professor at Sunkyunkwan University Seang-Tae Kim, Professor Sang-Ho Lee of Hanbat National University, Professor Sun Phil Kwon at Mokwon University, Professor Sung-Gul Hong of Kookmin University, Professor Mooyoung Han of Seoul National University, Professor Surk-Tae Kim of Kyungpook National University and many others. Visits to Singapore have also been rewarding in many ways. From there I would like to thank especially Director Yeo Piah Choo and Deputy Director Jacks Yeo of the DesignSingapore Council as well as my colleagues Vice Dean Kenneth Paul Tan, Assistant Professor Ora-orn Poocharoen and Assistant Professor Yumin Joo at Lee Kuan Yew School of Public Policy of National University of Singapore for enlightening conversations. It has also been great to collaborate with Professor Arcot Desai Narasimhalu of Singapore Management University and retired Professor Jon S.T. Quah of National University of Singapore. I have had the pleasure to collaborate with a number of colleagues from Europe. Concerning city branding, a special mention must be made of Associate Professor Inga Vilka of the University of Latvia, who provided for me some relevant materials as well as a chance to learn from real-life cases in city branding. From the University of Tampere, Director of Research Pekka Valkama and FiDiPro Professor Stephen J. Bailey have for years been my close collaborators. Special thanks for Pekka for great companionship. Concerning this project, Professors Ilari Karppi and Hannu Laurila have kindly commented upon some parts of my texts. Institutionally, thanks go to the University of Tampere and its School of Management and especially Professor Arto Haveri, for providing me with excellent working facilities and support through the years. From the administration of the School thanks go to the Dean, Professor Markku Sotarauta, the Head of Administration Sari Saastamoinen and Administrators Anita Vieru and Sirpa Rämö, who have been of great help in different phases of the project. Financial support from the University of Tampere as well as from Tekes – the Finnish Funding Agency for Technology and Innovation – have been indispensable in making the internationalization of my research activities possible. From Routledge thanks go to Robert Langham and Natalie Tomlinson for encouragement and help during the project. I’d also like to thank Damian Penfold

xii Acknowledgements

for his careful copy-editing, and to express my gratitude to Ms. Virginia Mattila for the initial language checking. Last but not least, I wish to express my gratitude to my wife Young Shin Lim and my son Pauli for their tolerance of my absence from home while writing this book, and my parents-in-law, Seong Bun Cho and Eun Kyu Lim, for becoming an important part of my life. Ari-Veikko Anttiroiko Tampere

1

Introduction

Globalization is dramatically changing the context of urban communities and the premises for urban development policy. Due to increased cross-boundary flows of resources, urban governments have become increasingly concerned about their role in the global economy. Such an orientation paves the way to a new role for cities, their strategic task being to adjust to the conditions of the global economy (Sellers 2002; Douglass 2002; Savitch and Kantor 2003; Anttiroiko and Kasvio 2005; Kresl and Fry 2005; Sassen 2006; Chien 2008; Anttiroiko 2009b). In the context of global intercity competition, the major goal of cities is to increase their competitiveness, in which the positioning and attractiveness of a city have a critical function. Attraction-oriented strategy aims at effective absorption of external resources from the global space of flows. The operational side of attraction rests on promotion activities with tempting incentives offered to businesses, but it is assumed that such a competition is risky and may lead to a race to the bottom. Therefore the emphasis is increasingly on less costly and more synergistic city marketing, which utilizes symbolic assets through city branding and smart specialization though ‘city profiling’ that aim at attracting value within some special high-value adding service or high-tech sector. Mayors, councillors and urban managers know that they are in competition with other cities on various markets. There is thus an imperative to learn more about city marketing. As stated by Kapferer, ‘[by] creating a good reputation for their town they give themselves a voice. Like brands, towns need to grow: they therefore need to attract new resources (people, workers, companies, finances and so on). Like any brand, they must also be able to define where their unique attractiveness lies, or what is known as positioning’ (2008: 126). Practically all cities with direct connections to the international economy have already met this challenge. They are engaged in some form of city marketing, projecting their image or brand to the outside world. Marketing and branding place most emphasis on promoting the attractiveness of the city as a business or tourist location. This book proposes a city attraction hypothesis that states that global intercity competition is essentially about a city’s ability to attract the highest possible value from global flows of values in order to promote local development. The result of such a global intercity competition determines cities’ functions and positions in the global division of labour and thus in the global urban hierarchy. Ultimately it

2 Introduction

determines city governments’ ability to increase prosperity and welfare in their communities. We look at this scene through ‘First World’ lenses and thus from the perspective of challenges faced by cities in the developed world. In practice, the discussion concerns primarily cities in North America, Western, Northern and Southern parts of Europe, and Asia-Pacific with a focus on East Asia, Singapore and Australia. What most of the major cities in these regions have in common is that they have faced the need to revitalize their industries and to restructure their economy from industrial to post-industrial. Practically all cities ranking highest on the ladders of the global urban hierarchy are in these areas. In this sense we discuss the global benchmark cities. This makes the discussion focused and manageable, even if it undeniably increases conventional wisdom at the expense of intellectual surprises, and erases the nuances and diversities inherent in the global urban system as a whole, characterized by the huge differences in profiles and scales of cities as well as their special national, cultural and historical contexts. The purpose of this book is to describe how globalization and especially global intercity competition pose challenges to the development of post-industrial cities. The term ‘post-industrial’ may not be particularly fashionable in the postmodern age, but as the focus is on economic restructuring, diversity of post-industrial activities and local industrial policy, the chosen term is probably the best available. This book aims at analyzing the fundamental logic of attraction-oriented intercity competition, categorizing the economic city profile options associated with post-industrialism, identifying advanced cities in each post-industrial activity area on the basis of empirical sector-specific city rankings, and lastly, discussing the strategic and social dimensions of such attraction-oriented economic city branding. In order to shed light on the framing or contextual issues relating to city branding, we next briefly discuss: (a) (b) (c) (d) (e)

the approach applied in this book, i.e. ‘political economy’; globalization as a mega-trend of our time and a conditioning factor for cities; the rise of post-industrial society and the nature of post-industrial cities; city branding in context; the role of city rankings in analyzing cities’ global competition and positioning.

In the following pages this first chapter provides background ideas of the contextual view of city branding. In the subsequent chapters these topics are elaborated focusing in detail on both the ‘city’ and ‘branding’ side of our topic.

Political economy of city branding

Political economy is a somewhat vague concept owing to the disciplinary differences in understanding its meaning. In social sciences, however, it is usually associated with a critical approach to economic development and social issues

Introduction 3

with a special reference to the political dimension of broadly defined economy, deriving its original meaning from the school of classical British economists, most notably Adam Smith and David Ricardo, who developed an analysis of the bourgeoning economic system of their day, capitalism (Gough 1988: 5). Political economy is essentially about the interrelationship between political institutions and the economy and, as an important third element, the critical assessment of the social outcomes of their interplay. Understanding political economy

Political economy is often contrasted with neoclassical economics and this is, indeed, a good way of pointing out some of its special features. In spite of criticism from many directions, neoclassical economics is still a model for mainstream economics, which is fairly formal and reductionist, but more importantly, eliminates the political dimension from its analysis of economic life. What is essential in understanding the background of political economy is that historically economics was placed in the broader context of social science before it started to be narrowed by William Jevons, Alfred Marshall and a range of other neoclassical economists. It was also primarily interested in the state and the development of national economies, hence the term ‘political economy’. Even if such a broad perspective went out of fashion in the eyes of many economists and social scientists, it never died and it has even started to revive since the 1960s. We may identify three major schools of thought that have maintained some of the basic tenets of political economy. They are: (a) from the radical libertarian right the Public Choice theory, which since the 1960s has started to rekindle the interest in ‘political’ within economics, though retaining some of the fundamental principles of neoclassical economics; (b) institutionalists and evolutionary economists wishing to put economy into a wider framework, their lineage going back to John R. Commons and Thorstein Veblen; and last (c) from the political left, various forms of Marxism, which as a tradition is probably most commonly associated with political economy as it is understood today (Mosco 2009). This implies that political economy may be associated with various ideological factions and theorizations. Let us take a closer look at selected aspects of Marxistoriented political economy for the purpose of explicating some of the most relevant aspects of political economy approach to city branding. The school that actually never abandoned the terminology and approach of political economy is Marxism in its various forms. It has been claimed that the intellectual roots of Marxism are in classical political economy, German philosophy and French socialism. Marx’s major work, Das Kapital: Kritik der politischen Ökonomie (Capital: Critique of Political Economy), published in 1867, marked a radical reformulation of the most basic concepts of classical political economy. This new social theory came to be known as historical materialism: ‘materialist’ because of its conviction that the material conditions explain our behaviour and ‘historical’ because capitalism was seen as only one historical stage in the process of the historical development of human societies. To conceptualize the latter Marx

4 Introduction

developed the concept of mode of production, of which capitalism was only one among many (Gough 1988: 5–6). This implies that economic phenomena were systematically approached within a broad historical and social framework. This is in sharp contrast to neoclassical economics, which abstracted economic processes from social relations and from specific social structures of capitalist society. As Harvey puts it, ‘Jevons transformed political economy into economics with its emphasis on sophisticated theoretical devices for marginal analysis. These sophisticated devices, insightful as they may prove in certain respects, turn out to be weak tools for handling some of the important and relevant problems posed in classical political economy’ (1975: 153–4). Parallel to this development in sociology, the study of social behaviour, relations and structures – and later also in political science, the study of power and political behaviour and institutions – was separated from economic fundamentals (Gough 1988: 6). This gives a disciplinary viewpoint to perceive political economy as a unifying approach to economic, social and political life. Concerning political economy as an approach or as a framework, one of its tenets is the conviction of the need to analyze social phenomena in relation to social structures and the basic conditions of our material existence. It is in this general sense about the conditions of control and survival in social life. In this configuration control is fundamentally political as it involves the social organization of relationships within a community, and survival processes in turn are economic as they concern the production of what a society needs to reproduce itself (Mosco 2009). This is another way of pointing out the fundamental relationship between political and economic dimension of social life. Thematically, political economy has been associated with the profound understanding of social change and historical transformation. In its classical form since Adam Smith, David Ricardo and John Stuart Mill, attention was mainly directed to the great capitalist revolution and the rise of industrial societies. Radical political economists like Karl Marx were attracted by the historical analysis of capitalism and, even more importantly, the dynamic forces in capitalism responsible for its growth and change, and the inherent contradictions of this system that caused intolerable inequalities among human beings (Mosco 2009). The other characteristic feature of political economy is its insistence that the discipline should be firmly rooted in an analysis of wider social totality, including issues that are currently compartmentalized into different disciplines, such as political science, economics, sociology, communication studies and so forth (ibid.). It is also sometimes emphasized, especially by certain proponents of Marxist tradition that the formal ontology of social world is dialectic in nature, i.e. it is composed of the parts and the whole, organized in the concrete totality of integration and contradiction that constitute social life, which reveals various tensions that are inherent elements of our lives and also forces of social change under capitalism. The principal tension in Marxist political economy is between labour and capital, and thus the primary classes of society that are fundamentally in antagonistic relation to each other are respectively the working class and the capitalists. The social setting has changed dramatically since Marx’s days, most

Introduction 5

notably in developed Western societies, and it is extremely difficult to define these classes and to find coherence and unified class interests within them, but the fundamental tension is still there and has many manifestations. For instance, Manuel Castells’ (1979) structural analysis of urban conflicts as a reflection of social contradictions of capitalist society, as well as Henri Lefebvre’s (1971) analysis of bureaucratic society of controlled consumption, reveal how this tension between accumulation of capital and the reproductive aspect of everyday life can be seen in urban political analysis. More indirectly, the same tension can be seen in the core notion of Manuel Castells’ (1999a) later work on the bipolar opposition between the Net and the Self, which can be interpreted as the translation of the analytical core of Marx’s thesis applied to the conditions of a world that is pervasively globalized, digitized and networked. Lastly, another aspect of the political economy approach is praxis, which in a general sense refers to human activity and specifically the free and creative activity by which people produce and change the world and also themselves. This point has an important role in the discipline to counterbalance structural orientation, which is fairly strong in most of the traditions associated with political economy (Mosco 2009). This dimension is of particular relevance to orthodox Marxist analysis, which was anchored in the idea of class struggle and revolution. Later, especially in critical theory, it was rightly pointed out that in modern times in the developed world it was increasingly difficult to identify the subject of revolution. Yet this dimension continues to be relevant, and is apparent in critically-oriented urban research. Namely, the idea of the ‘right to the city’, a slogan originally coined by Henri Lefebvre (1968), which expresses a need for inclusiveness and shared power to reshape the processes of urbanization and thus the right to change not only our environment but also ourselves, is an important manifestation of radical urbanism (Purcell 2002; Harvey 2008). Urban political economy

Above we mentioned the ‘urban’ dimension of political economy, as an instance of class relations and a revival of the ‘right to the city’ movement. Yet, ‘urban’ is an important dimension here also in many other respects, for city branding is pursued by city government and from an input and/or output direction connected with urban communities, including the citizens and the business community as their most relevant stakeholder groups. What the preceding discussion clearly implies is that political economy does not take ‘urbanization’, ‘urban’, ‘space’ or ‘community’ for granted, as abstractions, but contextualizes them with social, economic and political contexts with the capitalist mode of production at their core. As crystallized by Newton (1981), urban economy cannot be understood outside its political context, and conversely, urban politics cannot be understood without its economic background. Thus, new urban political economy starts from the premise that the city is a reflection of the larger socio-economic fabric, with far-reaching ramifications. This implies that each city must be understood as an instance of a particular society at a particular time. This can be discussed at two

6 Introduction

different levels. First, the local and the national are knitted tightly together to form a single system, i.e. a national urban system consisting of an integrated and hierarchically organized set of urban places in which each unit plays a particular economic role (Newton 1981). Second, the urban is increasingly connected to global capitalism, or in more neutral terms to ‘globalized economy’, which at the same time challenges the previously mentioned state-centric view of urban system formation and its dynamics. Yet, from a political-economy perspective even capitalism as a contextual element is seen as a constantly evolving system of production and social relations. Such an approach is in stark contrast with conventional urban analysis, which commonly leads to a historical, ethnocentric view of urbanization and urban development (Sawers 1984: 4–5). In the globalized world, urban political analysis has increasingly directed its attention to urban regions as competitive collective units within the global dynamics of capitalism. As interpreted by Harvey, each urban region has the autonomy to pursue whatever course it will, but in the end each is disciplined by the external coercive laws of competition. Its industry has to compete within an international division of labor, and its competitive strength depends upon the qualities of labor power; the efficiency and depth of social and physical infrastructures; the ‘rationality’ of life-styles, cultures, and political processes; the state of class struggle and social tension; and geographical position and natural resource endowments. (1985: 158)

In fact, in the 1980s, urbanization and urban development were more directly linked with globalization, giving impetus to a completely new discourse with a fairly contextual and macro-theoretical nature in which the historical incorporation of cities into the world economy was the core topic. This is the time when theorizations of world cities and global cities started to infiltrate the urban research agenda. Two important figures behind this paradigm shift were the urban sociologists Manuel Castells and David Harvey, who in their works of the late 1970s linked urban formation with the wider historical movement of industrial capitalism and its structural conditions (Friedmann 1986: 69). They had slightly different focus than many of their predecessors and contemporaries who worked in the same or related fields of globally oriented urban analyses with a focus on cities linked to colonialism and the capitalist world-system (King 1991b). In any case it seems that the genuinely ‘global’ dimension as we understand it today was conceptualized in the 1980s, having its paradigmatic expressions in the works of John Friedmann (1986), Manuel Castells (1989) and Saskia Sassen (2001 [1991]) (King 1991a: 3, 7–8). In political economy attention is also paid to class relations and internal divisions into working class and capitalist class, which are most apparent in the urban context owing to the role of cities in the production and reproduction of capitalist societies (Castells 1978). An interesting case in this respect is the growth machine thesis, which explicitly discusses the role of parochial capital in building

Introduction 7

the urban growth agenda (Logan and Molotch 1987; Logan 1999). The dual city thesis also echoes the contradictions associated with class relations and their spatial expressions (Mollenkopf and Castells 1991). An institutional formation that mediates between the working class and capitalists is government, an institution with a special place in political economy. Traditionally, the primary interest has been in the relationship between government and economy, especially in its critical analysis of the state as the servant of the capitalist class as well as its local counterpart, local government or the ‘local state’, as the guarantor of collective reproduction and management of people, as hypothesized by Cockburn (1978) in her version of local state theory (Sawers 1984: 7–11). The relationship between local political authority and economic interests within the urban region is one of the core issues in urban political economy, even though most notably in Marxistinspired works this local ‘political’ or ‘governmental’ dimension usually remains conceptually underdeveloped (see e.g. Harvey 1985; Castells 1989). What, then, are the implications of political economy for research on city branding? First, we approach this phenomenon in a contextual way, focusing on the control and survival aspect of communities and institutions. The question is as much of an attempt and ability to control urban growth as it is of the capitalist world system and neo-liberal globalization policy that create special conditions for global intercity competition and the city government’s strategies and means, including city branding. Another important dimension is historical in the sense that our focus is on a specific historical era of globalized capitalism. To be more precise, our attention is directed to the metropolitan areas of advanced countries with a tendency to focus on post-industrial activities in which they have competitive advantages in the condition of globalized late capitalism. This approach reveals contradictions and tensions that are visible at the local community level, as manifested in the conflict between the preferences of local residents and the motives of entrepreneurial local governments’ business site development projects intended to serve global businesses, or differences between the interests of local residents and especially those who live in deprived areas versus the transnational creative class, which tends to inhibit privileged areas rebuilt at the centres of metropolitan cities in the name of creative class-oriented development policy. Lastly, the practical dimension or praxis calls attention to the premises, forms and strategies of city branding, thus bringing the civic, and more importantly, the managerial dimension into play. Actually, the political-economy perspective builds a view of city branding by rationalizing the role of ‘local’ in the global–local nexus. As, for example, explained by Amin and Thrift, even if globalization undoubtedly reflects the compression and transgression of time and space barriers, even globally-oriented actors in economy ascribe a sufficiently strong salience to place as the specificity of each locality may provide some competitive advantage: ‘Place-marketing in this context, is said to constitute a critical element both for success in the interregional competition for investment … and for global industry itself to derive competitive advantage and corporate distinctiveness’ (1996: 6–7). From this observation it is a short step to a very practical challenge of city marketing and city branding: how should politicians and

8 Introduction

public managers at the local level utilize city branding to achieve the best possible result in the given circumstances? Political economy adds to this question an inherent question of how well the approach to city branding is rooted in the identity of the local community, how various stakeholders and especially citizens are involved in constructing brands and visions, and how democratically such a brand-making process is governed.

From globalization to location specificity

Globalization is taken here as an empirical fact, but interpretations of its nature vary for understandable reasons. In the mid 1990s a new discourse emerged in such forms as the critique of unregulated global economy (Brecher and Costello 1994), the perception of globalization as a fatalistic economic ideology (Michie and Grieve Smith 1995) and the critique of the increased role of corporate power affecting both national and global scenes (Barnet and Cavanagh 1995). There are also claims that globalization itself is not as historically unique or pervasive as is generally assumed, for states are not as powerless as is generally believed in the face of global forces (Weiss 1999), and globalization itself has been challenged in the sense that we know it today. Hirst and Thompson (1996), for example, claim that globalization is a myth fabricated for ideological reasons, and that there has always been an international trading system of some sort. All such perspectives help us to understand the various dimensions and nuances of globalization, but they do not dispel the dramatic impact this particular trend obviously has on all major dimensions and systems of society. That is why we need to provide a framework to understand how globalization changes the structural context of cities. This discussion has been so well documented for more than twenty years that only a short description will suffice to outline globalization as a context of cities. Probably the major warning to issue here is not to see globalization as an excessively simplistically interpreted contextual entity. Castells (1989; 1999a) was among the first to analyze cities in the context of globalization as a part of a wider social theoretical scheme. Other frameworks for understanding globalization and cities include world systems theory (Wallerstein 1976) and Marxist urban political economy (Harvey 1982; 1985; 2012). Theories of modernity and post-modernity provided other apposite sociological accounts of globalization (Featherstone 1990; Giddens 1991; Beck 1992; Lash and Urry 1994; Beck et al. 1994). All these theorizations provide conceptual tools to understand cities in context, but at the same time it is important to bear in mind that globalization is not an internally coherent external force monolithic in nature, but a complex system of different dimensions (Newman and Thornley 2005: 16–17). As pointed out by Harvey (2012: 101), globalization should be seen as a geographically articulated patterning of global capitalist activities and relations. Globalization has been associated with two trends as regards the position of metropolitan areas. First, it has been claimed to cause the death of distance, which makes the location of productive activities increasingly irrelevant. Second, there are also claims that the ability to process and transmit information globally, and

Introduction 9

across great distances, undermines many traditional advantages enjoyed by established urban centres. These trends point in the same direction, whereas location specificity, differentiation and growth pole theorization have generated wellgrounded counterarguments to these claims (see Hartshorn 1992: 400; Kotkin 2005: 149–50). It seems that both tendencies are in play, having their locationspecific consequences in spatially uneven geographies. This interplay has its roots in costs, proximity and brand value. Firms need to assess how important close proximity to high-profile urban centres and thus to brand-enforcing cluster of advanced business services is for them when considered against the cost of doing business in a given location. In such a calculation it is not certain that the high-cost global cities are always the winners (Kotkin 2005: 150). Probably the most paradigmatic flows and networks of values on a global scale are international transfers of funds. The USA has been and continues to be the most central for such flows, as an economy with two-way exchange of information (monetary flows) that both sends capital to other countries and receives it from them. More generally, the global community based on international monetary flows is composed of nations with the Western industrial powers at the centre and the less-developed nations on the periphery. Yet, even if the evidence supports the view of an interconnected economic system, the nations and even macro-regions may be differentiated in terms of how central they are in this system (Salisbury and Barnet 1999: 47). Positions in such networks may change fairly quickly, within only a couple of decades. It is worth considering how global financial crises and the shift in the economic gravity towards Asia transform global flows of values and global urban hierarchy.

The rise of post-industrial cities

The story told in this book, even if fragmentary, revolves around economic restructuring, deindustrialization, and the survival of the post-industrial city. The industrial city was for long a centrepiece of accumulation; and of the attention of the world business community and local developers. Geographical patterning of labour and commodity markets, of spatial and social divisions of production and consumption, and of differentiated socio-technical mixes within the labour process became pronounced on the urban landscape (Harvey 1985: 197). This is the ‘thesis’ against which we can plausibly assess current trends associated with post-industrialism and the expansion of the service sector in particular. Services, multinationals and high rises

The trend that undermines industrial development is called deindustrialization; it has caused decline and urgent need for restructuring in most of the cities that succeeded in the wake of the Industrial Revolution. Emerging manufacturing plants hungry for manual workers reshaped the urban form and served as the centres of capitalist production of global significance. Manchester in the UK has sometimes been symbolically referred to as the birthplace of capitalism. Many of

10 Introduction

the first industrial cities relied on the production of textiles, metals and chemicals. This was the era of large manufacturing plants with most of the employment based on waged labour. The pervasive impact of industrialization created a culture of dependency in these old industrial areas, which were connected to urban processes of collective consumption and social relations of production and consumption. Hudson even characterizes such a context as a hegemonic culture of waged labour: ‘As a result, the often profoundly paternalistic social relationships within the workplace became extended into mechanisms for social ordering and control in the community beyond the workplace, transmitted and communicated through the institutions of local civil society and/or the state’ (1996: 197). Historically the overall view of economy changed soon after the Second World War from cyclical fluctuation to inexorable decline, which was further accelerated after the two oil shocks of the 1970s and the decline of Keynesianism and later also welfarism as the cornerstones of redistributive societies. Such historical development posed new challenges to industrial cities, which were burdened by the hegemonic culture of waged labour, some version of corporatist structures and industrial heritage, and thus had difficulties in becoming attractive locations for emerging growth sectors, such as knowledge-intensive business services (Hudson 1996: 196–8; cf. Hirschhorn 1988). The share of services in GDP and employment started to grow steadily in the wake of the aggregate industrial surplus and natural increase in demand for services. At the same time the composition of the service sector started to change due to the addition of new high value-adding services to the traditionally low valueadding service sector. This constitutes the basis for the standard view of the post-industrial turn, which emphasizes the transition from blue-collar to whitecollar workers, reflecting the change in how and for what purpose labour was used in production: blue-collar workers kept the machines running and produced goods, whereas white-collar workers dealt with people and manipulated information; though in due course the order may have been reversed – they dealt with information and manipulated people. This development was most apparent in the development of occupational structures, including the people who sustained and developed business, provided advanced personal services or were engaged in regulation and ‘social system engineering’, which when aggregated, urged us to write a new chapter in the book of economy, revolving around service sectors (Savitch 1988: 4). The evidence in the 1970s and 1980s showed that it was the service sector that provided a major part of the expanding employment based in the large cities of the Western world (Hartshorn 1992: 401). In economic terms, in the heyday of industrial era, services were mainly seen as add-ons to goods manufactured in efficiently run factories and did not thus add much value (Millar and Choi 2011: 22). Services were for long considered simply to be a mere sinkhole of the economy, immune to significant technological or organizational productivity increases, reflected in the wide acceptance of socalled Baumol’s cost-decease hypothesis (see Baumol 1967). Baumol’s observation obviously had some intuitive appeal, especially in the 1960s, but it nevertheless provided too narrow a view of the service sector (see e.g. White et

Introduction 11

al. 1999; Zysman et al. 2011: 47, 58; Derudder et al. 2003; Sheehan, 2006: 44). It is actually the dynamic and high-value adding part of the service sector that contributes to productivity gains in other sectors, manufacturing included (Daniels and Bryson 2002). An important dimension of post-industrialization was multinationalization, which first appeared between the two world wars. It preceded the formation of global cities. Today, most of the advanced producer services are located in cities belonging to the top tiers of the national and international urban hierarchies. In general, the larger the city, the greater the share of producer services of total urban employment (Moulaert et al. 1997: 99; see also Sassen 2001). Global cities in particular have been reshaped by the producer services revolution. Thus, large cities are centres of service activities par excellence. They may have different profiles and different areas of specialization, but they also have shared features and shared interests, providing a rationale both for co-operation in the form of alliances and networks and stiff competition related to advanced producer services (Moulaert et al. 1997: 99–101; Bathelt and Clückler 2011: 111). Lastly, post-industrialism had its expressions in the making and reshaping of physical environment and urban form. The most characteristic signs of such development were the burgeoning of office blocks and luxury high rises and the refurbishing of old waterfronts or deserted industrial sites (Savitch 1988: 5). Office buildings became the factories of the information age and employers in producer services occupied the best offices as the specialized white-collar ‘working class’ of the information age (Hartshorn 1992: 401–2). The rise of the creative class brought additional impetus to this development by explaining that in order to attract creative and high-value adding people to a city, amenities must be provided to satisfy their needs (Florida 2002). Urban design and physical development became an integral part of the post-industrial turn. A critical view of the post-industrial thesis

The post-industrial thesis is usually associated with the work of the American sociologist Daniel Bell (1973). It is a theorization that goes hand in hand with actual developments in the economy in the Western world. The dramatic changes from agrarian to industrial society took off in the nineteenth century, followed by a further transition towards a new occupational structure. The role of unskilled labour and also blue-collar employment started to decrease in the first half of the 1900s and as its counter-trend white-collar workers proliferated; in the USA, for example, from 18 per cent of the total workforce in 1900 to 37 per cent in 1950 and to 49 per cent by 1974 (Ley 1981: 33). Another important part of this picture was the increased role of technology not only in the economy but in society as a whole, which was accompanied by a rise in the importance of theoretical knowledge and the role of universities and research establishments in particular (Bell 1973). A related trend was a shift from goods-producing to a service-producing society, in which the role of public services was particularly important: ‘Whereas in the nineteenth century government promoted entrepreneurial interests either

12 Introduction

actively or else indirectly, under post-industrialism state intervention has become forceful while its objectives are social, ecological and even aesthetic as well as economic’ (Ley 1981: 34). (On post-industrial society see also Powell and Hendricks 2009; on planning for industry in a post-industrial world see Howland et al. 2008.) There is much that is attractive in the thesis on the coming of the post-industrial society. Yet it is not as self-explanatory as it may first appear. One of the most powerful alternative views of the post-industrialism thesis was voiced in the late 1980s by Stephen S. Cohen and John Zysman, a duo from BRIE (Berkeley Roundtable on the International Economy) of the University of California, Berkeley, who evinced a persuasive argument against the view that the US economy would or should have gone at the time of the writing of the book towards a post-industrial economy. Their claim was that there was no such economy, nor indeed any such post-industrial politics. They argued that ‘the jobs of many, and the income levels of almost all, depend upon American mastery and control of production’ (1987: 260). Smaller territorial communities may specialize in services or a certain subset of services and prosper, be it New York, Washington, DC, Monaco, Singapore or the Bahamas, but large economies as vast as that of the USA cannot fit into any such niche. Even though the labour force may be located in services it does not mean that the country can prosper without a sufficient industrial base. Thus, as they saw it, the transformation in the late 1980s, was not from industry to service, but from one kind of industrial society to another (Cohen and Zysman 1987: 260–1). This view emphasizes that the widely held belief in the post-industrial thesis is a dangerous myth undermining developed countries’ ability to compete successfully in world markets. The core of their antithesis is that in today’s sophisticated technological environments, high-tech services are inextricably linked to the mastery and control of manufacturing; lose manufacturing and you will lose your competitive edge in high-tech capabilities (Cohen and Zysman 1987). Later Zysman emphasized that the argument should be applied more broadly to production rather than manufacturing and is to be understood in the context of the global decomposition of production and global production and innovation ecology (John Zysman, personal communication, Berkeley April 8, 2013). This relativizes the thesis to some extent but retains the core concerning the critical role of the technology–production axis for the future of developed countries. The other criticism of post-industrialism comes from the Marxist tradition, which points to the flaws in Bell’s claim that the system of a private enterprise market system is changing towards one in which the most important economic decisions are taken at the political level, and that the ‘economizing mode’ of business activity is not changing into a ‘socializing mode’ in which the satisfaction of the workforce becomes the primary drain on resources as claimed by Bell (Callinicos 1989: 121). There is no space to go through Callinicos’ critique, which partly holds as it emphasizes aspects of the persistence of capitalist tendencies, relativity and productivity aspects of manufacturing in the economy, and the relevance of global perspective, but appears eventually to produce only numerous

Introduction 13

excuses for why the post-industrialism thesis cannot possibly hold. More recent discussion of creative class by Florida (2002), for example, depicts nicely how many aspects of Bell’s original ideas, when slightly modified, actually find their expressions in today’s world. The meaningfulness of the term ‘post-industrial’ has its limits, for it vaguely denotes something that comes after ‘industrial’ but does not specify what it is. On the other hand, as one of the key features of the post-industrial phase is increased diversity in the economy in contrast to assumed convergence of industrial societies (Kerr 1983), especially from the point of view of the research interest of this book, the term post-industrial serves as the best proxy for what is the context within which we approach local industrial policy and restructuring. The postindustrial logic revolves around knowledge, information, technology, services and innovation, but it would be somewhat misleading to base its conceptualization on any single element of economic transformation, such as informationalism or networking (e.g. Castells 1989; 1999a). If anything, the perception of the contextual change behind local industrial policy should be based on the idea of service transformation (Zysman 2004; 2006; Zysman et al. 2011). To conclude, in an economic context the term ‘post-industrial’ is usually associated with services, such as industrial services, social services and personal services (Lash and Urry 1994: 196). The increased importance of services is certainly a reality in post-industrial cities. This implies that we must change the supply-oriented view of industrial cities to reflect the real-life developments in the urban economy. In short, developed economies must generally put their emphasis of pro-growth policy on services. This is one reason why services specialization is becoming a key factor in local competitiveness policy (Ioncica et al. 2010). At the same time academics usually admit that the analysis of services is difficult, due to conceptual vagueness as well as a lack of appropriate statistical data (Schmoch 2003).

City branding in context

We have previously established the context for our discussion of city branding. The approach can be labelled as political economy, even though ‘political’ is primarily associated with city governments’ economic development policy. Globalization is the most important mega-trend that provides a generic context for understanding the competitive situation of cities. This also indicates that the interest is mainly in global cities. In addition, our discussion is more than anything about post-industrial cities in the developed countries, which to a great extent narrows the empirical focus among cities. These are the major points of departure from which we start to conceptualize city branding. Consider one of the fundamental issues related to branding in the context of city governments’ development policy: does city branding make sense, that is, does it create any true value for city governments? A good starting point is the observation made by Kapferer (2008: 2) on countries that have started to think of themselves in branding terms. He states that whether countries want it or not, they

14 Introduction

are de facto brands, summaries of unique values and benefits. Indeed, the conscious attempt of governments to shape a specifically designed place identity and promote it to identified markets is almost as old as territorial government itself (Kavaratzis and Ashworth 2005; 2008; Anholt 2007; Kavaratzis 2008). Even if national branding is usually regarded as a pioneer in branding in the public sector, city branding has actually equally long roots as national branding associated with the competition between cities from Ancient Greece to the citystates of mediaeval Italy (Kornberger 2010). Denying the existence of branding would imply shutting one’s eyes to the realities of the surrounding world. If city branding can promote neighbourhood revitalization or local economic development, should we hesitate to utilize it because of its reliance on municipal entrepreneurialism or assumed instrumentality? And how often does criticism of city branding erupt because of the inability of critics to perceive the positive side of this marketing concept or the aspects that benefit local communities, or to reconceptualize branding in order to give it a sufficiently balanced, integrative or participatory meaning? In order to avoid an excessively simplistic and antagonistic discussion, we should ask questions that help to reconcile the negative and positive views of branding, to reveal the relativity of both pros and cons, and to see the very idea of city branding in a constructive light: branding is what we make it. This means explicitly that in this book we discuss different phenomena than, say, Naomi Klein (2000) in her widely debated book No Logo, which enters the area of brand-based politics in a way that misses the constructive side of branding that can be of service of urban communities. Klein rightly points to the critical aspects of the branded world we live in, but instead of addressing ‘branding’ as the marketing tool for public sector organizations, she addresses the inequalities and asymmetries of our branded world, the misdeeds of multinationals, the fight for global commons and the tensions between consumerism and citizenship. This book relates to a different branding discourse, even if from the point of view of political economy these critical remarks are worth taking into account. In this sense the perspective in this book is more on economic competitiveness than political or cultural critique. A special legitimation problem related to city branding is the apparent difficulty in branding a city, which pits conscious branding efforts to gain a high mindshare for a brand against the long-term evolution of the image of a city. For example, if a manager of a manufacturing company considers creating connections to some high-tech centres or R&D hubs in the world, there are literally thousands of viable options available, but due to the reputation of various hightech centres, possibly influenced by connectivity, his or her attention is attracted by only a handful of such centres: starting for example in the US context, from San Jose and the surrounding Silicon Valley, Boston’s high-tech suburbs known as Route 128, Raleigh–Durham–Chapel Hill known as the ‘Research Triangle’ and Austin, Texas and continuing to less prestigious or more specialized high-tech regions; then on to Munich, London and Stockholm from Europe; and further to Seoul, Taipei and Hong Kong from East Asia. Reputational landscapes are, to a large extent, industry-specific, which is why interest in biotechnology would add

Introduction 15

to this list San Diego; in clean technology San Francisco, Berkeley and Pasadena in California; in mobile technology Stockholm or Oulu from Europe, and so forth. From the wider perspective of urban symbolism our world consists of images of places, and most of these have evolved over time due to history, business, activities or events, such as the Garlic Festival in Gilroy, California; the Sin City reputation of Las Vegas, earned from (adult) entertainment, games and quick weddings; the country music of Nashville; the Winter Olympics of Lake Placid; the hippie heritage of Woodstock, New York; the wine of Napa Valley, and so forth. Every town and city has some kind of reputation, but this varies case by case in terms of its nature, significance and publicity. A consciously promoted brand is an attempt to associate the city with a desired category of urban development, analogous to the way in which Hoover was synonymous with vacuum cleaner, Xerox with copying machine, or ‘googling’ with the use of a web search engine. However, no city government can exercise exhaustive control over the image of the city, which is why branding is always risky and resembles a kind of viral branding or partnership approach to branding, which is a middle-way strategy between mindshare brand and the natural evolution of the image (van Gelder and Allan 2006). For example, in Bloomberg’s financial news, ‘Made-in-London Scandals Risk City Reputation as Money Center’, it is speculated that London may be risking losing its status as the world’s top financial centre ‘as the $360 trillion interest-rate fixing probe follows a series of market abuses by banks that eroded trust in a city already shrinking faster than rivals’ (Crowley and Choudhury 2012). This illustrates that branding has a strong connection with both economic realities and the increasing mediatization of the economy (Rawolle and Lingard 2010). At the same time this shows the vulnerability of the brand-making process and the inevitability of having uncontrolled elements in the process (cf. Granås 2009; Nyseth 2009).

City rankings, economic profiles and city brands

In the empirical part of this book three concepts that relate synergistically to each other are combined: economic profiling, ranking and branding. The idea is that city rankings reveal a natural direction for the economic profiling of highlyranked cities, which in turn both affects the naturally evolving image of the city and is also one of the bases for a rationally constructed industrial city brand. A word on methodology is appropriate here. City rankings are basically lists of cities that are evaluated and ranked with regard to different economic, social and geographical characteristics in order to reveal the position of each ranked city as ordered according to given criteria (cf. Giffinger et al. 2010). The next question to address is, what have rankings to offer in the research on economic city profiling and cluster or industry identification and selection? Obviously, rankings provide a shortcut to the symbolic battlefield of cities or, one might say, to the symbolic economy. We may even hypothesize that the novel aspect of competition between cities in the contemporary world relates to league tables and rankings (Kornberger 2010: 89). Rankings, especially among cities with good

16 Introduction

results, are widely publicized and often used by city government’s themselves to improve their international image (Giffinger et al. 2010: 300). The implications for urban managers are obvious: the city is under considerable pressure to move up the league tables and rankings and to establish itself as a regional, if not global, heavyweight (Kornberger 2010: 89). The diametrically opposite way would be to rely on indicators of the ‘objective’ conditions of cities and compare them to the brands of cities (cf. Hildreth 2008), but this approach would somehow miss the very nature of branding in global intercity competition. Anyhow, the ranking-based approach undeniably has its limitations. First and foremost, rankings are relative or criteria-sensitive and often even somewhat arbitrary in terms of results due to poor methodology and rule-of-thumb sampling. For instance, in Expat Info Desk’s (2013) ranking ‘Choosing Where in the World to Live’ countries were ranked on the basis of the cost of living, healthcare provision, taxation and personal safety, which resulted in Mexico, Canada, India and Greece being ranked as the top four places to live in the world. The question is, are the indicators valid and reliable, are the results sensible and do they match the reality? It is also good to check how these results match with other relevant rankings, such as the ranking of liveability, wellbeing, quality of life and happiness. This is what we always need to consider with rankings. The potential drawbacks of city rankings include the neglect of complex interrelations related to intercity competition and international positioning, a tendency to exaggerate existing stereotypes, and disregard of poorly ranked cities. Moreover, attention is generally directed solely to final ranking results at the expense of methodological and reliability considerations (Giffinger et al. 2010: 300). On the other hand, the criteria of most of the city rankings are transparent and do not claim to offer the ultimate truth about how cities should be ranked concerning the given area of activity. Thus, in terms of reliability, they are not generally particularly good sources, but concerning ‘validity’ and symbolic relevance they have some degree of intellectual appeal. As mentioned by Ooi, there are a number of surveys that rank cities, and these rankings in turn may serve the purposes of city branding: ‘Many city branding authorities refer to selected indexes, pointing out their cities’ high rankings. Just as importantly, these surveys have also become frameworks for authorities to organize and manage their cities’ (2011: 58). Ooi presents Singapore as an illuminating case of this: For instance, Singapore, in wanting to attract more skilled labor, investments and tourists, has invoked Florida’s arguments by loosening up the cultural scene in the island-state and informing the public that the government has no more qualms about employing self-professed homosexuals. When conservative voices rise, the authorities justify the changes by saying that these moves are part of the signalling and branding process of a tolerant, open and creative Singapore. (ibid.)

Introduction

17

Rankings are thus tools for cities to learn from one another and to justify their policies, and as a result, cities are said to become ‘equally special’, which is one of the paradoxes of international city branding; a paradox in the sense that while the brand package is supposed to accentuate the identity and uniqueness of the city, global benchmarking and learning tend to make cities similar as there may be a temptation to design policies and direct actions according to the criteria applied in rankings (Ooi 2011: 57–8; see also Chapman and Pike 1992; Giffinger et al. 2010).

Structure of the book

The lengthy description of the basic aspects of the political economy of city branding in previous sections provides the basis for understanding the approach to city branding applied in this book. They also highlight some of the fundamental issues that help to render various aspects of city branding comprehensible and to explain some of its forms and ramifications. In the next chapters we elaborate the picture of city branding concerning its global and urban dimensions. The following chapter provides a brief description of the most important mega-trend of our time, globalization, which affects the development and relationships of cities. This section offers a general framework that articulates the preconditions of urban development with a special view to global intercity competition, global space of flows, global city formation and global trends in industrial restructuring. Chapter 3 addresses the most obvious and widely discussed ‘outcome’ of intercity competition in the globalized world: the ‘spikiness’ of our world (as formulated by Richard Florida), and from a more structural point of view, the formation of global urban hierarchy (à la John Friedmann, Saskia Sassen and Peter Taylor), which determines how cities are positioned in the global division of labour. This is not a zero-sum game, but reflects the specialization and differentiation of cities in terms of economic profile. Position in the global urban hierarchy is simultaneously both an end result of intercity competition and the basis from which to climb higher in the hierarchy in the interests of increased prosperity. Urban asymmetry is featured as an underlying structural factor that conditions global intercity competition and the evolution of a global urban hierarchy. Chapter 4 presents the ‘City Attraction Hypothesis’, which builds a bridge between global trends and city branding. The hypothesis is based on the idea that in a globalized world the attractiveness of a city is the key to its success. Specialization is a tool to determine what kind of resources or values a city should try to attract from the global flows of values. In this section topics such as location specificity, investment promotion and economic profiling are discussed. Branding is a primary means of attraction and, more precisely, of extracting high values from the space of flows. Thus, in Chapter 5 we start to focus on branding, and the chapter is essentially a brief introduction to branding. It provides a basis on which Chapter 6 is based. The latter provides an introduction

18 Introduction

to a conventional ‘instrumentalist’ conceptualization of city branding as well as a broader understanding of this concept, the former associated with neoliberal or entrepreneurial city and the latter built within the framework of urban political economy. The main objective is to outline how to utilize city branding in global intercity competition by clarifying the concepts of brand and brand management. After this the discussion takes a new turn by focusing on empirical development among the cities in terms of local economic development, competitive relations and global positioning. Chapter 7 is built on the preceding chapters, focusing in a very practical sense on economic city profiling, specialization and differentiation. The discussion is based on the city profile model, which contains eight special economic profiles for post-industrial cities: business intelligence, finance, high-tech, research, culture, tourism, large-scale meetings and logistics. The empirical discussion in this section is based on global rankings of cities in different economic sectors, supplemented by selected case descriptions. This section provides tools to consider how global cities compare in sector-wise global rankings and the implications of these for cities’ economic profiling and branding. Towards the end of the book there is a need to take a critical view of the outcomes and consequences of the global attraction game and city branding. In Chapter 8 the discussion revolves around the social tensions and especially dual city, social responsibility and urban governance issues relating to city branding and intercity competition. The main question is how local communities and citizens should be involved or taken into account in urban economic branding. This also highlights the unavoidable tension between urban managerialism and local activism, as in the case of the Creative Class Struggle movement in Toronto. In Chapter 9 attention is directed to the challenges of urban management. The chapter looks at the above discussion as a challenge to urban management and urban governance. How should the management approach the challenges to urban development and restructuring the context of globality? How to involve residents and other stakeholders? On what principles should the economic city profiling and local economic branding be built? The discussion revolves around complexity, multiscalarity and community-oriented brand politics. The book ends with a concluding section that draws together the major insights and presents a brief summary of the main points raised.

2

Challenges of globalization

Globalization is probably the most important mega-trend of our time or, as we may say, the last instance of modernization, which profoundly affects the development of cities. In fact, cities are like mirror images of globalization, as the latter imposes changes in the relationships between localities. This chapter is devoted to outlining the global context of intercity competition.

Global imperative

Globalization is a gradual macro-structuration of the world order, which implies a development towards a world-scale systemic interdependency and new relationships between national and sub-national political entities (cf. Robertson 1990: 22). Globalization is inherently boundary-eroding, which explains why it is dramatically changing the context of local communities as well as the premises of local development policy (Anttiroiko 2009b). Globalization itself has a long history, starting from the earliest explorations but taking a major turn through Columbus’ voyages to the West Indies in 1492 followed by such turning points as the expansion of the slave trade in the seventeenth century, the French Revolution of 1789 and the United States Declaration of Independence in 1776, and the surge of imperialism in the last quarter of the nineteenth century. In the twentieth century globalization in both a cognitive and a material sense was further accelerated by the Great Depression of 1929 and its aftermath, the Second World War, the founding of the United Nations in 1945, the Cold War between the US-led Western and the Sovietled Eastern blocs starting around 1947, the decolonization movement in the 1950s and 1960s, the rise of mass media and contemporary popular culture since the early 1960s, the cultural and political radicalism of the late 1960s, the economic opening up and liberalization of China since the early 1980s and of India since the early 1990s, and accelerated financial globalization since the 1990s. Historically globalization can be seen as a long-lasting multidimensional process, which gathered momentum in the 1990s. That is the decade when globalization became a buzzword and the main topic in political arenas, economic life and academia. As a term ‘globalization’ is actually already passé, as we live in a globalized world and the possible changes in globality in the near future are likely to be incremental when compared with the radical changes experienced in the 1960s and 1990s.

20 Challenges of globalization

Historically speaking, the transition from an international to a global economy is often associated with the breakup of the Bretton Woods system of advanced industrial nations, which since the Second World War established a negotiated order concerning the international monetary system (Amin and Thrift 1996: 2). The USA through the so-called Nixon Shock set itself free from the system in the early 1970s and consequently, after some years, all the major currencies were floating. This meant that governments’ grasp on monetary policy through exchange rates weakened in the face of speculators. This has been said to mark a turning point in post-war capitalism, for it encouraged the development of an increasingly global system of production and finance, and at the same time caused the relative decline of the USA within the Bretton Woods order and its shift towards a new regime based on the free movement of capital in order to maintain its position as a dominant power in global economy (Beams 2001). The subsequent reorganization of the world economy profoundly affected the spatial processes and the role of territorial communities. Amin and Thrift (1996: 2–5) identify the following implications: • • • • • • •

increasing centrality of the financial structure through which credit money is handled and the resulting increase in the power of finance over production; increasing importance of the knowledge structure and knowledge as a factor of production – this is what Castells (1989) captures with the term informational mode of development; transnationalization of technology, coupled with an enormous increase in the rapidity of redundancy of given technologies; the rise of global oligopolies and the tendency of corporations to ‘go global’; the rise of transnational economic diplomacy and the ‘globalization’ of state power (transnational governance structures); the rise of global cultural flows and ‘deterritorialized’ signs, meanings and identities; the rise of new global geographies as illustrated by eroding borders, space of flows, and global cities.

