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Growth IQ

Five ways to attract business investment to your city

Cities face tough competition for business investment if they are not national capitals. What can they do to put themselves in the running?

Every city official knows that if you’re not running a global capital, you’re going to have to work twice as hard to attract business investment. Being a second or third city might seem to be a handicap but it forces you to innovate, which can only be a good thing.

Innovation doesn’t have to be difficult, though. Most city officials are looking for an epiphany that will bring investment flooding in but in reality, workers and businesses simply want to go somewhere that feels relevant and vibrant. This environment cultivates creative, productive workforces and long-term, sustainable businesses. Here are five things city officials can do to start the journey towards that transformation.

1) Make your city a place where young people want to live, work and play

Businesses want to invest in cities with a young workforce. Omaha, in the US state of Nebraska, used to have a population of mostly under-20s and over-45s, and very little in between.

City officials recognised that the community may not thrive without the missing demographic. So they benchmarked themselves against other US cities with young working-age populations to answer the question: what do they have that young people want to experience that we don’t have?

The answer? River walks, downtown boulevards and arts districts. Young people aren’t ready for the house in the suburbs. They want central areas where they can meet, relax and have fun with friends.

Omaha remade itself over a decade, transforming its industrial area alongside the Missouri River into promenades and bridges. Arts districts have sprung up near the river too and more people, of all ages, are being drawn into the city by activities such as the performing arts.

The city continues to remake itself. Last May, the Campaign for a Greater Omaha launched a survey to identify what keeps young professionals in the area and what could improve the city’s chances of attracting and retaining more of them.

Previous survey results have influenced the development of attractions such as the city’s TD Ameritrade Baseball Park and the Midtown Crossing Project, which provides residents with “urban walkable retail”.

2) Use good data to tell a compelling story about your city

Many federal and national governments require their cities to publish data on economic and social performance. Often these figures are presented in the format mandated by national governments, rather than considering how, if presented well, they could be part of the story to attract investors.

Cities that can provide businesses with good, concise information about relevant factors – economic performance, wellbeing of the population and where entrepreneurs are located, for example – will be the ones that attract investment. If they can use that data to tell a story, even better. There are many cost-effective tools available that some cities have already adopted to help tell their story.

Finland’s Espoo is one of three main cities in the metropolitan area of Greater Helsinki. Vantaa and the capital, Helsinki, are the other two. Espoo offers a handy statistics pocketbook for download, sharing top-line data on education, employment and income levels, a sector breakdown of the labour market, figures on real-estate stock and much more besides.

It’s just a taster, however, of what Espoo is making publicly available through its participation in the Six City Strategy, an initiative involving Finland’s six largest cities and designed to encourage “smart and open urban development”.

The Helsinki Region Infoshare website, part of this initiative, pulls together comprehensive data from across the Helsinki Metropolitan area, which includes Espoo. The website offers in-depth data about Espoo on 20 categories, including economy and taxation, jobs and industries, IT, health, housing, and education and training. Everything a business needs to conduct its due diligence is there.

Separately, the jobs and enterprise section of the City of Espoo’s website lists user-friendly pages such as ‘For employers’ and ‘Businesses and potential entrepreneurs’. The pages offer companies a range of information on starting, operating and growing businesses in the city.

Right now, there’s a lot of data to trawl through and it could be curated more effectively to explain why Espoo is worth investing in. The city has a lot to learn from neighbouring Helsinki on this front. However, at least city officials are thinking about the questions that investors might be asking. It’s a step in the right direction.

3) Build a case for positioning yourself as an international location

When a young person joins a business, if it’s international and they can see an international career path for themselves, they are two to three times more likely to stay. International companies are more likely to want to invest in international locations.

The UK’s second city, Birmingham, has long pitched itself as an international city.

Birmingham Airport’s slogan, “Hello world”, reflects its positioning as a global travel hub operating flights to Europe, the Middle East, the Indian subcontinent, North America and the Caribbean and, most recently, China.

Birmingham City University describes itself as a “modern, dynamic international university” with staff, students and alumni from more than 100 countries.

The city council has a dedicated European and international affairs team that oversees the implementation of its European and international strategy for Birmingham, which sets out the direction for the city’s global engagement.

The message is getting through, with newspapers such as the Financial Times running headlines such as “Why Birmingham is now one of Europe’s best cities for investors”.

4) Elect and appoint visionary leaders

Smart city expert Uri Ben-Ari recently wrote: “Every smart city programme around the world started with a visionary mayor. No smart city programme can even succeed – or begin – without a visionary and smart mayor.”

Smart cities are gaining traction around the world. They use technology and intelligent management systems to solve current and future challenges and deliver groundbreaking services to their constituents.

Israel – the “start-up nation” – is no stranger to the potential of smart cities and Eilat was the first city in Israel to adopt the concept. In 2012, mayor Meir Yitzhak Halevi appointed Ben-Ari as its smart city strategy consultant and tasked him with formulating its smart city strategy, working alongside a dedicated smart city team led by deputy mayor Eli Lankri. 

Results are already starting to emerge. Around 70% of Eilat’s daily energy supply now comes from renewable sources and visitors have access to free Wi-Fi after officials voted to put an internet cloud over the city. The European Union has awarded a €500,000 grant to Eilat to establish a “smart neighbourhood” that comprises all aspects of a smart city.

Whether you decide to attract investment through smart-city status or some other means, you need visionary leadership of the kind Halevi and Lankri provide to understand what will attract investment in the first place and push through the changes to make that happen.

5) Identify and exploit your cachet

A World Bank report, "Competitive cities for jobs and growth: what, who and how", examines the characteristics that make up globally competitive cities. Researchers say all the cities they identified as globally competitive had a clear strategy to exploit their competitive advantages.

Cities named as exemplifying global competitiveness are not the usual suspects. The list includes Bucaramanga in Colombia, which has used oil revenues to turn itself into a centre of oil expertise. City officials have invested in universities known for their research into the oil industry, boosting the availability of technical skills in the process. Bucaramanga is also home to the Colombian Petroleum Institute, the research arm of state oil company Ecopetrol.

The report also cites Tangier, Morocco’s third city, which it says has gone from “dormant to dominant” in just over a decade. The city has regenerated around its old port and now boasts one of Africa’s largest seaports, automotive factories, multiple free trade zones, industrial parks and a thriving tourist industry.

Like their colleagues in Bucaramanga and Tangier, city officials all over the world need to find the one thing that rival cities don’t have and which will give investors a reason to come.

As globalisation makes the world smaller, pitting second cities against national and international rivals, city officials face a stark choice: adapt or contract. Like Omaha, Espoo, Birmingham, Eilat, Bucaramanga and Tangier, those that adapt can look forward to an investment-rich future.