Special edition

Citizen T oday
April 2011

Cities for citizens

State of the cities

Lessons from around the world

Cleaning up
The future is green

Crunch time
City nance in focus

Welcome
Ernst & Young Assurance | Tax | Transactions | Advisory
About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com 2011 EYGM Limited. All Rights Reserved. EYG no. FK0013

A warm welcome to this special edition of Citizen Today, Ernst & Youngs magazine for our government and public sector clients around the world. Recent incidents across the globe, from natural disasters to citizen unrest, demonstrate the volatility of the 21st century world in which we live. In our interconnected world, such incidents serve to remind us all of our collective vulnerability to unpredictable events. In this, our seventh edition, we report on the ndings of our year-long examination into the biggest challenges facing urban communities around the globe. While all cities are different, there is no doubt that ours is an increasingly urban world. Shifting economic power from West to East and North to South has increased both the number and the sophistication of urban centers in emerging markets. Globalization, too, has meant that cities are more interconnected than ever before as capital and people move freely between them. As a result, the competition for talent and capital between cities worldwide is surging only those centers that adapt quickly to these changing trends and demographics will prosper. Ernst & Youngs global Government & Public Sector team has interviewed more than 70 city leaders from around the world, including mayors, chief executives and their implementation teams. We have investigated what drives city leaders, how they see their city developing and how they are shaping their cities to be t for the future. In this edition of Citizen Today, we consider our ndings. We look at how cities have a deepening commitment to sustainability, recognizing the many benets that a green economy can bring. We examine the growth of new nancial centers and the prospects for economic growth and jobs across the European Union. The challenge of ensuring Paris transport system is t for the 21st century also comes under our microscope. We investigate the civic stories of London, Los Angeles and Bogot; three cities of differing histories and size, but with shared ambitions and hopes for the future. And in our regular Hot off the press pages, we highlight recent thought leadership from Ernst & Young. Ernst & Young would like to take this opportunity to thank all the respondents for taking the time to participate in our survey. We are also delighted to receive your feedback and suggestions for the magazine. We look forward to receiving your suggestions, as well as offers to contribute your own insights.

In line with Ernst & Youngs commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content. This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. The views of third parties set out in this publication are not necessarily the views of the global Ernst & Young organization or its member firms. Moreover, they should be seen in the context of the time they were made.

www.ey.com

Philippe Peuch-Lestrade
Global Government & Public Sector Leader

1126944.indd (UK) 04/2011. Artwork by Creative Service Group.

Contents
04 08 10 13 14 16 19
Cities for citizens: mapping the future
We set out the results of Ernst & Youngs investigation into the biggest challenges facing 21st century cities

The vision thing

We reveal some of the aims and aspirations of city leaders from around the world

A city where the world comes together

We talk to Antonio Ramn Villaraigosa, Jr., the 41st and current Mayor of Los Angeles, about his role and his plans to shape the citys future

City spotlight: Perth

Lisa Scafdi, Lord Mayor of Perth, talks to Citizen Today about the future for her city

Cities of gold
The leaders of some of the most admired cities in our survey explain their success

Paris moving story

Citizen Today talks to Maurice Leroy and Jean-Paul Huchon about Grand Paris, a massive investment program that will transform the journeys of commuters and tourists in the French capital region

A city on the move

We speak to Bogot leader Yuri Chilln Reyes about his citys civic and economic resurgence in recent years

22 29 30 32 35 36 38

London calling
Citizen Today examines why London Mayor Boris Johnson believes Londoners can be condent about their citys future

City spotlight: Mexico City

Marcelo Ebrard, Mexico Citys Mayor since July 2006, tells Citizen Today about his role and his plans for the future

Clean and green: the future of cities

How cities can harness the potential of clean technology is one of the many challenges uniting civic leaders around the world

Competing for growth, cooperating for balance

Why greater collaboration will ensure that cities around the world will grow and develop

City spotlight: Curitiba

We talk to Luciano Ducci, Mayor of the Brazilian city of Curitiba, about the continuing evolution of his city

Hot off the press

A look at recent thought leadership from Ernst & Young

Spotlight on Germany
Introducing Ernst & Youngs Government & Public Sector service line in Germany

April 2011

03

Cities for citizens: mapping the future

Twenty-rst century cities face unprecedented challenges as the twin trends of globalization and urbanization have increased the competition for talent and capital. Here, we set out the results of Ernst & Youngs global tour of City Halls around the world