Due to increased cross-boundary flows of capital and human resources, local and regional governments have become more concerned than ever before with global economic development. In a way they are becoming networked cities, their strategic mission being the adjustment of local communities to the conditions of global economy (Anttiroiko 2009b). Nevertheless, localities and local communities have their continuing relevance, as the global economy and global society are still constructed in and through territorially bound communities, in global-local nexuses or nodes (Amin and Thrift 1996: 5). In this, cities need to find their place in a multi-level and multi-scalar governance system with new roles assumed by different levels of governance, such as the nation-state (Weiss 1999) and international organizations (Gilpin 2001; Held and McGrew 2002), and the role of global business networks affecting the forms of trans-national economic diplomacy (Lever 1997: 34–5).

Challenges of globalization 21

Globalization has brought about increasing centrality of the fiscal structure, by which credit money is created and allocated. Financial capital has become an independent force in the world economy. If we want to find the basic form for the new morphology, we must follow the generic value signifier – money – that is used to make more money. The core functions of the economy in a globalized world can be associated with the global capital markets, which have been reshaped by securitization, deregulation and digitization (Lash and Urry 1994: 18–22). This has coincided with the growth in the importance of knowledge in the production system. Financial means are in principle much more mobile than knowledge, but the formalization of knowledge and the development of the language of technology and professional life have increased the ‘fluidity’ of knowledge tremendously (Lever 1997: 34–5). In short, it is the global economy, rather than institutionalized global governance, that sets the rules of game for global intercity competition. Lever (36–7) sheds light on this phenomenon with four elements within globalization processes that have an impact on the urban hierarchy: financial flows, information and/or knowledge flows, the movement of cultural and social components, and ecosystem components. (On cities and space of flows, see Harvey 1982; Castells 1989; 1999a; 1999b; Veltz 1997; Newman and Thornley 2005; Zaloom 2010.)

Urban response to globalization

As global and national governance structures have not been particularly effective in determining ‘globalization policy’ and its outcomes, while at the same time local communities have become sensitive to footloose economic activities, polarization and volatility of development have gradually tended to increase. There are various signs of this tendency. For instance, the number of countries promulgating favourable policies towards foreign direct investment (FDI) has skyrocketed since the early 1980s, which implies that the number of candidate locations for businesses increased exponentially (Douglass 2002: 56). Another sign of this trend is that the relocations of factories and business units from Western and Northern Europe and the USA to low-cost countries have become daily news. It is commonly believed that the role of local and regional governance has increased due to the relative decrease in the power of national governments in the multi-level governance field at a time of liberalization of the global economic order (cf. Weiss 1999). One theoretical concept that tries to depict the fundamental nature of this emergent dialectic is ‘glocalization’, which suggests that local/global interplay of contemporary capitalist restructuring processes should be thought of as two dialectically inter-related instances, which are inherently related and involve de facto a recomposition of the articulation of the geographical scales of economic and social life (Swyngedouw 1992, 40–1; see also Moulaert and Scott 1997; Held and McGrew 2002; Matusitz 2010; Scott 2011: 314). There are two fundamentally different ways of responding to this challenge: to increase the competitiveness of a local community, in which the positioning and attractiveness of a city is approached within a dynamic competitive environment,

22 Challenges of globalization

or to affect the very conditions under which these intercity relations are determined and regulated. In other words, the local response to globalization has two paradigmatic forms and arenas: (a) competitive development-oriented responses in a dynamic environment of economic competition by which cities attract values from global flows and strengthen their export base, and (b) collaborative welfareoriented responses in an institutionalized environment, which are needed to promote solidarity and sustainability from the local to the global level as a joint effort of local governments and other public bodies and sometimes also in partnership with private sector actors (see Figure 2.1). It goes without saying that transnational solidarity shown by local governments is extremely difficult to realize (Borja and Castells 1997; Kresl and Fry 2005; Anttiroiko 2009b). It has been claimed that major urban transformation and reconfigurations through interscalar strategies have a potential to increase the capacity and status of cities in a wider context of global competition and governance. The term ‘glurbanization’ has been coined to describe such a phenomenon. One of its tenets is the convergence of global cities as the key nodes in global interplay (Matusitz 2010). The other one is about emerging governance and power relations, which can be seen from a territorial/scalar or relational viewpoint, the latter reflecting the increased need to deal with fixity and mobility. Yet, even within such a context the fixity of production as well as related reproductive processes guarantee that people will continue to be interested in the particular places and governance processes that affect them (Harvey 1985; Amin 2002; 2004; Short 2004; Cox 2013).

Globalization Global solidarity

Global competitiveness

Pressure to urban communities Local welfare policy

Institutional welfare setting

Responses of city governments

Local competitiveness policy

Dynamic competition setting

Figure 2.1 Dynamic and institutional aspects of local–global dialectic Source: Anttiroiko 2009b

Challenges of globalization 23

Globalization and city formation: the global city

Globalization, economic change, urban formation and public governance during the twentieth century gave the impetus for the emergence of a special type of spatial expression at their intersection, which came to be known as the global city. The root of such a formation is more accurately conceptualized as ‘world city’, which was used in 1915 by Patrick Geddes to refer to those urban centres where a disproportionate amount of the world’s business was conducted (Doel and Hubbard 2002), but more properly conceptualized in the 1960s by the urban historian Sir Peter Hall, who conceptualized world cities primarily as concentrations of political and bureaucratic power surrounded by a range of professional associations, trade unions, headquarters of business concerns and cultural institutions (Newman and Thornley 2005: 20). Around the early 1980s our understanding of globalization started to become more mature, including the re-conceptualization of world cities. This new insight is usually associated with John Friedmann (1986), who in turn relied on Wallerstein’s (1976) world systems theory but focused primarily on its implications for cities. This theorization became known as the ‘world city hypothesis’ which is based on the idea that economic globalization is articulated through urban nodal points, leading to the restructuring of these cities and the asymmetric relations with cities in terms of a global division of labour. Some of the cities became world cities – either primary or secondary world cities depending on their maturity and connections to the world economy – due to their role in global financial services, the availability of advanced business services, connections to major transportation hubs, the attraction of international institutions, the concentration of headquarters of multinational corporations and the size of population (Newman and Thornley 2005: 20). This view started to feed the discussion about world cities and related global hierarchy, primarily seen as concentrations of international institutions, financial institutions and company headquarters. Such a conceptualization emphasizes economic power at the core of urban hierarchy formation. The seminal work that disseminated the view of the apex of global urban hierarchy, highlighting the role of New York, London and Tokyo as the major trans-territorial marketplaces and command-and-control centres of the global economy, was Saskia Sassen’s The Global City (2001 [1991]). Sassen was also one of those who started to point out the difference between ‘world city’ and ‘global city’, as not all world cities were global cities in the sense she understood them (Newman and Thornley 2005: 20–1). Sassen explains her terminological choice as follows: When I first chose to use global city, I did so knowingly – it was an attempt to name a difference: the specificity of the global as it gets structured in the contemporary period. I did not choose the obvious alternative, world city, because it had precisely the opposite attribute: it referred to a type of city which we have seen over the centuries in earlier periods in Asia and in European colonial centers. In this regard, it can be said that most of today’s

24 Challenges of globalization

major global cities are also world cities, but that there may well be some global cities today that are not world cities in the full, rich sense of that term. (2005: 28)

What is essential in such a view is the focus on the function of cities in the global division of labour and in global networks rather than, say, their population size or political power. Thus there are many exceptionally large cities or mega-cities in different parts of the world, but only a few of them are genuine world cities and even fewer could be included among the highest ranking global cities. Beside command power and financial and business services, global cities essentially are defined by their connectivity, which has different layers, such as telecommunications, transportation and business networks (cf. Newman and Thornley 2005: 22–3). One aspect of such connectivity relates to the key topic of this book, the preconditions for a city’s ability to attract values from the global value flows. It has been claimed that the concepts of world city and global city are atomistic – or at least ‘pointillist’ – as they are defined as bounded spatial entities with quantifiable attributes that are in their exclusive possession. The world city discourse started to change after Castells’ analysis of the informational city and Sassen’s analysis of the global city, as both of them in their own way shifted the root metaphor from hierarchy to network. A postmodern challenge to this view was articulated by Doel and Hubbard (2002) in an attempt to overcome the atomism implicit in the idea of functionally and spatially fixed positions of cities within a structured global network by focusing on how such relations are built, how flows drift in and out, how they contract and expand, how they fold and unfold space. At its extreme, in such a picture cities’ positions and intercity relations are in a perpetual state of becoming. Whether such a hyperbolic conception matches reality is another matter. Even if cities such as New York and London are currently unchallenged as global cities, their ability to stay competitive cannot be taken for granted. Amirahmadi and Wah have pointed out how industry employment, occupational structure and educational attainment in New York City gives a glimpse of the daunting challenges ahead for economic restructuring. They state: [t]he need to upgrade skill and educational levels and to grow quality jobs in the global city is of utmost importance to its economic restructuring. The question remains unanswered as to what types of industries would best suit the city’s population and would simultaneously maintain its global advantage … New York City will need to undertake the long and expensive process of generating highly educated residents if it is to retain and grow its global competitive advantage. (2002: 101)

In just the same way all global cities from London to Tokyo, San Francisco and Singapore face their own challenges which may threaten their long-term success.

Challenges of globalization 25

Yet the global city is not a theoretical stance or paradigm that helps us to explain the realities of cities world-wide. As concluded by Newman and Thornley (2005: 268), grand theories of globalization and the world city or global city concept cannot account for the different experiences in cities throughout the developed world, from the USA to Europe and East Asia. What is needed is the analysis of the state and urban politics and governance. Local preconditions, histories and responses vary considerably, making it practically impossible to find a common pattern for the development of cities in the global context. This relates to the convergence hypothesis that cities, especially in the higher levels of global urban hierarchy, would become more similar owing to the pressure of global forces, the dominant model being business-led urban development or the neoliberal city, epitomized by New York, Los Angeles or Toronto. In European cities, competitiveness policy is generally balanced by inclusion and a social agenda, as evidenced by Barcelona, Amsterdam, Stockholm and many other dynamic cities. The surge of Asian cities to the global top creates a new situation in the sense that they have traditionally been instances of the developmental state, which did not conform to the neo-liberal global city model. Seoul, just like Tokyo, is a developmental city that serves as a starting point for the Korean transnational corporations, not as a starting point for the global operations of footloose firms (Hill and Kim 2000). Even if the paradigmatic differences between Western neoliberal global cities and Asian developmentalist global cities are definitively blurring, some traits of this dichotomy persist in representative top ranking cities in West and East.

3

Global urban hierarchy and asymmetry

This book is about cities. A city is a geographically definable large settlement or high density concentration of people, with a distinctive way of life in terms of production and reproduction and circulation, and characterized by a socio-technical structure that supports its functionality (for the concept of city, see e.g. Hartshorn 1992; on the recent discussions of the role of cities see e.g. Glaeser 2012). In a world where institutional boundaries – especially those of nationstates – have been eroded, direct and indirect connections and interdependencies between cities have increased. In the open globalized economy probably the most characteristic feature of their relations is competition. It determines which cities attract the most prestigious relocating headquarters, venture capital, talented young designers, mega-events and so forth. The most visible and widely discussed outcome of intercity competition is the ‘spikiness’ of our world (Florida 2005b), and from a more structural point of view, the formation of asymmetric global urban hierarchy (Friedmann 1986; Sassen 2001; Abrahamson 2004), which determines how cities are positioned in the global division of labour. Factual development has two faces in this respect: (i) it reflects the structural tendency towards a dynamic differentiation of cities in economic life; and (ii) designed or planned actions of differentiation, which either utilizes or countervails dynamic processes. Cities therefore occupy differing positions in the fields of asymmetries, and to understand their positions therein is of great strategic significance.

Global urban hierarchy

Asymmetry is a constitutive element in urban hierarchy, implying differences in qualities, positions and power relations (Taylor 2010; cf. Pumain 2006). In urban–regional processes we see the outcomes of such asymmetry in dynamic competition, which implies that an asymmetrical situation causes differences in the processes, structures and outcomes of urban development (Henderson et al. 1995; cf. Tse 2008; Duranton and Puga 2005; cf. McElrath 1965; Beckham 1975; Pumain 2006). Cities’ positions and principal roles in the global division of labour form a global urban hierarchy, which has no clear hierarchical nature, but rather

Global urban hierarchy and asymmetry

27

resembles a slowly changing multi-dimensional continuum (Abrahamson 2004). The ‘hierarchy’ is relative to some extent, as it depends on criteria used to measure the assets, features or performances of cities. Special attention has long been paid to the top of the urban hierarchy, i.e. global cities or world cities with a wide range of attraction factors and global capabilities, making them the most powerful nodes of global flows of values (see Amin and Thrift 1996: 10–11; Sassen 2001; Taylor and Aranya 2008). The Globalization and World Cities (GaWC) research network based in the Department of Geography at Loughborough University in England, has conducted several studies that rank global cities and analyze their connectivity (Beaverstock et al. 1999; Derudder et al. 2003; Taylor and Aranya 2008; Taylor et al. 2008; Taylor 2010; Taylor and Csomós 2011). A fairly narrow yet illustrative way of comparing the positions of cities in the global hierarchy is to assess their strengths in industrial and business services. One of the rankings based on such criteria was made by Beaverstock et al. (1999), who ended up with the following global view of the hierarchy of world cities: A: Alpha world cities (full-service world cities) 1 London, New York, Paris, Tokyo 2 Chicago, Frankfurt, Hong Kong, Los Angeles, Milan, Singapore B: Beta world cities (major world cities) 3 San Francisco, Sydney, Toronto, Zurich 4 Brussels, Madrid, Mexico City, Sao Paulo 5 Moscow, Seoul

C: Gamma world cities (minor world cities) 6 Amsterdam, Boston, Caracas, Dallas, Dusseldorf, Geneva, Houston, Jakarta, Johannesburg, Melbourne, Osaka, Prague, Santiago, Taipei, Washington, DC 7 Bangkok, Beijing, Montreal, Rome, Stockholm, Warsaw 8 Atlanta, Barcelona, Berlin, Buenos Aires, Budapest, Copenhagen, Hamburg, Istanbul, Kuala Lumpur, Manila, Miami, Minneapolis, Munich, Shanghai

An example of a ranking with broader categories is presented in the Global Urban Competitiveness Report (2007–8) prepared by a team led by Ni Pengfei and Peter Karl Kresl. In this report, urban competitiveness is defined as a city’s ability to create more wealth faster and better than other cities in the world. The report measured the comprehensive competitiveness of 500 cities around the world in terms of nine indicators, namely GDP, GDP per capita, GDP per unit area, labour productivity, number of multi-national enterprises settled in the city, number of patent applications, price advantage, economic growth rate and employment rate. The top 20 most competitive cities identified by the report are (Global Urban Competitiveness Project 2008):

28 Global urban hierarchy and asymmetry New York London Tokyo Paris Washington, DC Los Angeles Stockholm Singapore San Francisco Chicago Toronto Seoul Boston San Diego Oakland (US) Helsinki Madrid Vienna Philadelphia Houston

As a third sample view of the global urban landscape consider the economic power of cities, which entails no hierarchy but nevertheless indicates potential that may be below or above the actual connectivity and global functions of a city (McKinsey Global Institute 2011; Florida 2012a; 2012b; Economist Intelligence Unit 2012a; PwC 2012). Economic wealth and power are concentrated and this makes our world spiky. Florida (2012b; cf. Florida 2012a) has aggregated the scores and positions presented in five different rankings and generated an overall picture of the economically most powerful cities, which are the following (starting from the strongest). New York London Tokyo Paris and Hong Kong (tie) Chicago Singapore Shanghai Los Angeles Zurich Seoul Boston and Beijing (tie) Washington DC Osaka Brussels Rhine-Ruhr and Toronto (tie) Shenzhen

Global urban hierarchy and asymmetry

29

The most powerful nodes of global flows of values – New York, London and Tokyo – form a special case for urban attractiveness, which is based on head offices, financial services and international business services, but are also strong in such areas as business meetings, mega-events, shopping, logistics, design and cultural offerings. In terms of attraction, there are also several other multi-dimensional global cities, which seem to have strengths in several post-industrial functions, namely Singapore, Hong Kong and Dubai. This group also includes cities such as Seoul, Shanghai, Chicago, San Francisco, Sydney and Toronto, to name some well-known multi-profile cases. In terms of attractiveness, the third category is cities with a narrower base of attractiveness, exemplified by such cases as San Jose as a high-tech centre, Milan as a city of fashion, Zurich as a financial centre and Vienna as a conference city (on the evolution of urban hierarchy, see e.g. Cohen 1981: 307; Kresl and Fry 2005: 14; Markusen 2005; Collins and Brainard 2006; Taylor and Aranya 2008). In general, capital cities are likely to have more of the characteristics of a global city than other cities in the country. It is also a rule that it is difficult for more than one or two cities per country to be included in the top ranks of global cities. For example, London and Paris belong to the highest rank of global cities, but no other UK or French cities usually succeed in such rankings. There are exceptions to this rule however, as some large economies such as the USA, Germany, China and Japan and to a lesser extent Australia, Canada, Spain, Italy and Switzerland may place more than one city in the top 30 global city ranking. The USA has currently the strongest position, with several cities ranked as global cities (Global Sherpa 2011).

Urban asymmetry

A special aspect of urban development in a global context revolves around asymmetry, which needs to be addressed in order to understand the nature of intercity competition in a polycentric, and to a great degree borderless, global landscape. Asymmetry is the underlying feature of the evolving global urban hierarchy, with implications for urban development, governance and branding. Urban asymmetry

Urban asymmetry has various dimensions from population size to economic and occupational structures, from accessibility and connectedness to proximity to markets, from physical infrastructure to the availability of public services, and from knowledge institutions like universities to cultural diversity, thus including everything that supports and brings added value to human activity. As important as this aspect is, especially in terms of global competition of cities, the theorization of spatial asymmetry has not been particularly well articulated in urban studies. Instead, asymmetry in regional development is more widely discussed and also slightly better conceptualized (e.g. Giovannetti 2000). The most fundamental question to be addressed here is how the structural

30 Global urban hierarchy and asymmetry

urban asymmetries at national, macro-regional and global levels condition urban development policies. There has been a great deal of theorizing about the convergence of countries and regions due to industrialization and international trade, which also frames local development (Streissler 1979a; 1979b; Baumol 1986; Romer 1986; 1990; Scherer 1999: 35; see also Maddison 2001). Urban asymmetry – understood here in the context of global intercity competition – is a reflection of global social asymmetry. In a competitive setting, capital cities and international gateway cities have the upper hand against most of the middle-sized and smaller cities (Dunford and Kafkalas 1992: 15; Hall 2000; Wolfe and Bramwell 2008; De Propris et al. 2009; Chapain and Comunian 2010). Metropolitan areas are usually well-resourced nodes due to their role as major concentrations of highly qualified people, and the importance of the development of networks favours locations at major transportation, logistics and telecommunications hubs (Dunford and Kafkalas 1992: 24–5). There are also smaller cities that rely on a mixture of urban services and functions and draw upon a pastiche of international architectural trends and local vernaculars to attract new investment and untapped consumer expenditure (Amin and Thrift 1996: 11). At the other end of the continuum there are small rural towns facing completely different challenges in their efforts to capitalize on entrepreneurship, small-scale manufacturing and local culture and creativity (Cooke and Lazzeretti 2008: 5; Stolarick et al. 2010; Hall 2011). This points directly to structural conditions, for the criteria of success are often such that they logically imply certain urban scale, amenities and diversity (Lewis and Donald 2009; see also van Heur 2012). Asymmetry in economic geography

Urban asymmetry is a key dimension of economic geography, which is generally known as the study of the location, distribution and spatial organization of economic activities. It implies that the highest-ranking global cities have a special growth potential and act as magnets for talent and investments, whereas cities with an outdated economic structure and small cities in rural areas have lost out, at least in relative terms. It seems that the ‘winners’ inherited a bundle of assets that helped them to thrive in the knowledge-based economy (van Winden 2008; cf. Wolfe and Bramwell 2008). They are the centres of geographical agglomeration and thus centres of representation, interaction and innovation with predominantly post-industrial profiles (cf. Amin and Thrift 1996: 13). As important as this point is, it may also be too simplistic and deterministic, for in reality all local communities have certain limits to their realistic development goals that relate to the level of the local potential to exploit, leaving limited scope for local choices according to a kind of policy transformation curve. The key to the utilization of local potential is in the quality of local leadership and governance. We may thus assume that the impact of structural conditions within the given scale is to some extent determined by capability constraints (cf. Giddens 1984), which manifests in both the nature of governance and policy processes and in the resonance of their outcomes. From the point of view of political economy, this reflects

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31

the interplay of structural constraints and praxis (Amin and Thrift 1996: 15). Let us return to the question of what the urban asymmetry is about. To start with, symmetry is literally a condition in which there is a balance between entities belonging to same system or reference group. Thus, asymmetry is the absence of such balance, similarity or correspondence. A good example is information asymmetry in economics, which describes the situation in which one party has more or better information than the other, which creates an ‘asymmetric’ relationship between them, i.e. to the advantage of the more knowledgeable party and the disadvantage of the other. Another equally relevant example here is asymmetric gameplay, in which two or more players have different manipulative power and experience regarding the game they simultaneously play. These examples indicate that, theoretically speaking, social asymmetrization reflects a continuous tendency to shift from mirror-like similarity in the premises of action towards differentiated conditions within which the action must take place. It is dynamic in the sense that ‘old’ asymmetries are replaced or supplemented by ‘new’ asymmetries, as has actually happened in times of structural transformation, as in the change in the positions and preconditions of cities in the transformation from industrial to post-industrial society. The crucial point here is that territorial communities have features that differ from each other to such an extent that it makes their position dramatically different, as if they were playing a different game or at least had completely different manipulative power over the rules of the game. An illuminating description of asymmetry is Richard Florida’s (2005b) account of how ‘spiky’ our ‘flat’ world actually is. It is claimed that new technologies, transportation and communication systems reduce our time–space constraints making the world ‘flat’ (metaphorically, of course), referring to the ease of accessing most parts of inhabited world and interacting with people in different parts of the world. Yet, if we start looking at the activities or values that are supposed to be created and shared in this ‘flat world’, the picture turns out to be surprisingly spiky. Florida has painted a picture of global economic topography in which only a handful of large cities and regions assume a pivotal role in today’s global economy. The highest peaks of the new economy rise higher and higher, like skyscrapers in the city centres in the heyday of modern America, whereas the ‘valleys’ in this new landscape, unable to create or diffuse values, are doomed to languish (Florida 2005b). We may start to paint the picture of urban asymmetry from the growth in the urbanized population and the ever growing cities, the largest mega-cities having over 20 million inhabitants, i.e. more than most of the nation-states. The other vital aspect of asymmetry is the factual dominance of the world’s most powerful metropolitan areas, such as New York, Los Angeles, Chicago and Boston in the USA, which are the major local economic powerhouses of our time. What is more striking is the role of innovation, as it is highly concentrated on a global scale. For example, in terms of patents, the innovative potential is concentrated in countries such as the USA, Japan, South Korea, Germany and a few others, and within those countries, in the most innovative metropolitan areas. Patent-intensive

32 Global urban hierarchy and asymmetry

metropolitan areas generally enjoy higher incomes than other cities of comparable size and education levels (Lohr 2013; Rothwell et al. 2013). Even more than patents, industry concentration can be explained by R&D expenditure, which has a major impact on patent quantity. In addition, scientific advancement is even more concentrated than patents. Perhaps only a few dozen cities really compete in scientific discoveries and cutting-edge technologies, i.e. in the economic sphere that none of the cities of the two major emerging economic powers, China and India, have been able to reach, at least so far (Tödtling 1996: 73–81; Florida 2005b; Miller 2009). Concerning the geography of patents, in an article entitled ‘The US Is Losing Its Lead in Patents’ Bloomberg Businessweek reported in 2009: ‘When it comes to US patents, America is no longer No.1. Last year, for the first time, the US Patent and Trademark Office issued more patents to foreigners than to Americans’ (Arndt 2009). This trend is mostly due to an upsurge in patents to inventors in Japan, South Korea and China, and a gradual decline in the USA. This does not imply that the world is becoming flat, rather, it implies that new spikes are rising in Asia. Along with such development volatility, polarization and nation-wide disparities may also increase, as is clearly shown by the developments in Western countries and even more clearly in China and India. This gives rise to a kind of ‘dual nation’ phenomenon (cf. dual state thesis, Saunders 1980) with a drastic disparity between ‘flat’ valleys or disadvantaged regions with endemic poverty and a lack of capability and ‘spiky’ metropolitan areas with a firm hold on global flows of values through export, offshoring, capital and talent mobility. Florida ends his excellent analysis by pointing out the very challenge this emerging dialectic poses for us: We are thus confronted with a difficult predicament. Economic progress requires that the peaks grow stronger and taller. But such growth will exacerbate economic and social disparities, fomenting political reactions that could threaten further innovation and economic progress. Managing the disparities between peaks and valleys worldwide – raising the valleys without shearing off the peaks – will be among the top political challenges of the coming decades. (2005b: 51)

Asymmetric geography of branding

City branding has a natural geographical dimension, which reflects the various urban asymmetries discussed above. Andy Pike (2009) has raised three aspects that show the geographical dimension of branding goods and services, which can be applied to some extent to city branding as well. First, brands are entangled in inescapable spatial associations. Second, brands are geographically differentiated and uneven in their manifestation, representation, visibility, fixity and mobility in spatio-temporal settings of economy, polity and culture. Third, entanglements of branding are intertwined with spatially uneven development because its underlying

Global urban hierarchy and asymmetry

33

dynamic of differentiation is predicated on the search for, exploitation and reproduction of economic and social inequalities over space and through time (Pike 2009; cf. Pike 2011). In the context of city branding these geographical dimensions emphasize the transformative nature of branding, as it reshapes places, is geographically uneven and rests on a differentiation that exploits spatial and other differences with differing values and connections to the asymmetries of our material world. Brands are sign values capable of claiming symbolic rents by means of exercising reputational advantage, thus fighting against commoditization and accessing the ‘pockets of affluence’ (Pike 2009: 629, 632; cf. Zysman et al. 2011: 43). In place promotion the same phenomenon is associated with offering incentives and services to footloose firms, but when competition reaches the global scale, asymmetries start to play a role, turning quantity into quality in the form of the agglomeration effect, critical mass and economies of scale and scope. For example, the Summer Olympic Games is a potential for major redevelopment, economic gains and media attention for the host city, but due to the facility requirements, huge investments and well-known risks, only a limited number of large cities can bid for them, especially without significant backing from their national government. Asymmetry is also apparent in the global urban hierarchy, in which top level cities have strengths in several post-industrial areas of activity, which make most of the global-scale city rankings look like a lottery among a handful of the highest-ranking global cities. This discussion has a particular practical relevance for research on city branding. Namely, ‘natural’ differences among cities imply that they have varying capacities to create a brand and manage the branding process, differing natural appeal and magnitude to offer brand value to international audiences, varying degrees of critical mass of people and business to benefit from branding, and different preconditions for gaining media attention. Jansson and Power (2006: 13) have distinguished three levels of competition that reflect the managerial and transformative capacities of cities: global cities, regional centres and smaller peripheral cities. This implies that cities compete on different scales and try to attract different target audiences through suitable channels. Global cities, for instance, are inclined to attract high-value adding activities, such as the headquarters of multinational corporations (MNCs), advanced producer services and design industries. Yet the way urban asymmetry conditions industrial policy is more limiting at the lower level of the urban hierarchy. Interestingly however, besides improvements in the networking and governing capacity of the city, branding is a promising means that can help to contend with the structural limits of urban asymmetry by creating symbolic value with a potential to surpass functionality and scale. For example, Charlotte’s reputation as the second largest financial centre in the USA by assets after New York City can be used to build a brand that generates attraction power beyond the city’s position in the national urban hierarchy. Bilbao’s brand value as a cultural city is much higher than its location and scale would suggest. Such cases show the potential of branding to help cities to cope with the challenge of asymmetric global competition.

4

Underlying dynamics

City attraction hypothesis

So far we have discussed globalization, global space of flows, global urban hierarchy and global urban asymmetry as a precondition for cities’ industrial development. If we now turn our attention to cities themselves, what does this scene look like? What is the imperative that seems to emanate from such a world order? From a strategic point of view, one possible answer is attraction. In this chapter we will discuss this hypothesis, which also forms a conceptual transition between global trends and city branding. The hypothesis is based on the idea that in a globalized world the attractiveness of a city is the key to its success. This leads us to two paradigmatic forms of local industrial policy, foreign direct investment and industrial specialization, which are of special importance in global intercity competition. Inspired by the works of Manuel Castells and David Harvey who extended the view of cities beyond the framework of social ecology, Friedmann (1986) developed his world city hypothesis, which was among the first theorems to link cities with the world capitalist system. Even if the city attraction hypothesis is not derived from it, these two theorems have some features in common. Friedman crystallizes his analysis of the link between urbanization and global economic forces into seven theses. 1 2 3 4 5 6 7

A city’s integration with the world economy is decisive for its structural changes. Cities are used by global capital as ‘basing points’. Global control functions are reflected in the structure of cities’ production sectors. World cities are major sites for the accumulation of international capital. World cities are points of destination for domestic and international migrants. World cities manifest major contradictions of industrial capitalism, including spatial and social polarization. World cities generate social costs that tend to exceed the fiscal capacity of the state.

Where the world city hypothesis and the city attraction hypothesis diverge is the reliance of the former on Marxist-inspired world systems theory and related

Underlying dynamics

35

social concerns, whereas in the latter case the approach to political economy is more pragmatic and institutionally oriented. In other words, what the former does not explicate at all because of its structural emphasis, the latter takes as the core concept of the analysis: the perspective of city governments. In addition, the primary concern of city attraction hypothesis is not social equality and equal sharing of the economic cake but the city governments’ ability to promote the process of baking a bigger cake. Social concerns are part of the picture, of course, and have two entries to this discourse; first, people’s participation in the local economic strategy process in diversifying the development options, providing a critical reality check, pointing to major local concerns, and gaining residents’ support for the development process; and second, in the form of assessing the meaningfulness of the strategy options designed by experts and favoured by public managers and politicians and the local business community and considering their impact on local people and local communities, as voiced in an ongoing participation in planning and governance processes of the city. Both aspects contribute to the legitimation of local economic development policy.

Location specificity and relationality

The global competition among cities does nothing to erase either the distinctive features of cities or their relevance. In earlier historical phases mobility was simply slower, more costly and more dangerous than it is today, which certainly emphasizes the role of urban areas as pools of resources, loci of market transactions and the base of production and commercial operations. However, even if time–space constraints are significantly reduced and mobility has reached a completely new global scale when compared with earlier historical times, a place is still essential for any operation with the possible exception of the factual flow of money in the space of flows. This is simply because in production we are still tied to our physical existence and the exchange of information and other values must be sent and received at some physical site with some physical devices used by physically existing human beings, while consumption is to a large extent connected to the space within which it takes place. Even if immaterialization, delocalization and virtualization change the role of place, the emerged hyper-reality is in various ways rooted in the physical world. The uniqueness and specificity of places will always keep the spatio–temporal dimension of human existence at a safe distance from total colonization of space by global forces of instrumental exchanges, such as multinational corporations and global business alliances and networks (see Amin and Thrift 1996: 7–8). The foregoing entails that we must at some fundamental level understand what is ‘real’ in the concepts of place and local. Yet, at the same time it is clear that there is something inherently relational in ‘local’ and that in the context of globalization it is even more important to understand that particular dimension of local, usually referred to as a node or a hub. Local is simply one of the elements of the setting for social and economic existence, which inherently eludes attempts to root it in any simple ways to locations, local ties or local communities. The

36 Underlying dynamics

place that is embraced as ‘local’, ‘close’ and ‘intimate’, is still tied to cognitive globalization and objective global exchange relations so intimately that ‘global’ has become an inescapable feature of almost everything that is close to us, even if we refer to it as local. Place-bound living has an inherently global dimension, and global is always connected to a relationally constructed concept of place (cf. Amin and Thrift 1996: 8–9). Urban community thus consists of everyday functions largely controlled by inhabitants themselves, yet at the same time it is a structured socio-spatial entity or a dissipative structure at the ideological and material levels, breathing through its connections with its external environment. This makes it understandable that the more open and connected the community, the less authentic it is in the sense of containing elements that are from the outset something original and purely local. Yet, in a globalized world, there is really no single haven free from global intrusions, which is why the question whether local should be seen primarily as ‘relational’ or ‘real’ is a misleading formulation of the dilemma, as it is certainly both. As described by Amin and Thrift, there is ‘the continued salience of places as settings for social and economic existence, and for forging identities, struggles, and strategies of both a local and global nature’ (1996: 9). These places and place-bound processes are part of living in the global. According to such a redefinition, place is a juxtaposition of intersecting global flows and historical fixities. The pressure imposed by globalization is to divide and fragment cities. At the same time these places continue to embrace singular and common identities in order to live in, or challenge, the global. The critical question remaining is whether the politics and policies of place are appropriate or sufficient to ensure acceptable levels of social and economic well-being within the global (Amin and Thrift 1996: 10). A similar issue is pointed out by Castells (1989) in his observation that if cities are not able to deal with the challenge of the space of flows, to have any control over them, they may lose their chances to serve as instances of democracy in the globalized world. The city attraction hypothesis is an attempt to look at this dilemma through the realist lenses of local intercity competition and the requirements of local economic development policy.

Investment promotion at the heart of attraction strategy

The forces of economic globalization are commonly presented as imperative. Urban managers must ensure that their city is attractive to the economic interests that are at the centre of global economic changes. This implies that the hyperglobalist thesis has a firm grip on urban reality (Newman and Thornley 2005: 269). At the core of the urban attraction strategy are business promotion activities with incentives offered to businesses, including the donation of land, pledges to build infrastructure to support a new facility, low-interest loans, tax exemptions, free training for workers or provision of other public services (Sellers 2002; Savitch and Kantor 2003; Kresl and Fry 2005). In this field, municipal business promotion campaigns to attract foreign direct investments (FDIs) constitute a paradigmatic case for attraction strategy. Other forms of the attraction-based

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approach include providing premises for international agencies, hosting major international events or promoting tourism (Kresl and Fry 2005: 57–62; van Gelder and Allan 2006). Especially in investment-oriented cases, such strategies are costly and extremely risky. Moreover, if they are not based on real local strengths, the benefits are unlikely to stand the test of time. This means that cities must have a strategic approach to attractiveness in order to avoid high-risk investments and short-sighted solutions. There are many success stories of local restructuring based on municipal business promotion campaigns to attract FDIs. There are cases like the ambitious FDI attraction campaign of Spartanburg, South Carolina, which helped to restructure its industrial base, to create tens of thousands of jobs and to transform Spartanburg into a more dynamic cosmopolitan city. Attracting FDIs is an example of high profile attraction strategy. Attraction strategy may sound like the opposite to export-oriented strategy, but in many cases they go hand in hand, as in the cases of Asian developmental states. East Asian countries – Japan, China, South Korea, Hong Kong, Taiwan – and Singapore in South-East Asia have generally speaking adopted long-term articulated policies that influence national economic and industrial development (Zanatta et al. 2008). For example, since its independence Singapore has actively attracted MNCs to set up a manufacturing base in the country, yet the focus throughout was on export-oriented industrialization (EOI). In such a case, FDI contributed to the creation of MNCs, and conversely, MNCs generated the majority of FDI flows. Another example of a similar kind of attraction–export combination is economic favouritism in the form of special economic zones (SEZ), of which a famous example is China’s first such zone in Shenzhen, a wellknown success story based on SEZ policy. At the rudimentary level, FDI is the acquisition or creation of assets undertaken by foreigners. Facilities created with such direct investments are then used to produce and/or to market a product in a host country or across a wider region. Such a direct investment benefits the recipient city by providing a fast track to industrialization, contributing to technology transfer, forging a link to world trade networks and providing resources for local development efforts. A larger number of studies favour the conventional assumption that FDI has a positive effect on growth (Ozturk 2007). On the other hand, it is generally assumed that FDIs may occasionally leave only a marginal trace on the regional economy around them, and more importantly, too massive unilateral FDI may cause economic dependence on external forces. A classic case of FDI is a manufacturing plant using foreign capital, technology and management techniques to exploit low-cost local resources and selling to markets dictated by the investor. However, there are also market and demand oriented FDIs (e.g. tourism, transport and banking) (Piana 2005; see also Narula and Lall 2006; Ozturk 2007). What makes FDI a paradigmatic instance of city attraction is the assumption that the inflow of FDIs increases with the attractiveness of the country, region or city due to various factors related to chances to profit from relocation, such as (Piana 2005):

38 Underlying dynamics 1 2 3 4 5

Large GDP and market potential High human or knowledge capital i. Advanced know-how ii. Skilled workforce Low cost levels i. Low labour costs and wages ii. Low taxation iii. Low environmental protection High tariff protection Entrepreneurial public sector i. Favourable legislation and public incentives ii. Successful place marketing and branding

At the sub-national level, FDIs tend to concentrate on the wealthiest and most dynamic part of the country. This implies that cost minimization is not the only factor that explains them. Other important factors include infrastructure and logistical accessibility from abroad (Piana 2005). In the developed country context the special production factors may actually predominate in FDI. For example, on the basis of the analysis of US data from 1986 to 1993 it seems that knowledge base measured by patent counts is linked to the location decisions of foreign plants. It is estimated that a 1 per cent increase in patent counts is associated with a 1.874 per cent increase in the probability of attracting a new foreign plant (Co and List 2004).

Promotion agencies and innovation networking

Due to the tough intercity competition, city governments and regional institutions have established investment promotion agencies and other intermediary organizations. Intermediaries that operate in the field of global production and innovation networking are expected to enhance business and innovation with a special emphasis on the international dimension of such activities. The support provided by intermediaries can be anything from technology and knowledge transfer to commercialization, including R&D, marketing and support for factors of production (funding, infrastructure and workforce) (Komninos 2002; Howells 2006). Some local, regional and national developers, associations and governments have taken their first steps in supporting global innovation networking. An example of such global innovation networking support is the project of a group of business developers in North Carolina’s Eastern Region, which aims at developing a global bioscience network referred to as the Global Innovation Network (GIN). The rationale behind this case is the fact that there are only a handful of such global hotspots in the life science industry – San Diego, Munich, Copenhagen and Boston, to name a few – that possess the critical mass of human, financial and institutional assets that leading investors in the field are seeking. In such a situation, less well-known regions may work together, for they vary in what they lack (Bivins 2008).

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Another example of such a policy initiative is the InnovationXchange (IXC), which was originally created in Australia but which was soon also adopted in the United Kingdom (in 2006) and some three years later in Malaysia. The aim of the network was to provide an online ‘open network’ to enhance innovation by improving communication across institutional boundaries. In its current form, IXC is a commercially neutral intermediator that has retained its initial mission to foster collaboration between companies, public sector organizations, universities and research institutes (Christopherson et al. 2008). InnovationXchange has an important international dimension; IXC intermediaries are on the ground in four continents and eight countries making and nurturing global connections. Many governments have established business promotion agencies and overseas offices with global or macro-regional outreach. This is a characteristic feature of innovation intermediation in Finland, as exemplified by the large global office network of Finpro for internationalization and investment promotion, as well as the FinNode network that operates in China, India, Japan, Russia and the USA (see www.finnode.fi/in_english). Another example of this strategy at regional level is Osaka Prefecture, which uses overseas offices for gathering and providing a variety of information on trade and investment required by Osakabased companies (see Figure 4.1). The dominant trend may be from overseas offices towards more flexible network organizations and further towards virtual organizations and Web 2.0- and Web 3.0-based solutions for innovation support. The simplest forms of these are national, regional and local online business promotion services and investment portals, such as Helsinki Business Hub at www.helsinkibusinesshub.fi/, Invest

Figure 4.1 Overseas offices and promotion desks of Osaka Prefecture (April 2013)

Source: Osaka Prefectural Government, available at www.pref.osaka.jp/en/introduction/friend.html

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Toronto as a marketing corporation for the city of Toronto (www.investtoronto.ca/) or Invest in Paris developed by Paris Développement, which is the economic development agency of the city (www.investinparis.com/). Yet the true change may be from on-site support structures towards virtual structures or platforms, which are at the same time flexible and light yet sufficiently embedded in local conditions. Such solutions require a high level of intelligence associated with the concept of Innovation 3.0 (Hafkesbrink and Scholl 2011).

The city attraction hypothesis

Attraction strategies take predominantly three forms, which can be used individually or in different combinations. These are the provision of (a) premises, (b) incentives and (c) information. The first is based on investments with the aim of developing and utilizing world-class developments, attractions or business sites, which, especially in the case of large-scale investment projects, are extremely risky. An alternative and apparently less risky approach is the provision of financial incentives and tax exemptions. The third way is simply to try to attract the attention of potential investors and other stakeholders in the international arena with largescale advertising and promotion campaigns. Aggressive use of any of these approaches – investment-oriented, subsidy-oriented and campaign-oriented approaches – in global competition may lead to unhealthy competition and may thus have a negative aggregate impact on urban development (Brecher and Costello 1994; UN-HABITAT 2004; Allard 2006; van Gelder and Allan 2006; Chien 2008). It goes without saying that in some cases any of these strategies may work well for an individual city, but at an aggregate level their impact may be uncertain because of the race to the bottom phenomenon caused by the aggregate effect of narrow-minded and investment-oriented local development policy. Such strategies may prove impractical, especially for middle- and lower-rank cities with few special advantages in the global intercity competition. Thus, in general, cities would do well to seek a more realistic approach to both supporting existing economic life and attracting new resources from the global value flows. Place promotion, city marketing and city branding are strategic tools for such an approach (Anholt 2007; Kavaratzis and Ashworth 2008; Dinnie 2011a;). The rationale of city marketing and its relationship with the attraction imperative and policy challenges is expressed by Newman and Thornley as follows:

Most cities are now engaged in some form of city-marketing, projecting their image to the outside world … These city-marketing strategies place most emphasis on promoting the attraction of the city as a business or tourist location; however, there is increasing awareness that the success of the city also lies in maintaining social cohesion and environmental sustainability. (2005: 44)

One of the strategic decisions of cities in the context of globalization is to determine the most beneficial ‘mixes’ of offerings, interactions and attraction factors

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in order to derive maximum benefit from the local–global dialectic (cf. Harvey 1989). This requires an understanding both of the local community and its economic environment. With regard to such premises we can formulate a city attraction hypothesis that includes five main arguments on the premises of the attraction-based global intercity competition (cf. Anttiroiko forthcoming): 1

2

3

4 5

The dynamics postulate Global intercity competition is about the attractiveness of a city. What is essential in global attractiveness is the types of values a city is able to attract from the global value flows, be they founded on organizational demand or individual consumption.

The rationality postulate For any city it is rational to attract the highest possible total value in terms of urban development based on its goals, attraction factors and locality characteristics, such as population, geography, location and natural resources.

The instrument postulate Attracting optimal value constellations requires a strategic city marketing approach, with special reference to industrial specialization and economic city branding, together with a wide range of place promotion activities.

The positioning postulate Materialized attractiveness determines a city’s function in the global division of labour and position in the global urban hierarchy.

The outcome postulate The higher position in the urban hierarchy and the greater the ability to attract resources from the global value flows, the better are the chances to create local prosperity and to ensure the well-being of residents and the entire local community.

The hypothesis presented above outlines the basic rationality of urban development in the age of globalization. It aims to explain how the intensification of inter-city competition tends to increase city governments’ conscious attempts to manage their contextual relations and to strengthen attraction-oriented thinking among city management. A simple illustration of the hypothesis is presented in Figure 4.2. It should be noted that even if the paradigmatic case of the attraction hypothesis is the attraction of frictional and frictionless values to the city, in which promotion adheres to the perspective of local government, attraction can also be perceived as a firm-level and product-level phenomenon. This distracts the attention from the city-wide promotion of FDIs and specialization to Business-to-Business (B2B) and institutional attraction, on the one hand, and consumption-based attraction, on the other. The former is essentially about the

42 Underlying dynamics

Figure 4.2 Illustration of city attraction hypothesis

attraction of attention, interaction and transactions with innovative leaders, headquarters, or prestigious universities in a city, whereas the latter is associated with the export of products and services to global markets. The latter renders comprehensible how the attraction hypothesis relates to export base theory (North 1955; Tiebout 1956; Thomas 1964; Dawkins 2003; Markusen and Schrock 2006; Markusen 2007; Ha and Swales 2010). Our focus in this book, however, is on city-wide attraction and its implications for local industrial policy. This phenomenon has its downside too, for it may undermine the city administration’s connection to local communities and lure cities into a bold ‘development game’ that may be alienated from grassroots-level realities. This suggests that even if the strategic element of the city attraction hypothesis is crucial for urban development in the global age, it also contains the seeds of ‘uncreative destruction’. This point has been elaborated most notably in critical and neo-Marxist urban analyses since the late 1980s (Logan and Molotch 1987; Harvey 1989).

Space of flows, attraction factors and economic profile

Theoretically speaking, in order to maximize welfare for their communities, city governments strive for as high a position as possible in the urban hierarchy, which is associated with the attraction of high value-adding activities to the community.

