The Importance of Local Economic Leadership

I attended an event a few weeks ago in Manchester hosted by the Council and the OECD LEED programme on the importance of local economic leadership in promoting sustainable inclusive growth. This was the LEEDs annual meeting and also highlighted a recent publication looking into such matters. I feel that the publication is worthy of sharing and discussion widely as it succinctly emphasises the importance of such leadership in the modern world.

OECDThe publication called Local Economic Leadership focuses largely on four city case studies of Amsterdam, Hamburg, Manchester and Stockholm – but draws from wider experience and research into other cities in recent years. Now let me say there is a danger with such research, which had the full cooperation and partnership of the cities involved, that it becomes a confirmatory and celebratory report, in effect a marketing document for the cities involved. This report whilst focussing on the positive in each city steers a fine line and avoids falling into that trap by highlighting the potential failures of local leadership and the dangers of falling into vanity project and white elephants. However a few examples might have helped to cement its independence as even the best lead cities make mistakes. Another failing as well is it talks about evidence lead leadership but fails to provide much evidence of the impact of such leadership.  That said it is a really interesting piece of commentary on local economic leadership and well worth time setting aside to digest it.

The report looks into why local economic leadership is important and how it can add value. In summary it notes this can include how

  • public and private coalitions are built,
  • external investment is attracted and leveraged,
  • major redevelopment projects are defined and promoted,
  • skills and employment systems are recalibrated towards new economic sectors,
  • institutional reforms are devised and promoted.

It states that ‘Exceptional leadership skills are required amongst local government leaders and their partners if economic development is to succeed and recognises that there are various potential common elements that underpin successful local economic development
leadership.

  • Vision, strategy, and agenda setting; looking to the longer future.
  • Evidence based leadership that sifts options and alternatives to intervene and engage
    markets.
  • Customer orientation that recognises employers, investors, entrepreneurs and
    workers as having distinctive preferences and requirements that a local economy
    needs to meet.
  • Systemic and integrating leadership that embraces all the entities that can impact on
    local economic performance.
  • Promotional skills that understand how to position a local economy within contested
    markets and how to leverage assets and opportunities.
  • Collaboration and alignment between different tiers of government and horizontal
    co-ordination.
  • The advocacy role of leadership that makes the case for better ways to organise,
    reform, or regulate a local economy and its institutions.

It recognises that leadership nowadays is facing a number of complex external challenges. For the mature EU cities which are the focus of this piece these include

  • Demographic changes  including ageing and more diverse populations
  • An increasing globalisation of industrial sectors
  • The impact of technology which include the merging of work and leisure, instant access to and demand for information, the emergence of a self-conscious and interactive citizenry
  • Environmental changes – Climate change is already having impacts worldwide,
    through rising sea levels, increased severity and frequency of extreme weather
    events, and unexpected temperature patterns.

The report also recognises the difficulties of leadership currently. They identify common themes such as

  • Low levels of autonomy / self-government – Almost all local governments are supervised through national and / or state systems. Many local government leaders feel they have insufficient powers to be able to implement the policies that are needed.
  • Fragmentation and coordination challenges – Many national systems and labour
    markets have too many local governments, operating with limited coordination, weak
    competences and powers, and within fragmented institutional frameworks. Only half of OECD metropolitan areas have any kind of metropolitan governance body. Leadership therefore often means navigating a complex mesh of local governments and negotiating with national and regional bodies.Local leaders can struggle to align institutions, investment and infrastructure with the functional geography of the economy.
  • Short termism – Most of the development challenges that local economies face require substantial and continuous action over and through several cycles of development and investment. But, the majority of local political systems provide leaders with mandates that span somewhere between 1 and 5 years. Many local economies suffer as a result of short termism in political thinking.
  • Fiscal and financial deficits – local development is often held back by a lack of
    resources to invest in the infrastructure required for long-term growth. Many local
    leaders have come to operate in a ‘low investment-low return’ equilibrium that
    makes it hard to manage growth proactively.
  • Distorting effects of national and state policies/systems/regulations. Only a
    minority of national governments have explicit national urban policies. Most rely on
    strong sectoral ministries that do not have the scope to embrace spatial and territorial
    issues. Coordination failures among national government ministries are a major
    barrier to local economic development agendas worldwide.

Learning Lessons for Birmingham

So what have I learned from these four cities. What is there for Birmingham and other cities.  Well much of it confirmed my belief in what modern leadership should entail which I will come onto in a minute. I knew much of the Manchester story and it is to be applauded.The stress on long term partnership working with neighbouring authorities is something we need to commit to. The proposed West Midlands Combined Authority is not just about getting a quick win from George Osborne but requires long term trust and strategy building for it to be effective.

It would be good to learn more about how Hamburg have increased their numbers of HE students and their employment rate – through actions on their education and inclusion agendas. This might be transferable to Birmingham given our lower than expected take up of HE courses and given our troublingly low employment rate.

It was interesting to hear about how Stockholm invested significantly in developing an Innovation Strategy for the Stockholm Business Region. Lets hope that the new West Midlands Combined Authority places as much emphasis on innovation as has Stockholm.

It was interesting to read more about the role of the Amsterdam Economic Board – a private sector led board that has taken leadership of key elements. Perhaps there is a lesson here for how the three LEPs in the West Midlands Combined Authority area might take forward there work – jointly.

Of course there is much more to learn than these brief snippets from the report and whilst earlier on in this post I almost questioned the rationale of the Cities in participating in this piece of research what must be commended is that they are open and outward looking and seeking views from elsewhere.on their leadership. Birmingham and the rest of the combined authority area would benefit from such an outside view.

What are the key overall lessons for cities generally. Looking to the future a few key areas are identified.

Innovation has become a key aspect of local economic leadership. – cities will continue to be faced by challenges which cannot be met using their formal and official powers alone. Leaders will therefore need to continue to innovate in future in order to ‘fill the gaps’ – but they will not be able to do this alone.

This means that future local economic leaders will need to be adept at influencing and
persuading other stakeholders, in order to make space for their innovations. They will need to
become expert in sharing, listening and networking, in order to learn about and adopt
successful tools and platforms developed in other places.

Leaders will certainly need to be skilled in planning for the future so that they can anticipate challenges, and develop the necessary tools and innovations in advance wherever possible.

It is already clear that local economic leadership is no longer the concern of
elected local government alone. The last decade has already seen new groups such as
networks, business leadership groups and authorities from wider economic areas drawn into
the sphere of leadership.  In the future even more actors will be concerned with their
leadership.

A key task for future leaders will be making the distributed system of leadership more coherent. This can be done through a combination of:

  • Partnership and coordination between leaders concerned with different areas of
    the local economy; a Leadership Team for the functional economic area must emerge
    and be encouraged
  • Coalition building between stakeholders from different sectors and interest groups.
  • Reforms including fiscal reform, devolution of powers, or the redrawing of political
    boundaries so as to better match functional metropolitan areas.

As you may have guessed large parts of this post have been lifted verbatim from the report (for those in HE – this would fail a ‘turnitin’ evaluation), because it puts the arguments very cogently. This is an important report for all cities and city regions that are starting to reflect on how they proceed in this new ‘combined authority’ world. Important as well for all leaders – who think they have power – which they do – but not in the old sense. A must read!

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