Academic journal article Theoretical and Empirical Researches in Urban Management

Performance and Competitiveness of Latin American Cities: The Physical Capital Case

Academic journal article Theoretical and Empirical Researches in Urban Management

Performance and Competitiveness of Latin American Cities: The Physical Capital Case

Article excerpt

1. INTRODUCTION

"Today half of the world's population lives in cities, generating over 80 percent of the global GDP. Global businesses have already begun to plan strategies from a city's rather from a country's perspective" (Economist Intelligence Unit [EIU], 2012, p3). Over the last decades, the cities have had intense global competition. While some cities have emerged from quiet and rural environments and turned into dynamic cities, others have failed to sustain their leading position and have deteriorated over time. It's clear that policies and urban management play a key role to accelerate the city's performance. Lack of awareness or planning can have a negative effect in the region. The cities' policies to improve urban competitiveness have been the quest of policy makers. Infrastructure and human capital leveraged by city marketing, foreign direct investment and clustering have been a major focus for differentiation, and they have also been a subject of study in the developed and developing worlds.

The developing world is emerging as an economic power, but it still has to develop strong and clear policies to improve its cities' performance. Over the last decade, Brazil, Russia, India and China -known as BRICs and emerging markets- have driven the consumption and demand, and have vied for business and talent in the global scene. This competition will further intensify over time. To illustrate, cities that were just spectators of globalization in the past, Shenzhen and Dubai have become important players.

It can be alleged that London, Paris, and New York are cities that have been growing for a long time, and thus, are the most competitive for their maturity and refinement gained over the years. Conversely, there are cities -Singapore- that in just a few decades transformed from underdeveloped to highly developed. Singapore's infrastructure, financial maturity, clean environment, human capital, and global appeal place it as a top city. Besides the infrastructure and human capital that characterize cities as either small or big, the common variable is that the authorities have generated and implemented policies according to their circumstances and positioning.

An illustration of rising cities based on extraordinary urban management can be found in the emerging world. In an unprecedentedly short period, emerging cities and regions for instance Tianjin, Dubai and Shanghai have established and achieved a new urban identity to equal their rapid economic and social development. One example is China's investment in physical capital and infrastructure that has increased an average of 20 percent annually over the last ten years. China has built airports, utilities, roads, bridges, mass transit systems, telecommunications and others (McKinsey Global Institute, 2009). On the other hand, mature cities with long-established infrastructure are facing deficit budgets and risk of debt, which is the case of cities in Portugal, Italy, Greece and Spain. These countries have postponed investment in new infrastructure or renewal of the existing one since 2012.

In the 19th and 20th centuries, Latin America was well-established and known by its global economic contribution to natural resources benefiting agriculture, mining and oil drilling. Over the last decades, there has been a shift to manufacturing in many cities and regions. The textile, electronics and automotive industries play an important role in many countries and cities. In recent years, some Latin American cities have emerged as service hubs. Many cities in Latin America have evolved from primary to tertiary service renders. More educated and trained work force and developed infrastructure are required to compete regionally or globally. Unfortunately, the growth in many cities is not happening not due to lack of natural, human or financial resources, but because of lack of regulations and policies aimed at growth and institutional effectiveness. …

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