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Such high value-adding, knowledge-intensive and service-oriented economic activities rely on sufficient concentrations of skilled workers and creative people (see e.g. Florida 2005a; Scott 2011). This is an indication of the increased importance of knowledge, know-how, innovativeness and creativity to high-profile urban development strategy, reflecting not only the informational mode of development but a transition towards a kind of creational mode of development, in which growth is increasingly based on innovativeness and creativity (cf. Castells 1999a; Florida 2005a). It is noteworthy that also in services and creative industries agglomeration economies and thus proximity factors have a considerable role to play (Rubalcaba and Carrido 2006). As factors of production and other values are increasingly exchanged on a macro-regional and global scale, this creates both pressures and opportunities for local communities to attract values from extra-local sources. In the space of flows these ‘flows’ operate through IT-based transmission systems, through which money and information flows are transferred in electronic mode from one transaction hub to another, to a virtual marketplace or to a receiver’s disposal at a given location (cf. Castells 1999a: 412–15). The information that flows between hubs is surprisingly difficult to identify and quantify (see e.g. Salisbury and Barnett 1999: 35; Pain and Hall 2008; Limtanakool et al. 2009). As mentioned earlier, we may tentatively apply a dichotomy of Castellsian ‘frictionless’ flows and more concrete ‘frictional’ flows. ‘Frictionless’ flows or in practice electronic or digital flows are characteristically production factor flows (cultural flows, technology flows, capital flows, information flows), whereas ‘frictional’ flows or physical flows are primarily client flows, such as tourist flows, expert flows, entrepreneur flows and student flows (Kostiainen 1999). What digitalization does for information flows, transportation and mobility do for human flows (see e.g. Williams and Balàz 2009). Another typology of flows is proposed by Williams and Balàz (2009: 679–80). It is built on four major categories related to regional development: (1) trade; (2) labour migration; (3) capital; and (4) knowledge. This is a good starting point for identifying different flows to be attracted, even if all these categories need to be specified and concretized in order to be useful for policymakers. Lastly, the typology of factors to be attracted may be built on the functionality principle, which measures human attachment to values in terms of rationality, the two primary reference points of the continuum being value-based self-development and instrumental gain. In this sense flows can be divided into four main categories: (a) consumption for immediate experience or condition improvement, for example leisure, adventure, relaxation and healing; (b) consumption for personal development and capacity building, such as education; (c) productionoriented location decisions, such as the relocation of a firm; and (d) pure monetary investments and transactions in which money flows to the companies, associations or programmes operating in the city, as in the cases of joint ventures or foreign investment in spin-off companies. In general, the abovementioned categories of flows are intertwined in a complex way, making it difficult to make clear-cut distinctions between them. Yet

44 Underlying dynamics

such categorizations give politicians and public managers at least some idea of how to identify the kind of flows they may intend to attract to their community. For practical reasons we may have to translate flows into groups of actors or aggregates of industries or clusters in order to be able to define target groups for branding efforts. If space of flows is something we try to capture in economies of signs, what bait should we use to catch them? Here we call them attraction factors. They are assets or magnets that attract different flows to a locality. Factors associated with production include everything from traditional ‘hard’ factors of production, such as natural resources, labour and capital, to ‘soft’ factors such as knowledge, know-how, creativity and entrepreneurship. The two main consumption-related sets of attraction factors are factors of consumption by business such as innovation milieu, business services, fairs and logistics and factors of consumption by consumers manifest in shopping, fashion, sports, cultural events and tourism. The strategic challenge at the local level is to determine how and in what areas to enhance the attractiveness of a local community vis-à-vis global flows of values. Beside the analytical view of space of flows and the typology of attraction factors, we need a sector- or industry-specific perspective on what kind of values we are actually willing to attract to the city. This is one of the most important strategic issues in local economic development policy. We may conceptualize this as the act of determining the economic profile of a city, which is made of a set of sectors or activity areas that are of strategic importance to the city and to which strategic development efforts are directed. In practice, this requires that the city is able to identify some target industries or clusters and determine the direction of its economic specialization.

Urban economic profiling: the case of San Francisco

As an example of urban economic profiling take the San Francisco Planning + Urban Research Association’s (SPUR) report on business attraction, in which it is stressed, relying on export-base theory, that ‘[f]or San Francisco in particular, the “export sector” mean selling locally developed software, art, video games, architectural designs, financial tools and other goods and services to clients beyond the boundaries of the city’ (SPUR 2010, 6). As this quotation implies, it is important to identify those sectors of the local economy that are able to sell their goods and services outside the locality and thus bring new wealth into it. Usually such strategies can rely on industries in which the local economy has currently special strengths and comparative advantages, and simultaneously on those in which it has prospects to create or attract fast-growing and emerging industries that provide special opportunities for future success. In San Francisco and the Bay Area as a whole an industry composition in which sectors requiring a highly skilled labour force and sectors related to tourism dominate. Concerning the former, the most concentrated industries and at the same time the most obvious strength in high value attraction are

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Professional, Scientific, and Technical Services (PSTS), including legal services, accounting, bookkeeping and payroll services; architectural, engineering, and specialized design services; computer services; consulting services; research services; advertising services; photographic services; translation and interpreting services; veterinary services; and other professional, scientific and technical services. The other sector of equal importance is the information sector, comprising establishments engaged in producing and disseminating information and cultural products; providing the means to transmit or distribute these products as well as data or communications; and processing data. Of the tourism-related sectors the most important are accommodation and hospitality services on the one hand, and arts, entertainment and recreation, on the other. In addition, manufacturing and especially sophisticated equipment design and development are highly competitive, especially in Silicon Valley. The Bay Area is blessed with what has been called the West Coast culture of innovation. The competitive advantage of the area is based on its entrepreneurial culture; highly educated labour force; world-class research universities such as Stanford and UC Berkeley; the world’s largest concentration of IT, Internet and digital entertainment firms; private and federal laboratories; and the availability of venture capital. In San Francisco, employment in PSTS, information sector and other services (excl. public administration) is much higher than in the country as a whole (the respective location quotients being 2.5, 2.0 and 2.0). Of the sub-regions, San Jose has strengths especially in the information sector (2.8) but also in PSTS (2.3) and manufacturing (1.9). Changes in industrial composition may occur fairly quickly, for in the 1980s and to a large extent also in the following decade, the major driving force behind growth was the development and manufacture of computer hardware, whereas since the late 1990s the focus has been less on the production of goods and more on the provision of services. Interestingly, it seems that in the future the region’s strength will rest on fewer industries with a higher location quotient than before, and, added to this, it seems that the most competitive sectors are becoming uniform across the region, a trend epitomized by the PSTS sector (Bay Area Council Economic Institute 2012: 6–12; see also Jaruzelski et al. 2012). From this perspective it is no surprise that San Jose and San Francisco are among the leading creative cities in America (Florida 2012d).

The city attraction tendency is usually visible in city strategies and branding strategies, as in the case of the three-fold attraction scheme of London: Think London, Visit London and Study London, which is designed to attract business, tourists and students to the city. The city set up a partnership-based organization for such promotional activities in April 2011 (see www.londonandpartners.com/). Another good example is Toronto’s Agenda for Prosperity, which organized

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promotional activities around four topics (Toronto 2008): (1) Proactive Toronto: business climate; (2) Global Toronto: internationalization; (3) Creative Toronto: productivity and growth; and (4) One Toronto: economic opportunities and inclusion. These examples reveal how specialization either on a generic functional basis or on an economic basis (by industry or target group) is built into the strategy formulations of leading global cities. They serve as instructive cases for a simple way to combine city strategy with economic development strategy.

5

Living in a branded world

The preceding chapters have built a view of asymmetry as a basic condition and attractiveness as the key modality of global intercity competition. Attractiveness has its roots in resource endowment, including so-called created resources and industrial specialization (Dunford 1998: 94–5). However, there is a need to find tools beyond existing assets and functionalities that can be designed to increase a city’s attractiveness. A generic tool for such a purpose is city marketing or place promotion. A particular set of tools within this arsenal, branding, is a means of attracting higher values from the global space of flows and utilizing the reputation of global city or specialized post-industrial city. This is why branding in the context of local industrial development is worth a closer look. This chapter provides an introduction to a conventional conceptualization of branding. The idea is to clarify the original idea of branding in order to have a sufficient basis to assess its application to local government. This chapter briefly outlines the history and background of the concept and discusses its position in the marketing field. After this the functions and dimensions of branding are discussed, followed by a brief list of different ways of defining a brand. After answering such ‘what’ questions of branding, we then briefly address ‘how’ questions by providing a processual view of the topic, i.e. branding and brand management.

Introduction to branding

Before discussing the application of branding to urban development, let us take a brief look at the nature and dimensions of branding as it developed in the private sector. This is an essential first step in understanding its potential as well as its limits in urban economic development. Background

Historically the word ‘brand’ seems to derive from an old Scandinavian word referring to burning, which is bränna in Swedish (fire is in Swedish brand), i.e. to burn a mark on something, like the farmer burning his permanent mark on the cattle with a hot iron. Thus, to brand is to put a mark on one’s property or on items

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one has produced (Nilson 1998: 57; Percy 2003: 12). It is actually a short way from this to its current use associated with goods with identifiable value promise. Branding as an activity can be traced right back to ancient times, for the simple reason that humanity has always used symbols to express individuality, pride, loyalty and ownership. Branding in power politics, religion and economy started thus long before the Common Era. Competition for recognition is as ancient as the symbols of power in the early kingdoms or heraldic banners on a medieval battlefield. Branding is still visible in power politics and the building of national identity, but the true battlefield is increasingly the global economy and the competition for a share of people’s minds (Wheeler 2006: 2). Brands, or trademarks, were used hundreds of years ago on ancient pottery and in stonemason’s marks, which were applied to handcrafted goods to identify their provenance. Such marks have been found on Chinese porcelain, pottery jars from ancient Greece and Rome and on goods from India dating back to more than a thousand years before the Common Era (Keller 2008: 43). When we come to early modern times, branding has its expression in the signatures of artists, for instance. This goes hand in hand with the fact that the first modern brands in arts and handicrafts were names, such as Rembrandt or Stradivarius. In the New World, branding pioneers included the makers of patent medicines and tobacco manufacturers, whose products with distinctive labels became known to the public before the American Civil War (Keller 2008: 43). Yet it was the modernity, and especially the development of technology, industrial production, transportation and the condition of market capitalism that created fruitful soil for the emergence of branding as we learned to know it in the early twentieth century. One of the cornerstones of this change was the advent of the railway, for it suddenly became possible to transport goods across countries and even continents. At the same time, industrialization made it possible to efficiently produce goods in factories in such quantities that they had to be sold far and wide to achieve the necessary volumes (Nilson 1998: 59). The era of industrialization and, more importantly, the development of its flip side – mass consumption and consumer markets in general – were important drivers behind the modern branding, epitomized by Messrs Procter and Gamble in the USA and Lord Leverhulme in the UK, entrepreneurs who started as small soap makers and became multinational corporations selling branded consumer goods. Procter and Gamble (today usually referred to as P&G) was founded in the USA in the late 1830s by two immigrants from the British Isles, whose products – including the famous Ivory soap on sale since 1879 – quickly became household names in the USA. In their advertisement in the 1880s they were able to create a relationship between consumers and a particular product, Ivory soap, and started to learn how to sell their products to the mass markets. That is how their brand advertising begun (Dyer et al. 2004: 31). Eventually the company became the largest consumer goods company in the world, a multinational with more than fifty brand names, including such widely recognized product brands as Gillette, Max Factor, Hugo Boss, Duracell, Oral-B, Olay, Pampers, Braun, Ariel and many others. Its special role in the history of branding explains why it is a widely used

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case in the brand literature (see Dyer et al. 2004). Another name in the history of branding worth mentioning here is William Lever, later Lord Leverhulme, a British industrialist whose name is linked to Sunlight soap and other brands developed by Lever Brothers, which later became part of the Anglo-Dutch multinational corporation known as Unilever. The key to the rise of branding in the early years of these companies was that the distance between producer and purchaser suddenly became much greater, concurrently with larger production scales and distribution capacity. As there was no longer any way to communicate in person, companies had to rely on other means. One way of communicating at a distance to a mass of consumers was to brand the product, that is, to give it a name and a distinct packaging, ensure that the product was always of the same quality, and then use mass communication to tell the public about it. These three elements – identity, quality and communication – remain the cornerstones of the branding process although today we need to deal with a much more complex environment than some 150 years ago (Nilson 1998: 59; Csaba and Bengtsson 2006). Branding burgeoned after the Second World War as surpluses piled up (Twitchell 2004: 5). Since the late 1980s, when companies started to pay well over the asset value for companies with strong brands, the concept of brand and especially brand value generated great interest (Nilson 1998). The accelerated pace of change in practically all aspects of economic life started to change the view on branding. There were growing numbers of anomalies that were inconsistent with the existing paradigm reflected in the classic brand management system that had worked well for decades for P&G and a host of imitators. Old doctrines began to fall short in dealing with market complexities, competitive pressures, channel dynamics, global forces and business environments with multiple brands, aggressive brand extensions and complex sub-brand structures. Since the latter half of the 1990s a new model has been gradually emerging to challenge classic brand management. The emerging paradigm has been called the brand leadership model, which is ‘dialectic’ in nature and broad in scope, emphasizing strategy as well as tactics and being driven by brand identity as well as sales (Aaker and Joachimstahler 2000: 7). It should be born in mind that marketing developed much earlier than modern branding. Sometimes the relationship is conceptualized as if branding came first and marketing served to promote it (Apéria and Back 2004: 17, 39; Baker 2012: 24–5). Their relationship is expressed in phrases like ‘marketing is about push, branding is about pull’, ‘marketing is what we do, branding is what we are’, ‘marketing activates buyers, branding makes loyal customers’, and ‘brand is the promise, marketing helps to deliver it to the customer’ (Heaton n.d.). Fascination through branding coupled with a sales-oriented view of marketing may lead to such an idea. Marketing should, however, be seen strategically as more of a combination of business philosophy, managerial process and a set of marketing tools that guides the approach of the entire organization (Hooley and Saunders 1993: 3–4). The fact is that historically, branding has been more about products than companies, and this suggests that branding is essentially a qualitative extension of product marketing as a part of marketing mix or the 4Ps (Product, Price,

50 Living in a branded world

Place, Promotion). In short, the product ultimately carries the brand (Kapferer 1992: 2; 2001: 32; 2008: 31, 40–1; Keller 2008: 5; de Chernatony and McDonald 1998: 7; on branding services see Lovelock and Wirtz 2007). This also reveals that branding is more about brand identity than brand communication, or, if expressed in marketing mix terminology, it is more about product development than, let’s say, advertising or other forms of promotion. Branding comes into the picture when we want to create brand equity beyond the functional value of the product, i.e. to stay in branded markets with differentiated products and high prices instead of their opposite, commodity markets. Branding has extended beyond its original product marketing scope and, indeed, the 4Ps can be enriched symbolically by branding (see van Gelder 2005; Sharp 2010: 136), but this does not mean that branding overrides strategic marketing. Rather, branding should be seen as identity-based marketing (Alsem and Kosteljik 2008) or symbolic product marketing (Tan and Ming 2003; Kadirov and Varey 2011). In fact, the symbolic dimension of marketing was introduced by Sidney Levi and others in the late 1950s, but it seems that it has not been fully utilized in providing a basis for understanding the relationship between marketing and branding (see Levy 1999). Dimensions of a brand

Brand is a many-splendored thing. It can exist on many levels and in several dimensions. Products, services, corporations, retail stores, cities and even individuals can be seen as brands (Percy 2003: 13). Sometimes brand is carried by an inanimate hunk of metal, a simple sheet of paper with something sticky on the back, a relation between an 18-year-old and his boom box, or just a way of life. Indeed, practically anything can be branded in order to generate brand value (Schultz and Schultz 2004: 13–14). But whatever object we are talking about, it is not a brand unless it has a meaning and label (Keller 2008: 10). This multi-dimensionality explains why brands may also have several functions. Consider the following strategic functions, as identified by Blythe (2006: 91). • • • • • • • •

Brand as a sign of ownership Brand as a differentiating device Brand as a functional device Brand as a symbolic device Brand as a risk reducer Brand as a shorthand device Brand as a legal device Brand as a strategic device

So many faces of brand mean that it pervades practically all aspects of organizational life and management. We must keep it in mind when considering the mission of the organization, but it is equally important when thinking about communication, risks or international competition. To radicalize this view further

Living in a branded world 51

and take a look outside the organizational boundary, we may say that brands are omnipresent. In other words, they are everywhere, for we live in a branded world (Wheeler 2006: 37; Kornberger 2010). Brands address us directly in public and subtly in the most intimate spheres of our lives. They stimulate our desires and form the hubs in the networks of goods that typify advanced consumer societies. No one can escape their influence. They can be seen symbolically as the emblems of a global economy, reaching new markets well ahead of the rest of the economy and visible from much farther away than the turrets of any company’s headquarters, as eloquently expressed by Riesenbeck and Perrey (2009: 1). A brand can be expressed by an image or a symbol, but a symbol with tremendous potential, which in the late 1990s began to assume almost mythical proportions (Nilson 1998). Even if brands are vague and escape our attempts to conceptualize them, they have enormous transformative power, especially in such areas of social life as consumption, lifestyles and business (Kornberger 2010). But let us discuss briefly the essence of brand. What are brands ultimately about? What are they built on? What do we use them for? First and foremost, brands relate to meanings, sense-making, symbolic interaction and, in general, the creations of the human mind. Interestingly, brands are psychological yet at the same time sociological phenomena. Brands become reality through our minds, our meaning-making processes (Wheeler 2006: 4), but in the minds in the historical, social and economic context, and in the minds that construct meanings with culturally bounded resonance, be it a yearning for the great outdoors, the expression of manhood or motherhood or association with a high-society lifestyle. They shape our perception and our behaviour, creating a special dimension at all customer touchpoints or value chains from the consumer’s choice to buying a product, usage and related interaction and after-use activities (Riesenbeck and Perrey 2009: 2–3). Brands have their origin as a signifier of a producer but evolved through product association with the context of consumption. It is a propertied form of life to be realized in consumption (Arvidsson 2009: 405). Another dimension of brand is associated with value and valuation. This can be approached from the point of view of the customer as well as of business, depending on whose value we are talking about. Let us consider first the former. For the potential customer brand is a symbolic landmark. Kapferer describes its role as follows: ‘A product’s price measures its monetary value; its brand identifies the product and reveals the facets of its differences: functional value, pleasure value, and symbolic value as reflection of the buyer’s self-image’ (1992: 2). A brand encapsulates identity, origin, specificity and difference. It aims to evoke this information–concentrate as economically as possible, as in a slogan or a sign (2). Due to its symbolic power, brand is present even when it cannot be seen or sensed. In this way it actually protects the innovation, for in the ideal case it creates a mental patent in people’s minds for a product, service or organization (11). The power of brand is sometimes illustrated by comparisons of the same products by both a blind test and an open test (in the latter case the brand is known to informants). In the classic test, in which Coca-Cola and Pepsi were compared, the blind test favoured Pepsi by a small margin and the open test Coca-Cola with a

52 Living in a branded world

fairly large margin, which indicates that Coca-Cola had been able to create brand value that improved its competitive position. Another example is the test drive of Skoda in the UK in the mid 1990s, in which the blind test yielded much more positive evaluations of the design of the car and its estimated value than the test in which Skoda’s name was revealed. This shows what negative brand can cause (Hollensen 2012: 331–2). Brand value is the actual financial worth of the brand. In the branding literature this term is usually associated with brand equity, which is used to refer to the descriptive aspects of a brand – whether symbols, imagery or consumer associations – and to reflect its strength in terms of consumer perceptions. The latter is actually somewhat misleading, as the word equity is used differently from what its origin as a financial term would imply (Temporal 2010: 4). At all events, organizations’ view of brand value is usually conceptualized as brand equity. It is a concept that emerged in the 1980s and certainly elevated the importance of brand in marketing, but the problem side of the coin is that the concept is still somewhat vague, as brand equity had been defined or operationalized in different ways to serve different purposes (Keller 2008: 37). Its three building blocks are associations and brand image in the target audience’s minds (brand awareness, description and associations), its strengths, which boil down to brand loyalty (brand strength), and last, the factual value of the brand (brand value). In business, strong brand can simply either command a higher price than competitors or sell a higher volume at the same price, which, theoretically speaking, shifts the demand curve of a product to a higher level. From the point of view of monetary valuation, brand can be seen as an asset that can be sold or included on the balance sheet (Apéria and Back 2004: 39–40). Brand equity has in this sense different facets, the two most essential being ‘sales’ associated with business processes and market sales and ‘assets’ associated with brand’s market value. Both are critical for capitalizing on brand (Aaker 1991; Apéria and Back 2004: 43–4; Arvidsson 2009: 400). From a broader perspective we may identify three factors that determine the perceived added value of brand: (a) information efficiency (the time factor); (b) image benefit (the identity factor); and (c) risk reduction (the trust factor). Thus, brand fulfils three basic functions. Information efficiency implies that brand facilitates information processing. We do not have to spend too much time looking for the right kind of product if we know that a product under a certain brand meets our requirements well enough in a given situation. Image benefit boils down to the fact that brands have an ideational value. Last, risk reduction means that brands help in reducing the risk of making wrong decisions (Riesenbeck and Perrey 2009: 9–11). The risks do not necessarily come to mind when thinking about brands, but the risk dimension is an inevitable part of brand, for as customers considering buying a product or consuming it, we are under the potential influence of various kinds of risks, which may be due to the dysfunctionality of a product, overpriced products, health risks or ethical problems associated with the product. Brand can serve as a risk-handling device, as the customer knows what the product represents in all essential respects (Keller 2008: 8–9).

Living in a branded world 53

The symbolic value attached to a specific entity is rooted in identity, which serves both as the basis of self-understanding and identification of the brand creator and of their transplanted equivalents on the side of the consumer of the branded product or service. Human characteristics associated with the brand are called brand personality, to which customers can relate emotionally (de Chernatony 1999: 168–9; Donald and Gammack 2007, 48). Brand is about identity, yet not in an isolated way but as part of a universe of identities of competing brands, of actual and potential customers and of a range of stakeholders (on brand identity see Kapferer 1992: 31–4; Joachimstahler and Aaker 1999, 5; Aaker and Joachimstahler 2000: 33; Csaba and Bengtsson 2006). Awareness of identity is the basis of further identification of an appealing set of brand attributes. They answer the fundamental question about the attributes that the organization relies on in its branding (Dinnie 2011b: 5). Even if everything from the reception of messages and building of the image to experience of the product is essentially built on the receiver’s side, the sender of the message takes the lead in creating brand identity. As a short digression, let us discuss important terminological demarcations between such important terms as brand, reputation, identity and image (on these concepts see e.g. de Chernatony 1999: 170; Kornberger 2010: 111; Engert 2003; Zinko et al. 2007; Bathelt and Glückler 2011: 121). They differ from disciplinary background, viewpoint, time horizon, scope and managerial relevance and have thus different functions in branding. For the sake of brevity, let us summarize their differences: brand relates to managing, identity to being, image to seeing, and reputation to knowing. In other words, brand as a managed symbolic essence of the product, place or other entity is based on identity, which is seen through images by internal and external audiences and is known through reputation. The first two (brand and identity) are primarily on the side of the brand creator, the latter two (image and reputation) on the side of recipient, user, customer or stakeholder. These concepts, however, have grey areas on the sender–receiver continuum and also intersections, which explains why they can occasionally be used interchangeably, depending on the context and the need to emphasize different nuances of the branding process. The previously mentioned sender–receiver continuum or, more precisely, the relationship between brand creator and brand ‘addressee’ or receiver and the related mingling co-creation is another important issue that needs to be addressed if we wish to understand the power relations in branding. As explained by Kapferer (1992: 37–9), who was the first to provide a comprehensive framework for identity as the brand’s innermost substance (Csaba and Bengtsson 2006: 119), ‘the sender’s duty is to specify the meaning, intention and vocation of the brand’. Whatever image or other form of appearance result from it, it is based on decoding of the features of identity. As the ‘code’ does not have an absolute form and the decoding can be done in different ways, there is no guarantee that the intentions and sentiments of the brand creator will be reflected in the receivers’ minds and behaviour, just as the artist cannot assume that the receiver will understand the idea of the work of art in the same way as she or he does. However, this does shift the burden onto the receiver. Conversely, in branding, the emphasis is and

54 Living in a branded world

must be kept on the sender’s side simply because if customers are given the power to define the brand, it is likely to lose its identity. The brand creator is thus the ultimate brand integrator, who ensures its coherence and duration, whereas customers with their unfocused minds would slowly destroy the brand. This is not a simple one-sided act, however, for whatever the sender wants to communicate with a brand, the other side of the story or, rather, the plurality of stories is told by the receivers. They may, however, have some degree of coherence as a group depending on the nature of the brand as the nominator of the group. This is relevant specifically because consumers are actually creative meaning-constructors, who deal with the challenges of ‘received meaning’ communicated through the brand creator’s branding efforts and whose receptions are conditioned and shaped by their personal values and life situations (Brioschi 2006: 198). Even Kapferer acknowledged in his later works that customers often define the brand, and they are ultimately the ones to decide how the brand-making process reaches its audience and how the brand is perceived (Csaba and Bengtsson 2006: 119–20). The relation is asymmetric, but as it is at the same time dynamic, paradoxically it is not always clear which side of the process, sender or receiver, has the upper hand in determining the life of a brand in the long run. If brand management is successful, the brand creator or sender is in control and leads the process and determines how brand identity develops over time. Due to the fundamental role of brand identity, it actually precedes brand appearance. This implies that instead of trying to please the public, brand building and management should express what kind of beliefs and values the brand is built upon, the ideals it expresses and its vision of the world. This explains why ‘identity’ is not solely about identification or the individuality of an entity, but also about meaning-making and legitimation. Furthermore, for the same reason, cultural associations have a role to play in building brand identity. They are in many cases evoked in brand countries of origin, in perceiving Coca-Cola or McDonald’s as something quintessentially American, L’Oréal as French, Swatch as Swiss and so on (Kotabe and Helsen 2011: 364), even though there are also cases in which brands have lost their roots and become genuinely international or global, as in the case of the Mars chocolate bar (Kapferer 1992: 37–9, 45). It is worth emphasizing that many products convey the identity of their country or region of origin in their brands. What is interesting from the point of view of city branding, is that even in the business world a brand can gain strength – or at times suffer – from values connected to its associated or host region. For example, Apple has benefited from the values of progress, entrepreneurship and innovation associated with Californian entrepreneurial culture and the saga of Silicon Valley (Kapferer 1992: 65). Conversely territorial communities may build their brands at least partly on local products, services or organizations, as let us say Napa Valley, California, as a designated wine grape-growing region or so-called American Viticultural Area (AVA) or Billund, a small company town in Denmark, known for the Legoland theme park and the LEGO Group head office. As brand is meant to differentiate the product from its competitors, it is always relational and located in a competitive field of products. Differentiation is one of

Living in a branded world 55

the cornerstones of successful branding. Yet at the same time the issue of its relevance and true nature is not black-and-white. In real life competition it is usually more important to consider competitive matching rather than avoiding competitors by delivering differences. It is also debatable whether such a differentiation really helps to increase popularity, market share or profitability. This view actually makes branding even more important, as the reduced emphasis of meaningful differentiation calls for more sophisticated branding, which builds loyalty through salience rather than bipolar emotional opposites such as love and hate. Branding is meant to identify the source of the product or service – this is actually why branding was developed in the first place – and thus to distinguish it from competitors’ products or services, which is done by means of a special brand name and a range of distinctive elements as a part of brand identity, ranging from logos and symbols to advertising style. Such distinctiveness is a refined way of understanding what the real-life differentiation should be about (Sharp 2010: 113, 129). Differentiation emphasizes more than anything its purpose of positioning an entity in a wider context of similar or related products (Kapferer 1992; Wheeler 2006: 38). In the branding context, the term positioning was coined around the end of the 1960s by Jack Trout in his paper ‘Positioning is a game people play in today’s me-too market place’ (published in 1969 in the Industrial Marketing) and became popularized especially through the ground-breaking book Positioning: The Battle for Your Mind, co-authored by Al Ries and Jack Trout (1981). The book states that brands succeed when they colonize valued ‘cognitive territory’ in consumers’ minds. Thus, the classic view of positioning conceptualizes it as something that happens in the minds that constitute the target market. It is essentially the aggregate perception the market has of a particular company, product or service in relation to their perceptions of the competitors in the same category. This aspect of brand is fundamental and can even be found in the classic definitions of the concept, such as in that presented by the American Marketing Association (AMA). In short, the reason for a brand is to enable a person to identify one alternative from a competitor (Hooley and Saunders 1993: 169; Percy 2003: 12). From another point of view, positioning is a part of the set of brand-building activities. The importance of positioning becomes clear in that some marketing scholars refer to it as the fifth P in the marketing mix in addition to product, price, promotion and place (the latter four usually referred to as the 4Ps of marketing mix). Positioning refers simultaneously to both belongingness and difference: to what product segment does the brand belong, and what is its specific difference? (Kapferer 1992: 37). Developing a positioning theme involves the quest for a unique selling proposition (USP), which serves to differentiate the product or service from those of competitors. Positioning strategy includes the following activities (Kotabe and Helsen 2011): 1 2

Identify a relevant set of competing products or brands and picture for yourself the competitive frame. Determine current perceptions held by consumers about your product/brand and the competition.

56 Living in a branded world 3 4 5 6

Develop possible positioning themes. Screen the positioning alternatives and select the most appealing one. Develop a marketing mix strategy that will implement the chosen positioning strategy Over time, monitor the effectiveness of your positioning strategy.

Positioning can be seen as one of the key elements of brand management. It is rooted in the brand identity that the brand creator communicates to consumers, whose mental identification–differentiation processes as a whole create the basic brand value, which in turn benefits the company in terms of sales and assets. In this sense the brand reflects the degree of the brand creator’s symbolic power in the marketplace of minds. As branding is primarily understood as an intentional, goal-oriented and managed process, there is a need for further clarification of brand management, which will be briefly discussed later.

Defining the brand

It is understandable that there are many different ways of defining brand, simply because there are so many alternative ways to look at it. This variety does not arise only from the vagueness of the concept but also from the diversity of elements associated with brand: business, strategy, profit, marketing, product, sales, image, value, equity, differentiation, competition, customer and many others. They may be used to define both the content of brand as well as the approach to branding. This plurality is not necessarily bad, after all. It only becomes a problem if it affects the strategic branding process unexpurgated and, more importantly, if it increases confusion in such concrete functions of branding as measurement (Kapferer 2008: 9). The bluntest way of approaching branding in the business world is to view brand simply as a way for the brand owner to make money. It is thus an economic tool that provides value for its owner and also value for its buyer (Schultz and Schultz 2004: 13). Sometimes a brand is associated with selling: brand is a name or symbol that is supposed to help sell products or services (Miller and Muir 2004: 3). Strong brands can be thus seen as cost-effective marketing tools (Nilson 1998). To the family of straightforward approaches to branding we may also add a legal definition, according to which, brand is a sign or set of signs certifying the origin of a product and differentiating it from the competitors, which brings it close to trademark and emphasizes its property rights dimension (Kapferer 2008: 10). These are simplistic ways of approaching branding and certainly insufficient from the point of view of the developments in the business world, not to mention the views of other areas of application, such a city branding. To broaden the view of brand, it may be perceived as shareholder asset or brand equity to be managed by the company (Pringle and Field 2008: 3). Such an approach directs attention to intellectual capital or intangibles. The latter may give rise to thoughts about such conventional aspects of intangible assets as patents, strategic alliances, customer lists, employee know-how and other

Living in a branded world 57

forms of non-physical assets, but in many companies the most important intangible assets are actually brands. We have only recently started to properly understand their value. In some sectors brands comprise up to 70 per cent of companies’ market capitalization (3). Brand as an asset can be categorized in many ways, but for our purposes the simple three-fold typology of intangible assets is sufficient: brand can be: (i) a legal asset affording rights; (ii) a relational asset building affinities; and (iii) an economic asset creating value (Abrahams 2008: 17). Parallel to this asset-centred approach, the concept has been defined in terms of business strategy, positioning, and competition. The widely referred to definition that belongs to this category with a somewhat narrow focus was formulated by the American Marketing Association (AMA), which describes brand as a ‘name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and differentiate them from those of competitors’. It has been rightly claimed that the AMA’s definition is fairly narrow in terms of how brands are understood today. It defines brand with a small ‘b’, so to speak, i.e. with an operational and instrumental flavour, making it competition-centric but not particularly strategic, as the attention is distracted from the view of branding as a means to build competitive advantage towards an instrumental view of how to use brand names, logos and package design in product differentiation. It emphasizes brand elements or brand attributes and how they are expressed by selected ‘brand tokens’ (Keller 2008: 2). This perspective usually also emphasizes the growth perspective on branding, which emphasizes the role of two assets, that is, physical availability and mental availability, in securing bigger market share (Sharp 2010). Brands have been defined in more symbolic, relational and social ways too. We may start this family of definitions from the symbolic meaning of brand. In essence, brand is a name or symbol that influences buyers, and this influence derives from a set of mental associations and relationships built up over time among customers or distributors (Kapferer 2008: 15). The relational line of thinking usually starts from customer-based definitions – emphasizing customer awareness, loyalty, willingness to buy the product and thus the communicational aspect of branding (9–10) – and develops towards a wider stakeholder perspective. A classic definition of branding that reflects a customer-based approach was provided by Gardner and Levy in the Harvard Business Review in the mid 1950s (see also Levy 1999: 153; Miller and Muir 2004: 4): [Brand] is a complex symbol that represents a variety of ideas and attributes. It tells the consumer many things, not only by the way it sounds (and its literal meaning if it has one) but, more importantly, via the body of associations it has built up and acquired as a public object over a period of time. (Gardner and Levy 1955: 35)

As an example of a definition that reflects the stakeholder approach we may refer to Miller and Muir who describe brand as follows: ‘A brand is a name and/or

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symbol that is used by an organization to create value for its stakeholders’ (2004: 4). Both these definitions of the brand are in essence relational. To take a more culturally-oriented view, we may say that brand is as much a cultural as it is managerial or marketing concept. This aspect has become more prevalent due to the impact of globalization and the development towards a networked society. It is not only an inter-company issue or a company–customer relation, but a wider set of social, cultural, political and economic relations that affects and shapes brands. Such a conceptually challenging phenomenon can be approached through the lens of brand ecosystem, which is an interdisciplinary framework that provides a multi-level perspective on branding (Bergvall 2006: 189; cf. Holt 2004).

Brand management

Brands are often examined through their component parts: the brand name, its logo, design, packaging, advertising or sponsorship, image and name recognition, or, more recently, in terms of financial brand valuation. Brand management, however, should begin long before graphic design or advertising, and it is closely integrated into the strategy of a company, that is, it starts from a mission, strategy and a consistent, integrated vision of the organization in question. It is also tied to the product wrapped-up with its promise to the customer, having thus its roots at the very fundamentals of business. Its central concept is brand identity, not brand image, and this identity must be defined and managed. Brand identity lies at the heart of brand management (Kapferer 1992: 5). That is why the brand management process must be understood holistically; it goes beyond products, advertising, customer service, selling or the like (de Chernatony and McDonald 1998: 6–7). There is no need to mystify the concepts of brand, branding and brand management, but there is certainly a need to consider carefully the true nature of this marketing concept in order to make the best use of it. As the term implies, brand management is the set of activities that aim at creating and sustaining the brand. By highlighting the strategic aspect of this management area, Keller defines strategic brand management as a set of managerial activities that ‘involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity’ (2008: 38). It includes all the vital aspects of branding, such as defining brand identity, attributes and promise, managing tangible and intangible aspects of the brand, positioning the brand in a competitive field, and delivering the brand promise. The strategic brand management process is described in Figure 5.1. One way of systematizing the fundamental elements of brand management is to divide the organization’s strategic branding toolkit into three major components, which should be aligned (Apéria and Back 2004: 38–9; originally developed by M. J. Hatch and M. Schultz, see Hatch and Schultz 2001): (a) vision as the expression of the organization’s aspirations; (b) culture as a totality of the organization’s values, behaviours and attitudes, which tell how employees in the ranks feel about the organization; and (c) image as the outside world’s overall

Living in a branded world STEPS Identify and establish brand positioning and values

59

KEY IDEA AND CONCEPTS The process starts with a clear understanding of what the brand is to represent and how it should be positioned (mental map, core brand associations, brand attributes, brand promise, slogan etc.)

Plan and implement brand marketing programmes

The process continues with choosing brand identity and elements and integrating brand into marketing activities (matching of brand elements, brand integration, leveraging secondary associations, etc.)

Measure and interpret brand performance

The next phase is to use brand audit, measurements and evaluations to serve brand management needs (brand value chain, brand audits, brand tracking, brand equity management system, etc.)

Grow and sustain brand equity

At this phase the focus is on maintenance and expansion of brand equity, or to rebrand or exit if needed (brandproduct matrix, brand portfolio, brand expansion strategy, brand revitalization, etc.)

Figure 5.1 Strategic brand management process Source: Adapted from Keller 2008: 39

impression of the organization, including the attitudes and perceptions of customers, stakeholders, the media and the general public. The analysis of the relationships of these three elements reveals the potential problems related to the fundamentals of brand management. Hatch and Shultz call them the vision–culture gap, the image–culture gap and the image–vision gap. An important dimension of this is the role of managers and personnel in making the brand unique. In branding, the focus on image has shifted towards value through employees’ involvement in relationship building. Such a transformation reflects a change in brand management’s internal dimension toward culture management and concerning its external dimension toward customer interface management (de Chernatony 1999; de Chernatony et al. 2006; cf. Brookes and Palmer 2004). A central brand management function is to decide about the brand structure within an organization, which is referred to as brand architecture. In big corporations in particular there is a need to design and manage the structure and relationships of brands within an organization’s brand portfolio. In the urban context it is used to determine the ways in which a place brand can organize its sub-brands (Dinnie 2011b: 4–5). The principles or strategies in brand–product relationships include the following options: product brand, line brand, range brand, umbrella brand, source brand (or parent brand), and endorsing brand (Kapferer 1992: 149; cf. Apéria and Back 2004: 116–17). Branding alternatives ranging from ‘branded house’ and ‘house of brands’ are illustrated in Figure 5.2.

60 Living in a branded world Corporate branding Branded house: Single corporate brand for all products, e.g. Virgin Group or Samsung

Product branding Sub-brands: Master brand as primary reference; products also have distinctive names/brands, e.g. Gerber and other products of Nestlé

Endorsed brands: Product brands dominate, but corporate brand is featured, e.g. iPhone and other products of Apple

House of brands: Stand-alone brand for each offering, e.g. products of Procter & Gamble and Unilever

Figure 5.2 The spectrum of branding alternatives Source: Adapted from Lovelock and Wirtz 2007: 87

There is no need to go into the details of brand management here (on brand management see e.g. Keller 2008; Keller et al. 2008; Kapferer 2008). Suffice it to say that there is a need to address such practical aspects as measuring, making and managing brands (Riesenbeck and Perrey 2009). Branding should be a managed process, as otherwise the company can neither maximize the value of its brand portfolio nor utilize it strategically. We will discuss brand management as a managerial process later in the applied context of city branding. Another matter worth pointing out is the continuous change of brand management paradigms (Heding et al. 2009), as expressed by criticism of mindshare marketing and its functional and emotional traps (Holt and Cameron 2010; cf. Wreden 2007: 9) and various contextually-oriented alternatives to it. The theoretical discussion has changed dramatically since the late 1980s, when powerful brands started to dominate markets and the age of big brands therefore saw the light of day (Temporal 2010: 2). New aspirations concerning current challenges in branding and in the search for answers to such challenges include holistic, balanced, inclusive, connective, customizing and participatory approaches to branding (Schmidt and Ludlow 2002; Nilson 2003: 4; Foley and Kendrick 2006; Ind and Bjerke 2007; Fisher-Buttinger and Vallaster 2008). Such a paradigm shift is of great importance to public sector branding, which inherently needs to emphasize the extra-organizational aspects of branding, such as citizens and stakeholders.

6

City branding as a strategic tool

Cities have always been brands of some kind, even if not necessarily particularly well managed. When we think of cities of which we know little, especially if considering their relevance with a view to visiting them, buying services they produce or doing or relocating business there, we orient towards the city on the basis of a few attributes, overall reputation, visual associations, or stories, and this significantly affects our decision (cf. Prophet 2006). Sometimes, if we have some prejudice against a particular city, it may mean that positive facts about it do not necessarily gain the attention they deserve. Conversely a ‘cool city’ may have many factual disadvantages, but may nevertheless be favoured at the time of decision-making. Middleton claims that ‘in a world where cities and regions aggressively compete for investment from public and private sectors, brand reputation is critical. The brand is both a lens through which information is viewed and a decision criterion’ (2011: 15). Modern marketing started to spread to local government in the 1970s, although at that time its transfer from the business sector to the public sector did not work particularly well, leaving city marketing elusive in both a conceptual and practical sense. Marketing mix and especially marketing communication or promotion were in any case taken on board to varying degrees in public sector organizations. Traditional marketing could provide no appropriate answers to such key questions as what is a city as a product, how to determine the market for city marketing, and how to understand the place consumer (Kavaratzis 2004: 63). A refined perspective on place emerged as a part of the critical discussion on entrepreneurial city in the form of analysis of re-imaging localities, urban transformations and post-industrial developments, directing attention to such topics as large-scale physical redevelopment, mega-events and cultural regeneration (Kavaratzis 2004: 61). This was a basis for discussion on city branding. Another reason behind the interest in branding was the concept of image as a vital part of the promotion process, which in a fairly straightforward way captured something essential in the otherwise messy conceptual field of city marketing. Brand value discourse in the private sector brought the last decisive element into the picture, leading to a surge of interest in city branding in the 2000s (on research on city branding, see Lucarelli and Berg 2011).

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Defining city branding

It is good to keep in mind the background of branding in business as the selection of attributes of a product to be used in building brand identity and value to be further used to facilitate interaction with selected target groups in the interests of long-term profitability (cf. Zhang and Zhao 2009: 246). Most researchers in this area seem to be willing to accept definitions of city branding that are analogous to product branding while acknowledging the special nature of a city as an entity. Even though Kapferer emphasizes the feasibility of applying the product–city analogy, he acknowledges its limits. This limitation holds even in the special cases in which place brand is derived from product brand (e.g. Zevedo 2004). Irrespective of what objects, features and images are used in city brand, the latter is contested by the local community. Kapferer reminds us of this by stating that:

a town, on the other hand, is first and foremost a human, local and immovable reality (which is not to say that it is unchangeable), anchored in history, culture and its ecosystem. It can and should be altered to adapt to evolution, to the economic and social needs of the present day. However, the brand cannot be built without it. It must be reckoned with. The construction of the brand should first of all involve a consensus among the town’s key actors. (2008: 127)

This means more than anything that the product analogy must be adjusted by taking account of the community dimension. Local knowledge, culture and history should be given a decisive role in the branding process (cf. Walker 2010). Let us next consider the concept of city brand. Applying Dinnie’s (2008) definition of nation brand, we may define city brand as the unique, multi-dimensional blend of elements that provide the city with locally grounded differentiation and relevance for all its target audiences. A slightly more precise definition is proposed by Baker as follows: ‘A place brand is the totality of thoughts, feelings, and expectations that people hold about a location. It’s the reputation and the enduring essence of the place and represents its distinctive promise of value, providing it with a competitive edge’ (2012: 27). These two definitions start from different angles; Dinnie’s definition starts from the city side and ends up with target audiences, whereas Baker’s definition starts from people’s perceptions and ends up with city brand’s distinctive promise of value. City branding describes a goal-oriented and managed process. The definitions of city brand or place brand above lead us to the managerially oriented definition of the branding process: city branding is simply a managed process of creating and sustaining city brand. Following Bill Baker’s definition above, city branding is seen to provide a framework and toolkit for differentiating, focusing and organizing around the location’s distinctive identity. His conceptualization rests on the notion that branding must be grounded in truth and reality (Baker 2012, 27). Accordingly, it is not something superficial that is used to attract people’s attention, but a well-reasoned process rooted in the identity of the city. Moreover,

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branding does not have to be a narrowly defined brand management process; it may be an explicitly community-oriented process involving stakeholders and include strong social and ecological components. It can, thus, be an integral part of the participatory identity-building and urban planning process (see Hague and Jenkins 2005). What well-thought-out and broad definitions of city branding always emphasize is the holism that takes into account the ontological layers and multi-dimensionality of the city. Zhang and Zhao express this as follows: ‘City branding has to be concerned with how culture and history, economic growth and social development, infrastructure and architecture, landscape and environment, among other things, can be combined into a saleable identity that is acceptable to all people’ (2009: 246). This implies the overt – and at times covert – dispute over the brand as well as underlying conflicts of interest and the impact of local power structures that determine the influence of different actors in the brand-creation process. Taken to the extreme, this may even lead to a nihilistic conclusion that because of internal tensions place branding is not possible (cf. Anholt 2010: 11). Anholt claims – primarily because of the centrifugal nature of cities and the difficulty to manage the city as a brand – that the ‘brand’ of an urban community is only a metaphor, not a real brand comparable to the brand concept in business. He would prefer the term ‘competitive identity’. His conviction is that better image, reputation or brand must be earned and cannot be invented or constructed. According to this view, the brand of New York is good because of what the city actually is, not because of the ‘I love New York’ campaign and other promotional efforts. This view seems to stress complexity and the evolutionary perspective on brand. Anholt’s view has undoubtedly some appeal, but as an approach to branding it is implicitly built on an excessively idealistic assumption of what branding should be and how exhaustively brand should be able to be controlled when applied to cities, and ultimately proves misleading, at least if interpreted too straightforwardly. Branding is possible even if some aspects of the ‘product’ – especially institutional actors and inhabitants of the city – are not always unanimously behind either branding in general or the chosen brand in particular. ‘I love New York’ when appearing every now and then on t-shirts evokes positive feelings towards the city. When we see the ‘I amsterdam’ logo, it invites us to ponder the aspects of this vibrant city and, when repeated on several occasions, hints at the unanimity behind this brand. Bilbao and Barcelona have enhanced their reputations through hard branding, which has enhanced their reputation and differentiated them from their European rivals. City branding can indeed make a difference.

Beyond promotion: the idea of place reinvention

There is a plethora of concepts that frame or have at least some family resemblance with city branding, such as place branding, location branding, destination branding, city marketing, place marketing, place promotion, place production, placeshaping, placemaking, place reinvention and so forth, all of them with

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different nuances conceptualizing the city government’s attempts to promote local development (on public sector marketing, see e.g. Chapman and Cowdell 1998). Place marketing and place promotion are generic concepts which have been applied in nation-state to cities, villages and destinations. From their perspective places are products, even if it is generally acknowledged that such a place-asproduct analogy is not without its challenges (Allen 2007; Jansson and Power 2006: 14). Place promotion pays special attention to ‘place’ and emphasizes primarily local assets as the point of departure, such as natural attractions, infrastructure, cultural destinations, services and local people (Kotler et al. 1993). At city level the umbrella concept is city marketing, in which marketing is applied to urban management and development (Nyseth 2009: 2). What makes it a unique application of marketing is the connection to a legally constituted territorial entity, local politics and the community dimension (cf. Allen 2007). Thus city marketing is a sub-category of place marketing or place promotion. In the urban context place production, placemaking and placeshaping point to the set of smaller-scale urban development actions directed to the development of the physical environment of the community with the intention to support place promotion. In this conceptual field, city branding is a sub-category of city marketing, in the same way as place, location and destination brandings represent different levels of place promotion. As much as branding helps in place promotion, it should not be reduced to the narrowly defined idea of promotion, not to mention communication or advertising. Promotional activities are designed communications-oriented suasive activities aiming at a special effect on target audiences, whereas branding is from the outset a more identity-based range of activities and engages with a variety of stakeholders and the strategic development efforts of the city government (cf. Houghton and Stevens 2011: 51). The difference may appear superficial in the literature, as occasionally these concepts may be used interchangeably, but the difference does exist and is actually very important. More recently, promotional activities have been given a community-oriented meaning, which serves the interest of creating a conceptual distance to the traditional approach to marketing. A new meaning deserves a new name, one of the candidates being place reinvention. This has been defined as a continuous process within which meanings are ascribed to the place (Granås 2009: 113). The terminological choice is not essential here. What matters is the new way of conceptualizing city marketing, which also has implications for the conceptualization of city branding. As noted, place reinvention reflects attempts to go beyond narrow-minded place promotion. It indicates a search for and recreation of the identity of the place. It tries to reflect the realities of searching for the meaning for a place and a place with a meaning. That is why it conceptualizes reinvention as a stream of transformational processes resulting from interplay between industries, authorities and the public, between projects of construction, promotion and consumption, and processes related to information, identity and imagery. Even if it tries to approach reinvention in a systematic way, it simultaneously

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acknowledges the unpredictable and constantly evolving nature of the process, something that just happens as largely unintended consequences of ongoing processes in which conscious promotional actions have only a minor role to play (Nyseth 2009: 3). What makes branding in the reinvention framework a particularly complex process is that the actions and outcomes are unique to each part of the organization and to each stakeholder group. Everyone ‘owns’ the brand in a sense; yet, in many organizations there is a lack of ownership of the brand or understanding of stakeholders’ role in, and impact on, the branding process (Neal and Strauss 2008: 171). When we add to this the community level and the role of multi-level governance and development networks in urban life, the uncontrollability and unintended consequences of branding become understandable. Places as brands or images are not results only of strategic development processes aiming at profiling and promoting the place, but also products of people’s everyday lives, the realities of business life and the consequences of local and national politics (Nyseth 2009: 3–4). This helps to understand the previously discussed view that place branding in the strict sense of the word is not possible (Anholt 2010: 11). The idea of place reinvention has been developed to challenge narrow conceptions of city branding. As expressed by Nyseth, ‘place reinvention goes beyond the concept of place branding and represents a critical perspective on certain aspects of branding as a practice’ (2009: 2). As good as it is to find new perspectives on matters that affect people’s lives, Nyseth, however, may not have been fair to the object of his critique, which casts a doubt over the very idea of place reinvention. That is to say that he conceptualizes branding in a way that does not fit in with the conventional picture of branding. For instance, he characterizes branding as an active strategic and deliberate policy for changing the image of a place, which is something none of the experts of city branding have ever claimed. Another of his misinterpretations is to see branding as means to reduce a place’s identity into fancy logos and slogans. Yet the literature on city branding repeatedly reminds us that branding is not ultimately about logos but is rooted in identity (e.g. Levine 2003: 2). Nyseth also emphasizes that branding places is a way of inscribing a certain logic in space, both symbolically through logos, slogans and so on, and materially through the construction of buildings, infrastructure and landmarks. This is partially true, but nevertheless only a small part of the big picture. At the conclusion of his critical discussion Nyseth, by referring to Harvey (1989: 35), declares that place promotion – and we may assume that this applies to city branding as well – has been labelled the carnival mask of late capitalist urbanization (Nyseth 2009: 2). There is a grain of truth in Nyseth’s and Harvey’s criticism. Not only that city branding emanates from the pores of late capitalism, but it indeed may be that in practice, in the hands of people working in local economic development departments or investment promotion agencies, branding turns into a simple tool of social engineering, promotional technology or imagineering. Nevertheless, the fundamental idea behind branding can be seen in a broader and more positive light, which is often missed by those whose energy is invested solely in contemplating the problem side of branding.

