What Can Cities Do to Enhance Competitiveness? Local Policies and Actions for Innovation

Policies on municipal actions to promote local competitiveness have typically focused in three areas: i) providing infrastructure (transportation, telecommunications, water & sanitation, etc.); ii) improving public services (education, health, public security, housing, etc.); and iii) reducing the cost of doing business by simplifying regulations (making it easier to open businesses, pay taxes, hire workers, acquire land, and exit from businesses). Recent theoretical advances and successful cases suggest that, for the local economy to be competitive in a globalize environment, simply reducing the cost of doing business, while critical, is not sufficient. Leading cities are also taking actions aimed at adding value to local businesses, by creating an environment that creates incentives for local firms to innovate and learn from each other, to upgrade the level of competitiveness of the overall local economy.