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As mentioned earlier in this chapter, city branding has a potential to contribute to socially-oriented goals, such as achieving community development, reinforcing local identity and the identification of the citizens with their city and activating all social forces to support local development efforts. The environmental dimension has assumed an increasingly important role in city branding (Kavaratzis 2004; Miyamoto 2007; Dinnie 2011a). An example of the city that is said to be successful in balancing critical aspects of branding – competitiveness, inclusion and sustainability – is the city of Barcelona (Marshall 2004; García 2004).

City branding as a local voice

City branding is part of a wider set of principles, methods and tools of local development under the umbrella concept of city marketing. A fundamental issue in this sense is to understand how the nature of cities as places relates to marketing and branding. From a localist point of view, the place-bound constraints move the emphasis from exit to voice with internal and external dimensions. One aspect of voice has to do with the internal governance of the community. City marketing can be seen as part of such processes, as its representations reflect interest management among local actors (Granås 2009: 119). The dynamics of such local processes is discussed, among others, in the growth machine thesis (Logan and Molotch 1987). As a part of this picture it is essential to pay attention to the role of the general public in community development and marketing (Olsson and Berglund 2009). However, city marketing that emphasizes this dimension is not a standard concept applied by city government, which tends to be a supply-oriented and outward-looking practice aiming at selling cities to external markets, tourism and investment promotion. Yet, even from marketing theory we may derive an alternative, more balanced approach to city branding, which is essentially a demand-oriented practice that aims at satisfying the wants and needs of both external and internal markets, the latter referring to those who already live and work in a city. The one-sided preoccupation with attracting external markets has resulted in an unclear role for local residents in contemporary city branding (Olsson and Berglund 2009: 127). The voice option discussed here is a chance to extend the idea of local choice beyond the community’s jurisdiction with a deliberate outward-oriented development policy. This is where branding can make a difference. Branding is an active use of the ‘voice’ option for a community in an increasingly networked and globalized world. Cities are finding that it is not enough merely to invest in the provision of urban facilities: ‘they make serious efforts to communicate their attractiveness and creativity inside and outside the city’ (Hospers 2008: 227). In short, at its best, city branding is a manifestation of community empowerment and staking a claim for a community voice in a globalized world.

Attraction through branding

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When the city government considers its voice option in relation to the environment beyond its jurisdiction, one of the most striking features of the world they see is competition. Not only do neighbouring municipalities compete with each other, but even the communities located on opposite sides of the globe are indirectly and sometimes directly in competition with each other. Competition can be anything from organizing sports events to attracting tourists or innovative companies. This is an imperative which any responsible and forward-looking city government takes into account in its development efforts. In the current literature in urban studies and city branding this aspect has been described in various terms. Let us present here some quotations from the city branding literature that exemplify the current understanding of this particular challenge to cities and especially how it relates to the dynamic core of this challenge, attractiveness. • • • •

•

‘In the global competition between places local actors are fighting to attract industrial investors and offer them the best possible terms to convince them to invest in their specific place.’ (Nyseth 2009: 2) ‘A pronounced aim with place marketing is to enhance attractiveness for the purpose of drawing resources to the place.’ (Granås 2009: 122) ‘Since the 1980s, city marketing has emerged as a key concept within urban development planning and urban management. In practice, city marketing has come to denote politics and planning conducive to city attractiveness and competitiveness.’ (Olsson and Berglund 2009: 128) ‘Today, cities of all sizes find themselves competing against places and organizations on the other side of the world … fortunately, communities are becoming increasingly conscious of the need to proactively shape and influence what the world thinks of them and to position and market themselves with strategic intent … an important starting point is for city leaders to recognize that there is a direct link between the city’s image and reputation and its attractiveness as a place to visit, live, invest, and study.’ (Baker 2012: 20–2) ‘As cities compete globally to attract tourism, investment and talent, as well as to achieve many other objectives, the concepts of brand strategy are increasingly adopted from the commercial world and applied in pursuit of urban development, regeneration and quality of life.’ (Dinnie 2011b: 3)

Competition between cities usually takes place under conditions in which the reputation and offerings of competitors are only vaguely known. Yet there are also sometimes clear competitive settings in which cities compete against each other for the location of company headquarters or for having the right to host some branded mega-event. There is a macro-regional competitive situation

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between leading cities in each continent, or competition on a national scale between cities within the same rank, such as let’s say Beijing, Guangzhou, Shanghai and Shenzhen in mainland China, all of which are scrambling to attract foreign-invested enterprises (FIEs) to set up regional headquarters (RHQ) in their jurisdictions (China Briefing 2011). One of the most widely discussed headquarters relocation cases is that of Boeing, which developed into a battle between three cities, Chicago, Detroit and Denver, for this huge Seattle-based aerospace concern. Besides their locations and business environments, all the cities offered multimillion-dollar tax breaks. Finally, after a round of site visits and negotiations, in September 2001, Boeing moved its corporate headquarters to Chicago. The City and the state of Illinois spent some US$ 50 million on tax incentives to make this move take place. Is this an indication of the race to the bottom? Or are such processes simply the way that markets show the value of location decisions and at the same time guarantee an optimal match of locations and companies? We may have good reason to claim that both elements can be found in cases like this. Yet, what is even more striking is that while Boeing brought some 500 jobs to the city, at the same time the confectionery manufacturing plant of Brach’s Confections shut down quietly in the same city, causing the loss of about one thousand jobs (Steiner 2007). This co-existence is the most telling. Neither companies nor jobs are equal in high-level intercity competition. By the same token, politicians’ concern is not always jobs per se, and not even the salary level of the jobs created, but a kind of ‘augmented economic reality’ that roughly corresponds to the economic brand value associated with the relocation. In a material sense this value boils down to such factors as the match between the relocating company and the aspired economic profile of the city, agglomeration effects and knowledge spillover, industrial brand value and assumed impact on the accretion of economic and political power of the city. This shows that in all these respects command-and-control functions and headquarters jobs are of special value to global cities like Chicago. Another example of direct intercity competition is the competition for the 2012 Olympic Games, which pitted London against Paris. ‘Paris’s technical dossier seemed to be superior, but even the name of London is more attractive nowadays than that of Paris. In other words, the product was perhaps better but the intangible components of the London brand made the difference with the international jury’ (Kapferer 2008: 125). In such bidding processes, reminiscent of beauty contests, culture easily becomes a policy product at the hands of local government or local partnership, in contrast to culture as an artistic or lived urban experience.

City branding as a strategic tool 69 Cities often need to rebrand themselves, like Newcastle upon Tyne together with Gateshead in their attempt to become a European Capital of Culture for 2008. In the application process in the first half of 2000s, the image of the city turned from one shaped by its industrial past to a business-friendly city with a strong cultural brand image. This rebranding generated a culture of display, a visible ‘spectacle of culture’, which goes hand in hand with the fairly low profile given to the public in the process. Newcastle’s rival in the process, Liverpool, was able to produce a more convincing application by involving the diversity of people it represented, utilizing its stunning dockside developments, city centre and strong visual arts – as if the whole city was involved in the bid and behind it. Ultimately Liverpool won, Newcastle lost. Liverpool had an industrial heritage just like Newcastle and the same compelling need to rebrand it, but it seems that in general real material processes changed along with the brand, and branding itself reflected the realities of the city, as the slogan ‘the world in one city’, which can be easily associated with the city’s multicultural background related to its international port and cultural exchanges (Wharton et al. 2010: 779–80, 785). Newcastle is actually a good example of a city with an industrial heritage, which suffered from its image, associated with street violence, urban decay and industrial decline. In a branded world this heritage became unattractive. In a new framework this part of the city’s history was better suited to the heritage museum business. A new focus had to be found from the space of consumption, as that was already what characterized the city more than production. Newcastle became a city for commodified leisure, i.e. shopping and partying (Wharton et al. 2010: 782–3). Cities such as Chicago, Frankfurt, Hong Kong, Los Angeles, San Francisco and Singapore, at the apex of the global urban hierarchy keep their doors open to providers of high-value adding activities practically any time, 24x7x365. One way of maximizing this continuous attraction game is to build strengths that speak for themselves, that is, reputation or brand. Most complex social processes can be made much easier if there is high degree of trust and clear expectations, which are built on reputation. A deliberate branding process is an attempt to contribute to such reputation.

Benefits of a positive brand

The imperative of intercity competition and the related need for city attractiveness is a fairly self-evident phenomenon in the open global world. Let us consider the role of branding in this picture, through its functions and benefits. First, as described earlier, brands have many strategic functions and dimensions, from ownership to differentiation, risk reduction and symbolic value (Blythe 2006: 91).

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In essence, a brand refers to a symbol, which can be used to create value for the owner of the branded entity or members of the branded community (cf. Miller and Muir 2004: 4). The next question is for what purposes we use such functions. The answer lies in the conventional motivation of local economic development policy. That is, branding is assumed to help in increasing local prosperity, creating job opportunities, improving local services and building better development opportunities for the future. This is more or less the universal motivation behind local development policies in present-day cities. Such activities have two implicit dimensions: (a) inward branding, which aims at building local identity, improving civic pride and regaining inhabitants and businesses in the community; whereas (b) outward branding emphasizes external communication for the purpose of attracting investments, knowledge workers, tourists and visitors to a place (Jansson and Power 2006: 6). If we consider city branding in detail, we can identify the following kinds of concrete benefits that the city may achieve through building a positive brand for itself (Jansson and Power 2006: 11; Middleton 2011: 16): • • • • • • • • • • •

attracting inbound investment and venture capital; attracting and retaining companies; attracting and retaining skilled knowledge workers; attracting tourists and visitors; attracting students; attracting new inhabitants; increasing political influence at national and international levels; improving chances to create partnerships with other cities, public or private research and higher education institutions, and private sector organizations; utilizing ‘city of origin’ effect on products and services; marketing locally produced goods and services outside the city; civic pride and related ability to increase local harmony and confidence.

Such benefits, which can be also understood as goals for city branding, highlight the instrumental side of the picture. There is, as our previous discussion implies, also the other dimension of the picture that must be taken into account. It revolves around local identity or identity politics (see Erickson and Roberts 1997). What the latter implies is strategic handling of place and its identity so that they are communicable both to inhabitants and external audiences. Such politics also involve the promotion of meaning categories that are embodied with power structures and have a homogenizing effect on place discourses, in which some voices are silenced and others are pronounced. City marketing operates necessarily within this terrain of intentional and strategic place reinvention. Thus, even if city marketing as an outspoken intentional practice has an inherent instrumental dimension, as expressed in explicit attempts to enhance the ‘attractiveness’ and ‘market value’ of the place, the task of place marketing cannot be only that of selling a place, but also includes imprinting on identity formations. Not only is the selling of a place involved in the formation of the product that is put on the

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market, but also it is ultimately related to the very lives, identities and histories of the people who live in that place (Hall 1997; Granås 2009: 123). Global city marketing is often associated with the competition of large cities that have a special role in global division of labour. Yet, concerning the significance of the phenomenon as a whole, this is only the tip of the iceberg. Namely, instead of associating city branding mainly with the competition between global cities, we tend to ignore the fact that in conditions of urban asymmetry city marketing turns out to be a tool in the perpetual struggle against political and cultural marginalization for thousands of middle-sized cities and smaller urban communities. Granås, for example, describes how city marketing relates to the realities of the northern Norwegian town of Narvik: ‘Within a late- and postrecession Narvik, where the townspeople had lost their former pride based on the iron ore transport industry, place marketing initiatives have contributed to the reassertion of the cultural dignity of inhabitants, including their identities as northerners and proud inhabitants of a town that “still is modern”’ (2009: 123). Narvik is certainly not alone. So, even if cities promote themselves as unique, vibrant and dynamic, and among other things give prominence to the good side of their location and access, business climate, quality of life, culture and built heritage (Olsson and Berglund 2009: 128), behind the bold and inviting image there may be a fear of being marginalized. Olson and Berglund (2009: 129) point out that in much of the academic city marketing literature the ‘city’ component has been given greater weight, at the expense of its ‘marketing’ side. On many occasions in which marketing is discussed, it is criticized for features that do not actually reflect the current stage of the discipline, as seen in the case of Nyseth’s (2009) criticism. It seems that one of the root causes of such a misunderstanding is the equation between marketing and selling. Yet it should be evident that marketing could be and should be more than just selling, not least because selling starts from products and marketing starts from markets (Olsson and Berglund 2009: 130). This distinction is significant in the marketing literature. Similarly, the critique conceives marketing one-sidedly as an outward-looking activity with the objective of attracting external markets to the city, which is not the textbook idea of this discipline. It may be, however, that citizens, for example, are not treated in city marketing as ‘end consumers’ but rather as ‘ambassadors’ and thus as promoters of professionally designed marketing efforts. Such a view may reduce the role of citizens to an overly marginal position and ignores the fact that ‘internal markets’ and hence local residents are always directly or indirectly affected by efforts undertaken to attract, for example, visitors, new inhabitants and business firms (Olsson and Berglund 2009: 130). The Toronto Branding project of 2004–5 is an edifying case. The project of the City of Toronto and its collaborators, including advertising agencies, resulted in a new brand slogan and logo, ‘Toronto Unlimited’, intended to celebrate the infinite potential of the people and the endless opportunities they offer the city (see Adnews 2005). As the brand was not sufficiently processed at community level, it even aroused hostile responses among some residents and was ridiculed in the media (Middleton 2011). City branding can be

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full of surprises simply because it is impossible to please everyone in the multivocal local processes.

City branding as managed process

We have previously devoted most of our attention to answering the question of ‘what’; that is, what city branding is about and what its main features are. The other vital question to be asked is ‘how’; that is, how the city government is supposed to brand the city, what is the process to follow and how to use the marketing tools to achieve the goals that have been set. The application of brand management to urban development began to attract attention from the 1990s onwards. A successful brand is an identifiable product, service, person or place, augmented in such a way that the buyer, user or investor perceives relevant, unique added value that matches their needs most closely. Furthermore, its success results from being able to sustain such added value in the face of competition (de Chernatory and McDonald 1998). Such thinking provides a fresh perspective on the development challenges of cities in a situation in which attraction is becoming a critical success factor due to the global mobility of resources. The point of departure in treating a city as a brand, according to Kapferer, is to (re)specify what brand means in the given context. Just as in product–brand relations, the further away we move from the cities themselves, and their realities, the more we see them through the prism of reputation. This implies a need to define those meanings precisely and then ‘undertaking all necessary actions to build that perception among the strategic audiences on which the town will depend for growth and influence’ (2008: 126). As cities operate in a competitive setting, other cities are doing much the same, relying on their strategic assets and interests. Kapferer explains that ‘turning a town into a brand therefore means building perceptions among strategic audiences, turning it into a unique and attractive destination, for companies, individuals, or cultural or educational organizations that might think of moving there. Perception has to be built’ (127). From the point of view of urban economic development, city branding is a means to an end. It is a means to move towards the vision of the city, to achieve the long-term economic goals, and to perform the required activities as a part of wider set of marketing and promotional activities. Yet, as a part of this wider framework, city branding also forms its own system of means to an end, which is integrated into the city’s development strategy and the related democratic decision making, governance and planning system. Middleton provides a brief account of branding, which implicitly also reveals the essential connections to city strategy discussed above. To succeed, the city administration must complete a strategic examination of trends in the social and economic environments; determine where the opportunities, skills, resources, and capabilities lie within the city; what core values, attitudes, behaviors, and characteristics have enabled the city to

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achieve these; and then figure out what combination of these provides a differentiated appeal to its various target groups. Based on this examination, an integrated brand strategy and execution must be developed and, from these, an integrated brand communications strategy and execution: one brand position based on the city’s core values, attitudes, behaviors, and characteristics. (2011: 15)

As a process, city branding starts from analysis, continues to design and ends with implementation and follow-up. It may be difficult at times to implement all aspects of branding within a rationally constructed comprehensive framework or as a linear process, but the basic elements of conventional management process can be identified in branding. These elements include the following steps: Step 1: Define clear objectives Step 2: Understand the target audience Step 3: Identify current brand image Step 4: Set the aspirational brand identity Step 5: Develop the positioning Step 6: Create value propositions Step 7: Execute the brand strategy Step 8: Measure success

(Prophet 2006: 7)

In destination branding, the process framework for strategic brand development can be divided into two major components: brand audit and brand development. The former focuses on identifying brand value starting with customers and then refining it on the basis of positional analysis that assesses the value within a competitive setting. The latter develops brand further by determining its core elements, creating brand promise as a distillation of the brand elements and symbolizing brand touch points where the guest or customer can literally ‘touch’ the brand (Ashworth and Kavaratzis 2010; Kwortnik and Hawkes 2011). Brand management models vary depending on their terminology and emphases. To give yet another view of brand management, let us look at the 7A model of destination branding process presented by Bill Baker in his book Destination Branding for Small Cities (2012: 88–9). The model contains seven key elements: (1) Assessment, (2) Analysis, (3) Alignment, (4) Articulation, (5) Activation, (6) Adoption, and (7) Action + follow-up. This process scheme follows a fairly conventional idea of a well-designed development or planning process, starting from the questions of what and where we are now, what is the city known for, how to design the relational and articulated elements and implementation of brand, how to involve stakeholders, and how to take care of the continuous development of brand. Even before articulating our aims, we need to learn about ourselves and our environment. On that basis it is good to define the general goals for branding and to start to consider who our

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Figure 6.1 The 7A destination branding process Source: Baker 2012: 88

audiences are and who among them are our target groups. As appealing as it may sound to include everyone, branding has to be based on target-group-oriented design in order to be effective. For example, World Business Chicago, a not-forprofit organization that was set up to attract companies to the city, selected senior business leaders and key media as the most important targets for its branding effort, which made it possible to conduct focused interviews and enhance the understanding of the preferences of people who are in key positions in making strategic decisions in companies. According to the interviews, Chicago suffered from some special stereotypes and peculiarities (Al Capone, bad weather etc.) as well as a lack of visibility on a global scale. The strategy work resulted in three components distilled from an unstructured ‘laundry list’: access to a skilled workforce, abundant business resources, and incomparable quality of life (Prophet 2006). In the competitive environment one of the key strategic elements of branding is the assessment and the analysis of positioning. It has tensional inner logic because at the same time we should locate ourselves where the needs and desires of our target audiences take us in the symbolic space, but at the same time, as pointed out by Baker (2012: 106), positioning should place the city outside of the gravitational field of competitors – especially if they show special strength in holding that particular place. Without sufficient distance through differentiation the city may have to stay in the shadow of its major competitors, which may mean

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great losses to the city in economic terms. In short, ‘to stand out from the crowd and capture significant mind share and market share, place branding has become essential’ (van Ham 2008: 129). After the analytical phase there is a need to seek competitive advantage, in which brand promise is a useful tool. It is a series of carefully formulated statements that guide the branding process (Baker 2012: 125; see e.g. City of Mounds View 2009; City of Kenora 2013). Delivery of brand promise is the way to create brand value. These early phases of the branding process require good ideas and a lot of creativity, which is why citizen and stakeholder involvement should be given an important role. As explained by Kapferer, the city chooses its positioning, the long-term, mobilizing, attractive differentiation strategy, ‘by digging deep into its own DNA, its identity. A town is a living and complex social body, which has its own genes’ (2008: 127). Branding is thus always also a process of collective selfinspection and a chance to find new sides to one’s own community. In the brand management the brand architecture and alignment are of vital importance. They are about the brand’s position in the wider context of the local government system, but also concern the internal structure of the umbrella brand and sub-brands, with internal and external as well as symbolic and physical dimensions. Internally it is important to consider how special destinations or themes relate to the umbrella brand. Externally the question is how the macroregion, country, state, region, city and city district or destination relate to each other (cf. Baker 2012: 129–32). It is also evident that there has to be good reason for organizations to use the umbrella brand and to relate to the strategic thinking behind it (Green 2005: 286). One example of city brand and sub-brands is the ‘city within the city’ concept as applied in Disneyfied Dubai, including themed developments such as Dubai Healthcare City, Dubai Media City, Dubai Maritime City, Dubai Exhibition City, Dubai Sports City and Dubai Festival City (cf. Lukas 2007; Botz-Bornstein 2012). Another version of this concept is applied in many Japanese cities with Tokyo as the most impressive example with such developments as Roppongi Hills, Shiodome Shiosite, Odaiba and Yebisu Garden Place. Tokyo also has wards and districts with a special reputation, such as Ginza as luxurious shopping district, Shinjuku as commercial and administrative centre, Harajuku as extreme youth culture and fashion spot and Roppongi as a major nightlife scene. All these areas are basically seen only as parts of Tokyo, which creates a special challenge for brand architecture as Tokyo, as great a metropolis as it is in terms of functionality, suffers as an umbrella brand from cleanliness, closedness, megalomania, and hyper-modernity, which stubbornly defy comprehension and in the Japanese context especially, is interpreted as inauthenticity and excessive Westernization. People may marvel at its quality and magnitude, but it has been claimed that it may be difficult to find people who really love it (Kelts 2011).

76 City branding as a strategic tool

Cities should explicitly design strategies for extensions of their umbrella brands or master brands. An umbrella brand, as it is used in business, is an established brand that dominates the consumer’s or user’s view of some product category, usage situation or consumer benefit. Two basic ways of extending such a brand are vertical strategies that add new elements to the existing brand category (super-branding or sub-branding) or horizontal strategies that combine elements from separate brand hierarchies (brand-bundling or brand-bridging) (Apéria and Back 2004: 136–7). An instructive case of district brand is HafenCity as a part of Hamburg. Hamburg used to be a logistics hub, in the German context a ‘Gateway to the World’. Yet, in the 1980s Hamburg’s long lasting image was being questioned. In the process, Hamburg’s city-level branding strategy became project driven, allowing deliberately different interpretations of the visual presentations of projects and different faces of the city. Eventually this strategy became affected by a special district development known as HafenCity, which had its own sub-brand reflecting an ambitious urban regeneration project with new public spaces, flagship buildings and re-definition of the maritime space to attract tourists and to create a new knowledge centre status. It is a large-scale waterfront regeneration project par excellence, reflecting a change from logistics to culture, tourism and knowledge creation. It may be that to many people Hamburg’s new image is built through HafenCity rather than vice versa (Clark et al. 2011). Baker provides a typology of place brands that illustrate the core challenge of brand architecture from the point of view of individual city government. • • • • •

An overarching place brand: umbrella brand embracing a city’s holistic qualities. A destination brand (tourism brand): brand in the context of the location being an attractive place to visit. An economic development brand: a brand directed towards business relocation, expansion and investment. A community brand: a brand created to resonate with local residents usually designated to boost local pride, provide a sense of identity for the place or increase local patronage for residential, retail, entertainment, leisure and sporting activities. Thematic brands: brand related to historical, wine, culinary, sporting, cultural or similar themes. (2012: 28–9)

Brand-driven local industrial development should learn from branding in business life concerning the difference between traditional product-driven and new

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brand-driven business development. In the former, the first step is to develop the product and then continue with building a brand for it. In the latter, the perspective is different in an essential way. Due to increased competition, high expenses of introducing a new brand, and better capitalization of existing brands, companies introduce new product through brand extension, especially in the fast moving consumer goods (FMCG) sector. Such an extension strengthens the brand if the extension itself can be fitted into the brand’s promise (Apéria and Back 2004: 115–16). This can be applied to city branding as well, especially if there is a strong city brand to which new features or sub-brands could be added in order to attract new target groups or value processes. For example, even if Milan is primarily known as a fashion city, it does not preclude the simultaneous profile of football city or finance centre in another branding context (Jansson and Power 2010: 892). Such brands are clearly horizontally positioned in the brand architecture, and such an architectural principle actually dominates in city branding, especially in the category of lager cities with strengths in various industries and clusters. Articulation of brand is about verbal expression of a city’s identity-based brand. In brand management one of the most important phases is the identification and articulation of an appealing set of brand attributes. Brand attributes are present in the everyday life of city branding. They answer the fundamental question of what attributes the city relies on in its branding (Dinnie 2011b: 5). Brand attributes form a set of key symbolic tokens that are abstracted from the city’s identity and characteristic features, systematized under the direction of the city’s chosen brand vision and strategy, and linked with brand communication, synchronizing advertising, public relations and other forms of marketing communication (Baker 2012: 156). This is the phase during which to consider everything from names of places and destinations to slogans and promotional videos. In most of the cases the name of the city is not the issue, as it has its historical roots and is already a verbal signifier of the urban community, but at times cities change their names for branding or other purposes, as in the case of the city of Koromo in Aichi Prefecture, Japan, and the home of the Toyota Motor Corporation’s main plant and headquarters, which, due to the appreciation of the major employer of the city, adopted a new name, Toyota, in 1959. Toyota is a good example of industrial company town. An indication of its branding problem is that the internationalization of headquarters of Toyota Motor Corporation has been somewhat cumbrous as foreign executives find it difficult to settle down in a remote city that lacks amenities, such as multi-lingual schools, good infrastructure, adequately working transport system and cultural destinations for spending time during weekends (Greimel 2013). Sometimes, renaming is also an act of differentiation with an economic dimension, as in the case of East Detroit changing its name to Eastpointe in the early 1990s, in an obvious attempt to dissociate itself from its neighbouring problem city, Detroit. Actually the unusual ‘-pointe’ is said to reflect the willingness to redirect the association of the name with the nearby affluent communities of the

78 City branding as a strategic tool

Grosse Pointes. This is a case in which renaming evidently served rebranding (Baker 2012: 137–9). There are villages, districts and towns with names that may be challenging from a branding perspective. Think of a village and fishing port Mousehole in Cornwall, a village of Ugley in Essex, and suburban village of Pity Me and the small village of No Place, both in County Durham, England. There are also places like Lost in Scotland, Wankdorf in Switzerland, Bitche in France and Hell in Norway. Imagination with place names has been equally great in North America, especially in the case of unincorporated communities, villages and hamlets, such as Lick Skillet in Virginia, Ding Dong in Central Texas or Boring in Oregon. We may add to this list suburban town of Slaughterville in Oklahoma, the farming community Looneyville in Texas, the city of Cut and Shoot in eastern Montgomery County, Texas, Whynot in Mississippi or Satan’s Kingdom in Vermont. A pronounced instance of city branding are slogans and mottos, which in order to be successful have to be short, snappy and capture something authentic and evocative about the place they are supposed to describe. They are among the most ‘economical’ forms of communication in the economy of signs, holding value in a small picture or a few words. This side of articulation also includes brand stories, which may be extremely useful for reputation building (Baker 2012: 144–8). Besides the verbal side, articulation also has strong visual and audiovisual dimension, including logos and audiovisual promotional materials, such as videos (149–50). This articulation space can be called the ‘slogosphere,’ combining in one word the two paradigmatic forms of articulation, slogans as verbal or textual expression and logos as graphic identifiers. Activation takes us closer to conscious and planned branding activities and especially brand communications, including advertising, Public Relations (PR), brochures, videos and Web and mobile marketing. In brand communication, special attention should be paid to the previously mentioned ‘slogosphere’ (slogans and logos), media presence, multimedia materials and their distribution, online marketing, embedded marketing (product placement), relationship marketing, symbolic and identity-based marketing and other key concepts and tools for brand communication that take account of the special nature – especially the symbolic dimension – of city branding. Such communication should be designed to help in branding, especially at the most critical touchpoints of value-creation and consumption processes (see Figure 6.2). We may identify them by considering the phases of destination instance model, which can be divided into five stages: (1) search, (2) plan, compare and book, (3) travel and arrival, (4) the visit, and (5) after the visit. As cities are bound by their location, a vital part of activation takes place within the city itself. The process starts from wayfinding and continues to placemaking or placeshaping (Baker 2012: 155–71). As defined by Baker, placemaking describes ‘the practice of creating, administering and managing this public environment so that it provides attractive and rewarding experiences for residents and visitors’ (169).

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79

CITY BRAND: brand identity, brand promise, positioning COMMUNICATION

Advertising Websites Public Relations (PR) Pre-visit / pre-decision

DELIVERY

Signage Transportation Environment Service During visit / while making decision

NURTURING

Memories Sharing experiences After-sales service Replanning

Post-visit / post-decision

Figure 6.2 Touchpoints to deliver on the brand Source: Adapted from Prophet 2006

The city government or local development agency can do for itself only a fraction of what successful city branding requires. The key in increasing the catalytic power of branding is partnership, networking and stakeholder involvement. It is local people and other key stakeholders that play a vital role in branding (Baker 2012: 175). They have a potential to contribute to envisioning, identity building and identifying brand attributes and last but not least, to serve as brand ambassadors on various occasions, from public events to business meetings and private conversations. Actually, that is what makes city branding different from conventional destination marketing and investment promotion. Therefore, in addition to media communication, city branding utilizes spokespersons, brand ambassadors and ordinary citizens as a channel for branding. This is one reason why brand identity must be based on understanding what the community really is and what it can realistically strive for (Donald and Gammack 2007: 48). This means that brand management is not only about deciding brand identity and attributes, but about managing the process of constructing a relational network brand that serves both collaborative and distributive functions in the branding process (van Gelder and Allan 2006; Dinnie 2011b: 5–6; Houghton and Stevens 2011). The core idea is that the city government maintains a guiding, catalytic and enabling role in the process in which internal and external stakeholders become brand ambassadors (see van Gelder 2011). Among the key principles of stakeholder engagement are to understand and work with the diversity of stakeholders in a place, to engage them from the beginning of the branding process, and to challenge and to be challenged by stakeholders in a constructive

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and deliberative way (Houghton and Stevens 2011). It has been said that the successful branding of Barcelona, Manchester and Sydney was based on their ability to develop strong relationships with key stakeholders who could realistically expect to benefit from the planned branding effort (Hulleman and Govers 2011: 152). Branding is undertaken in a context of several stakeholders who often either co-produce the brand or have the power to obstruct the whole process. In this sense, place branding is characteristically a governance process (Klijn et al. 2012: 501; cf. van Ham 2008; on the collaborative management of a complex branding process in West London, see Green 2005, and on the branding of Turin, see Vanolo 2008). ‘I Love New York’ is the mother of all city branding stories, having its origin in the late 1970s. The City’s self-promotion has a longer history, though. One of the anecdotes of some relevance was when in 1966 Mayor John Lindsay, during a debilitating transit strike, commented that “I still think the city is fun”, which was picked up by Dick Schaap, a columnist for the New York Herald Tribune, and shortened to a form ‘Fun City’, which was used for some time as a slogan to promote the city’s theatres, museums and cultural happenings. Soon, however, racial divisions, strikes and political upheaval of that time gave it a derisive tone, eventually backfiring on the Mayor’s jolly slogan (Stohr 2003). In the 1960s and especially the 1970s the news about New York was mostly about urban crisis, which is paradoxical, as New York was even at that time practically the most powerful centre of the country. Occasional international marketing efforts by the city also remained obscure as in many cases the rampant crime attracted more attention than business opportunities of the city. The change was just around the corner, though, even if the crime, deteriorating infrastructure, empty coffers and retreating businesses made the city look like what it was, a problem city. Perceptions of the city started to look alarmingly bad, the old glamorous allure faded away and tourism was suffering. In such a situation the State of New York commissioned the advertising agency Wells Rich Greene and graphic artist Milton Glaser to develop a campaign. In 1977 the ‘I Love NY’ slogan and logo were born. The goal was simply to promote tourism (Stohr 2003). Milton Glaser, who actually did his bit pro bono, explained later that it was the feeling of being able to change things that motivated him. He described the micro-foundations of the new beginning of self-respect and belief in future in New York City.

There was so much dog shit because people didn’t feel that they deserved anything else, right? I mean you were just walking through all this dog shit day after day, in this filthy city, garbage, and so on. And then the most extraordinary thing happened: There was a shift in sensibility. One day people said, ‘I’m tired of stepping in dog shit. Get this fucking stuff out of my way.’And the city began to react. They said, ‘If you allow

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your dog to crap on the street, you have to pay a fine of $100,’ and within a very short time it became socially untenable to allow your dog to shit on the street. Now, I don’t know what produces those behavioral shifts, right? From one day where it’s OK, and then suddenly the city simultaneously got fed up and said, ‘It’s our city, we’re going to take it back, we’re not going to allow this stuff to happen.’ And part of that moment was this [I love NY] campaign. More than anything else it was a device to encourage tourism. (Kidd 2003)

The rest is history. ‘I Love New York’ became the most successful city branding campaign to date and the most recognizable city logo in the world. It found its way onto coffee mugs, buttons, bumper stickers and t-shirts (Stohr 2003). Beside cheesy tourist item or visual shorthand for a brand, it is a stateowned logo with a high value. It made some US$ 1.83 million in licensing fees in 2011 alone, for example (Grant 2011). The story took a new turn owing to the terrorist attack on September 11, 2001. After this tragedy Glaser revamped the slogan to read ‘I Love NY More Than Ever’, of which he said that

I woke up one day, a few days after 9/11. I thought, you know, ‘I love New York’ isn’t the story anymore. Something happened. And I realized that what had happened was an injury, like when a friend of yours, somebody you love, gets terribly sick. You suddenly become conscious of how much you care for them. That’s the inevitable consequence of somebody you have affection for. And I realized that my feeling about the city had deepened. (Kidd 2003)

Brand leadership and brand management go hand in hand, in the sense that brand leadership takes the long-term view and brand management the shorter-term view on branding. Baker states that brands must be ‘led from the top and owned at the grassroots by customers’ (2012: 185). Brand leadership provides a strategic focus for long-term results, partnerships and competitive advantage. Brand management in turn is tactical in nature. It is about shaping and managing perceptions, satisfaction and opinions, which is not an easy task. It is not only about embracing a traditional marketing function with the help of advertising, PR and publications, but extends to such tasks as placemaking, wayfinding, infrastructure, visitor service, interpretation, partnerships and experience development (187). Brand management is a process in which a dynamic and constantly evolving complex phenomenon needs to be managed. This implies that brands evolve over time and sometimes they need to be changed in order to upgrade it to match the internal and external aspects of reality. In this respect, there are 3RE’s to be considered (Baker 2012: 54–60): refreshing, repositioning and reinventing.

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Refreshing or rebranding is about changing the wrapping of the image of the urban community. It involves a process where an outdated or irrelevant brand identity is modified and re-launched with a new focus. Its special subcategory is debranding, which describes an attempt to erase a negative image or stigma associated with a city (cf. Medway and Warnaby 2008; Avraham and Ketter 2013). An illustrative case is the city of Kitakyushu on Kyushu Island, Japan, which used to be known for heavy industry, polluting factories and smog, stigmatized in the 1960s as a deadly city due to the high levels of air and sea pollution caused by the petrochemical and other industries. To respond to such a situation citizens, businesses and the government united in a comprehensive programme to combat pollution. After a series of well-planned efforts, in the mid 1970s the city was proclaimed to have overcome its pollution problem. The image of ‘dark city’ was transformed into ‘green city’ (Avraham and Ketter 2013). As an example of rebranding we may present the New Songdo City, later renamed Songdo International Business District, which is an internationally oriented business site development of the City of Incheon, located near Seoul, South Korea. It is a partnership project of city government and the real estate sector, which has been promoted as a node in the multi-centred metropolitan region, a gateway to Northeast Asia, and a living space of u-life since the groundbreaking ceremony in 2004. The key developers of the area attach idealized connotations to these representations to mobilize support for their endeavour. Even if it is a recently initiated new town project, there are already signs of its rebranding, owing to the recognized need to adapt to the changing economic, political and social conditions. Sustainability has to some extent always been one element of the u-city concept, but in the case of Songdo it was in the wake of the global economic crisis in 2007 that it started to be rebranded as a sustainable, green or eco-friendly city in publicity and marketing campaigns (Kim 2010). In brief, Songdo’s image developed from exclusive emphasis on ubiquitous technology and international business, through the special role given to world-class urban amenities and accessibility (Incheon International Airport), towards smart and green city with an obvious attempt to soften the image and increase the attractiveness of this new town project (on the critique of smart new town projects, see Sennett 2012). Repositioning relates to the change in the way the target audiences perceive the city. The impetus may come from the city itself in order to improve its competitive position, or it may be the changes in competitors or the urban hierarchy which exert pressure to reposition. Whichever is the case, the city may find it necessary to completely change either the target audience or at least target audience’s attitudes to and perceptions of the place relative to competitors. On the internally generated repositioning agenda the need to change the position

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vis-à-vis competitors may relate to improved infrastructure, hallmark events, radically improved business services or large-scale cultural investments. Lastly, reinventing is to ‘take a second lease on life’, i.e. it is repositioning on a grand scale. It is a planned transformation that may take the form of new megaproject, new private development or a significant urban regeneration programme. Such changes often take the form of a revitalization of the downtown area or the transformation of an old harbour area into a culture and entertainment zone (e.g. HafenCity in Hamburg or entrepreneurial urban regeneration in Bilbao). In many cases, a need for refreshing, repositioning or reinventing is associated with urban restructuring. Let us think of the case of Osaka. It was for a long time the ‘commercial capital of Japan’, busy and virile. Being a ‘Manchester of the Orient’ was indeed something to be proud of in the early years of industrialization. It was known as the smoky city due to its thriving industries. Yet, especially after the Second World War, industries declined and many headquarters moved to Tokyo; the triple helix – business, universities and government linkages – did not work particularly well, infrastructure development did not keep pace with the growing global economy, and the region lost much of its appeal. This, together with environmental problems and subsequent economic downturns, considerably decreased the city’s attractiveness. The mega-projects developed in the 1970s and 1980s created first a short-lived investment boom known as the Kansai Renaissance, but led ultimately to a fiscal crisis of both the city and the prefecture. The mega-projects that were supposed to help Osaka reap benefits from globalization and technological development were simply failures (Kamo 2000; Anttiroiko 2009a). Yet, in the 1970s Osaka also started environmentally oriented projects, community involvement and heritage conservation processes, which helped in repairing the tarnished image. Osaka is a city with a strong business culture, pragmatism, open-mindedness and self-reliance, which had a role to play in dealing perseveringly with the problems and in finding the way out. While Osaka’s infrastructure-driven growth model may bear fruit under certain conditions in the long run, it appeared to be corrosive in the 1990s and 2000s. Osaka did not lose its entrepreneurial spirit, though. Persistent drive brought new elements to the profile of the city, including a creative city scheme. Another indication of the need for change was the establishment of the regional Osaka Brand Committee formed in September 2004 with the goal of creating a ‘Brand-New Osaka’ image in order to breathe new life into the region through diversification of the manufacturing base, creating new job opportunities outside its industrial core, including tourism, and increasing productivity through improved quality of life and health of citizens (Srinivas 2006).

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Preconditions for successful city branding

We have little empirical evidence of how to brand a city successfully (Parkerson and Saunders 2004). Most great cities have a brand that has developed as an evolutionary process. The best known city branding cases are those at the top of the global urban hierarchy, which reflect the special conditions of such internationally renowned cities. The most famous cases in this category are the branding of Amsterdam (Gemeente Amsterdam 2004; Kavaratzis 2008), Barcelona (Bellaso 2011), Hong Kong (Loo et al. 2011), New York (Greenberg 2008; Bendel 2011), Seoul (Kim and Kim 2011), Singapore (Koh 2011) and Toronto (Middleton 2011). However, this does not reflect the realities of most of the cities around the world, as for many of them the mission is rather to increase the awareness of the target audience that the city exists and that it may have, for example, attributes that could make a visit to the city or investment in the city worth consideration (Salman 2008). This is particularly important for tourist destinations that depend on consumption by large masses of visitors (see e.g. Tasci and Gartner 2007). In international comparison, the strongest city brands seem to belong to cities that are in the lead in most of the global city rankings, dominated by European capitals and leading Anglo-American and Commonwealth cities. Empirical evidence is provided by the survey published in the 2009 Anholt-GfK Roper City Brands Index (CBI) report, which captures consumer perception of the image and reputation of 50 major cities worldwide. The ranking of top 10 out of 50 cities is presented in Table 6.1. In another study on the brand and asset strengths of largest European cities, Paris emerged as the number one city brand, followed by London, Munich, Table 6.1 Global top 10 city brands Top 10 city brands 1 2 3 4 5 6 7 8 9 10

Paris Sydney London Rome New York Barcelona San Francisco Los Angeles Vienna Madrid

Source: GfK’s City Brands Index. Adapted from GfK Custom Research North America 2013 Notess: Index is based on the following six categories: 1. Presence (knowledge of city and perception of its global contribution), 2. Place (cleanliness, aesthetic qualities and climate), 3. Prerequisites (affordable accommodation and quality of public amenities), 4. People (friendliness, personal encounters and cultural diversity), 5. Pulse (interesting events, activities and lifestyles), and 6. Potential (perception as a good place to do business, to find a job and acquire education).

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Barcelona, Amsterdam, Rome, Milan, Vienna, Madrid, Athens, Frankfurt, Stockholm, Antwerp, Prague, Oslo, Berlin, Lisbon, Naples, Dublin and Hamburg. These results are based to some extent on rule of thumb, as most of the evaluations were made by Saffron Brand Consultants’ panel of experts, even if informed expert views do have a certain currency in such evaluations. The report, The Saffron European City Brand Barometer: Revealing which cities get the brands they deserve by London-based Saffron Consultants, ranked 72 of Europe’s largest cities. The results show that brand strength does not necessarily match with a city’s ‘objective’ assets, such as attractions, cuisine, compactness, cost level and weather conditions. What is of particular interest in this study is that when brands and assets are compared, some cities seem to perform better than their assets would imply, and in some cases brand was clearly below the level of asset strength. High performers with high brand-asset ratio include Berlin (137%), Stockholm (118%), Prague (115%), Liverpool (115%), Amsterdam (115%), Barcelona (112%), Paris (111%), London (110%) and Athens (110%). A special case in which brand scores equalled asset scores was Vienna (100%). Cities with the poorest capability in utilizing their assets in branding and thus with the lowest ratio include Sofia (45%), Vilnius (52%), Wrocław (53%), Nuremberg (58%) and Sheffield (60%) (Hildreth 2008). One of the well-known cases of branding is the city of Amsterdam and its ‘I amsterdam’ branding campaign. The process was initiated in 2002 by Geert Dales, alderman for Economic Affairs of the City, after seeing Amsterdam’s position dropping in various rankings, such as conference city ranking. Competition started to intensify especially from the Eastern European capital cities as well as cities such as Barcelona and Madrid. The other side of the coin was that there were also potential businesses and headquarters that could possibly be attracted to Amsterdam. This implied the increased role of marketing in winning the attention of relevant actors. The marketing process got under way, creating energy and the conviction that the city could do better. The city had had a range of slogans over the years – ‘Amsterdam has it’, ‘Amsterdam Capital of Inspiration’, ‘Small City, Big Business’, ‘Cool Capital’ and many others – but a need was felt to create something new backed up by an open and ambitious branding process. To do this, one of the first tasks of the then new marketing organization Amsterdam Partners was to ask several agencies to propose a creative concept to promote the city. In 2004 the new city slogan ‘I amsterdam’ was introduced. The campaign was launched on 23 September 2004. We may identify three major success factors in Amsterdam’s branding campaign. 1

It has been said that one of the reasons behind the success of the branding process was that the key actors in the city felt that both the city and the world had changed.

86 City branding as a strategic tool 2

3

The other key to the success of the process was its thoroughness, as indicated by two years of environmental scanning, ideation, sketching and designing, including analysis of the strengths, weaknesses and opportunities of the city and a city profile presented as a spider graph of sixteen economic and cultural dimensions. In the end, Amsterdam’s versatility was distilled into three words: creativity, innovation and spirit of commerce. In the process, seven primary target groups were identified: business decision-makers of international enterprises with their head offices in the Amsterdam area; logistics service providers; the creative sector; knowledge workers; international visitors; active city dwellers; and the current inhabitants of Amsterdam and its surroundings as ambassadors for the city. It was a process that was expected to produce tangible results as a ‘return on brand’, falling into three result areas: mental position (subjective), visitor, investment and purchasing behaviour (objective), and market position (relative). The third success factor can be said to be leadership, long-term vision and determination. Even if Amsterdam is the case of a city with exceptionally good preconditions – history, position, location, logistics, economy, innovativeness, culture – it is an instructive case for any city as regards the spirit and determination that is of vital importance in the branding process. (Gemeente Amsterdam 2004)

Brand management is a demanding process requiring resources and organizational capacity to be utilized properly. One way of learning from the experiences of previous cases is to list what city governments should avoid when engaging in branding. Such lists are many and include various points, but let us refer to the one created by Total Destination Marketing (TDM 2012), which is comprehensive enough as a checklist to warn about the pitfalls of city branding. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Insufficient understanding of branding Lack of stakeholder buy-in Failure to grasp the scope of branding Focusing on short-term results Forgetting the customer’s view Disagreeing on what is being branded Insufficient or irrelevant research The weak positioning trap Not following the strategy The lure of ‘bright shiny objects’ Forgetting to deliver what you promise Unhelpful mindsets Brand fatigue Going it alone as a DIY project (Do-It-Yourself) Not engaging specialist skills.

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An important part of the management challenge is to consider how city branding is organized, on the one hand, and how the branding is embedded in the organization and shared with stakeholders, on the other. The general trend among leading cities is that, especially since the latter half of the 2000s, city branding has acquired considerable sophistication, improved organizational capacity and also increases in budgets. For example, Seoul started to become involved in international branding at the time of the 2002 FIFA World Cup held in Korea and Japan, when the Hi-Seoul city brand was introduced, although focusing only on occasion-based promotion at international level. The first year of integrated internationally-oriented marketing communication of Seoul was 2006, with the aim to brand Seoul as a first-class global city. As Seoul was already strong in economy and technology, emphasis was placed on the cultural dimension. It was the first year of segmentation, targeting and positioning, something that Seoul’s rivals, such as Singapore and Hong Kong, had practiced for a long time. Seoul developed quickly on this front, making major changes already in 2007, the year when the new Mayor Oh Se-hoon took office, to promote itself as a clean and attractive city and to enhance its competitiveness in tourism. ‘Soul of Asia’ was adopted as a new slogan to express the central location of Seoul in Asia. Also positioning, especially in relation to its major competitors such as significant Chinese and Japanese cities, Hong Kong and Singapore, saw the light of day. The following year saw a considerable rise in the overseas marketing budget. At that time the Seoul Metropolitan Government undertook several downtown redevelopment projects, which became an important ‘physical’ dimension of branding. ‘My Soul Story’ was a positioning slogan associated with experience economy, which was modified slightly for different target markets: ‘Stylish Story’ for China, ‘Humanistic Story’ for Japan, ‘Fantastic Story’ for South East Asia, and ‘Inspirational Story’ for the USA and Europe. The year 2009 was the time to maximize Seoul’s brand image through new campaigns. Global positioning relied on ‘Trendy City’, ’24 Hour-Lively City’ and ‘Digitalization City’, based on a new slogan, ‘Infinitely yours, Seoul’. As a part of the ‘Seoul Infinite Dream Series’ sports, Korean drama and K-pop were incorporated into international marketing (Kim and Kim 2011). There is a range of city branding processes, which are all different and tell how intimately each process is tied to the history, politics, economy and culture of the city, as one can imagine in the cases of Amsterdam (Gemeente Amsterdam 2004), Barcelona (Bellaso 2011), New York (Greenberg 2008), Paris (Kapferer 2011) and Singapore (Koh 2011). In the 2000s, professionalism became a striking feature of leading cities’ branding. As a consequence, many cities established a special agency or partnership organization to take responsibility for co-ordinated branding activities. Marketing Manchester is an example of a specialized promotional agency with responsibility for national and international branding.

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Marketing Manchester, UK

The agency is charged with promoting Greater Manchester on a national and international stage. The aims are: • • • • •

Develop the Manchester brand through promotion of the city to focus on the contemporary and traditional strengths of the city-region’s culture. Increase the interest in, and visitors to, the city, through the creation of a world-class events programme that builds on and strengthens the Manchester brand. Position Manchester as a vibrant international destination, which also acts as a gateway to the Northwest and represents an alternative gateway to Britain. Ensure that Manchester is further established as one of Europe’s leading business destinations. Support the enhancement of the tourism product in Greater Manchester through the development of tourism infrastructure.

And how to do it: •

• • • •

We seek to influence the marketing activity of various agencies, authorities and independent organizations across the city in order to deliver a consistent, unified message. We provide co-ordinated marketing opportunities aimed at priority audiences to maximize the impact of public and private sector partner activity. We communicate with the world’s media to ensure a positive, modern image of Manchester is reflected in relevant coverage. We facilitate a Manchester presence at international events and exhibitions on behalf of organizations across the city, to present a joint showcase of the city region’s assets. We design promotional material and merchandise that reflects the brand of Manchester and our aspirations for the future. We are working to present an online destination presence for Manchester that fits with our original modern aspirations and is the embodiment of the Manchester brand.

Source: marketingmanchester.com (www.marketingmanchester.com/)

International city branding

Globalization and related processes present a new challenge and also new opportunities for branding. Discussion on international marketing has increased since the late 1980s (see e.g. Kotabe and Helsen 2011; Hollensen 2012). This

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discussion revolves around such questions as the internationalization of business activities, market selection processes and entry strategies and the design and implementation of global marketing programmes. The international dimension of branding generally centres on international product offering and product positioning. In the context of international marketing, branding is thus needed to distinguish a company’s offering from those of its competitors and to create brand awareness in order to create new sales or induce repeat sales outside domestic markets. In the broader picture of branding decisions the international dimension comes into the picture when choosing between single market and multiple markets, the latter urging to decide whether the company relies on local brands or a global brand (Hollensen 2012: 318–34). The international or global dimension has been part of the city branding discourse since the very beginning owing to its emergence at a time when globalization and the global competitiveness of cities became a critical issue not only among cities of the highest ranks in the global urban hierarchy but among all cities that were responsive enough to see that globalization challenged them to reconsider their competitive position and their ability to attract investments, tourists and other values from the space of flows. Global economic forces made the creation of a good brand and competent brand management more important than ever. Country-of-origin is one aspect of this awakening, but it seems that cities must stand to a large extent on their own as reliance on the home country brand is hardly enough for a brand identity, value and promise of an individual city (van Ham 2008). Such a global orientation of cities is also apparent in books published on city branding, not least because the most widely discussed cases in this field are inherently global in nature, be they about Barcelona, Dubai, Edinburgh, The Hague, Hong Kong, Kuala Lumpur, London, New York, Paris, Portland (Oregon), San Francisco, Seoul, Singapore, Sydney, Tokyo or Vienna (see Dinnie 2011a). The basis of awareness of the names, locations and characteristics of cities is part of our common knowledge, which is taught in geography classes at school and learned at home, in daily life and through the media. This knowledge-base has a connection, especially in promoting tourism. Yet, in general, a more important part of city branding relates to professional and business life, in which general knowledge has only a minor role to play. Rather, what becomes crucial is the sector-specific reputation and features, which are managed and promoted with an eye on the target group possessing assets that the city aims at attracting, be it knowledge, creativity, capital or power. As global visibility is hard to achieve, globally-oriented city branding benefits from measures of high magnitude, the most obvious being mega-projects and mega-events. This is why global city branding is often associated with the redevelopment of central business districts and the conversion of old industrial sites or harbour areas into urban oases, cultural venues or entertainment zones (e.g. Baltimore and Hamburg) and the hosting of internationally renowned megaevents and festivals (e.g. Olympic Games host cities or Edinburgh as a festival city) (Varrel and Kennedy 2011). In addition, global city branding can be

90 City branding as a strategic tool

associated with hot spots of global mobility, hospitality, logistics and consumption, such as shopping cities (e.g. London), conference cities (e.g. Vienna) and important airport cities (e.g. London, Frankfurt and Copenhagen in Europe), which have an inherently international dimension. On the international scene the role of the capital city of each country is also worth mentioning. These seem to attract special attention both from national players and from those outside the country. This reflects the fact that the capital city is usually the international window of the entire country and often also the only city in the given context that can be said to enjoy global city status. Another dimension that relates to post-industrialization is the international marketing of services, in which the largest economies, major tourist destinations, export-oriented service economies and countries that possess historical advantages in trade in services have a key role to play. One of the notable cases is India, which has globalized in business mainly through services (see e.g. Bosworth and Collins 2008). New business models and global production and innovation ecology have changed the role of services in the economy, and one essential dimension of this change is international marketing and international trade in services. Not only the share contributed by services to GDP but also service exports have risen rapidly during the last twenty years. Three global forces that have contributed to the acceleration of this development are the 3Ts, namely: technology, transportability and tradeability (see Ghani and Kharas 2010). Traditionally, countries such as the UK have benefitted most from the ‘invisible trade’ in such areas as tourism, intermediaries and financial services, shipping and construction works overseas (Cowell 1983). Yet, due to the 3Ts and new trends in business, the role of information technology, business services, transcribing medical records, data services, call centres, education, entertainment production services and the like are gaining ground. While in many cases offshoring is driven by the pursuit of cost reduction, some of the services have been taken over from cities in developed countries, either peripheries (as in the cases of call centres) or core cities, as in the case of advanced business services acquired from, for example, Frankfurt, Singapore or San Francisco. Another important point is that it is not only specialization and increasing volumes of niche services that matter, but, as has been the case with goods, service exports sophistication also has a potential to fuel growth (Mishra et al. 2011). It is important to keep in mind that invisible exports arise from a variety of activities; some interests, profits or dividends are earned in the home country from investments in foreign enterprises, or they are received from foreigners in return for the provision of services, such as shipping, insurance of a foreign factory, accounting advice given to a foreign client, raising of capital in a financial centre by a foreign borrower or the performance of a play in another country (Cowell 1983: 309). This implies that there are many ways in which city governments can support service exports. The benefits often come through the incomes of some local owners, service providers or joint ventures (Mishra et al. 2012). The chances to increase service export sophistication and growth are twofold: (a) traditional service activities gain in productivity from technology, transportability and tradability; and (b) a host of new service activities that have emerged

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(due to unbundling and technological innovation). Thinking about export-led growth and diversification should include the perspectives of the specialization and sophistication of services as well. Including services in growth considerations does not imply neglect of manufacturing exports and its benefits, but rather stresses that services can be an additional channel for promoting high growth. Increasing sophistication in service exports has important implications for countries that are stuck in a ‘middle-income trap,’ such as Malaysia or Vietnam, or for countries that wish to sustain their rapid growth, such as India and Sri Lanka. Resuscitating growth in the United States and G-20 economies will to a large extent depend on innovation and competitiveness in sophisticated service exporting firms. Major global cities have a critical role in accomplishing this mission (Mishra et al. 2011: 24).

E-city branding

Informatization and digitalization are mega-trends of our time, pervading practically all vital processes in economy, politics, and culture (Wang 1994; Kluver 2008). The capacity to transmit data, deliver services and manage processes electronically have increasing connections to the ‘real’ world, sometimes called real virtuality (Castells 1999a) or in technological hype, Web2 (Web squared). Value creation extends to the virtual world, but online processes and brands also rematerialize, thus creating a recursive ontological interplay between online and offline worlds. This manifests as a kind of two-way augmented reality. It is selfevident that such global transformative processes change the premises of intercity competition, communication channels and styles, and the overall environment of branding. As a consequence, a vital element of our branded world is built through information networks and virtual worlds. What seems to be changing most dramatically is the customer and stakeholder relationships and the setting within which to create and benefit from brand value (Gay et al. 2007). Physical presence is a precondition for experiencing the actual city and its brand promise. Nevertheless, the brand and practically all its relevant dimensions can go beyond the reality of the place itself (Florek 2011: 82). Internet and WWW in particular provide an obvious setting to articulate a city brand that transcends the geographical city and penetrates the target audiences’ minds irrespective of the locational and physical aspects of the city. On the other hand, there is still limited experience of the application of e-branding in the public sector. ICT effectiveness is constrained by institutional arrangements and the coordination of the marketing efforts with other government processes through urban planning and strategic development having a conditioning effect on city branding (HuertaCarvajal and Luna-Reyes 2011). Even if the development of Web generations indicates that the Web is much more than just a collection of individual websites, it is equally true that e-enabled city branding starts from the website. It is currently the primary and most popular tool for city branding (Boyne and Hall 2004; Florek 2011: 84). It is also the locus in which the various aspects of the city can be efficiently presented. It may

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be that the website was just an exotic addition to city’s presence in the mid 1990s, but it certainly became a necessity some ten years later (Levine 2003: 166). Now it seems that we are transferring from public sector portals to Web 2.0, which is an essential tool for stakeholder interaction and a symbol of the openness, innovativeness and vitality of the urban community (see Levine 2003: 167–9; Sullivan 2004; Donald and Gammack 2007: 56; Bernal 2010: 2–4). We may assume that after that the next big paradigm shift will be towards smart solutions or systemic intelligence, which means new opportunities afforded by GeoWeb, Semantic Web, Smart Web, augmented reality and Internet of Things for city branding (e.g. Markoff 2006; Spivack 2006; Aker 2009; Aurigi 2009). There are huge differences between continents in the digital readiness and much the same can be said about cities (Norris 2001; Graham 2002; Foley et al. 2002). In general, cities in the developed countries of the West and the East are at the top of the e-city hierarchy, when measured by such criteria as information security and privacy, usability, content, services and citizen participation. In the Rutgers-SKKU survey conducted every three years since 2003 the cities that have continuously been at the top of this ranking are Seoul, Hong Kong, New York, Singapore, Tokyo and Toronto. The pioneering case in the renewal of portal design among cities was Singapore, which designed a portal that contained separate entries for different user groups. The site is divided into four sub-portals (in 2013): government, citizens, business and non-residents. This idea has since then been widely applied in city portals throughout the world. In general, the reputable Web portals are based on target group thinking, their structure follows a fairly classic portal structure model, they are visually balanced and the amount of information on sites is kept reasonable (Rutgers Today 2010). In the Web design, brand and user experience intersect especially in visualization, which not only helps users to direct their attention to essential content in the website and thus to reduce the information overload using focus+context visualization and other methods (‘functional’ side of visualization), but also makes the general appearance of the site brighter, lighter and pleasanter, and, more importantly, creates a special atmosphere thereby supporting branding efforts (the ‘emotional’ side of visualization) (Sullivan 2004). How then is branding seen in the websites or portals of cities? Most of the cities do provide some elements – in pictures or in texts – that highlight their characteristic features and such positive qualities as vibrancy, dynamism, excellent service, and joyful atmosphere. Yet, genuine branding is not particularly obvious in official city websites or portals, mainly because they have been designed most notably to combine functionality and ease of use. As concluded by Fernández-Cavia and Huertas-Roig (2009), even though the Web is generally acknowledged as an increasingly important tool for brand communication, the official websites of cities pay primary attention to ease of navigation at the expense of the interactivity of the website. From the point of view of branding it is even more problematic that there is a lack of attention to the communication aspect of city branding in Web design. The majority of city governments’ websites present city symbols and slogans, but on the other hand, the inconsistencies in using brand elements hint at a need for

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greater consistency and integration of marketing communication (Tschirhart 2008). The potential of websites in city branding obviously has not been fully utilized. This holds, however, mainly for official websites. Besides, there are some exceptions to this rule, for example, in the website of the city of Amsterdam the branding theme ‘I amsterdam’ has a role especially in a visual sense (see www.iamsterdam.com/). What it highlights in particular is the visible connection between the website and other brand communications of the city. Internationally oriented specialized or thematic websites of city governments are completely different in nature, and in their case aspects of branding are also better articulated. This is actually a better forum for branding, as these sites are designed for international visitors and business and thus are not so cluttered with legal dimensions, democratic governance, public services and heavy information load as are official city websites. A good example of this category is the international website of the capital of Sweden with a slogan ‘Stockholm: The Capital of Scandinavia’, which highlights the city’s attempt to build an international profile for international audiences as the primary gateway to Scandinavia – positioning itself with a status higher than those of Copenhagen and Oslo (http://international.stockholm.se/) (see Dobers and Hallin 2009). The same outward-oriented branding is visible for understandable reasons in the official tourism websites maintained by city governments, tourism agencies or partnership organizations (Boyne and Hall 2004: 86). For example, in the official tourism website of Singapore, YourSingapore, the site is designed for three special groups under the tourism umbrella, namely travellers, business event organizers and medical tourists. This indicates a sophisticated approach to tourism in the sense that it is based on clearly defined target groups that are expected to bring the best added value for the utilization of local assets. Singapore since the 1990s has been a forerunner in city marketing and branding with a marked target group and customer-centred orientation. Another category of official websites that have an inherent connection with city branding is investment portals. Sometimes these investment portals are part of city portals, sometimes separate sites. The overall problem with website architecture is that the economically oriented thematic websites cannot easily be found from city government portals (Paganoni 2012: 22). Many investment portals are national, but there are also regional and local portals maintained by city governments, regional authorities, investment promotion agencies, public corporations or partnerships. There are thousands of examples to present, but let us mention here just a few, such as: Invest Osaka, which is the investment and business promotion site of the City of Osaka (www.investosaka.jp/en/index.php); the business promotion site of Munich as a part of the city portal (www.muenchen.de/int/en/business.html); Business Oulu as the website of the business promotion corporation of the City of Oulu, Finland (www.businessoulu.com/en/home-2.html); and the investment and business portal of Toronto maintained by Invest Toronto, the business, sales and marketing corporation for the city of Toronto (www.investtoronto.ca/Index.aspx). In fact,

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the Web world of investment attraction is surprisingly messy, as many of the investment promotion websites are maintained by real estate companies, property management firms, financial firms and regional or local associations and foundations.

Focusing on economic development brand

Marketing has long been deemed vital for economic development (e.g. Drucker 1958). Much the same has been said about branding (Allen 2007). On the other hand, even if the industrial and broader economic dimension have always been the key part of city branding, the branding agenda and process is usually fairly general, being only partly connected to the promotion of local industrial development. There is, however, good reason to pay attention to the systematic use of the symbolic power of branding as a part of local industrial policy, as advocated in this book. Baker (2012) calls such a brand an economic development brand, which is primarily directed towards business relocation, expansion and investment. It can be conceived of as a special brand strategy connected to the city’s overarching brand. As economic development brand can be seen also to include tourism brand and occasionally some economically oriented thematic brands, we could rather use the term industrial brand to describe brand that is associated with industrial and business development. Brand-driven local industrial development is based on the view that the traditional planning cycle is inadequate to deal with the rapid rate of change; it calls for more responsive and proactive ways of doing things, of envisioning the future in an action-oriented manner. It is also important that strategy is guided by markets and environment rather than an internal orientation. As defined by Aaker, ‘strategic market management is a system designed to help management both precipitate and make strategic decisions, as well as create strategic visions’ (2005: 19). Such management starts from analyses of the external environment, customers, competitors and markets. On this basis the organization needs to develop its business strategy and as its core a sustainable competitive advantage (SCA). Within this scope the company needs to take a range of strategic decisions concerning focus, value, quality, innovativeness, positioning and being global (Aaker 2005). City branding may be used with an emphasis on industrial development and economic activities. Such a perspective helps to focus on the city’s role and profile in economic terms. Moreover, such an approach indicates that city branding has a primary connection to exogenous growth, whereas its connection to the endogenous growth model with an emphasis on internal factors is assumed to be weaker or at least more complicated. For example, in the case of the branding of the Arno Valley in Tuscany, the empirical evidence indicates that the brand triggered limited social learning, fairly weak community-building and left little room for institutional change (see Pasquinelli 2010). Economic city branding can thus be seen primarily as a tool for economic development that is based on instrumental exchanges of values in the borderless space of flows, and thus is heavily

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influenced by external factors, which reflects the fundamental logic as outlined in city attraction hypothesis. In outward oriented economic city branding, the brand effects have two basic application contexts. Branding may serve as a general reference point in any interaction and transactions between the city and customers or external stakeholders. In this context it may rely on large-scale hard branding, including the utilization of mass-marketing techniques. It is visible in ‘selling the city’ as is usually the case with city tourism and other post-industrial activities that are primarily aimed at a large international audience of consumers and a complex field of operators, intermediaries, brokers and other professional organizations involved in the given activity area (e.g. tourism). The reputation of the city has a decisive role in determining whether such selling is difficult or easy. In this field brand benefits basically all promotional operations of a city that are mediatized, rely on brand communication and are directed to large audiences at different phases and touchpoints of the consumption process (cf. Anholt 2010: 91). The other paradigmatic branding mode is associated with selective promotional actions that are designed to attract high value-adding activities within a small number of organizations or even selected individuals, as in the cases of inviting headquarters or financial firms to the city, or when the city promotes the formation of international joint ventures, participates in a bid for a megaevent or mounts campaigns to attract particular type of firm to benefit from the cluster effect. In this area, branding is more problematic, as pointed out by Anholt (2010: 93), as one is selling the city to a relatively small and welldefined audience of elite purchasers. It deals with business-to-business (B2B) negotiation, not a consumer-style sale. Yet, even in such a situation, good image together with a well-thought-out identity and ‘product’ can be a recipe for success. Thus, government-to-business (G2B) style promotional activities and negotiations seem to make a case for relationship management-oriented branding or micro-branding, in which principles and methods of branding are applied to a strategic action and decision-making context. Thus, for example Anholt’s (2010: 13) scheme of strategy, substance and symbolic actions (3S) and more generally key ideas of brand management also hold mutatis mutandis in such interactive situations. It is actually obvious that the need to focus on microbranding increases as a function of the increase in the value and strategic importance of the decisions in question (on the idea of micro-branding see e.g. Sawerschel 2013). In many cases the industrial dimension relates to a restructuring of the local economy, thereby making branding part of one of the most critical moments of local economic development. We may even claim that place branding is in general mostly driven by the aims for regeneration or economic development, in one form or another (Green 2005: 280). Such transformations are about profound change in the city’s economic profile, as in the case of Turin’s branding efforts to transform itself from Italian capital of the automotive industry into a creative city (Vanolo 2008). Kapferer presents a good picture of such a challenge.

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Some towns have had to reposition themselves. This is the case when an economic crisis flattens their traditional expertise. Once all the textile factories of famous brands such as Dim, Well, Aubade, Olympia and Kindy have moved away, what will be left to the town of Troyes? This is also what happened to the great mining town of Bilbao, in the Basque country of Spain, a sombre town that suffered the demise of its mining industry. Like the phoenix, however, it has risen from the ashes, under the impulsion of a global flagship product: the fantastical Guggenheim Museum that was built there, bringing with it a great cohort of modern art lovers and tourists, giving the town a new lease of life. (2008: 126)

There has been a lot of criticism of the flagship project approach, including the Guggenheim Museum in Bilbao, but its high brand value to the city is undeniable. Besides the abovementioned flagship projects such as the Guggenheim Museum in Bilbao, there are such imagineering strategies as events and cultural planning as in Glasgow as the European Capital of Culture for 1990, functional specialization as marketing strategies in Montpellier in the South of France in the 1980s with an idea of building a technopolis, and the reinterpretation of the economic value of local traditions as in Cremona in northern Italy, where the music tradition was the core of an urban regeneration project. Thus we can identify four typical approaches to branding in the context of local economic development: (1) insertion – utilization of property-led approach and flagship projects; (2) temporary lighting – utilization of cultural planning and festivalization; (3) new specialization – utilization of new industrial profile, such as high-tech, finance or logistics; and (4) re-examining tradition – utilization of locally rooted cultural assets and history (Bruzzese 2004: 102–7).

7

Economic profiles of postindustrial cities

The focus in this chapter is, in a very practical sense, the critical choices of city governments regarding the development of the industrial city profile. The discussion is structured according to the city profile model, which contains eight special economic profiles for post-industrial cities: business intelligence, finance, hightech, research, culture, tourism, conferences and logistics. The empirical evidence of global sector-specific city hierarchies is based on the global rankings of cities, supplemented by selected brief case descriptions. Such an analysis gives an overall picture of the positions of cities in a multi-dimensional global urban hierarchy. Data saturation indicates the different categories of global cities, such as the most frequently top-ranked cities or full-service global cities, high-ranking diversified global cities and only rarely outranked specialized global cities. The relevance of rankings and other benchmarking and comparative analyses follows logically from the global competitive imperative, which we have previously conceptualized as the city attraction hypothesis. Politicians and public managers are keen to stay ahead in the game and ensure that their cities provide the right framework to attract activities of the leading or emerging economic sectors. As crystallized by Kornberger (2010: 89), a city manager is under considerable pressure to move up the league tables and city rankings, and establish the city in question as a regional or even global leader. In this chapter the aim is not to identify the most recent trends as such, but rather to focus on important post-industrial activities in contemporary cities in the developed world. In the post-industrial age such trends cannot be identified only as stand-alone economic activities, but as increasingly integrated synergistic activity mixes or attraction hubs, which builds an organic connection between industries and innovation ecology, knowledge infrastructure, urban aesthetics, and spaces of consumption (Newman and Thornley 2005: 269; Rubalcaba and Carrido 2006; Kolko 2007; Insch 2011: 10; Kimelberg and Williams 2013). Another related dimension is relationality, for the nodal function of a city in the global network economy implies positive network externalities for a city resulting from its connectivity with the international city system (Friedmann 1986; Sassen 2006; Bathelt and Glückler 2011: 114–15). Cities’ economic profiles must thus be interpreted within a contextual and relational framework.

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Criteria for determining economic city profile

According to the rationality assumption based on both the previously discussed city attraction hypothesis and the more widely discussed world city hypothesis (Friedmann 1986) and global city discourse (Sassen 2001), in order to maximize welfare for their communities, city governments strive for as high a position as possible in the urban hierarchy. This tendency is associated with cities’ ability to attract high value-adding activities to their communities, which means that this maximization tendency manifests in selective industrial policies. High valueadding, knowledge-intensive and service-oriented economic activities rely on sufficient concentrations of skilled workers and creative people (see Florida 2005a). This is an indication of the increased importance of knowledge, knowhow, innovativeness and creativity to high-profile urban development strategy, reflecting not only the informational mode of development but a transition towards a creational mode of development, in which growth is increasingly based on innovativeness and creativity (cf. Castells 1999a; Florida 2005a). Explicit knowledge of the current economic city profile serves as a local selfunderstanding of a city’s industrial composition and its consequences. The economic city profile can also be used as a tool for planning local economic development and for industrial branding. But how to conceptualize such a profile is a matter of its own. We may construct various kinds of typologies which are of use in defining such a profile. Let us consider briefly some of the most widely discussed options, which will be used to provide structure for the discussion in this chapter. Three economic sectors

A generic economic city profile typology can be based on the main economic sectors. These are illustrated in Figure 7.1 by presenting the three main economic sectors – primary (agriculture), secondary (industry) and tertiary (services) – and then dividing each further into two subcategories. This is obviously an excessively simplistic way of pointing out the options for economic city profiling, but nevertheless shows the widely discussed categories of local economic development. In Figure 7.1 the term agricultural town is used to refer to all urban communities with economic profiles in which the extraction of natural resources has a critical role to play. It is worth noting, however, that settlements that become genuinely urban usually require a highly developed division of labour and imply that the livelihood of people relies mainly on manufacturing or services rather than agriculture. Yet there are examples of agricultural towns that rely heavily on the utilization of natural resources, as in the cases of fishing towns, forestry towns, mining towns and energy towns. Owing to the dependence on natural resources, such communities have often more dramatic changes in their life-cycle than other types of urban communities, starting as an exceptionally rapidly growing boomtown and ending as a quickly declining ghost town. A good example of

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99

Profile of a city Service city Serving individuals e.g. tourism

Industrial city

Serving institutions

High-tech R&D

e.g. finance

Low-tech Manufacturing

Agricultural town Mining, energy, forestry

Farming, tillage, fishing

Primary focus of the post-industrial city

Attractiveness of the city Citizens and consumers

Public organizations

Corporations and business networks

Figure 7.1 City profile typology by main economic sectors Source: Adapted from Anttiroiko 2009b

a modern boomtown is Fort McMurray, which is formally an urban service area as a part of Wood Buffalo, Alberta, Canada with about 70,000 inhabitants. It is one of Canada’s major centres of oil production, which, together with the important role of natural gas and forestry, makes it a paradigmatic example of an agricultural town. Another example is Perth, the capital of Western Australia, which has benefitted for recent years from the rising price of raw materials and the energy boom (Pannett 2013). Energy towns have shown persistent growth rates in different parts of the world, benefitting especially from the great boom in fossil fuels. For example, Corpus Christi, Midland, Odessa and San Angelo, Texas, can all be characterized as energy cities belonging to the top ranks of Forbes’ Best Small Cities For Jobs, when measured by growth indicators from 2000 until early 2012 (Kotkin and Shires 2012). Thus, even if we focus on postindustrial developments, both low-tech manufacturing and agriculture can have an extremely important role locally. Theoretically speaking, new forms of urban agriculture together with an efficient food distribution system may even be an emerging trend, even though its impact on urban economy will most likely remain modest in the foreseeable future. Yet the future may be full of surprises in this respect. There are even speculations that vertical farming – growing crops in high-rises – could revolutionize our agricultural ecosystem and together with it both rural and urban ecosystems.

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It is based on a simple principle: ‘instead of trucking food from farms into cities, grow it as close to home as possible – in urban greenhouses that stretch upward instead of sprawling outward’ (Fletcher 2012). Functionally the key issue is to create sufficient infrastructure by establishing local systems to grow and process food and transfer it to consumers. There are various forms of urban farming, community farming projects, food processing facilities and farmers’ markets in different parts of the world, from New York to Chicago to a range of small American cities and towns, as well as major cities in emerging and developing countries, such as Bangkok, Beijing, Mumbai and Shenzhen (see Gorgolewski et al. 2011). As important as trends such as urban agriculture are, most of the cities cannot build their economic value creation solely on such options. There is a need to point out, however, that this trend, together with clean technology and efforts at sustainable development has considerable growth potential. Industrial city is the epoch-making urban formation based on processes that revolve around the production of manufactured goods. This secondary sector of the economy is still important to most of the post-industrial cities, even if the importance of heavy industries in particular is generally declining. Heavy industries are mainly large-scale, capital-intensive and heavily polluting industries, such as chemicals, metal, machinery, mining and shipbuilding, which convert large volumes of raw materials and components into intermediate or end products. The opposite category, light industries, comprises less capital intensive and usually less polluting industries, producing end products such as clothes, shoes, bags, toys, accessories, furniture and consumer electronics (see e.g. Encyclopedia of Global Industries 2011). In addition, there are industries with special relevance for post-industrial cities: high-technology industries, which emanate from the leading-edge technologies requiring high R&D input and a high level of expertise. They include computers and office equipment, telecommunications, software, electrical engineering, robotics, biotechnology, pharmaceuticals, nanotechnology, aerospace and motor vehicles (Rausch 1998; Cortright and Mayer 2001; Anttiroiko 2004). In terms of local economic development policy, the standard response to global intercity competition has long been to create favourable conditions for industrial activities in the growth sectors at the given time. Attracting footloose industries and influencing manufacturing firms’ location decisions are at the very core of such a policy. In addition, there are also indications that manufacturing has the potential to stage a renaissance and once again become a career of choice for talented people (Baily and Manyika 2013). However, of this large economic sector this book covers only the sector with an obvious connection to post-industrialism, high-tech industries. Developers in post-industrial cities devote their attention primarily to services or the tertiary sector of the economy, which is sometimes vaguely categorized further into quaternary (knowledge-based services) and quinary (advanced cognitive–cultural services) sectors (see Kenessey 1987). Increase in their relevance is premised on the transformation from an industrial society towards an information society, service society or network society, depending on what features of postindustrial condition are emphasized. New approaches to local development policy

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101

in developed countries widen the local development perspective to the cost-effective utilization of soft factors of production as well as to the range of demand-side attraction factors when compared with the manufacturing and productionoriented development paradigm that lasted until the 1980s or so. The focus of attention is increasingly on services and especially on knowledge-intensive and high value-adding services. Industry and cluster classifications

Another rational way of looking at the options for economic profiling is to build a picture through conventional industry classification systems or cluster classifications. Such an approach might sound ‘deductive’ in its basic logic as opposed to a more ‘inductive’ approach that relies on local knowledge, but it has its merits in both providing a basis for rational consideration for local industrial policy and serving as a heuristic device for target-cluster or niche identification, which permits local governments to allocate scarce resources to support the retention or expansion of a small group of key industries (Kelton et al. 2008). Regional and urban industrial situation, strengths and weaknesses can be analyzed using economic base analysis, shift-share analysis, location quotient, input-output analysis, occupation cluster analysis, regional impact multiplier, econometric modelling and many other methods (e.g. McCann 2001). It may be tempting to complement industry identification by analyzing local clusters only on the basis of the local or regional strengths of industries that are seemingly linked with each other. Such an aggregation however, is inadequate from the point of view of urban development strategies, as it does not specify the nature of such linkages and other aspects of cluster formation and relations. One way to resolve this dilemma is to build urban or regional cluster templates, as this gives an indication of what new industries the city government could attract that would benefit from the existing firms and industries in the city (Kelton et al. 2008: 306). The basic data for such templates can be collected from industrial classification systems, such as the North American Industry Classification System (Of NAICS, see www.census.gov/eos/www/naics/) (see Table 7.1). For a cluster classification, industries are grouped according to their potential to relate to each other. This naturally also allows industries to belong to more than one cluster. Relying on the early work of Feser and Bergman (2000), Kelton et al. (2008) have constructed a template of 61 clusters, which show the inherent industry linkages. Services and some other post-industrial clusters of their template are collected in Table 7.2. It should be noted that NAICS still has a particular limitation in that it is much more detailed in manufacturing than in services, which affects the accuracy of the formation of service-related clusters (Kelton et al. 2008: 318). What the US statistics from the early 2000s clearly show is the positive development of most of the service categories and negative employment change in manufacturing. This indicates the overall direction of development in the economy. Beyers (2010: 536) made similar findings in his analysis of employment changes by cluster in the US in 1998 and 2005, which shows highest growth in such clusters as government, professional, health, finance and transportation, and

102 Economic profiles of post-industrial cities Table 7.1 Structure of 2012 NAICS Sector 11 21 22 23 31–33 42 44–45 48–49 51 52 53 54 55 56 61 62 71 72 81 92

Description

Agriculture, forestry, fishing and hunting Mining, quarrying, and oil and gas extraction Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional, scientific, and technical services (PSTS) Management of companies and enterprises Administrative and support and waste management and remediation services Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation and food services Other services (except public administration) Public administration

Source: United States Census Bureau: NAICS. Retrieved from www.census.gov/cgi-bin/sssd/naics/ naicsrch?chart=2012

mostly negative development in manufacturing. It is important to recognize the huge differences between clusters in practically any relevant criteria, such as number of firms and jobs, total sales, location quotient, growth rate, and estimated future development. This implies that cluster identification and specialization has a critical role in local industrial policy. Cluster identification and subsequent cluster policy design is not an easy process, however. More than anything, it is not as rational as one might wish, as not only decision makers but also local conditions, actors’ relationships and contextual relations increase the irrationality and uncertainty in such processes. Some rules of thumb for rational inspection of statistical data and related considerations can in any case be given, including such criteria as size, specialization and focus (European Community 2008: 16–17). More accurate criteria for selecting and evaluating target clusters are presented by the Economics Center for Education and Research (2004). According to these, primacy should be given to clusters which relate to: 1 2 3 4 5 6

High average salaries; Strong local employment base; Export rather than local industries; High location quotient; Strong national growth; Strong local growth relative to national growth.

Economic profiles of post-industrial cities

Table 7.2 Examples of service and high-tech clusters derived from US economic statistics of 2002 Cluster

NAICS sectors represented

Consumer services

11, 22, 23, 48, 49, 52–54, 56, 61, 62, 71, 72, 81, OOD Industrial transportation 21, 23, 32, 33, 48, 61, 71 Printing and publishing 31–33, 51, 56, 81 Medical supplies and 31–33, 48, 49, services 53, 54, 56, 61, 72 Business support 31–33, 48, 49, services 52–54, 56, 72, FG Telecommunications 33, 51, 81 Entertainment and performing arts

Radio, movies and television Insurance

31–33, 51, 53–56, 61, 71, 81 33, 51, 54, 71 52, OOD

Information technology 21, 51, 54, 56, support services 61, 62, 81 Air travel 32, 33, 48, 49, 56, 72 Medical laboratories 32, 33, 51, 62

Advance electronic 33, 54 systems and components

103

Employment and Receipts, employment million change (%) $US, 2002 98–02

Average annual salary, $US, 2002

53,852,456 (9.11)

5,298,555

29,529

1,889,403 (6.64) 1,737,739 (–1.35) 18,368,987 (8.45)

245,150

32,018

1,418,026

23,341

2,224,795

47,189

1,563,791 (2.85) 7,352,524 (9.62)

425,125

51,433

305,897

51,494

1,060,095

47,880

10,818,466 (11.36)

1,419,541 (8.99) 2,376,265 (1.71) 7,934,919 (16.15) 9,532,901 (5.19) 1,318,575 (6.76) 2,037,266 (–3.75)

265,872

1,038,696

1,335,346 722,419

182,254

404,928

33,547

52,621

50,490 15,541

39,632

57,778

Source: Adapted from Kelton et al. 2008 Notes: NAICS sector numbers and titles are mentioned in Table 7.1; FG = federal government enterprises; NAICS = North American Industry Classification System; OOD = owneroccupied housing

Cluster analyses are currently widely used by governments at different institutional levels (see European Community 2008). Let us take an example. In order to strengthen its economic development performance, the Cincinnati USA Partnership adopted a strategy that identifies and focuses on a limited number of

104 Economic profiles of post-industrial cities

industry clusters. The report drafted by the Economics Center for Education and Research (2004) of the University of Cincinnati in collaboration with the Center for Business and Economic Research, University of Kentucky, was intended to guide such a process by providing tentative analysis and recommendations for cluster identification. The ten candidate clusters identified are briefly described in the box below.

Ten candidate clusters for Cincinnati, USA

The cluster identification analysis of the Economics Center for Education and Research recommended ten candidate clusters to serve as a reference for economic developers and decision makers. The ten Cincinnati clusters recommended as candidates for targeting by the Cincinnati USA Partnership are the following: A. Office-oriented clusters 1 Advanced Design Services: this cluster offers good wages and high national growth 2 Business Management: this cluster has strong wages and local concentration 3 Financial Services: this cluster is strong in wages and growth

B. Technology-oriented clusters 4 Biotechnology: this cluster shows reasonably good wages and growth 5 Digital Equipment and Telecommunications: this cluster has one part that is relatively strong in wages and another with strong growth 6 Software and Data Processing: this cluster is high on wages and growth

C. Manufacturing-oriented clusters 7 Advanced Manufacturing: this cluster is very large, has moderate wages, and shows very strong local concentration 8 Aerospace: this cluster and specifically engines and equipment has a strong local concentration and is strong in wages 9 Chemicals and Plastics: this cluster has relatively good wages and a very strong local concentration 10 Motor Vehicle Manufacturing: this cluster has moderate wages and good local growth.

Each of the recommended clusters has a fairly high average annual salary level. They are mostly also export clusters, engaged in selling goods and/or services to businesses outside the region. They all have sufficient employment base in the State (each accounting for at least one per cent of employment in the Cincinnati MSA in 2001) and have critical occupations that are concentrated within the region. The clusters differ significantly concerning strength of location quotient, national growth and relative local

Economic profiles of post-industrial cities 105

growth. The analysis uncovered two new clusters, Advanced Design Services and Business Management, which had not been recommended in previous cluster analyses for the region. Note: Cincinnati USA region is defined as the new 15-county Cincinnati Metropolitan Statistical Area (MSA), including several counties from south-western Ohio, northern Kentucky, and south-eastern Indiana. Source: Economics Center for Education and Research 2004, iv–v.

It should be remembered that cluster identification and selection are not mechanistic processes. The data can tell us some basic facts about the quantifiable aspects of economic life, employment and growth, but it does not describe the industrial tradition of the city, local economic peculiarities, networking and governance capabilities, the entrepreneurial spirit of the region or the overall competitive landscape in the given industries or clusters and the city’s relative position within it. Thus we need case-based reasoning on the feasibility of our choices. As emphasized by the report of the Economics Center for Education and Research (2004), cluster policy should be used in an interactive way. In addition, as clusters are dynamic, cluster analysis is not a one-time prescription but a continuous process, with a culture of information sharing as one of its preconditions needed to involve the analysts, business community and policy makers and administrative machinery in the policy-making process. As highlighted in the report, cluster policy is most valuable in identifying targets for recruitment and retention. For recruitment, cluster analysis is able to define an environment in which certain firms are more likely to succeed. Obviously, the probability of successfully recruiting firms that are well suited to a region is higher than for firms less well suited. For more effective retention of firms, better knowledge of clusters can help economic developers focus on strengthening the cluster by supporting the infrastructure underlying the cluster. (Economics Center for Education and Research 2004: iii)

Strategic choices in industrial profiling need to be assessed case by case. In general, cities must adopt strategies that are suited to them and thus provide optimal long-term value, greatest leverage, regional synergies and multiplier effects. For example, a knowledge hub may build on its existing advantages in science and technology (S&T) or knowledge, whereas an industrial production zone must be developed according to its industrial profile, varying from high-tech cities that build on their S&T base to low-tech manufacturing that may need special support, for their socio-economic transformation or catching-up process. In comparison, non-S&T urban–regional systems, depending on whether they are deindustrializing regions, service hubs, resource-based or primary sector intensive regions, have to choose their policy mix with the primary options being something like socio-economic transformation or the creation of knowledge-based capabilities.

106 Economic profiles of post-industrial cities

(OECD 2011; European Commission 2012; on smart specialization, see European Commission 2012). Another consideration to bear in mind is that cluster identification and industrial policy decisions continue with the challenge of implementation. As clusters vary in their markets, this implies differences in target groups and marketing strategies. For example, goods-producing clusters – process, manufacturing and resource clusters – rely predominantly on the intermediate market. Construction differs from this by relying on ‘other final demand’, which is mainly capital investment and sales of new construction to governments. In services, market structure changes dramatically, even if variations between services are significant. The food, education, travel and recreation and health clusters are strongly focused on household markets, the fastest growing areas in personal consumption expenditure from 1960 to 2005 being medical care, a cluster of welfare services (education, research, personal business, religion and welfare activities) and to a lesser extent recreation. The creative cluster has a mix of intermediate, personal consumption, investment, and export markets, whereas professional services focus predominantly on intermediate markets (Beyers 2010: 542–3). Such considerations must be set in a wider context. Some of the major factors worth a closer look relate to historical and contextual preconditions for urban economic development. A crystallization of such an approach is presented by Meyer in a statement that takes a combined view of industrial history, location and basic development cycles: A successful incubator is likely to be a city that has origins in some depot or transportation hub activities, some prior development in industries oriented to agglomeration economies, diversity in its industries and export base, enough size to have developed cumulative and self-reinforcing growth processes, and relatively strong access to a wide spectrum of human skills and capital. (2000: 29)

Post-industrial economic city profiles

Sophisticated views of the decomposition of the service economy started to emerge in the 1960s and 1970s. That is the time when Greenfield (1966) coined the term ‘producer services’, which reflects the fact that the expanding areas of services were consumed by business and government rather than households. Attention was paid to intermediate markets with a high proportion of employment in professional, technical and clerical occupations. Another turning point was Noyelle and Stanback’s (1983) classification, using formal cluster analysis to group cities on the basis of their industrial structure, highlighting the importance of producer services as well as education, health care and consumer services. Discussion about service society and service economy with various emphases increased in the 1980s and 1990s. A decade or two later new categorizations emerged emphasizing the need to pay attention to industries and clusters

Economic profiles of post-industrial cities

107

simultaneously with the development of occupational structures. A widely discussed contribution in this field was the creative class as an occupational group of college-educated people working in professional, managerial, technical and creative occupations, as presented by Florida (2002), accompanied by discussion about creative economy and creative industries (Caves 2000; Howkins 2001; Cooke and Lazzeretti 2008). Another way of conceptualizing recent economic trends is to label them as new economy industries, which are dominated by employment in creative, highly-skilled occupations requiring considerable formal education (Beyers 2010: 531–2). Post-industrial conditions also reflect the rising importance of high-tech production. It is emblematic of the crossing industrial trends that while traditional heavy industries started to escape many US and European cities in the 1980s, this was the same decade when science parks started to mushroom in both continents. Within the last 30 years, high technologies have diversified and proliferated (see e.g. Hatzichronoglou 1997; Rausch 1998; Cortright and Mayer 2001). Note that high-tech industries have a close connection to services. High-tech location quotients are strongly positively correlated with the professional and technical cluster location quotients, which indicates the service industry dominated nature of the high-tech industry in the USA (Beyers 2010: 542). In all, such new hightech, knowledge, consumption and service-related industries and clusters with predominantly high value-adding functions in the economy can justifiably be called post-industrial activities (cf. Sellers 2002; Fisher 2007). For the purpose of presenting distinctive city profiles with a high degree of relevance from the point of view of the current discourse on post-industrial cities, we need some simple profile typology. We may build such a typology on the fact that cities may profile themselves utilizing hard and soft productive inputs. At the core of hard factors are corporate power and capital on the one hand and knowledge and technology on the other. Soft factors may focus on business and professional services or culture and entertainment. On this basis we may divide city profiles into four broad categories, which relate to specific city conceptions (Anttiroiko 2009b). 1 2 3 4

Capital: headquarters city, financial centre and business city Knowledge: university town, knowledge city, science city and high-tech city Mobility: hub city, conference city and MICE city Pleasure: cultural city, tourist city, resort town, shopping city and service city.

These form a field of high-value adding city profiles, which are illustrated in Figure 7.2. The profiles presented in the figure are examples of city profiles, meant only to show some of the most widely discussed city conceptions and profiles. What makes them challenging is that they are fundamentally ‘composite products’ in the sense that offerings within each economic profile include components supplied by various producers, such as higher education institutions, service firms, consultancies, associations and promotional agencies and embedded in the overall demographic, economic, political and cultural setting of the urban

108 Economic profiles of post-industrial cities High-tech city

Finance city

Business city

Financial district

Corporate intelligence Business services Head office cluster Logistic hub

Hub city

Technology Know-how R&D

Capital Securities Insurance

Transport Logistics Warehousing

City profile

Exhibition centre Exhibitions Conferences Hospitality

Conference city

Research Education Knowledge

High-tech park

Knowledge city

University campus Cultural centre Art Culture History

Tourist destination Entertainment Shopping Well-being

Cultural city

Tourist city

Figure 7.2 City profile pie: eight post-industrial economic city profiles Source: Adapted from Anttiroiko 2009b

community. Tourism is a paradigmatic case of this (cf. Naipaul et al. 2009). Other points worth mentioning are the categories included in the economic profile pie. In this model such important areas as biotechnology, medical technology and clean technology are included in the high-tech cell. Another special category is the property industry, which, in spite of its economic importance, is excluded from this model. Architecture, product design and other design activities mainly can be categorized as business services, but they have connections to the hightech, knowledge and cultural dimensions as well, which makes it difficult to fit them clearly into any individual category of this model. Similar problems arise with many other economic activities, which only serve to emphasize the schematic and illustrative nature of these kinds of simplified models. An important context for such profiling of a city is post-industrial society or information, service or network society, depending on which factors are emphasized, as mentioned earlier. At the level of urban communities this discussion may be related to the generic concept of post-industrial city. This is a city that strives to adjust to the conditions of post-industrial society, as originally theorized by

Economic profiles of post-industrial cities 109

Daniel Bell (1973: 367). This development is accelerated by ‘tectonic’ transition in the industrial paradigm and development, epitomized by a trend in which manufacturing from high-cost cities, especially from North America and Western Europe, seeks more favourable environments for production in terms of regulation, taxation, labour costs and proximity of markets (see e.g. Dunford and Kafkalas 1992; Tödtling 1996; World Bank 2000; US Department of Commerce 2004; Anttiroiko 2009b; Fisher 2007). The most characteristic feature of a postindustrial city is that its employment is based on advanced, knowledge-intensive, high value-adding and IT-enabled services, i.e. jobs in professional, managerial, administrative and technical occupations. Yet, even if there are some common denominators in the premises of the post-industrial cities, they have different profiles, which reflects the varieties in the preconditions of each city for coping with the problems of declining industries, changing occupational structures, increasing educational requirements and the urgent need for job creation and wider local economic restructuring.

Global view of economic city profiles

This section examines post-industrial economic city profiles by relying on global city rankings. In such rankings cities are evaluated and ranked with regard to different economic, social and geographical characteristics and then presented in a simple list of cities from best to worst. Such rankings make simple comparisons possible and thus support various stakeholders, such as urban developers, business investors, marketing experts and even individuals, in making decisions on investments, consumption, participation or location. During the 2000s city rankings became widely used and publicized empirical references for disclosing comparative data on competitive advantages and specific profiles of cities, which inform both private and public actors involved in global intercity competition. Such rankings also helped city governments to communicate their situations to their internal stakeholders in strategy-making processes as well as in defining goals and strategies for future development (cf. Giffinger et al. 2010: 299–300). High position in global city ranking actually comes to resemble an unplanned proto-brand and thus part of the city’s competitive identity as it indicates the area of the city’s economic strength, the potential direction of its specialization and its position among other highly-ranked cities. This is why the discussion in this chapter is implicitly also about industrial city profiling and branding. Cities of corporate power and international business

A special place in the global urban hierarchy is reserved for those cities that have attracted corporate management functions – strategic planning, corporate law, finance, marketing, human resources and so forth – and various business services, some of them specialized in international business. Such a city is characterized by a concentration of office facilities, which expand as a function of the city’s role in the international division of labour rather than of its population (Hartshorn

110 Economic profiles of post-industrial cities

1992: 400). Cities’ profiles vary to some extent, however, as some may have headquarters or financial firms, or regional service centres or government offices. A headquarter city is a special agglomeration of command-and-control functions of corporations (see Diacon and Klier 2003; Davis and Henderson 2004; Wanner et al. 2004; Birkinshaw et al. 2006; Collis et al. 2007; Strauss-Kahn and Vives 2009). A large number of headquarters not only strengthens the city as a command centre of economy but also increases the demand for legal and accounting staff and various business services (Bloom and Grant 2011). They create high-wage jobs, have a considerable multiplier effect, contribute to the building of high-rise towers in the city centre or business district, and provide an undeniable positive stimulus in branding. A global overview of top headquarter cities that benefit from clustering of headquarters is presented in Table 7.3. Another indicator of the global attractiveness of a city is its role as a host for multinational corporations (MNCs). Here again the top-level players include well-known global cities and business hubs of emerging markets, as illustrated in Table 7.4. Office rents are an indicator of local real estate markets, which in international comparison serve as a rough indicator of the concentration of economic power and global attractiveness of cities. According to global office rent rankings the highest rent levels are in the major global cities of London (West End), Hong Kong, Moscow, Paris and Tokyo. Other cities with high office rents include New Table 7.3 Top 20 headquarter cities by total revenues

Rank City

Country

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Japan France USA UK South Korea China USA USA USA Japan Japan USA Germany Russia USA USA The Netherlands China China USA

Tokyo Paris New York London Seoul Beijing Dallas San Francisco Chicago Nagoya Osaka Fayetteville Munich Moscow Houston Minneapolis The Hague Hong Kong Shanghai San Jose

Number of GICS / HQs

10 / 163 10 / 61 10 / 84 9 / 59 9 / 42 7 / 34 9 / 18 8 / 17 9 / 32 6 / 19 8 / 34 2/2 6 / 10 6 / 17 7 / 28 7 / 14 3/4 9 / 49 7 / 16 4 / 25

Source: Adapted from Taylor and Csomós 2011 Notes: GICS = Global Industry Classification Standard; HQs = Headquarters

Aggregate revenue ($US billion) 3,115.02 1,956.69 1,541.50 1,416.25 758.01 707.66 558.77 540.33 497.13 464.01 439.96 435.03 434.95 383.30 380.05 375.85 363.12 347.49 340.49 324.82

Economic profiles of post-industrial cities

Table 7.4 Office presence of international companies by city Rank

City

Number of companies

1 2 3 4 5 6 7 8 9 10

Hong Kong Singapore Tokyo London Shanghai Moscow Beijing Madrid Dubai Paris

191 189 179 177 172 170 169 167 157 156

Source: Adapted from Burggraf 2011

111

% of companies present in city (n = 280)

68.2 67.5 63.9 63.2 61.4 60.7 60.4 59.6 56.1 55.7

York, Washington DC, San Francisco, Singapore, Beijing, Shanghai, Geneva, Frankfurt, Milan, Stockholm, Perth, Sydney, Toronto, St. Petersburg, São Paulo, Dubai and Mumbai (The Economist 2012; Samra 2013; cf. discussion about the world’s most economically powerful cities by Florida 2012b). Cities of finance and business services

Finance is a critical part of business life and also the most globalized sector in the economy. Consequently, successful financial centres have traditionally had a high profile in the global urban hierarchy (Castells 1999a; Agnes 2000; Sassen 2001; Reszat 2002; Clark and Wójcik 2007; Dixon 2011). Financial centres have practically the same effect as headquarters, with a possible difference in a more narrow demand for other business services. Such centres can be found all over the world. There is nevertheless a certain pattern in their location, for they are usually located in the major urban agglomerations of their respective countries, comprising a world system of financial centres with a limited number of truly international centres (Shachar 1997: 24) (see Table 7.5). The preconditions for building such centres include open financial markets, free flow of capital, transparent political, regulatory and tax regimes, skilled workforce and high quality physical infrastructure. Old and still powerful financial centres are located in the USA and Europe, including Frankfurt, London, New York and Zurich but the world’s largest companies are increasingly opting to locate their offices in Asia’s booming cities, reflecting the eastward drift in global economic power (Burggraf 2011). The first successful financial centres in Asia were Tokyo, Hong Kong and Singapore. Since the opening up of the Chinese economy Shanghai, Beijing and Shenzhen have emerged as new rivals with a claim to become the economic and financial centres of the Greater China region (Heng 2003; China Briefing 2011). Recently Seoul has also improved its position as an East Asian financial centre (Yeandle 2011).

112 Economic profiles of post-industrial cities Table 7.5 Major financial centres in the world Rank

1 2 3 4 5

7 8 9 10

12 13 14 15 16 17

19 20

City

London New York City Hong Kong Singapore Shanghai Tokyo Chicago Zurich Geneva Sydney Toronto Boston San Francisco Frankfurt am Main Shenzhen Seoul Beijing Washington, DC Taipei Paris

GFCI9 rating 775 769 759 722 694 694 673 665 659 658 658 656 655 654 653 651 650 650 639 637

Source: Adapted from Yeandle 2011 Note: The Global Financial Centres Index (ninth edition) or GFCI9 is based on two sets of data input: 75 instrumental factors and responses to an online survey. Scores are aggregate values drawn from these two data sets

Besides the clusters of headquarters, MNCs and financial institutes, some cities may generally have a business-friendly environment or may possess special strengths in a wide range of business services. Kotkin (2009) describes the relevance of this sector as follows: ‘Media coverage of America’s best jobs usually focuses on blue-collar sectors, like manufacturing, or elite ones, such as finance or technology. But if you’re seeking high-wage employment, your best bet lies in the massive ‘business and professional services’ sector.’ The cities with such strengths at the top of the urban hierarchy are generally called ‘global cities’; they have a special position as transterritorial market places and command centres, as described by Saskia Sassen (2001) in her seminal book on New York, London and Tokyo. Thus, internationally oriented business services are for obvious reasons the most developed in global cities, such as Hong Kong, London, New York, Paris and Tokyo (see Table 7.6). Similarly, in the ranking of worldwide centres of commerce the same league of cities can be found at the top: London, New York, Tokyo, Singapore, Chicago, Hong Kong, Paris, Frankfurt, Seoul and Amsterdam (MasterCard Worldwide 2008; Scott 2011: 293–4). On the other hand, even if producer or industrial services have been disproportionately located in the highly ranked global cities, the core functions of international business services – finance, accounting, law and marketing – are

Economic profiles of post-industrial cities

Table 7.6 Top 10 global cities for business activity in 2010 Rank

1 2 3 4 5 6 7 8 9 10

City

New York Tokyo Paris Hong Kong London Beijing Singapore Shanghai Seoul Chicago

Country

USA Japan France China UK China Singapore China South Korea USA

113

Score

6.4 6.4 6.3 5.4 5.2 4.7 4.7 4.5 4.5 3.5

Source: A.T. Kearney Global Cities Index 2010. Adapted from Global Sherpa 2011 Note: Business activity is scored on the basis of five factors: number of international conferences, flow of goods, capital markets, number of companies among the top 40 global service firms, and number of Fortune Global 500 companies with headquarters in the city (Global Sherpa 2011)

only one part of the picture. Beside these, the companies involved in international business increase demand for consumer services, through business to business and indirectly also through employees’ demands, such as demands for property, travel, architecture and so forth. If we take into account the increased demands of top management, the creative class and the affluent middle classes, rather than speaking of producer services, we should refer to them as a whole as advanced services, comprising ‘reflexive producers producing services for reflexive consumers’ (Lash and Urry 1994: 206–7). One of the key economic policy concerns of top-ranking global cities is to weight options between diversification versus specialization. Let us take New York City as an example. Debates focus on whether New York City’s economic specialization in international capital and in sectors that are fairly volatile – global communications, advertising, accounting, insurance, legal services, news media and entertainment – should be changed or intensified. There is no simple solution here. Some suggest further diversification of the city’s economy in order to strengthen the overall base of the local economy. Advocates of enhancing market-share point to the higher wages associated with certain sectors. This is indicated by the fact that, for instance, the finance, insurance and real estate (FIRE) sector in New York City in 1993 accounted for 15 per cent of the city’s employment while contributing 27 per cent to its wages (Amirahmadi and Wah 2002: 101). Current city brand is also of particular benefit for the high-profile business service option. Yet it is important to remember that path dependency is in the long run the ultimate reason behind many regions’ decline. Amirahmadi and Wah (102) suggest that New York’s future lies in a few industries that are forecast to grow: biotechnology, computer soft-

114 Economic profiles of post-industrial cities

ware, high-end apparel and jewellery, film and television production, recycling, health care, nonprofits and retail. The production of information technology and computer software may be difficult to realize due to the high cost of living, as this sector may be able to offer wages too low to become sustainable. Whether the focus is on diversification or specialization, both of them call for the effective use of New York City’s strengths, the need for highly specialized pools of skills, and advanced urban technological infrastructures. Since the early 1990s, New York’s factual economic profile has developed towards a global creative centre. If assessed on the basis of the location quotient (LQ) of New York’s occupations relative to other Metropolitan Statistical Areas (MSAs) in the USA, using 2000 and 2004 Occupational Employment Statistics (OES) data, it seems that New York’s comparative advantage is not in command-and-control functions associated with chief executives and other management occupations throughout advanced producer services, for the top-level management in the city do not show any particular advantage in terms of employment or salaries when compared with other MSAs. In fact, New York’s LQ of management is below average, 0.95, considerably lower than Boston (1.40) and Chicago (1.32). In finance the situation is somewhat better (LQ 2.41), but even that does not show any special advantage when assessed against the background of New York’s other industrial and occupational advantages. In this area especially Boston, Chicago, Washington, DC and San Francisco are close behind New York and even have higher LQs in some specialized financial occupations. In occupations in professional services, such as law, public relations and advertising, education and medicine, New York’s LQ is generally between 2.00 and 2.70. Yet overall employment figures show a general decline of this sector in the city, showing declining concentration and increased competition from other metropolitan regions. Concerning high technology, New York City does not have any particular advantage; LQ is low (0.64) and show moderately downwards, and more importantly, occupations in high-tech and engineering-related fields are absent from the wider regional economy. There is a drastic difference with Austin, Boston, Raleigh-Durham-Chapel Hill, and Washington, DC, which show an exceptionally high concentration of hightech occupations. Lastly, occupations that are most concentrated and show exceptionally promising opportunities for regional competitive advantage may actually be in arts and culture. This is the area in which New York has a nationally leading role, its major rivals being Los Angeles and to a lesser extent San Francisco. New York’s LQ for artistic and cultural occupations in 2004 was 3.55 and in film, video and media as high as 5.40. It was also high for fashion designers (LQ 15.98) and makeup artists, theatricals and performance (LQ 19.28). When looking at New York’s competitive advantage through this kind of occupational window, it appears that the city’s greatest strength lies in artistic and cultural production (Currid 2006).

Economic profiles of post-industrial cities

Cities of knowledge and innovation

115

A group of cities that reflect the current trend in knowledge-based economy are concentrations of knowledge, innovation, science and technology, sometimes referred to as knowledge cities. According to Carrillo (2006), knowledge cities are urban communities that possess an economy driven by high value-added exports created through research, technology and brainpower. In these communities knowledge is valued and nurtured, resources are dedicated to supporting knowledge dissemination, learning and innovation, and knowledge is harnessed to create products and services that add value and create wealth. This cluster provides fairly high salaries, has growth potential including export, and more than anything, has a potential to increase innovativeness in other industries (cf. Riddle 1986; Dewan and Kraemer 2000; Sheehan 2006). A city without high-tech, higher education and innovation capacity has certainly a lack of assets that are critical to survival in the competitive global economy. A good example is the city of Berkeley, CA, with only 112,000 inhabitants, which is rightly referred to as ‘a city with a small population and a big reputation’. In the city the University of California and other state-supported educational and research institutions are a fundamental source of economic stability. The University of California, the City of Berkeley, Lawrence Berkeley National Laboratory, the State Department of Health Services and the Berkeley Unified School District account for approximately 30 per cent of all jobs in the city (City of Berkeley n.d.). Another example is the Boston metropolitan area, in which MIT graduates and staff have founded thousands of firms, many of them staying in the region and generating huge numbers of jobs and economic value. In a nutshell,

between 2000 and 2006, MIT graduates started more than 5,800 companies, and the numbers have only been rising since. The Institute produces more patent applications than any other single university in the world, with 179 in 2011. MIT’s entrepreneurial impact is so great that, according to a 2009 study conducted by the founder of the Trust Center, active companies created by its alumni bring in a combined revenue today of as much as $2 trillion. That would make those companies the equivalent of the 11th-largest economy in the world. (Vogel 2012)

The same holds, even if usually on a smaller scale, with most of the cities that are blessed with innovative and entrepreneurial research university. The key asset of a knowledge city is human capital, which is globally highest in major cities of the developed world, as illustrated in Table 7.7. Innovativeness is another asset of a knowledge city. It is difficult to measure, however. In many cases, innovation hot spots are identified simply on the basis of reputation rather than objective indicators (e.g. Kao 2009). A commonly used proxy is the number of patents, which actually is a fairly good indicator of inventive activity and technopreneurship among the data available. Such data show that

116 Economic profiles of post-industrial cities

Table 7.7 Top 10 global cities for human capital in 2010 Rank

1 2 3 4 5 6 7 8 9 10

City

London New York Los Angeles Chicago Hong Kong Tokyo Sydney Boston Toronto San Francisco

Country

UK USA USA USA China Japan Australia USA Canada USA

Score

5.6 5.4 4.6 4.6 4.4 4.1 3.7 3.4 3.1 3.1

Source: A.T. Kearney Global Cities Index 2010. Adapted from Global Sherpa 2011 and Hales et al. 2010: 8 Note: Human capital is scored on the basis of five factors: size of a city’s foreign-born population, quality of its universities, number of international schools, international student population, and percentage of residents with university degrees (Global Sherpa 2011)

the geography of innovation is biased: inventions and innovations are generated by people who live in metropolitan areas, and among them those with highly educated people tend to be more innovative. Another important factor is the presence of technical universities, for especially if operating within entrepreneurial framework, they tend to increase patent activity. Thus, for example, most US patents (63 per cent) are developed by people living in only 20 metropolitan areas, which are home to only about one third of the US population. The same holds globally: some 93 per cent of the world’s recent patent applications were filed by inventors living in metropolitan areas with just about 23 per cent of the world’s population (Rothwell et al. 2013) (see Table 7.8). Another ranking of innovativeness of cities is 2thinknow’s ranking, which classifies 445 benchmark cities of which the top 133 cities were ranked by analysts. Ranking is based on 2thinknow analyst interpretation of 162 city indicators from the 2thinknow City Benchmarking Data set. This ranking combines qualitative analysis with statistics. Data was grouped to form three broad categories, a simplified 3-factor score for Cultural Assets, Human Infrastructure and Networked Markets, which were further graded into 5 bands (Nexus, Hub, Node, Influencer, Upstart) based on how broad based the city performance was (2thinknow 2013). The twenty most developed cities, which all have a ‘nexus’ status, are presented in Table 7.9. Paradigmatic examples of knowledge cities are university cities or college towns and cities of science. The world’s top universities have especially given impetus to extensive campus tourism providing campus tours, gifts and souvenir shops, galleries, sports facilities, accommodation and dining rooms and cafeterias. A special category of city, the global university city, hosts top rank

Economic profiles of post-industrial cities

Table 7.8 Cities with high intellectual capital and innovation Rank City

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

117

Libraries Per cent of Research Innovation EntreTotal with population performance Cities preneurial score public with of top Index environment (based access higher universities on nine education indicators)

Stockholm Toronto Paris San Francisco New York London Sydney Los Angeles Chicago Tokyo Hong Kong Berlin Seoul Milan Singapore Madrid Moscow Shanghai Abu Dhabi Beijing

27 22 17 21 18 24 26 15 19 20 11 4 12 14 5 10 23 8 7 2

26 20 25 27 24 19 11 17 21 22 13 15 16 12 6 18 23 14 9 10

19 18 22 15 26 27 17 23 21 25 20 16 24 13 11 9 7 10 2 12

18 24 26 27 25 23 19 13 12 17 21 22 14 20 15 11 4 16 9 10

27 22 20 26 26 18 22 26 26 14 19 12 16 15 18 11 2 9 14 9

205 198 194 191 189 184 179 171 170 167 150 147 137 131 122 119 109 99 87 82

Source: Adapted from PwC 2012: 42–3 Note: Original ranking included 27 cities. Points: max 27 (best), min 1 (worst). Total score is based on nine indicators, of which five are presented in this table. Criteria: classroom size; libraries with public access; math/science skills attainment (national); literacy and enrolment*; percentage of population with higher education; research performance of top universities; Innovation Cities Index; intellectual property protection*; entrepreneurial environment*. (*= country-level data)

universities that attract a huge amount of paying international students and have strong global appeal, exemplified by Harvard University (Cambridge, MA), MIT (Cambridge, MA), the University of Cambridge (UK), UC Berkeley (CA), Stanford University (CA), the California Institute of Technology (Cal Tech), and the University of Oxford (UK) (WiredCityNetwork nd.). They all belong to the world’s top ten universities according to the ranking of the Institute of Higher Education of Shanghai Jiao Tong University, which emphasizes Nobel Prizes, high ranking of faculty members and articles published in prestigious journals (Törnqvist 2011: 99–102). The Global University City Index measures liveability, education expenditure, the number of graduates produced and how many universities the city has in the Financial Times Higher Education top universities

118 Economic profiles of post-industrial cities Table 7.9 City innovation ranking, 2012–13 Rank 1 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

City

Boston New York Vienna San Francisco Bay Area Paris Munich London Copenhagen Amsterdam Seattle Toronto Los Angeles Berlin Hong Kong Frankfurt Stockholm Lyon Melbourne Hamburg Sydney

Country

USA USA Austria USA France Germany UK Denmark Netherlands USA Canada USA Germany Hong Kong Germany Sweden France Australia Germany Australia

Index score 57 57 57 56 56 56 56 55 55 54 54 54 54 54 54 53 53 52 52 52

Source: 2thinknow Innovation Cities Index 2012–13. Adapted from 2thinknow available at www.innovation-cities.com/innovation-cities-global-index-2012/7237

list. The 2008 Global University City Index (Tomazin 2008) gives the highest rank to the following cities: 1 2 3 4 5 6 7 8 9 10

London Boston Tokyo Melbourne Sydney Pittsburgh Paris Vienna Chicago New York

According to data on research output in 2002–4, the major research centres of the world were such city-regions as Tokyo-Yokohama, London, San Francisco Bay Area, Osaka-Kobe, Paris, New York, Boston, Los Angeles, Amsterdam-HagueRotterdam-Utrecht, Beijing and Moscow. The data for 1994–2004 shows that the biggest improvers were Asian cities: Shanghai, Beijing, Seoul, Singapore and Hong Kong. Centres with considerable relative decline include mostly European

Economic profiles of post-industrial cities 119

and American cities (Matthiessen et al. 2006). In all, a striking feature of most of the rankings is the long-lasting domination by American universities. Their positions at the apex of rankings are fairly stable from one ranking to another (Törnqvist 2011: 101). High-tech cities

Under knowledge city category we may also discuss technology-oriented conceptions, such as technocities, high-tech cities, e-cities, digital cities, ubiquitous cities, smart cities, intelligent cities and city 2.0 (e.g. Downey and McGuigan 1999; Komninos 2002; Anttiroiko 2004; Aurigi 2005; Kasvio and Anttiroiko 2005; Leadbeater 2007). The most important formation in industrial terms has been the high-tech city, i.e. a city profiled by its extensive high-tech industries and R&D activities. This was probably the most popular urban development paradigm in the 1980s, and even more so in the 1990s. In high-tech development, Silicon Valley in California became a global benchmark for urban developers. One indication of the power of this trend is that since the 1980s the number of science parks has proliferated in different parts of the world (Castells and Hall 1994; Anttiroiko 2004). Most of the high-tech cities are specialized in a few products and technologies. A competitive environment inevitably leads to specialization, for no single site can create world-class expertise with a broad set of high technologies. Cortright and Mayer (2001) presented excellent analysis of fourteen American high-tech metropolitan areas and observed that each area tended to specialize in relatively few products or technologies, with the exception of such large-scale concentrations as Route 128 around Boston and San Jose at the heart of Silicon Valley (Anttiroiko 2004; Chapple et al. 2004). The top US high-tech cities, San Jose, Washington, DC, Boston, San Francisco, Seattle, Austin and Raleigh, are ranked high in global comparison (Cook 2009). They are challenged by numerous European and Asian high-tech centres with varying profiles. The top high-tech cities include: in Europe, London, Paris, Munich, Zurich, Stockholm, Helsinki, Oxford and Cambridge; and in Asia, Seoul, Tokyo, Singapore, Taipei, Hong Kong, Bangalore and Tel Aviv (see Anttiroiko 2004; Icon 2007; Buck and Draisma 2008; Belisle 2009). The high-tech field is changing from production-oriented conceptions towards a stronger demand orientation and high-tech services, even to the extent that in spatial terms the time of isolated suburban science parks is said to be over (Castells 2001). The new paradigm emphasizes a closer connection to a rich innovation milieu, demand and services, which requires close proximity to the very heart of urban life. Another trend is increased ubiquity, smartness and intelligence, which has given rise to the emergence of smart cities, a concept that is embraced in their development policies with varying emphases by cities like Amsterdam, Barcelona, Copenhagen, Dubai, Hong Kong, Melbourne, Seoul, and Songdo in the city of Incheon (see e.g. Komninos 2002). This may, in the long run, change the overall picture in favour of liveable metropolitan high-tech areas.

120 Economic profiles of post-industrial cities

Seoul as a smart city

Contribution by Professor Sang-Chul Park

What is unique to leading East Asian cities and Singapore from South East Asia is their keenness in following global industrial trends and responding to them with smart and determined policies. Most of them are textbook cases of city boosterism, export orientation, emphasis of science and higher education, urban sprawl and strong government involvement in economic life. They are usually referred to as developmental cities (Hill and Kim 2000). Apparent similarities bury important differences in their industrial profiles and policies. For example, Seoul as the capital of the Korean IT powerhouse is more technology-driven than its East Asian rivals (Park 2008; 2009), Singapore is constantly renewing itself towards knowledge-intensive highvalue adding services coupled with impressive urban development projects (Goh 2005; Kotkin 2005: 14; Smith 2010: 2; Koh 2011), Hong Kong developed from entrepôt trading hub into an international business city with exceptionally strong service economy (So 2004), and Shanghai wants its share from high-value adding services, such as finance (Wu and Yusuf 2004), just to mention a few examples (See Yusuf et al. 2008). Let us take a closer look at Seoul and its economic profile. Seoul has been the capital of the Republic of Korea since 1945. However, its historical heritage goes back some 600 years. In 2011 Seoul had 10,582,744 inhabitants, which was 22 per cent of the nation’s total population. Its gross regional domestic product accounted for US$ 257 billion in the same year, making 24.2 per cent of the national GDP. In sum, Seoul plays a key role in the politics, economy, technology and culture of South Korea. Seoul is located in the middle of the Korean Peninsula linking China and Japan, the largest consumer markets in Asia. It also has around 40 large cities with over one million inhabitants within two hours’ flight time. Seoul is the geographical hub in East Asia in terms of transportation and distribution industries. Seoul is undoubtedly one of the most techno-savvy metropolises in the world. Technological development also has a more visible role in Seoul’s economic development policy than in most other global cities. This has posed a special challenge to the city, for in the twenty-first century the world is rapidly entering a new stage of technological development, thus going beyond the digital age, in which Information Technology (IT) played the key role in the pursuit of efficiency and high performance. The emerging ‘smart age’ brings a new element to this picture: a need to interact with people and support them fully with ingenuity and sensibility. Seoul Metropolitan Government (SMG) has prepared to develop the Smart City aiming to utilize enormous potential of smart technologies for urban development. In fact, Seoul has been extremely successful in using broadband internet since the late 1990s. It has been a top ranked city by UN supported Rutgers Global

Economic profiles of post-industrial cities 121

E-Governance Survey conducted since 2003. Additionally, Seoul has the highest internet competitiveness in terms of broadband internet penetration, mobile service usage, level of online services and other categories. It is also a world leader with its plans to apply ubiquitous technologies in cities (Rutgers Today 2010; Seoul Metropolitan Government 2012). Seoul is building up smart infrastructure in line with the rapidly increasing number of users of smart devices and wireless internet. In 2011, there were 7,910,000 Internet users in Seoul, which accounted for 81 per cent of the population of the city. The portion of smart devices such as smart phones and smart pads has increased rapidly as well. In 2011, 42.5 per cent of Seoul citizens used smart phones, while only 2.3 per cent of them used smart pad. In total, 44.8 per cent of citizens used smart devices (Korea Internet Security Agency 2012). SMG intends to expand the installation of wireless internet service (wi-fi) to every public place such as government buildings, public service centres and community centres. Additionally, SMG plans to install public wi-fi in around 10,000 public places such as neighbourhood parks, roadsides near commercial areas, welfare and public facilities, school zones, residential areas and major roads. After completing this project carried out by SMG and Mobile Network Operators (MNOs), citizens in Seoul are able to use free wireless internet at any time and anywhere. In addition to this, SMG intends to enhance the satisfaction of citizens by free access points (APs) installed by mobile carriers at public facilities (Seoul Metropolitan Government 2012). SMG strategically supports businesses that develop new technologies of information security for smart phones, surveillance cameras and cloud computing. For this, the city operates a business incubator and the world class test bed of security system in the Sangam Digital Media City. By doing this, SMG aims to become one of the three most competitive cities in smart information security. Moreover, SMG promotes application businesses by nurturing smart application experts and emphasizing start-up venture businesses. It will also foster highly skilled workers in application business and even support one-person creative start-ups. In order to provide public information properly, the metropolitan government plans to build Seoul Data Mart (SDM). With the help of such measures, ICT-enabled public service industries may grow and the size of the content industry may even be doubled. The priority in the high-tech field is the smart information security industry. SMG is ready to invest capital and manpower in this area in order to make Seoul safe from hacker attacks. As a special organizational response, a support centre for the smart information security industry will be set up in the Sangam Digital Media City. Furthermore, 50 companies will be supported by business incubators annually to develop and test their product by utilizing the world-class test bed for security systems. In all, the city government invests in strengthening security for mobile public administration, surveillance cameras and the use of other smart technologies that are closely related to citizens’ daily lives. The capital investment in this area is planned to increase

122 Economic profiles of post-industrial cities

from 73 million Korean Won (c. US$ 65,000) in 2011 to 23.4 billion Korean Won (c. US$ 21 million) in 2015. By doing this, the number of workers in the field of the smart information security will increase from 6,000 to more than 10,000 in Seoul alone during the same period. Along with the smart information security industry, SMG promotes a unique application business by fostering smart application experts and supporting entrepreneurs. In 2011, there were 100 application development centres run by schools, activity clubs and private companies in Seoul. Around 2,000 application experts worked in the same year in these centres. The city government also provides education and supports start-up businesses in cooperation with the existing private application development centres. By doing this, it has built a foundation for systematic support along with Seoulbased mobile carriers, research laboratories, universities and professional associations. As a result, SMG expects that the number of application developers could be tripled up to 6,000 by 2015 (Seoul Metropolitan Government 2012). Furthermore, SMG plans to build software business clusters for smart devices in IT Complex and Seoul Application Development Center in Sangam Digital Media City. The IT Complex is expected to be completed in 2014. It will be a high-tech IT landmark, which is the home to the centre for Smart Information Security, the Secretariat of World E-Government (WEGO) and E-Sport Arena. In addition, Seongsu IT Center is the place for IT convergence, biotechnology industry, and research and development (R&D). Seoul aims to become one of the top smart cities in the world by 2015. To achieve this goal, three strategic business areas will be focused on: smart information security, application business and the data mart. These business areas are developing in innovative clusters established and planned by SMG. Based on the master plan, the four sites for innovative clusters are: Guro and Gasan Digital Complex for IT and manufacture, Teheran Road in Gangnam for trade and high-tech, Sangam Digital Media City for media and environment and Magok Bio City for R&D for the biotechnology industry. The first two clusters have been in operation since 1998, while the last two clusters are under construction. Guro and Gasan Digital Complex were built as industrial complexes in 1963 and converted into innovative clusters for IT industries. Teheran Road was developed for ICT venture businesses as a central government strategy at the time of the Asian financial crisis. Sangam Digital Media City as a new concept is planned to be completed by the end of 2014 and Magok Bio City will be completed in 2031 (Seoul Metropolitan Government 2006). Among the four innovative clusters, Sangam Digital Media City gains special importance for building a global smart city in Seoul. It aims to build not only an ecological and information city, but also a gateway city being a base for Seoul’s globalization. In fact, SMG intends to build Sangam Digital Media City as a digital media industrial district, which provides a wide range of digital industry services and facilities. Moreover, it plans to combine the

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123

Sanggye

Gimpo/SongdoYeongjongdo Axis (international business)

Mangu Yeonsinnae

High-tech industry

Sangam

Magok

Media/Environment Mokdong Guro Geumcheon

International finance City Center

Dongdaemun

Digitization of old industry

Sinchon Yongsan Seongdong Yeouido International GwangJin International business Gangnam finance

Trade/High-tech

IT/Manufacture Gwanak

Seocho

Bucheon/Anyang Axis (IT/Manufacture)

Munjeong

Bundang/Pangyo-Yongin Axis (S/W, IT Service)

Figure 7.3 Innovative clusters in Seoul

Source: Adapted from Seoul Metropolitan Government 2006

digital media industrial district with a digital media research and education park, making it a unique hub with global renown (Seoul Metropolitan Government 2011). Hub cities

Services have been, and continue to be, on the urban development agenda, including such a broad range of activity areas as transportation, tourism, hospitality, entertainment, retail trade, consumer services, welfare services and cultural services (see e.g. Martinelli and Moulaert 1993; Konishi 2000; Law 2002; Bryson et al. 2004; Clark 2004; Miles and Miles 2004; Hanssens et al. 2012). Let us start the discussion with cities with two different roles in international business and trade: transport hub and host city for meetings and conferences. They are the forms of services that provide a logistics base for the entire economy and as industries provide high added value while serving businesses, professional associations and international organizations.

124 Economic profiles of post-industrial cities

Transportation is vital for modern society. It takes care of the physical aspect of the circulation of the economy, simultaneously having a dramatic effect on population patterns, urban landscape, global division of labour and economic development (Coyle et al. 1990). Some studies indicate that investments in transport infrastructure are among the most important contributors to urban growth (UN-HABITAT 2008). Related to this, transportation is also critical to the location decisions of international business. It facilitates business and migration and improves conditions for consumption-driven retail, entertainment and tourism industries. Even in the case of conventional transport interchanges the logistics hub provides its surroundings with greater commercial activities than similar areas of the city and allows business profiling on the basis of the income levels of the users of different transportation modes and within each type of station, e.g. airport vs. high-speed rail vs. bus station (Díaz et al. 2012). These are only some of the reasons why the development of a logistics city or hub city – be it a global or regional logistic hub or a specialized port city, airport city, or distribution, wholesaling or warehousing hub – is an appealing profile for a city in the globalized world. Nation-wise, the top ten logistics performers in 2010 include (starting from the highest rank of the Logistics Performance Index 2010): Germany, Singapore, Sweden, the Netherlands, Luxembourg, Switzerland, Japan, the UK, Belgium and Norway (Arvis et al. 2010). European cities, especially those in continental Europe, such as Rotterdam, Antwerp, Hamburg and Frankfurt, have long served as major global and regional logistic hubs. Similar logistics hubs in the USA include New York-Newark, Houston, Minneapolis-St. Paul, Dallas-Fort Worth, Atlanta, Chicago, Cleveland, Detroit and Denver (King and Keating 2005; cf. Steele 2009). In the Asian context, world-class logistics hubs include Singapore, Hong Kong and Tokyo, challenged by Beijing, Shanghai, Guangzhou and other Chinese hub cities as well as Dubai (Jacoby and Yang 2008). Probably the best indicator of an international logistic hub is the business of international airports, presented in Table 7.10. For understandable reasons, in such ranking global cities and major tourist destinations dominate. A hub position is generally favourable for a city in the networked and globalized world. Hubs vary widely, however. Strategically the most important logistic hubs are airports. Neal (forthcoming) categorizes them into three overlapping groups: (a) a degree hub is a city that is the final destination for large numbers of passengers, such as New York and Los Angeles in the USA; (b) a betweenness hub is a transit point by serving as a place where connecting passengers change planes, as for example, Charlotte; and (c) a closeness hub is a city that is easily accessible or close to other cities because it is connected to many cities by nonstop flights, such as Detroit. Many airport cities have several of these hub functions, such as Chicago and Atlanta and to a lesser extent Dallas and Denver, which all belong to Top 10 US cities in all these three categories. Among the most important degree hubs in the USA are New York, Los Angeles, Chicago, Miami, San Francisco, Las Vegas, Orlando, Dallas, Atlanta and Denver (Neal, forthcoming). These three types of hub cities have different profiles. Neal (forthcoming) confirms the common sense expectation that being a hub city of any kind has a

Economic profiles of post-industrial cities

Table 7.10 Airports ranked by international passenger traffic Rank

Airport

1 2 3 4 5 6 7 8 9 10

London Heathrow Airport Charles de Gaulle Airport Hong Kong International Airport Dubai International Airport Amsterdam Airport Schiphol Frankfurt Airport Singapore Changi Airport Suvarnabhumi Airport, Thailand Incheon International Airport Madrid-Barajas Airport

Major nearby city

London Paris Hong Kong Dubai Amsterdam Frankfurt Singapore Bangkok Seoul Madrid

Code (IATA) LHR CDG HKG DXB AMS FRA SIN BKK ICN MAD

125

Total passengers

64,687,737 55,674,880 52,749,262 50,192,013 49,680,283 49,477,184 45,429,263 35,009,002 34,537,845 32,449,857

Source: World’s busiest airports by international passenger traffic, January–December 2011, by Airports Council International. Adapted from http://en.wikipedia.org/wiki/ World’s_busiest_airports_by_international_passenger_traffic

positive effect on employment. A hub city is good for economic development and is thus an important function of post-industrial cities. Yet, when all three previously mentioned forms of hubness are analyzed simultaneously, it shows that the degree hub is economically most significant owing to the impact of terminally inbound passengers that cannot be attributed to other factors, whereas the betweenness hub has weaker impact and provides benefits primarily for the transportation sector, and the closeness hub has only a marginal effect on jobs (Neal 2010). Zachary Neal’s analysis shows that types of hubs vary, which has implications for development policy. Direct flight connections especially have been given a prominent role in urban economic development. Frequent airline service to a variety of destinations facilitates easy face-to-face contact with businesses in other cities, attracting new firms to the metro area and stimulating employment at established enterprises. The empirical results show that a 10 per cent increase in passenger enplanements in a metro area leads to an approximately one per cent increase in employment in service-related industries (Brueckner 2003). This is plausible, but the true benefits are gained through large numbers of terminally inbound passengers, who can infuse the local service, knowledge and creative scene with new information and spending potential. For example, Los Angeles does not offer nonstop flights to many cities and does not serve as a connecting point for many passengers – that is, it is neither a closeness hub nor a betweenness hub – but it is, nonetheless, a destination for large numbers of people (i.e. a degree hub) and the location of one of the largest urban creative economies in the USA (Neal, forthcoming; cf. Brueckner 2003). Rather than seeing airports as just one form of transportation, there are conceptions that emphasize their strategic role in shaping twenty-first century business location, urban competitiveness and economic growth, as proposed by Professor John D. Kasarda. He introduced a term ‘aerotropolis’ to highlight the new urban form in which metropolises are developed around airports, rather than vice versa.

126 Economic profiles of post-industrial cities

This idea has many development paths and manifestations. One path emerges simply from the growth of airports, which makes them city-like, including parking lots, hotels, shopping centres, entertainment zones, office towers, conference venues and light industrial spaces. Airports and cities may also grow into each other and start to form synergistic and efficient multi-function magnets for global business, the nouveaux-riches and the wealthy creatives. Occasionally an entire city plan can be drafted with a strategic view of accessibility and logistics coupled with the principles of new urbanism and/or requirements of global business, including Kasarda’s own ideal model of aerotropolis. Kasarda’s examples of aerotropolises of our time include Las Colinas, Texas, Songdo adjacent to Incheon International Airport, Singapore and Dubai (Kasarda and Lindsay 2011; Moore 2013). Another indication of economic hub status is a city’s role in the transportation of goods or container logistics. Globalization has expanded international trade, but it did not spread evenly to port cities that had grown since the early years of industrialization. Some developed into technological and logistical enclaves and were able to keep up with the changing times, others were transformed into venues for recreation and culture. Those that retained their functions were more tightly integrated with the host city, renewed their logistics technology and embraced innovation in securing their competitiveness (see e.g. FNAU 2011). The worlds’ top container ports seem to be endowed with both centrality vis-à-vis a strong traffic-generating local or immediate hinterland, and intermediacy with respect to pairs of distantly-located traffic-generation regions. Ports can and must cultivate hinterland connections but also sell their relative locations and services (Fleming 1997). A good example of such endeavours is Dubai Logistics City (DLC) in the United Arab Emirates, planned to become the world’s first integrated multi-modal logistics platform for air, sea and road services. According to the ranking of ports in 2011, the top 10 container load centres/ports included Shanghai, Singapore, Hong Kong, Shenzhen, Busan, Ningbo-Zhoushan, Guangzhou, Qingdao, Jebel Ali (Dubai) and Rotterdam (World Shipping Council 2013). The most striking change between the early 1990s and the early 2010s is the relative decline of European and American ports and the rising importance of Chinese port cities, which is a natural consequence of the opening of the Chinese economy since the late 1980s and the ensuing success in its export industries. MICE cities

If we turn our attention from goods to people, we speak of a special form of service city that combines logistics, meetings, exhibitions and hospitality. Such a city is the MICE city, which provides a range of services and facilities to host meetings, conventions, fairs and exhibitions (MICE is an abbreviation of meeting, incentive, convention and exhibition), offered mainly to business people and to professional and international organizations. In such a city, as important as conference or exhibition venues and transportation are hotels, which form an essential part of fully-fledged global city functions (Hartshorn 1992: 346–8). Availability of world-class hotels is an indicator of the attractiveness of the city.

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127

Well-known MICE cities include Barcelona, Berlin, Paris and Vienna in Europe, and Hong Kong, Seoul and Singapore in Asia. In the US, top meeting cities include Chicago, Las Vegas, Miami, Orlando and Washington, DC (CNBC 2012). Top international meeting cities are listed in Table 7.11. Although some 80 per cent of inbound arrivals to cities are tourists, MICE travel is increasingly important for cities, not only because of the higher per capita expenditure of MICE travellers, but also because of its huge promotional impact (Bremner 2007). Cities of consumption and urban tourism

In globalized postmodern conditions, the success of cities hinges more and more on their role as spaces of consumption. It emphasizes the role of cities’ distribution systems and retail structure, including landmark department stores, shopping malls, restaurants and entertainment zones (Hartshorn 1992: 361). There is empirical evidence for the claim that high amenity cities have grown faster than low amenity cities. Urban rents have gone up faster than urban wages, suggesting that the demand for living in cities has risen for reasons beyond a corresponding rise in wages. The rise of reverse commuting suggests the same consumer city phenomena, as concluded by Glaeser and others (2001). Tourism, shopping and Table 7.11 International meeting cities, 2009 Ranking 1 2 3 4 5 6 7 8

10 11

13

15 16 17 18 19 20

City

Vienna Barcelona Paris Berlin Singapore Copenhagen Stockholm Amsterdam Lisbon Beijing Buenos Aires Seoul Budapest Madrid Prague London Istanbul Sao Paulo Bangkok Athens

No. of meetings 160 135 131 129 119 103 102 98 98 96 90 90 87 87 86 83 80 79 76 75

Source: Adapted from ICCA 2010 Note: The ICCA ranking covers meetings organized by international associations that take place on a regular basis and which rotate among a minimum of three countries

128 Economic profiles of post-industrial cities

entertainment are conventional elements of service city or consumer city as illustrated by fashion capitals such as Paris and Milan, sports cities such as Melbourne, Sydney, Vancouver, Manchester and Dubai (Dubai Sports City), shopping cities such as London, Madrid, Dubai, Singapore and Hong Kong, and quick wedding destinations like Las Vegas and New York. There is recognized competition between attractions, leisure and sports facilities, educational activities and retail-based complexes that have purpose-designed themes of hospitality, leisure and entertainment and are retail-marketed as leisure day-out experiences (Weidenfeld et al. 2013). Economically, the most important type of city in this field is a tourist city, which is also a vital profile for many post-industrial cities, even if tourism is often associated with low value-adding services provided by renowned historical and cultural sites or coastal destinations. In short, tourism has become an essential demand-driven element in a city’s capitalist revival and globalization (Short 2004: 38). Yet, tourism itself is a many-sided phenomenon and can be conceptualized from different angles, such as number of tourists (solitary vs. family vs. small groups vs. masses), organization (self-organized vs. package), touristic experience (recreational, experiential etc.), consumption style (luxury travel vs. mass tourism vs. budget travel), purpose of travel (business, holiday, hunting, health, culinary, shopping etc.), and many others (see Coccossis and Constantoglou 2006). Our focus is on urban tourism (see Heeley 2011; World Tourism Organization 2012). This is an industry that is of particular importance for city branding, as many branding initiatives are primarily motivated by the promotion of tourism. The list of major tourist cities is dominated by well-known global cities and metropolitan areas: London, Bangkok, Paris, Singapore, Hong Kong, New York City, Dubai, Rome, Seoul, Barcelona, Dublin, Bahrain, Shanghai, Toronto, Kuala Lumpur, Istanbul, Madrid, Amsterdam, Mecca and Prague (Bremner 2007). In this field, country profile is related to cities’ overall opportunities. In the Travel and Tourism Competitiveness Index (TTCI) rankings 2011, the top ten countries were Switzerland, Germany, France, Austria, Sweden, USA, United Kingdom, Spain, Canada and Singapore, regionally dominated by European countries. Here again, countries vary in terms of criteria, such as regulations, environmental sustainability, health and hygiene, air transport, infrastructure, human capital and natural and cultural resources, which were applied in the TTCI ranking. Countries with strengths in many of the criteria used in that study were Singapore and Switzerland and to a lesser extent Hong Kong and Sweden (WEF 2011). Methodologically sound tourism benchmarkings and rankings by city are surprisingly difficult to find (Heeley 2011). According to New York-based travel magazine Travel+Leisure (2013) world’s top 10 cities in 2013 were Bangkok, Istanbul, Florence, Cape Town, Kyoto, Rome, Charleston (South Carolina, USA), Barcelona, Paris and Chiang Mai (Thailand). In the National Geographic’s (2013) ranking top 10 beach cities were Barcelona, Cape Town, Honolulu, Nice, Miami Beach, Rio de Janeiro, Santa Monica, Sydney, Tel Aviv and Vancouver. Cities have been often ranked according to travellers’ opinions. One such ranking is

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provided by the Readers’ Choice Awards published by Condé Nast Traveler magazine (each city is rated on six criteria: ambience/atmosphere, friendliness, culture/sites, restaurants, lodging and shopping). In the ranking from the year 2011 best cities for travellers included Sydney, Florence, Charleston, Cape Town, San Francisco, Santa Fe (New Mexico), Québec, Barcelona, Vancouver, Rome, Kyoto, Chicago, Paris, Bruges (Belgium), Venice, Bangkok, Salzburg, Victoria (Canada), Hong Kong and Vienna (NSW 2013). It seems that cities such as Sydney, Barcelona, Paris, Rome, Florence and Bangkok are usually included in such global tourist city rankings, adding vital post-industrial element to their economic profiles. An important consumption-related aspect of urban tourism is shopping. The large food stores, retail parks and large out-of-town shopping centres or so-called regional shopping centres (RSCs) have restructured the retail provision considerably in the post-war years. They have been much criticized, and for good reasons, but have an undeniable economic impact on their locations and surrounding areas. RSCs, for example, have made their contribution to this overall growth in opportunity, but they have been additionally effective in providing large numbers of jobs for local people, in ways that prestige projects in other sectors, such as office development, have often been unable to match. In some cases RSCs have given a clearer identity to an area and helped change perceptions of it. Their role in stimulating new development of previously unattractive areas and in attracting other investment to areas that had previously been less successful in that regard, has also been important, at least according to the British case (Robertson and Fennell 2007). For understandable reasons, global cities focus more on luxury shopping in boutiques, in shopping streets or in prestigious department stores rather than suburban shopping centres or outlets. According to the World Shopping Capitals 2011 survey carried out by the Centre for Retail Research in 2010, London was found to be the world’s shopping capital in terms of the actual retail market, followed by other cities from the apex of the global urban hierarchy, Tokyo, Paris and New York. The most popular global shopping destinations for overseas tourists are London, Singapore, New York, Dubai, Paris, Hong Kong and Rome (Centre for Retail Research 2011). The shopping city profile is demanding in terms of marketing efforts, as it requires special attention to retail and wholesale business as well as to marketing channels and segmentation, and in general holistic approach to marketing (Warnaby et al. 2002). Consumption-based tourism and shopping relate to another high value-adding activity area, which has often been used to characterize entire cities. Fashion is a high value-adding industry encompassing fashion shows, fashion modelling, expensive boutiques and close links to the entertainment industry. It has a natural appeal to consumerism-oriented city branding. A good example of a fashion city is Milan, the industrial and financial heart of Italy, which under the pressure of deindustrialization started to develop interlinked cultural industries, such as fashion clothing, footwear, media, high-end designer furniture and interior design. Fashion is the most characteristic industrial profile of the city. In addition, Milan is a major agglomeration for related manufacturing, the wider Lombardy region

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Table 7.12 Top 20 shopping capitals by food and non-food sales Rank

City

Country

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

London Tokyo Paris New York Los Angeles Hong Kong Dubai Sydney Singapore Barcelona Milan Manchester Madrid Berlin Rome Amsterdam Moscow Copenhagen Oslo Stockholm

UK Japan France USA USA China UAE Australia Singapore Spain Italy UK Spain Germany Italy The Netherlands Russia Denmark Norway Sweden

Source: Adapted from Centre for Retail Research 2011

Sales (€ billion )

108.49 106.44 91.96 78.15 33.94 29.27 29.09 28.81 28.00 25.27 24.01 19.94 19.22 18.74 18.52 15.24 14.77 14.15 10.24 9.91 33.38 (statistical mean)

being the largest textile and clothing manufacturing concentration in Europe. Yet, fashion cities do not have to be actual primary centres of design and even less of a location of highly skilled manufacturing, if home to relevant headquarters and the fashion publishing media, like New York. What is critical to the success of such centres is, as pointed out by Jansson and Power (2010: 891), their role in brand negotiation and projection channels that form a vital infrastructure for the switching, transmission and commercialization of fashion and design knowledge. Knowledge processes in such industries are increasingly encapsulated in brands, dealing with markers and carriers for a range of aesthetic, symbolic and cultural values and knowledge (Power and Hauge 2008). Such image-productions are complex multi-scalar processes in which only a minor part is promoted by city governments, as most of the industry-related brand-making has a more complex and relational nature. For instance, the images and brands associated with New York City are not only created by image-producing agents based in the city but also millions of people actively watching Sex and the City or The Devil Wears Prada in their living rooms, equivalent to what The Bold and the Beautiful is for Los Angeles. In the same way, short-term visitors to trade fairs, passing retail tourists and bloggers who follow urban fashion trends in different parts of the world are all part of such a process (Jansson and Power 2010: 893–5).

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Fashion is a unique industry in which brand channels are of vital importance. They include promotional events, spokespersons, flagships and showrooms and retail districts. For example, Milan’s most notable shopping district is the socalled Quadrilatero d’Oro (literally Golden Rectangle), including the famous fashion street Via Monte Napoleone (ibid.: 895–901). Indeed, as a highly branded business, fashion has affected the sites of consumption, as indicated by worldclass shopping districts like Ginza and fashion streets such as Fifth Avenue in New York, Bond Street as a major shopping street in the West End of London, Avenue Montaigne with its luxurious boutiques in Paris, and Bahnhofstrasse in Zurich. The role of fashion houses’ stores, fashion streets and fashion districts is important for such cities, as they are places where luxury brands meet wealthy shopaholics. At the intersection of culture and sports, increased mobility, urban tourism and globally-oriented branding we may locate another form of consumption-driven development: events. These include major events, market days, fairs, carnivals, festivals, games and contests, which usually require special facilities such as sports stadia, concert halls and convention and exhibition centres, or alternatively sufficient open spaces, parks and facilities. The increased importance of this area can be seen in how many major cities are increasing their capacity to succeed in bidding processes to host branded events and to support the organization of major events in the city. A case in point is London and Partners, a special promotion partnership of London, which provides support for organizing major events through its Major Events team (see the website of the Major Events at www.londonandpartners.com/events). For example, for September 2013 the Major Events listed the following large-scale events to take place in London: World Cup Qualifier – England vs. Moldova, Wembley Stadium (6 Sept); BBC Proms in the Park, Hyde Park (7–8 Sept); ITU Triathlon World Series Grand Final, Hyde Park (11–16 Sept); London Fashion Week, London-wide (13–17 Sept); London Design Festival, Trafalgar Square/city-wide (16–22 Sept); Tour of Britain London stage (22 Sept); and NFL International Series Game – Vikings vs. Steelers, Wembley Stadium (29 Sept). It goes without saying that the capacity to organize events on this scale and frequency is possible only for attractive and well-prepared global cities. So-called ‘hallmark events’ have become synonymous with the places where they are habitually staged, generating significant revenues and attracting the attention of international media. Sometimes the first association of the city may actually come through such an event, as may be the case with, let’s say San Remo (music festival), Roskilde (rock music festival) or Salzburg (music festival). The most popular ones are usually cultural or sports events, such as music festivals and big city marathons (see e.g. Latham and McCormack 2010). The other type of event is smaller in number but exceptionally impressive in scale, i.e. prestige ‘mega-events’ that have an ambulatory character and are normally subject to a bidding process by potential hosts. These include World’s Fairs (with declining influence), the World Cups in soccer and other sports, UEFA Champions League games, UCI Track Cycling World Championships, the Asian Games and other

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large regional sports events, and last but not least the Summer and Winter Olympic Games. Rotation is also applied to some cultural events like the Eurovision Song Contest and cultural programmes such as the European Capital of Culture and the World Design Capital designation as a city promotion project by the International Council of Societies of Industrial Design (Gold and Gold 2008: 302). Winning the right to host a global or regional mega-event is an excellent opportunity for city branding. Through investments and efforts the impact of such events may have long-lasting impact on the internal dynamics and landscape of the city or its relative position, thus potentially affecting even the values behind the city brand. Mega-events have the potential to profoundly change a city’s standing in the international arena and the image of the city by: (a) producing new landmarks of urban space and architecture for hosting the event, such as a grand stadium; (b) introducing new markets and new resources, such as sponsorships and public-private partnerships; (c) redefining the position of the host city in the world’s urban hierarchy through improvement of international relations, enhanced capacities and upgrading international gateway status; and (d) creating, publicizing and consolidating the city’s identity through media coverage, tourist visits and community support (Zhang and Zhao 2009: 247; see also Kim 2004; Short 2004: 107–108; Short 2008; Gold and Gold 2008; Clark et al. 2011: 4). Lastly, welfare services are slowly attracting increasing attention among urban developers owing to the continuing increase in the demand for services related to health, well-being and self-development. A paradigmatic case of this trend is healthcare town, which is based on the increased regional and global demand for medical services – a trend that evolved from cosmetic surgery to alternative and conventional medicine (e.g. Woodman 2010). For example, Singapore and Dubai have chosen healthcare among the growth sectors to be promoted internationally (Dubai has even established a special healthcare resort known as Dubai Healthcare City). Another example to be added here is spa town. A famous case of such a destination is Baden-Baden in Germany, which lacks manufacturing but thrives thanks to its growing popularity with international property buyers and its role as a cultural and lifestyle centre (Norwood 2012). Another example is Beppu on Kyushu Island, Japan, with several natural hot springs. To the well-being category we may add also a range of resort towns that are specialized in hiking, skiing and other sports or specialized in urban winter sports events and facilities, such as Zakopane in Poland, St. Moritz in Switzerland or Whistler in Canada. Other versions of resort town are seaside towns such as Blackpool in the UK or Nice in France, beach and surf cities such as the city of Huntington Beach in California, party and nightlife cities such as Ibiza in Spain and destinations for gambling, shopping, conventions, nightlife and leisure, such as Atlantic City, NJ, or Las Vegas in the USA. Tourism excluded, there are hardly any global rankings of welfare cities. In the USA there is a ranking of the top 50 cities for hospital care produced by HealthGrade, relying on two aspects of patients’ clinical outcomes: risk-adjusted mortality and in-hospital records 2007–2009. The top ten hospital cities were West Palm Beach, FL; Brownsville, TX; Dayton; Minneapolis/St. Paul; Tucson;

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Cincinnati; Phoenix; Greenville, SC; Chattanooga; and Richmond. The bottom five in this ranking was Syracuse; Pittsburgh; San Francisco; Louisville, KY; and New York (Merrill 2011). In another ranking made by the non-profit Commonwealth Fund of 306 local healthcare markets on the basis of 43 healthrelated indicators, the top places for healthcare in the USA were St. Paul; Dubuque, IA; Rochester, MN; Minneapolis; Appleton, WI; Santa Rosa, CA; La Crosse, WI; St. Cloud, MN; Manchester, NH; and San Mateo County, CA (Moeller 2013). What these two national rankings imply is that welfare services belong to another world than most of the post-industrial city rankings. We may plausibly assume that the global ranking of healthcare cities or medical tourist destinations would not reflect the global city rankings the way most of the other service rankings do. There are some indirect ways to assess cities’ strengths in health, recreation, well-being and self-realization and thus also the service business they may generate in the city. Such criteria are more closely related to global city rankings than, let’s say, evaluations based on the actual performance of hospitals or a healthcare system as a whole. One of these features of the city is liveability, which can be used as an indicator of a precondition for a city profile in which well-being, health and cultural experience have some relevance. Usually middle-sized cities in affluent countries with a relatively low population density have been favoured in liveability rankings (Mercer 2008; The Economist 2011). In the liveability dimension of the ranking of the Worldwide Centres of Commerce, which was based on 25 indicators that measured quality of life, basic services, health and safety and personal freedom, the highest ranked cities were Vancouver, Dusseldorf, San Francisco, Frankfurt, Vienna, Munich, Zurich, Tokyo, Copenhagen and Paris. It shows the over-representation of European cities and under-representation of Asia-Pacific as well as the USA (MasterCard Worldwide 2008: 15). A somewhat similar ranking by the Economist Intelligence Unit, which was based on spatially adjusted liveability index, measured by such indicators as location, environment, cultural assets and connectivity, shows a similar resemblance to conventional global city rankings. In this ranking the best cities were Hong Kong, Amsterdam, Osaka, Paris, Sydney, Stockholm, Berlin, Toronto, Munich and Tokyo (Economist Intelligence Unit 2012b). These cases show clearly how multi-criteria rankings favour the highest apex of global urban hierarchy. Creative and cultural cities

We have previously discussed shopping, festivals, services and well-being as economic profiles of a city. The other side of this demand-driven policy field relates to history, arts, culture and creative industries, which may indeed help to generate income and jobs. This is highlighted by the concepts of cultural city, city of arts and creative city, which reflect the transition towards an economically challenging trajectory of urban development. Such a culture-driven development is often part of a wider progressive agenda combining it with the ideas of smart growth and sustainable development (Scott 2006; Miyamoto 2007).

134 Economic profiles of post-industrial cities

To put these concepts into their historical context, it is best to see them as a recent phase in culturally oriented urban planning and development (Freestone and Gibson 2006). The key to creative city development was in the concept of culture. Since the 1990s, attention started to shift towards the commercialization of culture and bolstering creative industries (Jacobs 1961; Zukin 1995; Howkins 2001; Florida 2005a; Landry 2008; Flew and Cunningham 2010). At this phase the focus was on investments in cultural facilities and support programmes aimed at boosting creative and cultural industries, largely influenced by the cluster approach (Palmer 2000; Oakley 2004; Comunian 2010). What is essential in this turn is that culture as a public good made way for the commercialization of creativity (Cooke and Lazzeretti 2008). This development raised the need for evidence of how creative industries or, more broadly understood, creative city development give impetus for local economic growth (Scott 2006; 2007; Evans 2009a; Musterd and Murie 2010; Flew 2010). The discussion culminates in two dominant scripts for the explanation of creative city’s connection to growth (Flew 2010): (a) the Cluster script, relying on the agglomeration effect on different scales, from clusters of creative industries to creative quarters (Porter 2000; Mommaas 2004; Wu 2005; Evans 2009b); and (b) the Creativity script, relying on creative people and their social environments as expressed in theorization on creative class, creative capital and creative milieu (Landry and Bianchini 1995; Florida 2002; 2005a; Landry 2008). The most widely discussed agenda in this field has been introduced by Richard Florida (2002; 2005a), whose theory is a paradigmatic case for the soft conditions theory (Musterd and Murie 2010). Florida takes the view that the advanced capitalist world is turning to a new economy posing centrality on human creativity (Vanolo 2008). Florida does not relate creativity to culture and the arts. Rather, his theory is essentially about creative occupations in high-tech, business services and professional services. The formation of creative cities is a global phenomenon and has various expressions in different parts of the world. In the American context, for example, large cities with high status in creativity ranking, according to Florida, are San Francisco, Austin, San Diego, Boston, Seattle, Chapel Hill, Houston, Washington, New York, Dallas and Minneapolis, i.e. areas that are well known for their success in various high-tech fields and advanced services (Florida 2002; 2005a). Globally, examples of creative city developments in larger cities include Sydney, Toronto, Vancouver and Yokohama, in which the creative city concept has been integrated in their urban planning, branding and development strategies. Among the culturally oriented developments a prime example is Bilbao, a symbol of urban regeneration through the arts, especially through its Guggenheim Museum (Rauen 2001; Keating and De Frantz 2003). Another set of examples is the European Capitals of Culture, most notably the story of Glasgow, which, just like Bilbao, was an industrial city that needed to regenerate its industrial base and also to clean up its industrial face in order to start looking appealing in the post-industrial world. Culture was the key word that made it possible for Glasgow to renew its image and broaden its economic base to creative industries (see European Communities 2009;

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Papanikolaou 2012). In all, valuing creativity has a potential to create value. Consumption of culture and cultural tourism in particular are increasingly used as a vehicle to promote economic regeneration and to differentiate cities from each other in their heightened competitive battle for survival and growth (Johnson 2009). Creative industries comprise such activities as arts, architecture, design, marketing, media and computer services. Design in particular has recently attracted attention as a new growth sector. It has become a new industrial focus, especially for many European and later East Asian national governments and cities. Design as an industry is somewhat dispersed, having its roots in industrial design and architecture, but having overlapping areas with such fields as multimedia and advertising, for example. Its sub-sectors include industrial design, graphic design, interior and exterior design, fashion and textile design, digital and media design and service design. Design is on the development agenda of many genuine global cities, owing to its growth potential. In New York, which may have difficulties in reviving its financial sector to the job levels of 2007 due to prolonged financial crises, city economic development officials are keen to identify new growth opportunities and diversify the economy. Sectors from digital media and biotechnology to clean tech have attracted special attention, but so far design has not been given much consideration, even if it is the part of the economy that has experienced phenomenal growth over the past decade, and for which New York holds a significant competitive advantage. Facts speak on behalf of taking design seriously: New York has more high grossing architecture firms than any other US city and, for example, about twice as many architectural and interior design firms as Los Angeles. Over 800 fashion companies are headquartered in New York, more than double its next closest international competitor, Paris. In all, New York is the global centre for architecture, urban planning, urban design and landscape architecture. Design sector jobs in the New York metro area grew by 75 per cent between 2000 and 2009, highlighting considerable jumps in the number of New York-based interior designers (increase of 223%), graphic designers (139%), industrial designers (127%), fashion designers (45%) and architects (28%). Surprisingly, there are actually more firms in the city’s design sector than in any other creative industry, including publishing, film, music, advertising and broadcasting. In terms of industrial policy it seems that New York City considers design so strong that it does not require special promotional support. Yet, it seems that economic development agencies could do more to support the growth of the city’s design industries. The vast majority of the designers interviewed by Giles and Maldonado (2011) thought New York was far too complacent about its status as a design hub. Their report shows that other major design centres such as London and Milan go to much greater lengths to promote their designers and brand their products at both local and foreign trade shows (Giles and Maldonado 2011).

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In general, design is a central element in the cultural and experience economy, which is one of the major economic growth areas in most post-industrial economies. In Denmark, for example, one in eight people employed in the private sector works in the experience economy, accounting for approximately 5.3 per cent of GDP. Wider employment of design by business will benefit the economy as a whole in addition to contributing positively to the bottom-line of the businesses themselves (National Agency for Enterprise and Housing 2003). This is why cities have also started to promote design by providing design business and promotion facilities, such as the Danish Design Centre (DDC) in Copenhagen. There are also commercial developments such as Design House Stockholm (www.designhousestockholm.com/) and design quarters and districts, such as Design District Helsinki (www.designdistrict.fi/). Old design cities have already felt the competition, especially from the Asian entrants. Singapore is an illustrative case for the current interest in design. Soon after Florida’s (2002) groundbreaking work on creative city, Singapore embraced the idea of creative city with an emphasis of promoting creative industries and attracting talented people. In the first half of the 2000s it took design – besides education and healthcare – as the new element in its growthoriented industrial policy, set up the DesignSingapore Council (in 2003) as well as DesignSingapore Initiative. It began determined efforts to develop a design cluster. Interestingly, in the blueprint of DesignSingapore, ‘design’ was also conceptualized as the principal way to build a sustainable and liveable city, which for its part was expected to help in attracting creative talent. The policy was geared to promote four sub-sectors of design services industries: placemaking (environmental design), objectmaking (industrial, product and fashion design), imagemaking (advertising and visual communications design) and software design. The vision is to create ‘a global city with design creativity in Asia where design improves capability, enhances the quality of life, and drives competitiveness’ (DesignSingapore Council 2008). Even if cultural services as an industry are not seen as high-value adding business as such, this is one of the emerging urban development trends, mainly because it utilizes consumption-driven growth and gives a fairly coherent view of how to respond to the need to restructure a local community that is losing its manufacturing industries and is often compelled to immediately consider how to utilize local culture in the development of the service sector and how to convert old factory buildings or warehouses into cultural centres and deserted harbours into entertainment zones (Mommaas 2004; Scott 2006; Landry 2008). Lastly, it is worth pointing out that history is an important part of the cultural spectrum, having its basis in historical events, personalities and sites. One of the global acknowledgements of the historical relevance of the site is the UNESCO’s list of World Heritage sites. If we count destinations within existing cities in the

Economic profiles of post-industrial cities

Table 7.13 Top 10 global cities for cultural experience in 2010 Rank 1 2 3 4 5 6 7 8 9 10

City

London Paris New York Tokyo Moscow Los Angeles San Francisco Berlin Buenos Aires Chicago

Country

UK France USA Japan Russia USA USA Germany Argentina USA

137

Score 7.6 6.3 5.5 5.4 4.9 4.2 3.9 3.8 3.8 3.7

Source: A.T. Kearney Global Cities Index 2010. Adapted from Global Sherpa 2011 and Hales et al. 2010: 11 Note: Cultural experience is scored on the basis of six factors: museums, visual and performing arts, major sporting events a city hosts, international travellers, diverse culinary establishments and sister city relationships. Values are calculated on a scale 0 to 10 (Global Sherpa 2011)

developed world, leaving out such world-class sites as Machu Picchu, the Pyramids at Giza, Petra, the Taj Mahal, Angkor Wat and Stonehenge, European cities show special strength, as shown by the cases of Athens in Greece, Rome and Florence in Italy and Granada in Spain, just to name a few prominent examples. This is a policy area with a certain degree of fixity as it is based on existing assets rather than newly created ones (concerning the latter, novelty attraction is a special category of tourism). Yet historical significance and historic sites can also be found, rediscovered and retold, and history, like any other asset, can conceal a considerable economic potential, which is waiting to be exploited.

What do city rankings contribute to?

City rankings disclose strategic information about cities. Due to the nature of rankings, they inherently encourage people to take a relational and competitive view of cities, which contributes to the knowledge base of local economic policy. However, such a view is hampered by poor methodology and the generalist approach typical of many rankings. Especially when they use multiple criteria, this dramatically affects the overall scores and ranking order. In a similar way, finding ‘the best’ or ‘most attractive’ city in general terms may be relevant for high calibre global cities, but such a setting does not reveal much for assessing the role of more specialized middle-sized cities in the lower ranks. It is also difficult to determine how different aspects of ranking should be weighted. If Tokyo is a top city in global corporate headquarters, it may be on the problem side in terms of the cost of housing or living in general. If Helsinki is ranked innovative, it suffers from small scale, remoteness and a challenging climate. Mumbai may be one of the global leaders in attracting offshoring activities, but hygiene, health and infrastructure considerations put it definitively down in multi-criteria-based

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rankings. Combining a wide range of indicators tends to neutralize rankings, for global cities with multiple strengths will naturally stand out. The Economist Intelligence Unit’s (2012a) benchmarking of global city competitiveness, PricewaterhouseCoopers’ Cities of Opportunity (PwC 2012) and MasterCard’s Worldwide Centers of Commerce Index (MasterCard Worldwide 2008) are good examples of such rankings. Their positive impact on local economic policy is, however, that they encourage policymakers and developers to look beyond narrow-minded economic indicators, implying that it is not only the number of headquarters, patents or skilled workers that count in global intercity competition and overall competitiveness, which is certainly true. This creates an interesting methodological dilemma. ‘The World’s Best’ type of rankings become like a global city lottery, in which lower-rank global cities show up only randomly, depending on sampling and criteria. The problem becomes more obvious with the category of middle-sized cities, which cannot compete in all fields of economic activity but have to focus on selected branches. This strategy of specialization is based on an accurate examination of existing economic, social and environmental potentials in order to find specific niches in which the city is able to establish some competitive advantage. For that reason, it does not really make sense to compare medium-sized cities generally and to evaluate their attractiveness in total. (Giffinger et al. 2010: 303)

At the same time, rankings that are methodologically sophisticated enough have a strategic role to play as they are a powerful competitive instrument working on the basis of differences. This enables cities to find their position in the global urban hierarchy and economic division of labour, to sharpen their profiles and to initiate local learning processes (Giffinger et al. 2010: 310). In practice, such processes are largely affected by mediatized political economy, which leads to complex knowledge processes in which businesses, media, public managers, politicians and citizens interact. A simple expression of an impulse that ranking may give is the headline of a news item in Yahoo! Finance, India, published on the basis of a city ranking, ‘Mumbai among worst cities for intellectual capital and innovation: study’, or the one in Forbes in February 2013, ‘Detroit tops 2013 list of America’s most miserable cities’. Sometimes the results are used for promotional purposes too, as in the feature story in the investment portal of the City of Stockholm, entitled ‘Top ranking for Stockholm in prestigious report’, with a leader ‘The PWC ranking “Cities of Opportunity 2011” puts Stockholm at number four, together with New York, Toronto and San Francisco. It’s the highest ranking city in Europe.’ Actually many large cities have started to publicize rankings in their economic development websites to substantiate the facts of their assets and performance, as in the website of the Economic Development Board of Singapore (www.edb.gov.sg/content/edb/en/why-singapore/about-singapore/facts-and-rankings/rankings.html). In such cases, rankings are powerful

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tools to convey a message of competitiveness, as the results are based on analyses and comparisons made by an independent party. Information on a city’s high position in different rankings gives an impression that the city really is a good place for business, belongs to the rank of global hubs, or is a member of a top league of creative cities or whatever is the message promoted by the city and supported by rankings. In addition, rankings serve many times as impulses for even leading cities to start the hard branding process, as was the case with Amsterdam in the first half of the 2000s (Gemeente Amsterdam 2004) or Sydney in the latter half of the 2000s (Parmenter 2011).

How does all this relate to branding?

This book underlies the need to pay attention to the economic dimension of city branding. The special sub-brand, what Baker (2012: 29) calls the economic development brand, has a connection to the brand essence, values, identity and promise of the city, but as it is specific, it follows industrial logic and builds on identity understood in industrial terms, that is, it builds on knowledge of a city’s economic assets, profile, special features and relational strengths. This process is affected by naturally evolving images and reputations of cities, but what really makes the difference is that industrial brand must start from the brand-creator’s understanding of the economic dimension of the community as well as the dialectics of local and global, i.e. the relationship between the economic base and features of the city and global trends that condition the division of labour of cities and determine their positions in the global urban hierarchy. In industrial branding the point of departure is the city’s economic profile and industry and cluster identification. The knowledge base built upon such analyses serves the industrial brand creation process. As industrial brand is a special brand, it both feeds and relies on brand identity, value and promise produced by general city branding, but it has nevertheless a special role owing to its narrower scope, clear objectives and defined target groups. It is not meant to be based on community identity in the same way as the overall city brand, due to the abovementioned industrial logic. This depends, however, on the nature of the city and the essence of city brand in terms of internal vs. external and social vs. economic dimensions. In the usual case industrial branding is an integral part of the general city brand. This depends on the scale and volume of the city’s economic activities and the degree of specialization in the organization of the city’s industrial and investment promotion. Often working independently, investment and tourism promotion agencies create their own brands to supplement the general city brand. For example, Singapore’s Economic Development Board, after the country’s independence in the 1960s, started to work on attracting foreign direct investment in the interests of rapid economic development. Even the Garden City image and clean and beautiful landscape, harmonious cultural diversity, regulated economic environment and corruption free government, were motivated by an interest in enticing potential investors and new business. As a part of this process, Singapore developed a special brand for

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tourism, crystallized in the tagline Uniquely Singapore in 2005 and later YourSingapore, which replaced it in 2010. Similarly the Economic Development Board had its own industrial branding with prioritized industries and special promotional actions (see Koh 2011). Amsterdam also had economic profiling incorporated in its general city brand attributes, supported by demographic and social dimensions (Gemeente Amsterdam 2004). These two world-class city branding cases suggest that industry and cluster identification help in economic city profiling, and further in building an industrial brand, thus eventually forming an integral part of the general city brand. There are, of course, also different kinds of cases, such as the ‘I love New York’ campaign, but the planned, comprehensive industrial branding is usually an endorsed brand in terms of brand architecture. Another important aspect of industrial branding is its relationality, usually conceptualized as positioning and differentiation. When assessed from a strategic point of view, the economic profile of a city must be seen in context, especially within a competitive framework. Thus, even if the city has the biggest strength in a certain industry, it may be that owing to the competitive situation or restructuring process it is not the best direction for industrial promotion. Comparative or competitive advantage may, from a forward-looking viewpoint, lie elsewhere. Economic histories of post-industrial cities with varying profiles contain many stories that point to the relevance of this idea, and some of these have also been discussed in this book. Singapore’s involvement in design in Figure 7.4 can be used as an illustration of such a branding process supported by a programmebased economic development policy.

TRENDS: knowledgebased economy and creative industries as expressions of new growth trend Singapore’s constant need to scan economic environment and maintain its economic competitiveness Academic influence: Florida, Landry, etc. Benchmark cities: Glasgow, Bilbao, Milan, Hong Kong, Seoul etc.

OUTCOMES / EVALUATION Response to economic development by focused cluster-specific promotion

ACTION: Design promotion, development and culture

Identifying new growth areas: e.g. education, design and healthcare

BRAND: Singapore as a major design hub in Asia

Design as a new value proposition for Singapore’s competitiveness

POLICY: Government support for creative industries; MICA and DesignSingapore Council (in 2003); Design Singapore Initiatives: Dsg I 2004–2009 and Dsg II 2009–2015

Figure 7.4 From cluster identification to a brand: the case of Singapore

Economic profiles of post-industrial cities 141

The idea of industrial branding is to give the special strength within a city’s economic profile a symbolic power with an empowering or enhanced effect on industrial development. The idea is to create an attractive atmosphere around the way people see and talk about the business opportunity associated with a particular industry or cluster within a city. Industrial branding works on different scales. At the level of ‘frictional’ attraction we may even think of the analogy between a consumer who uses a brand product because it complements his or her self-image and aspirations and an entrepreneur who chooses to relocate to a particular city because his understanding of the opportunities and atmosphere of the city matches his idea of doing business and even his idea of a good life. Yet, industrial branding cannot operate only at that level. It is also supposed to affect speculative, calculative and impersonal processes of instrumental exchanges of businesses within global markets and global business networks. In such a context, branding becomes more an aggregate image of a particular city that is represented as a location able to satisfy the requirements of multinationals, global service firms or global investors. It is important to bear in mind that post-industrial activities vary in many ways and these variations have their implications for branding. Tourism is one of the most typical cases of destination branding with potentially huge gains from a well-managed branding process. The same can be said of promoting a city as a locus of art, history and culture. Yet, the other major areas of the post-industrial economic profile are clearly different in this respect. Hub and MICE cities need branding that is targeted at airlines, manufacturers, conference organizers, international organizations and other business clients. This requires branding that is adjusted to the given industrial sector. High-tech and knowledge cities have two primary areas, attracting and clustering high-tech industries, on the one hand, and attracting talent – especially knowledge workers, academics and students – to a city, depending on what kind of knowledge hub we are talking about. In this area, many cities have a brand that is associated with its technology parks, research establishments or higher education institutions, in which the major task is to support the magnet institution or related cluster. For example, in the case of a city with a world-famous university the role of branding is to support this image and the symbiotic relationship between the university and its host city. Lastly, concerning the most high-value adding activities relating to headquarters, financial services and other advanced business services, the branding must be part of high-profile promotion that reaches the key actors of this attraction field, such as company presidents, CEOs, managers and experts. Branding has a potential to help in intermediary dominated selective processes directed at small groups of target organizations and key individuals (Anholt 2010: 93). This is the area in which visibility in global media, including rankings, is an important part of global city branding.

8

From win-win situation to creative class struggle

This chapter discusses local social tensions relating to the urban dimension of city branding. The main idea is to raise critical aspects of brand-sensitive urban development. One of these challenging questions, which harks back to the good old Growth Machine thesis, is how different socio-economic groups relate to city branding and who reaps the benefits of branded urban development. It is also important to pay attention to tensions between urban entrepreneurialism and local activism, as in the cases of the Creative Class Struggle of Toronto or the tension between prestigious art institutions and the everyday life of local art communities as discussed in the case of Bilbao and its Guggenheim Museum. This chapter discusses critical aspects that form an integral part of the big picture of political economy of city branding.

Restructuring as a legitimizing storyline

The cases of urban restructuring to be found anywhere in the developed world take place at the intersection of economic revitalization and urban design. What the process is about at the rudimentary level is the loss of manufacturing jobs, which poses a challenge to city government’s industrial policy to find some alternative ways to strengthen the city’s economic base and generate jobs. Stories of the local economic structuring of cities such as Detroit and Pittsburgh in the USA or Manchester and Liverpool in the UK are classic examples. If the inability to meet the challenge of industrial restructuring is prolonged, it creates image crises that are difficult to overcome; a trap in which cities such as Detroit seem to have found themselves (Avraham and Ketter 2013). An illuminating example of restructuring is Newcastle, New South Wales in Australia, which developed during the twentieth century into a steel city. Heavy industries dominated the development of the city for decades until the 1970s, when industrial restructuring initiated the demise of the city’s economic base, leading to a reputation of a Problem City. To change the situation the city government launched an aggressive city marketing campaign seeking to reposition the identity of the city, which helped to transform

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Newcastle into a Promise City. A critical element of this re-branding was the revitalization of a significant area of disused waterfront known as the Honeysuckle Redevelopment. It included consumption-oriented facilities, a high-tech business park and luxury residential development. In cases like this, transition from an industrial to post-industrial economy is an expression of community-level identity crisis, in which vital aspects of the collective identity transformation are communicated through the changes in urban landscape (Rofe 2004).

Such processes reflect creative destruction, as the vestiges of the past that seem to be hindering the realization of a more positive urban identity and bright future have to be obliterated (Zukin 1991; Gotham 2005; Rofe and Stein 2011: 338). Stories of how this has been done in cities are easy to find throughout the developed world and almost all of them have a fairly similar storyline. What is different in each case is the intensity with which the city government and local business community set about changing the situation, the governing capacity they rely on and the policy lines they follow to renew the industrial base, to attract visitors and investments and to revitalize and involve local communities. The mushrooming of industrial and technology parks since the 1980s may indicate that at that time the general leap was from manufacturing to high-tech and later to such special areas as biotechnology, medical technology and clean technology, but in the 1990s there was a parallel shift towards culture and later in the 2000s towards creativity, which became a standard counter-image for deindustrialized cities in need of radical rebranding (Jansson and Power 2006: 20).

Is it a win-win game, after all?

Globalization, urban deindustrialization and the crisis of Fordism in the developed world, especially since the 1970s, were the forces behind the increased interest in city marketing, as they compelled city governments to search for new ways to deal with the challenges of restructuring in an increasingly borderless environment. Deindustrialization gave rise to revitalizing city boosterism and large-scale urban regeneration. One of the technologies borrowed from the private sector was marketing, which later changed into an interest in branding (Kavaratzis 2004: 59). Marketing and branding appeared as new instruments for doing what was generally deemed necessary from the local economy point of view. Surely this is a win-win situation for all local actors irrespective of their social or economic status? Is it not better to try to attract talent rather than let the community wither? Such questions invite us to consider local development with regard to fairness, justice and democratic rights. Cities operate in a field that is largely beyond their control. Global capitalism and intercity competition are, theoretically speaking, a policy issue in the context of global governance and policy, but in practical terms cities have to take them for granted. Thus, cities must cope with them one way or another, and that is how

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they become involved in a field conditioned by dynamic multiscalar asymmetries (Friedmann 1986; Newman and Thornley 2005: 25–6). Urban competition becomes an imperative with the power to shape urban politics. In this context a biased view of urban politics has fruitful soil indeed, as when assessed within an economic rationality framework there is clear and justified motivation to take business interests to the top of the agenda, while citizen participation and welfare policy may start to look not only difficult but also to some degree unnecessary; let the political-administrative machinery take care of development policy and thriving business generate wealth for everyone. This actually reflects the ideology of streamlined neo-liberal cities in the West and is even more characteristic of East Asian developmental cities. All in all, intercity competition seems to entail policies with a shift from social concern to competitiveness concern (Logan 1999; Douglass 2002; Smith 2002; Newman and Thornley 2005: 268; cf. MacLeod 2002). This has logically also occasioned changes in intergovernmental roles. Namely, in days gone by, national borders insulated cities to some extent from global competition, bringing about the conditions for competitiveness-oriented state politics and welfare-oriented local politics, as theorized in the dual state thesis (Saunders 1980). However, globalization has decentralized the competitive logic. This is the last instance when local governments became literally ‘local states’ (cf. Cockburn 1978; Keil 1998; Mowbray 2011) with an inclination to further become politically neoliberal cities (Peck and Tickell 2002; Hackworth 2007). As the creative city agenda was in usual cases habitually moulded into a neo-liberal shape, it seemed to set the attraction of well-off creative people against the socially-oriented policies for local inhabitants. It was manifest in the tendency to force the poor – at least passively through market mechanism – to relocate elsewhere if they happened to be obstacles in areas of greatest potential for creative class attraction. Without regulation and counter-balancing forces this leads to gentrification and social polarization and new ‘creative’ forms of dual cities or divided cities (Mollenkopf and Castells 1991; Gaffikin and Morrissey 2011). What determines the dynamics of this social struggle? In a simplified sense, in the post-industrial conditions the entrepreneurs and investors became less dependent on blue-collar workers and instead more dependent on professionals and creatives, which had a tendency to expand the middle class in society. Both upper and middle classes needed the poor for informal labour markets and lowpaid jobs. However, it seems that the largest segment of this underclass only became an economic burden and a source of social instability from the point of view of capital owners and affluent taxpayers. Relations and needs in this scene became unbridgeable in post-industrial conditions as the demand for highly skilled workers exacerbated the exclusion of the poor from the economy (Savitch 1988: 305–6; on the super-rich and the global elite, see Short 2004: 110–22). This scheme points to a tendency against which we may measure the empirical observations of social and economic development in post-industrial cities. It also gives a reason to think outside the neo-liberal box in order to find a way out through

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social innovation and new solidarity, as a combination of smart and inclusive growth, ecological thinking, global solidarity and new lifestyles associated with downshifting and other postmodern trends. We cannot avoid the question of who ultimately reaps the benefits of attraction-oriented development. Are attraction-oriented strategies too costly and do they benefit multinational corporations, global meritocracy and local elites rather than local residents and in what proportions? An expression of such a tension is apparent in Toronto, a neo-liberal creative city par excellence, whose development policy has been challenged by activists of the Creative Class Struggle movement (Boudreau et al. 2009; see the website of Creative Class Struggle at http://creativeclassstruggle.wordpress.com/). In general, the attraction oriented approach has a tendency to remove development processes from the grassrootslevel realities, which may cause problems in the long run by bringing destructive elements into the local economy, creating exclusive enclaves in a city, and relying on risky large-scale investments. What serves as justification of such criticism is the fact that in the case of publicly-funded investments it is ultimately the local community that pays the price if the bold endeavour proves to be a failure. Open discussion is needed as a form of community-based risk assessment. Of course, the discourse becomes more constructive and balanced if some ideas of sound development policy and even concrete alternative actions accompany the criticism of neoliberal policies. The case of Osaka’s development policy in the 1980s and 1990s aptly illustrates the realization of the risks associated with attraction-oriented urban development policy, as large-scale investments in business locations were made in the context of an excessively optimistic growth image, insufficient risk assessment and minimal involvement of educational institutions in creating innovation milieus, leading to a massive urban policy failure (Kamo 2000; Anttiroiko 2009a). Real estate companies made a fast profit but local taxpayers footed the bill in the form of huge municipal and prefectural debts, causing a lack of financial resources and lost opportunities in development policy in the 1990s and 2000s. If people had been knowledgeable, active and powerful at the time of the decision making on such insufficiently planned and managed mega-projects, the entire community might have avoided a financial catastrophe and the consequent long-lasting negative image associated with it. Osaka still suffers from its problem city image, even if the city has a lot of economic power and, beneath the surface, great opportunities for future development. Ideally, city branding is an integrative process with consensual and inclusive work methods seeking legitimate solutions based on dialogue between developers and citizens. Yet, in real life it is tempting for any city government to adopt a rational planning and development model which produces professionally

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constructed strategies. In such a case there is a risk of a failure to utilize local potential, being inclined to short-sighted policy and ‘attraction hysteria’, and designing high-cost attraction strategies that rely excessively on footloose firms’ location decisions (Miyamoto 2007). To avoid this there should be enough balancing between social and economic elements in local economic development. The key dimensions of such a potential trap of attraction-oriented policy are illustrated in Figure 8.1. To meet the contextual challenges and to deal with social, political and economic fragmentations, the core city and surrounding areas need to increase their coherence and capacity as a geopolitical entity. To this end, a ruling class alliance will seek to mobilize sentiments of community boosterism and solidarity, to co-opt and create loyalties to place, to invent an appropriate local tradition, as expressed by Harvey (1985: 160). This may result in localism that is a mask for conveying the interests of instrumentally oriented urban developers, but on the other hand, if we rule out scepticism, we may also see a chance for genuine mutual understanding of the idea of identity- and community-building, especially if it is a participatory process and the stakes and rewards of the process are kept fair within socio-economic groups of the community.

Identity struggles in inauthentic places

Class struggle has trailed off into a variety of social conflicts and tensions. However, class politics has been taken over by identity concerns in the seemingly apolitical identity struggle. This cultural shift has changed our perception of urban form as a field of struggle over production and reproduction and related

Local society: lack of concern of inclusiveness Attractionoriented policy

Local government: attraction hysteria and narrow-minded developmentalism Local economy: attention to location decisions of footloose firms

Industrial city branding as potentially destructive element of urban development

Figure 8.1 Three dimensions of an attraction oriented policy trap Source: Adapted from Anttiroiko 2013

Corrective measures: – Social inclusion – Integrated policies – Development dialogue – Smart growth – Economic diversification – Sustainable development

From win-win situation to creative class struggle 147

circulation increasingly to identity signifiers and support structures that stimulate the ‘pleasure cells’ of local collective personality. This makes it understandable why urban design goes beyond functionality, and why it even goes beyond aesthetics. It is more precisely about identity. It has been recognized that a city’s physical form not only superficially affects the visual appearance of the city but can potentially transform its identity (Rofe and Stein 2011: 334). Through all the layers from functionality to aesthetics to identity, urban design has a lot to do with city branding. It reflects a constant sophistication of capital accumulation in the urban context. Where design is a tool to support accumulation through reshaping urban space, in order to feed the hunger for profits, branding is supposed to do the same in the realm of urban symbolism. They have their enthusiastic rendezvous in the urban ‘experience economy’, which in turn is a cognitive dimension of global capitalism and reflects its transformation towards a consumer society (Knox 2011; on political economy of urban design see also Cuthbert 2006; 2011). This development goes beyond consumer society, however, in the sense that its prevailing logic of the cultural economy of capitalism has emerging forms of production, which, as a reflection of image-producing industries, are modularized, networked and clustered (see Scott 2001). More generally, the irreducibility of symbolic dimension from the sphere of real, material dimension of production emerged in two aspects of immaterialization, i.e. ‘symbolization’ on its meaning and sense-making side (Zukin 1995; Zhang 1996; Scott 2001), and ‘informatization’ on its data and information processing and transmission side (e.g. Wang 1994; Kluver 2008). Concerning the former, in today’s economic life, the new role for symbolic and cultural resources in strategic positioning of economic actors, and in general, the role of symbolic capital beside other forms – intellectual, social and reputational – of soft capital, has been convincingly pronounced (Dalpiaz et al. 2010). It has been said that the forces of modern capital and communication with city marketing and branding as their instruments are based on fake identities that actually erode authenticity (e.g. Zukin 2010). This is a result of the evolution of capitalism that can be seen in such manifestations as pseudo-places like Disneyland, themed environments such as Disney’s Celebration as the ideal American small town or Thames Town near Shanghai in China as the form of urban mimicry, the standardization of buildings and products, formless developments associated with urban sprawl, mammoth developments such as skyscrapers and non-permanent constructions or buildings (Erickson and Roberts 1997). Authenticity is a dynamic concept. As no-one has authority to decide what is authentic, it is ultimately subjective, relative, time-sensitive and perpetually in the making. It is undoubtedly important to discuss such aspects of postmodern life and identity, but it is equally important to avoid making one’s own feelings of nostalgia and yearning for assumed authenticity an ‘ultimate truth’ of the postindustrial city of our time.

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Commodification of urban space

The previously discussed creative class struggle is an expression of an attempt to restore a civic voice to urban design. It reflects the need to ask ourselves such questions as how we design cities, which parties actually give the concrete shape to a city and whose interests are best served by the chosen solutions. It is about the importance of being aware of the privatization of public space, increased segregation and gentrification, and also control of urban life and the securitization of the post-9/11 era (Nussbaum 2007; Knox 2011). From the political economy point of view, a critical question concerns the commodification of urban space and the innovative mechanisms of extracting capital from space, beyond conventional rent (Cuthbert 2011; Harvey 2012). At the level of material processes it results in the creation and refurbishing of landscapes of consumption rather than production, which has actually become a global trend in urban governance (cf. Oakley and Rofe 2005). This is manifest in the attempts to attract back high-income groups to revalorized places, such as new residential areas in downtown or other favourably located places, which may result in the displacement of existing residents due to rising housing costs. Such a phenomenon, referred to as gentrification, leads to a contested notion of regeneration for understandable reasons. Usually the idea in town centre management (TCM) is to seek for a consensual approach among a range of urban stakeholders, even if projects need to take into account the impact of funding imperatives and especially the role of private capital (Warnaby et al. 2005). The creative class-inspired approach, however, may become biased in this respect in order to be able to attract well-off talent (cf. Florida 2002; 2005a). The most extreme form of this development is the gated community, which brings the methods applied most commonly by the rich in the Third World to the developed world, simply because the deprivation of the surrounding areas and overall polarization of society have in the most extreme cases created Third-World-like conditions against which well-off communities want to protect themselves (cf. Biddulph 2011: 66; on social polarization of postindustrial metropolises, see O’Loughlin and Friedrichs 1996). The shift from the manufacturing era to post-industrialism is manifest in the spatial instances of the consumer society. In such conditions the capitalist-managerial-professional elite manipulates the masses to create a space that maximizes the chances for capital accumulation and for extracting managerial and professional rewards from serving such an accumulation process, whereas the other side is more direct involvement in the building of arenas for spectacles, regenerating urban spaces, and capitalizing on consumption through shopping malls, theme parks and other commercial sites (Isin 1999: 269–70; Cuthbert 2011; Knox 2011; Harvey 2012). As stated, the neo-liberally-oriented policy shifts attention from basic services and local inhabitants’ immediate needs to the facilitation of consumption (cf. Sellers 2002, 111–12; on the neo-liberal city, see Hackworth 2007). The branding associated with urban design related to such a consumption-driven policy is called hard branding. It is characteristically a persistent attempt to capitalize on commodity

From win-win situation to creative class struggle 149

fetishism (Evans 2003), epitomized by ‘starchitecture’ (iconic architecture designed by signature architects à la Frank Gehry, Rem Koolhaas or Daniel Libeskind), flagship developments, consumption-oriented shopping and leisure environments (casinos, cinemas etc.), and redeveloped public spaces, festivalized through cultural and sports events. It has been claimed that this results in homogenization or placelessness, as different cities adopt fundamentally similar strategies. Iconic buildings become one-liners that erase something unique from the city (Jansson and Power 2006: 18). The most obvious differences in such re-imagineered cities may be the result of theming rather than their original, historically rooted identity (see Lukas 2007). The danger is that such a re-imaging of the urban environment merely puts a carnival mask on the city (Harvey 1989: 35; Biddulph 2011: 65–6; Gotham 2005). A consequence might be the emergence of a ‘liquid city’, which is experienced by its inhabitants as a disorienting junk space, a closely monitored territory under the aegis of the untrammelled market (McQuire 2008: 104). Even such a prominent case like Barcelona has lost something essential from its uniqueness, for there the impressive waterfront development looks exactly like any other waterfront in the Western world, even including blatant signs of Disneyfication (Harvey 2012: 105). There is always the other side of the story, however. Investments in public art, development of a city quarter or a harbour area, or the organization of a recurring city festival can have tremendous symbolic value. Such symbolic actions, however, work best if they have substance and local roots and are part of a long-term strategy. A good case of a famous city without scenic features is Brussels, which has a brand problem connected to this particular feature. Sometimes abundance may cause problems with branding, too, as may be the case in Rome, with its endless historical buildings and ruins, Barcelona with the mass of iconic edifices, Greater Tokyo’s architectural wonders of modernity, mimicry and hybridization scattered all over the vast conurbation and London with impressive skyscrapers and largescale events, which to some extent blur their images and may cause architectural fatigue (Hospers 2011: 30–4; see also Anholt 2010).

Creative class struggle in a creative city

The governance and policy challenges within the creative city discourse have revolved mainly around Richard Florida’s (2002; 2005a) theorization of creative class. His influential and well-grounded discussion sharpens the view of this concept by pointing out that certain community features such as talent, technology and tolerance, make cities ‘cool’, that is, they serve as magnets to creative people and therefore also ultimately determine the location decisions of creative industries and high-tech firms and, consequently, the hubs of future growth (Pratt 2008). Yet, along with fame, Florida also came in for criticism for building an excessively elitist development agenda (see e.g. Glaeser 2005; Peck 2005; Scott 2006; 2007; Zimmerman 2008; Pratt 2008; Pratt and Jeffcutt 2009; Hahn 2010). Critical theorists point out that the standard view of creative class policy is prone to elitism, instrumentalism and a kind of masked Fordism in the design of creative city policy (Ward 2003; Schwab 2004; Pratt 2008; Vanolo 2008). The creative city

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with its talent attraction scheme is a creative version of the Growth Machine thesis, for the application of the creative class concept contributes to profit-oriented property-led development in city centres (Logan and Molotch 1987; Zimmerman 2008) and on the other hand, leads to gentrification and spatial inequalities (Atkinson and Easthope 2009; Ponzini and Rossi 2010). Even if at times criticism seems to be levelled at the straw man of the critics’ own making, as Florida (2012c) has rightly pointed out, these remarks are generally a wholesome reminder of the potentially darker side of instrumental business-oriented creative city policy. There is something surprising in this whole dispute, for ‘creativity’ is a concept that could be embraced by any social group; it implies sharing and inclusion; and it gives hope for the revitalization of economically distressed inner city communities, the redevelopment of brownfields and reinvigorating deprived suburban areas. The reality in creative class-inspired policy making may look somewhat different, however, from the perspective of the city’s inhabitants. Toronto, which is a creative city par excellence, at least when measured by its goal-oriented and master-minded creative city planning, faced the opposition of the Creative Class Struggle movement, which in its website explains its mission to challenge the dominance of creative city ideas inspired by Richard Florida: Our campaign exposes the politics concealed in the glossy myth of the ‘creative class,’ and confronts the people, governments, and institutions that propagate it. To this end, Creative Class Struggle uses Florida and his theories as a vehicle into a broader set of debates about justice, urban governance, and neoliberalism. Creative Class Struggle mobilizes people to reclaim our institutions, our city, and our elected governments (http://creativeclassstruggle.wordpress.com/)

It takes its stand on the side of the local poor and the authenticity of city as opposed to profit-seeking renewal. Its claims are closely associated with the idea of ‘the right to the city’, originally developed by Henri Lefebvre and later popularized by David Harvey (2008; 2012). It can be translated into a branding-related question of who has the right to ‘inhabit’ the dominant image of the city (Barker 2008: 385; see also Zukin 1995: 2010). Jamie Peck has put forward a range of arguments against neo-liberal creative city policy. He writes: creativity strategies have quickly become the policies of choice, since they license both a discursively distinctive and an ostensibly deliverable development agenda. No less significantly, though, they also work quietly with the grain of extant “neoliberal” development agendas, framed around interurban competition, gentrification, middle-class consumption and place-marketing – quietly, in the sense that the banal nature of urban creativity strategies in practice is drowned out by the hyperbolic and overstated character of Florida’s sales pitch, in which the arrival of the Creative Age takes the form of an unstoppable social revolution.

From win-win situation to creative class struggle 151

Around the time of the introduction of creative class theory there was general confusion among city governments regarding the future direction of local economic development, especially as high-tech as a recipe for restructuring had already become mainstreamed. Besides, high-tech regions had a different starting-point from traditional industrial cities, and it was precisely the latter group that needed new development ideas under the increasing pressure of deindustrialization. An important additional source of inspiration came from a few entrepreneurial cities, such as Cleveland and Baltimore, which were celebrated during the 1980s for pioneering property-led and partnership-facilitated city centre revitalization and waterfront redevelopments, which in different variations became probably the most widely applied formula applied by would-be creative cities since the late 1990s or so. (cf. Peck 2005: 749) The creative city movement spread fastest among Anglo-American and Commonwealth cities, from the USA and Canada to the UK and Australia, i.e. among countries which unsurprisingly were also pioneers in applying privatization and outsourcing in the public sector some thirty to twenty years ago. Case studies of creative city development policies reveal some problems associated with this ‘instrumental intellectual technology’, though. For example, Baltimore became a model for post-industrial waterfront development and more generally for nurturing creative economy. However, as Ponzini and Rossi (2010) point out, at the city-wide level, ‘creative class policy has favoured the interests of local politicians and their closer institutional partners; while … the embraced cultureled policy … has proved to be concerned more with real estate revitalisation than with issues of social inclusion and life-chance provision’(1037). While reviewing recent attempts to implement creative city ideas across five Australian state capitals, Atkinson and Easthope (2009) found that ‘the rhetoric of universal social potential accompanying creative city ideas continues to overlook those unable to participate in this new economy, as well as those who are more actively excluded’(64). Observations such as these are weak signals of possibly underlying problems with excessively instrumental creative class theory-inspired local development policy. There is actually nothing new in this, for the same need for balanced development was experienced at the time of industrialization in the then rapidly growing industrial cities. The underlying logic of ‘creative class struggle’ echoes the era of the rising awareness by the working class of its need to unite against capital. That is what happened, especially in Europe, and it certainly shaped world history, showing the huge practical impact of Marxism throughout the world. Yet, since the 1960s, the question of who is actually the subject of revolution has raised doubts. Which group should be in the lead in changing the structures of society? What is the legitimation for the change programme? What is actually to be changed, how is it to be done and what are the long-term consequences? Since the Second World War, such a ‘subject’ has vanished completely due to discouraging experiences, increased diversity, the rise of the middle class and various postmodern social and cultural trends. The struggle for material interest and workplace democracy seems to have changed into control of the living environment, a dialectic of material

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conditions revolving around personal development, individualized struggles of precariat and people in informal employment, a search for a meaningful life through progressive green values and downshifting in pursuit of a balanced and fulfilled life. This is not a class struggle but an ‘identity struggle’ in which the issue is to strike a balance between personal desires and material conditions. A trend that points in the same direction is post-industrialism with its social and urban ramifications. Variations among service workers and sectors imply variation in their socio-economic standing (Lash and Urry 1994: 218). We have to only refer to such people as those who work at the headquarters and those who work for a fast food chain. In this sense, ‘services’ as such form neither a homogeneous occupational group nor a sub-class. Yet there is a rising meritocracy, or creative class, which may have some class interests in the sense that they need good infrastructure, urban amenities, multi-lingual day-care centres and cultural services both to support their work and to facilitate their reproductive functions, from care to leisure. Their interest is not built on workplace democracy or labour rights, for their positions are performance-based and competitive in nature – as the new jobs increasingly are among highly skilled labour today – rather they share certain values, consumption patterns and requirements of the living environment. They form a ‘consuming class’ rather than a ‘working class’. In work they compete and follow an increasingly decentralized logic of the capitalism of uncertainty, whereas in consumption – of urban vitality, cultural richness, amenities, basic services and safety – they can be more united, their interests being channelled as much through local development policy à la creative class policy as through user democracy and democratic community governance.

9

New paradigm for urban management

This chapter discusses how forward-looking urban management should approach the challenges to global attractiveness. The starting point is to acknowledge that the task of city government goes far beyond attractiveness. Ideally, they should be able to deliver a good governance system, efficiently produced public services, high-quality urban amenities, sustainable and lively city centres, reasonable cost level, good infrastructure and much more. Kresl and Fry (2005: 96) have aptly stated that governing urban regions effectively in the twenty-first century is a monumental task. Brand management has a role in meeting such challenges, but it must be understood in the wider context of urban politics. Brand management has a dual nature in that it has a connection to participatory planning and community governance but should not lose sight of the strategic attraction-oriented perspective and the need to restructure the local economy and to sharpen the economic profile of the city in order to serve the interest of its long-term vitality. The following discussion is not a comprehensive description of new urban management, but rather highlights those aspects that have a connection to the core topic of this book, that is, globally-oriented economic branding.

Branding: a problem or a solution?

Theoretically it is fairly easy to construct policies that are capable of meeting the challenges and problems addressed in the preceding chapter. Concerning the problem of creative growth machine, urban management should rely on ideas of smart and inclusive growth and ensure that the initiatives are established to serve the community interest with a special consideration for the local residents. Commodification of urban space is to some extent inevitable, but what the city government can do is to guarantee that there is a sufficient supply of public spaces and, more generally, that the city is designed as an open city in which the input from local residents is given a decisive role. In the process of building or reshaping industrial identity it is important to keep the strategy process open and to value the contributions from the community in industry, cluster and niche identification and related policy formulation. Special attention should be paid to the inclusiveness of urban revitalization projects.

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Lastly, even if the creative class struggle may bring conflicts and bring the unruly underclass onto the streets of the city to vent their anger at ‘institutionalized cupping’ – that is, to show their irritation at excessive corporate power, tax evasion, astronomical salaries or options, or reckless speculation – or simply to commit vandalism, the city government may set an example of the good conduct of public affairs and try to initiate open dialogue and create forums within which people may express concerns, ask for reasons, call for change, present alternatives and vent their frustration. Demonstrating success and the benefits people derive from development policies is likewise of vital importance. On the basis of the criticism of brand-driven industrial policy and responses to it, one might assume that city branding is rather more of a problem than the solution. Even if this is an illusion, it reveals something essential to be taken into account, not least because one-dimensional branding that is instrumentally harnessed to attract high value-adding business may look like a problem if assessed from the point of view of those who do not have a stake in the process and who are excluded from both decision-making processes and the benefits to be reaped from those decisions. Yet, in this respect it must be emphasized that it all depends on the ideological and policy context within which city branding is applied. City branding has been associated with proactive operations of the neo-liberal city or entrepreneurial city, which have been said to promote the interests of business and especially property owners and lead to uneven local development (Savitch 1988; Harvey 1989; Biddulph 2011). The spearhead of criticism has been directed at cities as trans-territorial loci or meso-environments with a global span, which carry a risk of favouring the ‘global’ abstracted from the ‘local’ due to an exaggerated interest in global competitiveness at the expense of community needs and problems that largely relate to the redistributive side of local politics and policy (cf. Sassen 2001; Paganoni 2012: 14–15). To put it bluntly, the received view of the relevance of attraction orientation should not imply the neglect of locally oriented democratic community governance and the need to give high priority to balanced local development.

Attraction management of branded hubs

The message in the first chapters of this book for urban management is that if globalization intensifies intercity competition, if space of flows really matters in the economy and if the key to success in such a situation is the attractiveness of the city, new urban management should be able to understand and cope with these preconditions in one way or another. It is difficult to distil the essence of this challenge into only a few words. One of these is attraction, as discussed earlier, but the other conditioning factor seems to be complexity. Attraction requires strategic adjustment processes and, basically, marketing, whereas complexity is more challenging, primarily requiring on the part of city government a superior governing capacity. We may assume that branding helps to deal with both attraction and complexity through its capacity to help in manipulating the processes of symbolic

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capitalism. As Chevalier and Mazzalovo (2004: 13) put it, brand, and especially its symbolic tokens, are a visible part of a more complex reality by providing the mediation between the essential values of an organization’s identity and the perceptions its customers have of it. This is one of the core processes the city government should manage, with both internal and external dimensions. Economic trends give impetus to city attraction management, which at the very concrete level appears as a challenge to create and manage an urban hub capable of dealing with material flows. This echoes the Castellsian thesis of the need to find innovative ways of matching space of flows with the power of places (Castells 1989). Seeking smart solutions for governance is vital for urban development. This also applies to external or trans-territorial processes, such as competing for private capital in the international marketplace. According to Savitch and Kantor (2002: 46), differences in outcomes are a product of four variables: market conditions, intergovernmental support, popular control and local culture. There is a wide range of suggestions on how to cope with the vicissitudes of the marketplace, such as supply and demand strategies, cluster policy, niche strategy, human resource strategies, amenity-centred strategies and the deregulation approach. One item in this list is city branding or, more broadly, place marketing, which is a tool for creating and using city brand to attract investors (Savitch and Kantor 2002: 313). An interesting question is to what extent cities’ ability to deal with global challenge and competitive advantage arise from the strategic manipulation of local assets, when compared with more outward or externally oriented lines of action that try to directly reach the space of flows. A postmodern perspective offered by Doel and Hubbard (2002) invites us to look beyond the spatiality and connectivity of places to ‘a configuration of heterogeneous materials and practices that attend to the intersection, bifurcation, and cultivation of innumerable flows’. Such an approach provides a new framework for understanding the local and global and the multi-scalarity of the politics of competition. Doel and Hubbard favour distributed politics of flows whose degree of concentration and dispersion is both contingent and context dependent. The only problem with this recipe is that urban managers may find it difficult to decide where to start, not to mention how to continue. To shed some light on this, let us contemplate the core principles of city attraction management. Its major elements are: (1) creating a sufficient knowledge base; (2) defining clear target groups; (3) building on reputation-oriented branding; (4) specifying the decision spectrum; and (5) evaluating policy outcomes. To start with, we must concede that if branding is built only on emotions or images as opposed to facts and realities, the degree of rationality decreases and the risk of economic mismanagement increases. Brand comes closer to illusion than proper understanding of the values and attributes of the city. That is why it is vital to adhere to the wisdom that brand must be based on truth (Baker 2012), or to be more precise, to rely on what is real and what is substantiated by facts and empirical observations. At the core of this truthfulness is identity, which, in spite of its vagueness, is the basis of the truth about the city, supplemented by

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facts that are the building blocks of brand attributes. The latter dimension is of particular importance in industrial branding, in which understanding assets, endowments, existing industries and clusters as well as economic profile and opportunity horizon in general form the basis of brand management. The primary concern is ultimately industrial profiling – or if you like, economic identity – as it is a vital part of the knowledge base for industrial brand creation. In sum, building a sufficient knowledge base is needed to guarantee that we do not have to base our strategic adjustment, attraction and economic profiling on guesswork. In spite of Doel and Hubbard’s (2002) invitation to embrace flows, it may be that, in the interests of feasibility rather than chasing flows directly, city governments should look in two directions: to actors who carry (as visitors and tourists) or control (as executives and investors) the flows of values, or alternatively, to activity areas which are indications of flows of values within economic sectors, industries or clusters. Thus, analysis of value flows translates into people and economic activities of strategic importance. If the emphasis is to be on actors as a target group, branding may emphasize the building of brand reputation among that target group and rely on relational and viral branding (e.g. Hulleman and Govers 2011); if more weight is put on sector, industry, cluster or niche economies, branding needs to be built on sector-specific rationalizations and reputation building, which capitalizes and economizes on industry-specific symbolic processes. In general, as flows of values do not think, build images or consider reputation, it is important to focus on the people who hold key positions in firms in a given industry. In this picture, rankings are of great value, as they contribute to the building of the international reputation of a city. The next step is to specify the decision spectrum, especially in terms of whether the focus is on individual consumption (tourism) or the activities of business or professional organizations, and such strategic aspects of attraction management as attraction factors and economic profile, as discussed in Chapters 4 and 7. This cycle ends with an evaluation of policy outcomes and refining the strategy on the basis of outcomes, experiences and learning, and, of course, changes in the environment. In this way economic city branding may serve as the essence of local economic development strategy, revealing what we are and articulating where we want to go.

The bottom-up spirit in multi-scalar governance

What has been stated earlier about globalization of the economy, global competition and geographical asymmetries on different scales, poses challenges to public governance. The globe in its entirety has become the economic and diplomatic battleground, extending greatly both the types and the number of actors (Held 1997; Gilpin 2001). This has magnified the intercourse between states, localities, businesses and social movements, cultivating shared interests as well as reducing vulnerabilities (Savitch and Kantor 2002: 14). Multi-scalarity is probably the most obvious aspect of ‘glocal’ economic development policy in which local problems and policies resonate with global developments and local governments

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act across different geographical scales (Somerville 2011). In days gone by, the institutionalized public governance was dominated by intergovernmental relations between local and central government and international dimension by town twinning. Attempts to build a global agenda from below culminated in the establishment of United Cities and Local Governments in 2004 (www.uclg.org/). Yet, the role of city branding is critical in the dynamic side of the governance field rather than the institutional side, traditionally dominated by attempts to attract footloose industries and tourists. Now both institutional and dynamic fields are increasingly diverse and as indeed are local interests, which makes urban management more challenging than ever. Global challenges do not translate in any simple sense into urban or metropolitan agenda. Some of the global challenges and wicked problems have been addressed at local level almost as a replica of a higher-level policy agenda, as in translating Agenda 21 as a global action plan for sustainable development created at the 1992 Earth Summit in Rio de Janeiro into a Local Agenda 21 as an important mechanism for implementing that plan (Evans et al. 2007: 4), the Millennium Cities Initiative as a reflection of the United Nations’ Millennium Development Goals (http://mci.ei.columbia.edu/), the idea of sustainable development codified in the principles of intelligent urbanism (Benninger 2001; Naidu 2004), or various local responses to climate change (Gore and Robinson 2009). Yet, especially in development issues and in globally oriented economic competition common policies, shared views, collaboration and partnerships easily give way to competitive strategies as local actors often perceive the situations as instances of a zero-sum game. Only if there is a clear joint interest motivated by collaborators’ position in competitive markets has collaborative strategy good chances to work. International networking based on shared interests and similar positions or industrial profiles with a fairly general development agenda is another feasible way to build connections to higher-level agenda formation, as in the case of the International Regions Benchmarking Consortium (www.internationalregions.org/), the World Association of Investment Promotion Agencies (www2.waipa.org/cms/Waipa) or the World Technopolis Association (www.wtanet.org/). In general, international networking is much discussed in the urban context, but how to reap tangible benefits from such activities is still largely unknown. It seems that in economic life in the future the role of metropolitan areas will be decisive. This has given rise to a view of the multi-scalarity of the domain of economic development policy from a bottom-up perspective, emphasizing the uniqueness of metro areas in global competition; state resources to be aligned with metropolitan priorities; and federal initiatives squarely to support metropolitan growth (Katz 2012; cf. Sellers 2002). Concerning urban governance, it should be adjusted to the global challenge, not in terms of redesigning the city–central government relationship, but more widely by increasing local capacity to independently and proactively cope with the global challenge. Kresl and Fry provide the following list of key points of urban governance reform which may help in building such governing capacity.

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A need for municipal government to anchor its activities in democracy, transparency and accountability, and to build its capacity and assets through institutional reform. 2 Amalgamation or extensive inter-municipal collaboration is a must in order to govern larger metropolitan areas properly and to start thinking ‘regionally’ in development matters. 3 Multi-level governance is needed for a well-functioning financial system, pooling resources and coordinating development policies. 4 Fiscal reform is needed to guarantee sound public finance and sufficient local financial autonomy. 5 Exchange of information and learning from best practices through associations and networks are important tools for city governments to avoid mistakes and to serve as a source of inspiration for their industrial policies. 6 International networking is vital for cities to learn from others and other contexts and to be able to scan global developments and participate in globally designed collaborative actions. 7 Immigrants and ethnic minorities should be seen and developed as municipal and international assets. 8 Physical infrastructure and education are two critical assets that need to be developed systematically as they contribute to local economic development. 9 Municipalities should join together to create a strategic plan of how to move their metropolitan area forward in the era of economic globalization. 10 Thinking globally and acting locally should be adopted on a case-bycase basis depending on local conditions and global connections. (2005: 113–31)

The dynamics of metropolitan or regional structure concerns primarily how well the central city is integrated into its surrounding areas and the degree of connectedness of local governments in the region (see e.g. Mahnken 2011; cf. Taylor et al. 2008). This is referred to as the polycentricity of the region. For example, in Europe the Randstad region in the Netherlands exemplifies fairly strong city network connectivity and polycentricity on a global scale, as beside the core city of Amsterdam, cities such as Rotterdam, Utrecht and The Hague also have a sufficiently high degree of connectivity. The situation is completely different in the Frankfurt/Rhine-Main region, in which most of the global connections are concentrated in Frankfurt and even more drastically different in Greater Dublin, which is arguably one of the most core city-centred metropolitan regions in Europe (Taylor et al. 2008). This dimension affects the scope of city branding and, more than anything, the extent to which the city stands on its own feet in its branding when facing the challenge of global competition. Regional structure does not, however, determine the success of the brand. There are compact cities, city-regions and city-states such as Singapore, with extremely successful and

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well-managed industrial brands, but at the other extreme there are sprawling edge cities and high-tech regions such as Silicon Valley, California, which is still the most prestigious regional high-tech brand of the world (see Garreau 1992).

Assimilating network governance and stewardship

Branding inevitably leads to a conviction that it is part of such trends as urban entrepreneurialism or marketization of urban affairs. This is understandable, but at the same time the different facets and approaches to branding must be born in mind. For instance, from the point of view of governance, branding need not be based on market-led urban development (cf. Deakin and Allwinkle 2007). It can be harnessed by any mode of governance – hierarchies, partnerships, networks, quasi-markets, markets and communities – and can support any kinds of policy lines and social goals. Similarly, branding can be managed in a communityoriented manner as a healthy exercise in mining community identity and building community pride. This means that the issue is, rather, what ideological, governance and policy framework we use to frame branding. Concerning the local dynamics of public governance, local governments throughout the developed world have ceded some of their activities to other agencies, such as development corporations, in a horizontally and vertically expanding governance system, while still enjoying a potentially powerful control that has been characterized as meta-governance (Evans 2007). Networking seems to be the key mode of governance, both in dealing with multi-scalar development efforts and in mobilizing local resources (e.g. Gilchrist 2004; Farías and Bender 2010). Networking relates through the city attraction hypothesis to the space of flows, but through multi-scalarity it finds its way to supplement local hierarchies and, more importantly, to form networks of hierarchies of both public and private domains. This yields a special framework to understand what the phrase ‘from government to governance’ actually means. As an important manifestation of the evolution of governance we can identify a bottom-up view of inter-governmental relations (Katz 2012; cf. Saunders 1980) and a need to go beyond macro-regulation to micro-regulation (Morgan 1992) and from command-and-control towards incentivization (Katz 2000; Burgess and Ratto 2003; Heinrich and Marschke 2010). Perspectives also seem to go beyond narrow-minded contracting to partnership governance and stewardship, which indicates partnership over patriarchy, adventure over safety, and service over selfinterest (Block 1996). Even if it may go against the current trend in urban development and regeneration, there may be call for plan-led alternatives to market-led projects, which entails strategic actions rooted in a place-based knowledge of what communities need to be lively, pleasant, sustainable and attractive (Deakin and Allwinkle 2007). That said, note that the picture is not black-and-white. Even if the profit-driven privatization of the public realm legitimately may be the shared concern of citizens and community groups, issues like gentrification and ‘placelessness’ also may be easily overstated (Biddulph 2011; cf. Peck and Tickell 2002).

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Towards consensual decision-making

In the new urban paradigm, global and local, real and virtual, competition and collaboration develop side by side urging politicians and city managers to strike an intuitively healthy balance between them. This task has a direct link to the roots of local politics and policy, as attractiveness is not only about bridging external demand with local offerings or providing access to a location, but is also about designing and developing local conditions to meet the requirements of the global context. How far can urban communities go along this road? To what extent should local economy and also infrastructure, development and welfare policies be determined by the globally-oriented attractiveness perspective? If assessed within a decidedly instrumental framework, this easily leads to a production-factor dominated view, which, under the influence of local property owners and developers, creates a growth machine agenda, which tends to put the interests of real estate and the business development regime before those of local civil society. Such a development conflict occurs between ‘pro-growth’ and ‘antigrowth’ coalitions, both of which are increasingly trans-local (Savitch and Kantor 2002: 23). The basic nature of such a situation is illustrated in Figure 9.1 from the point of view of the need to find locally adjusted solutions to a policy challenge that is perceived differently by major political coalitions. In the figure, branding is assumed to have a potential to bring about unbiased expansion in the policypossibility frontier (or transformation curve), which indicates a theoretical possibility to view branding as a win-win case.

Community-oriented, inclusive policy

Local welfarist and sustainability group

Indifference curves for different interest groups

Bargaining process Indifference curve of local society

Increase in brand value

Transformation curve (trade-off function)

Bargaining process Local real estate and business group Business-oriented policy (real estate and business interests)

Figure 9.1 Compromise-seeking procedure and optimal local solution Source: Adapted from Zander and Kächele 1999: 316

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Even if the one-dimensional compromise may sound satisfactory, from the point of view of long-term development it is not always the optimal solution for the urban community. Instead, communities should seek smart solutions that are more dynamic. In such a case, each party tries to find innovative solutions and resolve disputes by assuming each other’s roles (as in social entrepreneurship and corporate social responsibility) and learning from other institutional contexts. The actual role of city government may be passive, facilitative or interventionist in such processes, depending on the cultural and institutional context (Autès 1997: 233). In this process, learning-by-doing is of vital importance. One of the most brilliant ideas to follow is to apply the idea of ‘assuming each other’s roles’ as theorized in Triple Helix theory (Etzkowitz et al. 2000; Etzkowitz 2008). When applied to the Government–Business–Community triangle this teaches at the very concrete level how government may, through special organizational arrangements, do business and be a constructive part of the community, how business can function as a micro-regulator and show practical community concern and how communities can learn from business and learn ways to support public governance through community action. In such a synergistic setting branding can play a unifying role and help to create a win-win atmosphere.

Open brand politics

Local brand politics should not be seen as an unchallenged, streamlined Pro Logo agenda, i.e. as mechanical application of corporate and product branding to local government (see e.g. Chevalier and Mazzalovo 2004). There are, however, some positive aspects in branding that deserve to be acknowledged in local economic development. At the other extreme there is a No Logo agenda as a manifesto against big corporations (Klein 2000). Such an approach contains important elements by showing that brand politics may carry destructive elements; that we can promote important social causes through critical analysis and conscious politically motivated actions; and that social movements and people can create ‘counter-brands’ by various means that are built on alternative worldviews. Our focus is on the city government perspective, however, and it is located somewhere in the middle of the realms of business and civil society. As local government as a public hierarchy must find its own way in branding, there is an inherent interplay between Pro Logo and No Logo aspects in its endeavour. The construction of the brand should first of all pursue a consensus among the urban community’s key actors (Kapferer 2008: 127). The critical question is who those key actors are. In our conception the most important actors are local residents, who should have a say at different steps of the brand-building process. This is a tricky dilemma; branding requires analyses and strategic understanding and brainstorming, which is usually easier in smaller groups of experts, developers and responsible public managers. After such preparatory processes decisions basically are made by politicians as the elected representatives of the local people. As these processes involve only a few people and easily become somewhat elitist, it is vital to define how people are included in branding and what they are

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expected to contribute during the various phases of the process. This is particularly important against the background that city brands are ultimately discursively constructed identities of local public entities (Kornberger 2010: 104). The idea is to avoid creating a new brandocracy, which is able to allocate resources and gain personal benefits from manipulating ‘glocal’ processes of symbolic economy (cf. Morley 2009: 8). The rule of thumb could be to apply two basic facilitation forms depending on the needs of the branding process. First, branding should be developed along the lines of the conventional democratic urban planning process, which may gather a larger pool of interested citizens to express their ideas of brand attributes, identity and promise and harness local creativity (e.g. crowdsourcing exercise in creating People Make Glasgow brand, see Montgomery 2013), and second, at a later stage of the process, work through consensus conferences, panels or other small-group work methods to refine policy lines and innovate in implementation. In local industrial branding the emphasis is inherently on the professional work of experts in tourism, event management, business development and investment promotion, leaving the laymen’s involvement more limited than in working on a general city brand. In any case, as industrial policy is part of the public policy domain, it should be kept ‘open’ in two senses of the word: open to new ideas and methods, and open to citizens to exercise their influence over the policy agenda.

10 Conclusion

The global competition of cities is ultimately about their attractiveness, i.e. their ability to attract resources from the global flows of values; values that can be anything from capital or investments to information, new technologies, talent and tourism. This competition takes place within a system of global urban asymmetry under the conditions of varying scales of global circuits of values (cf. Sassen 2008). This implies that we must build an accurate picture of globalization, and for example, that we should scrutinize Michael Porter’s famous Value Chain Model with primary (inbound/outbound logistics, operations, marketing, service) and support (firm infrastructure, HRM, technology, procurement) activities and recognize the tendency to shift its specific functions to lower-cost or higherproductivity destinations (Porter 1985). This creates actually decentralized and geographically dispersed production and innovation ecology with far-reaching consequences for cities (Western Economic Diversification Canada 2011). If cities wish to claim their share of the global flows of values and expected growth, local production, innovation and consumption environments must be cultivated in order to make them appealing to globally oriented businesses. What is essential in such development is the global division of labour and the formation of global value constellations, as a product may be designed in one country, manufactured in another, with software developed in a third, and components sourced from several other countries, as noted by Linden and others (2009) in their excellent analysis of the global production network in the assembly of Apple’s iPod. When a city is able to attract, say, foreign direct investments, such as a manufacturing plant to an industrial district of a city, it means increased economic vitality, new jobs, induced demand for goods and services and better opportunities to improve local services and amenities. But when a city has a chance to attract hundreds or even thousands of jobs from high value-adding industries, it means higher wages, more educated people, investments in prestigious business premises and a better brand for a city and, as a result of improved conditions and reputation, not only greater prosperity but also further opportunities to attract related or new high value-adding activities. This is essentially what global cities compete for. Faced with such an attraction-based competitive situation, city governments may utilize industrial city branding as a tool to attract values from the space of ‘frictional’ and ‘frictionless’ flows.

164 Conclusion

According to the rationality postulate, the industrial brand is built on aspirations for the mix of the highest possible values derivable from global flows of values as a reflection of the match between the economic city profile and the global economy. The city profile model presented in this book, with eight major post-industrial economic profiles, provides an illustrative framework for considering the economic branding options for post-industrial cities. A shortcut to learning about them in relational terms is through global city rankings. Rankings are tools for positioning and promotion and are thus of relevance for city branding, directly and indirectly. On the basis of empirical observations, the cities at the apex of the urban hierarchy, i.e. full-service global cities, form a special rank, including cities such as London, New York, Paris and Tokyo. Such cities have been widely discussed in urban research (Beaverstock et al. 1999; Sassen 2001; Taylor and Csomós 2011). Their ‘brand’ is built upon their factual high status and a wide variety of postindustrial functions. In the second rank of global cities with multi-dimensional profiles, ranging from business services to high-tech, logistics and tourism, we can identify cities and city-states such as Dubai, Hong Kong and Singapore. Chicago, Los Angeles and San Francisco are also strong international players in many post-industrial activities, as are Frankfurt, Sydney and Toronto. The cities with the most dramatic improvement in their global rankings are to be found in the Asian economies that opened their doors much later than Japan, Hong Kong and Singapore. Paradigmatic examples are Seoul in South Korea and Shanghai and Beijing in China. Tectonic change in the world system of cities’ global functions is slowly drifting towards East Asia and eventually possibly to South and South East Asia. Strategic city branding is an important tool in keeping global cities attractive in the face of the constantly evolving global economy. We may find a feature that is common to all cities in the highest positions in the global city rankings: they have world-class qualities in various areas of post-industrial activities and they seem to work constantly to keep their industrial profiles updated and to catch on to new trends that may yield high economic values, highly paid jobs and improved industrial brand. That said, we may at the same time accept the thesis of the diversity of global cities, as they all have their own industrial heritages, industrial policy regimes, geopolitical conditions and variation in their economic profiles (Gugler 2004: 2, 10, 22). The co-existence of uniqueness in character and convergence in the post-industrial service palette can be easily observed by comparing global cities. For specialized lower-rank cities, branding is even more important as they must gain, increase or maintain their visibility in selected areas as global players, such as Zurich in the banking industry, Charlotte in North Carolina as a financial centre and a headquarters city, Rome as a historical city, Munich as a high-tech city, Barcelona as a creative city, Boston as a knowledge city, Milan as a global fashion capital, and Vienna as a MICE city. In their case, the narrow economic profile in terms of global functions increases their vulnerability and creates path dependency from which it may be difficult to break away. The critical task of

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cities at this level is to expand the palette of their global functions with a megacluster policy that aims at functional synergies between industries within aggregate profiles or inter-sector combinations, which, when derived for example from the previously mentioned economic city profile model, could be in their rudimentary form such as business city profile with headquarters, MNCs, financial services and producer services; hub city profile with logistics, meetings, events and urban tourism; knowledge city profile with prestigious universities, innovation environments and test beds, high-tech services and selected areas of technological specialization, such as biotechnology or green technology; or cultural city profile with World Heritage sites, rich history and culture, cultural industries, attractions and hospitality. Rankings are manifestations of mediatized industrial competition. They often have methodological problems, but even leaving these aside, they require such a careful reading because of their sensitivity to the criteria used. For example, the Economist Intelligence Unit’s (2012a) benchmarking study of sixty cities presents a fairly conventional view of ranking of cities’ competitiveness, especially if we measure them by a composite of indicators, having New York, London, Singapore, Paris, Hong Kong and Tokyo as the top six cities. Yet, if we look at the sub-categories of this multi-criteria ranking, there is remarkable diversity among the top cities. For example, in economic strength the top 20 cities are in descending order Tianjin, Shenzhen, Dalian, New York, Doha, Guangzhou, Shanghai, Tokyo and Chongqing, Beijing, Qingdao, Chengdu, Suzhou, Hangzhou, Singapore, Bangalore, Los Angeles, Houston, Ahmedabad and Hong Kong. In physical capital the leading cities are Vancouver, Tokyo, Stockholm, Singapore, Melbourne, Hong Kong, Hamburg and Amsterdam (all with the same score). In social and cultural character the cities in the top ten were Zurich, Sydney, New York, Los Angeles, Madrid, London, Frankfurt, Chicago, Berlin and Barcelona. In the category of global appeal, which is based on such indicators as number of Fortune 500 companies, frequency of international flights, number of international conferences and conventions, global leadership in education and globally-renowned think-tanks, the leading cities become more reminiscent of the conventional list of the cities at the apex of the global urban hierarchy, as its top ranks were held by London, Paris, Tokyo, Singapore, Beijing, Hong Kong, Amsterdam, New York, Barcelona and Vienna, followed by Washington, DC, Madrid, Seoul, Berlin, Boston, Toronto, Zurich, Sydney, Taipei and Copenhagen (See Economist Intelligence Unit 2012a). Hence, even if the economic muscle is increasingly in the East, especially after the rise of many Chinese cities, it does not mean that their competitive position is particularly good, due to such reasons as insufficient infrastructure, shortage of highly skilled labour, lack of capital, institutional inefficiency or environmental degradation. Overall competitiveness is a multi-dimensional capability, thus it is difficult to reach the higher levels of the urban hierarchy if measured by aggregate indicators (cf. Giffinger et al. 2010: 303). The situation changes dramatically if ranking is based on a single industry, a cluster, some special aspect of competitiveness or a criterion such as liveability. We may also notice fairly clear regional differences here. If Chinese cities are

166 Conclusion

characterized by manufacturing, economic vitality and growth, European cities have strength in social and cultural areas and environmental issues. In physical capital, financial maturity, institutional effectiveness and global appeal it seems that the top ranks are occupied by a genuine global blend of renowned European, Asian and Anglo-American cities, which seem to hold the top positions in almost all areas of economic competitiveness and post-industrial activity (Economist Intelligence Unit 2012a). This may be an indication of the onset of a global era in which power, capital, services, amenities, wealth and attraction are structured around dominant global cities supplemented by lower-rank cities with specialized global functions. The critical turning point in this respect would be the point in the future when the ‘spiky’ economy starts to dominate politics; when governance from below starts to mean in practice the power of elitist quasi-local actors of the most powerful metropolitan regions; when a networked version of the cumul des mandats principle at national, macro-regional and global levels is heavily influenced by global city politics; and lastly, when major cities in terms of economic magnitude and risks become too important to fail. This is not the development of the immediately foreseeable future, but what happened in the collapse of the Soviet Union or the resurgence of autonomous regions in Spain, could happen at local level if the economic and political power seized by major metropolitan cities surpass that of the nation-state. In many cases, the mayors of large cities may have even more direct power over development than a weak prime minister of the same country. The balance has not so far tipped in favour of cities but, as said, it is possible that we will see that day, the age of cities, somewhere in the future. Industrial city branding is not a panacea for cities’ problems in coping with the challenge of economic globalization, but it helps to utilize local economic potential in the attraction-oriented intercity competition by focusing branding efforts on attracting values from the global value flows with a targeted view to selected economic sectors, industries, clusters or niches. City brand is the totality of thoughts, feelings and expectations that people have about a city. It is the reputation and the enduring essence of the place and represents its distinctive promise of value, providing it with a competitive edge, as defined by Baker (2012: 27). City branding is an expression of urban symbolism, having connections to both material and immaterial aspects of community life. Industrial brand is a sub-category of a general city brand, used as a primary strategic tool in industrial promotion and economic development policy. In this book we have approached city branding from two perspectives of political economy. First, we have conceptualized industrial branding from the point of view of applied economic policy, which is a special intersection of economy and politics. Second, we have conceptualized industrial branding from the point of view of the critique of existing theory and the practice of branding (see Frey 1978: 38). Both these aspects are essential pillars of a critical yet constructive analysis of city branding and together underpin efforts to provide a rich view of it. Such an analysis does not only contribute to a government-advising part of political economy, but also raises critical issues of the ideological contours, rationale and praxis of city branding. As both these aspects are in a dialectic

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relation with each other, it is pointless to attempt to provide an ideal view of city branding. Rather, it is important to be able to highlight various aspects and perspectives of the actors involved – especially city government, business and citizens – and their perceptions and interests that should inform local praxis in the ideal case in mutually appreciative and consensus-seeking governance processes or, as some sociologists might have it, through communicative action. Branding at least to some extent is a reflection of instrumental exchanges, calculation and competition, but in today’s world such a dimension simply reflects the de facto relationality associated with attraction-oriented global intercity competition. This does not imply that city branding needs to be one-dimensional; it can also be a community-oriented process of learning, inclusion, resource generation and selfsustainability. Branding thus must be seen in the context of urban governance as a set of tools applied within an ethically motivated, sustainable and inclusive local economic development agenda.

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Index

4Ps 49–50 7A model 73–4

aerotropolis 125–6 age of cities 166 agricultural town 98–9 airports 124–6 American Marketing Association (AMA) 57 Amsterdam 25, 85–6, 93, 139, 158 Anholt, S. 63 Arno Valley in Tuscany 94 asymmetry 31, 33; in economic geography 30–2 attraction factors 44 attraction hysteria 146 attraction management 154 attraction strategy 36–7, 40 attractiveness 29, 67 augmented economic reality 68 authenticity 147, 150 Baker, B. 62, 73–4 Baltimore 89, 151 Bangkok 100, 128 Barcelona 63, 66, 80, 149 Beijing 68, 111, 124, 164 benefits of a positive brand 69–72 Berkeley, CA 115 Berlin 27, 85, 127 Bilbao 33, 63, 96, 134, 142 Boeing headquarters in Chicago 68 Boston 31, 115, 119 brand 48, 50–1, 56–8; as a symbol 51, 53, 57, 70; successful 72 brand ambassador 71, 79 brand architecture 59, 75–6; brand portfolio 59; see also umbrella brand brand attribute 53, 77

brand communication 77–8 brand creator 53–4 brand equity 52 brand identity 53–4 brand leadership 49, 81 brand management 58, 73, 81, 153; strategic 58–9 brand promise 75 brand value 51–2 brand-based politics 14 branding 47–50, 73; and marketing 49–50 branding a city: difficulty 14, 63 brandocracy 162 Brussels 27, 149 business services 27, 29, 111–12

capitalism 3–4, 6, 147; global 6–7; postwar 20 Castells, M. 5–6, 24, 155 Charlotte, CN 33, 164 Chicago 31, 68, 74, 124 Cincinnati USA 103–5 citizens 71, 75, 79, 145 city 26 city attraction hypothesis 40–2 city attraction management 155; see also attraction management city brand 62; global top ten city brands 84 city branding 61–5, 73; pitfalls of 86; international 88–91; electronic 91–4 city government 143, 145 city manager 16, 35, 97 city marketing 64 city profile pie 108 city profile typology: by main economic sectors 99; eight post-industrial profiles 108; see also city profile pie city ranking 15–16, 137–9, 165

198 Index

city within the city 75 cluster classification 101; cluster template 101; cluster identification 102–6 cluster policy 102–6 colonization of space 35 commodification of urban space 148 communication see brand communication community 20–1, 36, 66, 145–6 competition 33, 67, 144 competitive identity 63 consensual decision-making 160 consumer city 127–8 consumer society 147–8 consuming class 152 Copenhagen 38, 90, 136 Cleveland, OH 151 creational mode of development 43, 98 creative city 133–4, 151; see also neoliberal creative city policy creative class 7, 149, 152 creative class policy 149–51 Creative Class Struggle movement 145, 148, 150–1 creative industries 107, 135 cultural city 133 deindustrialization 9, 143 design 135–6 destination branding 73 destination instance model 78 Detroit 138, 142 developmental city 25 development policy 1, 7, 13, 19, 30, 44; outward-oriented 66; see also local economic development policy differentiation 26, 33, 54–5 Dinnie, K. 62 diversification 91, 113 Disneyfication 149 dual city 7, 144 Dubai 75, 126, 128, 132

Eastpointe, MI 77 e-branding 91; see e-city branding e-city branding 91–4 economic city profile 44, 97–8 economic development brand 94, 139 economic development policy 13, 35–6, 44, 157; see also local economic development policy economic favouritism 37 economic profile of a city see economic city profile economic sectors 98

energy town 99 entrepreneurial city 18, 61, 154 European Capital of Culture 69, 96, 132, 134 events 131–2 export-oriented industrialization (EOI) 37 factors of production 44 fashion city 129 FDI see foreign direct investment financial centre 111–12 fixity 22, 36 Florida, R. 13, 31–2, 107, 134, 149–50 flows 43, 155–6 foreign direct investment (FDI) 36–8 Fort McMurray, Canada 99 Frankfurt 69, 90, 111, 158, 164 frictional flows 43 frictionless flows 43 Friedmann, J. 6, 23, 34

GaWC see Globalization and World Cities research network gentrification 148 Glaser, M. 80–1 Glasgow 96, 134, 162 global 36 global benchmark cities 2 global cities 6, 23–5, 27; see also world cities global city ranking 109 global competition 35, 40 global economy 6, 20–1 global intercity competition 40 globality 19 globalization 8, 19; and territorial communities 20; local response to 22; policy 21 Globalization and World Cities (GaWC) research network 27 global network 24; global innovation networking 38 global production and innovation ecology 90, 163 global shopping destination 129–30 global university city 116–8 global urban hierarchy 26–9 glocal economic development policy 156 glocalization 21 glurbanization 22 governance 80, 157; global 21, 143 government 7, 20; see also local government; local state

growth machine thesis 6–7, 66, 142, 150, 160 HafenCity 76 hallmark event see events Hamburg 76, 89 hard branding 148 Harvey, D. 4, 6, 8, 34, 146, 150 headquarter city 110 healthcare town 132–3 Helsinki 39, 136–7 high amenity city 127 high-tech city 119 history 136–7 Hong Kong 29, 37, 87, 111, 118 hospital city 132 hotel 126 hub city 123–6

I amsterdam 63, 85, 93; see also Amsterdam identity 53–4; see also brand identity identity politics 70 identity struggle 146, 152 I Love New York 80–1 image 53 imagineering 65 industrial brand 139, 164 industrial branding 141 industrial city 10, 100 industrial city profile 97, 109; see also economic city profile industrial profiling 105, 108; see also economic city profile industrial revolution 9 industrialization 10, 30, 37, 48 industry classification system 101 information sectors 45 innovation milieu 119 innovation networking 38 InnovationXchange (IXC) 39 intermediary 38 international meeting city 127 investment portal 39–40, 93–4

Kapferer, J.-N. 1, 13, 53–4, 62, 72, 75, 95–6 Kitakyushu 82 knowledge city 115 liveability 133 Liverpool 69 local 7, 35 local community see community

Index

199

local economic development policy 13, 35–6, 40, 44, 70, 96, 100 local government 7, 22, 144, 156–7, 159 local identity 70 local industrial policy 13, 34, 94, 101–2; see also local economic development policy local restructuring 13, 23–4, 37, 83, 95, 142 local state 7, 144 local voice 66 local-global dialectic 22 locality 7, 20, 44 location 8–9; location specificity 9, 35–6 logistics city see hub city logo 78 London 15, 24, 29, 45, 68, 129, 131 Los Angeles 31, 114, 125, 130

manufacturing 9–12, 37, 100–2, 106, 109 marketing 49; and local government 61 Marketing Manchester 88 Manchester 9, 80, 128, 142 marketing mix 49–50 Marx, K. 3–4 marxism 3–5 mega-event see events mediatized industrial competition 165 mediatized political economy 15, 138 Melbourne 119, 128, 165 metropolitan areas 31, 157, 166 MICE city 126 Milan 77, 129, 131 mindshare brand 14–15, 60 MIT 115 multinational corporation (MNC) 37, 110 micro-branding 95 multi-dimensional profile 164 multi-scalar governance 156 Munich 38, 93, 119, 164 NAICS 102 Neal, Z. 124–5 neo-liberal city 25, 154; see also entrepreneurial city neo-liberal creative city policy 145, 150 networked city 20 networking 159 Newcastle, NSW 142–3 Newcastle upon Tyne 69 New Songdo City see Songdo International Business District New York 24, 80, 113–14, 130, 135 no logo 14, 161

200 Index

open brand politics 161–2 Osaka 39, 83, 93, 145 overseas office 39

Paris 29, 40, 68, 84, 164 Park, S.-C. 120–3 Perth 99 P&G 48–9 place 35–6 place brand 62; see also city brand place marketing 64 place names 77–8 place promotion 64 place reinvention 63–6 placelessness 149 placemaking 78 placeshaping 64 policy possibility frontier 160 political economy 2–5; see also urban political economy polycentricity 158 port 126 positioning 55, 74 post-industrial activities 107, 141 post-industrial city 9–11, 108–9 post-industrial economic city profile 106–9, 141 post-industrial thesis 11–12 producer services 11, 106, 113; see also business services product-brand relation 72 product-city analogy 62 product marketing 49–50 production 4, 6, 9–12, 35, 49, 100 promotion 64 promotion agency 38; business 39; see also overseas office proto-brand 109 pseudo-places 147 PSTS 45

ranking see city ranking rebranding 82 regional shopping centre (RSC) 129 reinventing 83; see also place reinvention repositioning 82 reputation 53 resort town 132 right to the city 5, 150 Rome 137, 149, 164 San Francisco 27, 44–5, 119, 133–4 San Jose, CA 14, 29, 45, 119 Sangam Digital Media City 121–3

Sassen, S. 6, 23–4, 112 sender-receiver continuum 53 Seoul 25, 87, 120–3, 164 service city 128 service export 90–1 services 10, 100–1 service transformation 13 Shanghai 29, 68, 111, 120, 124, 164 Shenzhen 37, 68, 111 shopping city 129 Silicon Valley 54, 119, 159 Singapore 16, 136, 139–40 slogan 78 slogosphere 78 smart city 119–20 space of consumption 127 Spartanburg, SC 37 special economic zone (SEZ) 37 Songdo International Business District 82 spa town 132 space of flows 21, 35, 43, 155 specialization 1, 44, 102, 113 spiky world 31–2 stakeholder involvement 79 starchitecture 149 stewardship 159 Stockholm 93, 136, 138 Sydney 80, 129, 134, 139 Taipei 14, 27, 119 Taylor, P. 17 theming 149 Tokyo 23, 25, 29, 75, 112, 149 Toronto 45–6, 71, 145, 150 tourism 128 tourist city 128 town centre management (TCM) 148 Toyota 77 Turin 95

umbrella brand 59, 75–6 uncreative destruction 42 urban agriculture 99–100 urban asymmetry 29–33 urban community 36; see also city urban design 147 urban governance reform 157–8 urban political economy 5–8 urban restructuring 83, 142; see also local restructuring urban symbolism 147, 166 urban tourism 127–33 value see brand value

Vancouver 133–4, 165 Vienna 29, 90, 127, 164

Washington, DC 27–8, 119, 127, 134 waterfront redevelopment 151 Web generations 91 website 91–3; tourism 93; see also investment portal

Index

201

well-off creative people 144, 148 world cities 6, 23–4; hierarchy of 27; see also global cities world city hypothesis 23, 34 Zysman, J. 12

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