Ours is an increasingly urban world. In 1950, only 29% of the worlds population was classed as urban dwellers; by 2050, the United Nations predicts that this will have risen to 69% regionally, this gure will be 90% in North America, 88% in Latin America, 84% in Europe and 75% in Oceania. Ernst & Young believes that such changing demographics, twinned with rapidly shifting economic power from developed to emerging markets, and diminished nancial budgets, means that more is now depending on the decisions taken by city leaders than ever before. But what are todays generation of mayors and their deputies thinking? What drives them? How do they see their cities developing as they seek to balance economic and infrastructure investment with sustainable development? Such questions underpinned Ernst & Youngs investigation into the biggest challenges facing urban communities around the world. As part of this year-long project, our Government & Public Sector teams have interviewed more than 70 city leaders from around the world, including mayors, chief executives and their implementation teams, to uncover their ambitions and targets; their challenges and priorities.

Yet at this time of intense competition, resources primarily due to the deep impact of the nancial crisis are increasingly scarce. The degree of nancial resource a city can secure from its citizens, the governance hierarchy, donors and investors is dependent on a number of factors. These include the population size and migration into and out of the citys borders. If a citys leaders are viewed positively by citizens and prospective citizens, this will impact demand and migration levels. The success of a city leaders strategy will be shaped by the current state of the city and its leadership whether aspirations or ambitions are shared or bought into by the citys diverse spectrum of stakeholders (see diagram below), and whether a city has the ability to generate the resources needed to achieve its ambitions in a sustainable manner.

But while each faces a unique mix of multiple and competing stakeholders, there are some underlying themes that universally apply in terms of applying an urban strategy to increase a citys attractiveness to business and investors. The priority actions fall into four key categories: Introduce powerful, accountable leadership and governance Build stakeholder confidence through delivery Harness popular support and drive change Embrace the future and step ahead However, it is vital that these actions are backed by robust analysis and insight in order to sell the vision to all stakeholders and transform the ambition into reality by securing the right resources.

The body politic comprises the political and administrative mixture that governs and manages the city.

Body politic

Citizens

State of the cities

While every city is different, globalization, in all of its forms, has meant that cities all over the world are more interconnected than ever before. As capital and people move freely, city leaders are now striving to attract talent and investment, and to provide a sustainable, vibrant community for their citizens to live, work and play. Successful cities that can attract both talented people and inward investment will be high-performing, balanced and creative, under good economic leadership, have a highly skilled pool of human capital, high levels of innovation and good quality of life.

Each city will coexist with local, state, regional and national government in a governance hierarchy that encapsulates the degree of devolved power/ delegated authority the city retains.

Governance hierarchy

How do cities become/stay competitive?

Existing businesses

The citizen is the lifeblood of every city all will have their hopes and aspirations for a brighter future. Their leaders must lay the foundations for them to want to live, work and play in the city, or they will migrate.

Donors
Donors represent a potential resource pool for cities to compete for. They comprise international organizations such as the World Bank, as well as nongovernment organizations (NGO) like philanthropic foundations.

New businesses Investors

Existing businesses help ensure the city can maintain itself nancially through the provision of jobs for citizens and by paying corporate and employee taxes. New businesses will appeal to capital for investment (their life blood) in order to create jobs and wealth.

Investors will consider the balance of risk versus reward from the city debt they purchase and/or the business ventures they back.

April 2011

05

Cities for citizens: mapping the future

The survey results

We devised two survey question sets on the developing agenda for city leaders around the world. The rst was for the city mayor, or a chief executive the person with the vision to build a brighter future and the second was for their strategy or nance director; the person who will oversee the planning and execution from an operational and nancial perspective. The results fall broadly into ve categories.

said they were between 51% and 75% in terms of their progress, whereas only 32.4% of deputies shared this assessment. According to our research, the key activity supporting these strategies is infrastructure and environmental improvement, with 66.7% of our respondents citing this as a key priority. This was followed by building a city brand (57.8%). Ernst & Young believes that robust nancial management is critical to the successful execution of policy priorities, as well as the day-to-day running of a city. Managing resources effectively and striking a ne balance between income and expenditure requires a high degree of competency and capability, much as one would expect to nd in a well-run corporate organization except in this instance the shareholders are citizens. Looking at how a citys strategy is nanced in more detail, our survey asked for an estimation of how it will be funded, and where the current budget comes from. The largest source is, and is expected to continue to be, citizen taxation, followed by national governments and then business taxation. Financial sustainability is vital, and robust nancial management capability is essential to enable city policy-makers to model different funding scenarios and consider the implications they raise.

These include: New transportation systems (84%) Emission reductions (78%) Energy reductions (70%) Renovation of existing buildings (70%) Green promotion campaigns (65%) These results underline how many cities, and indeed many countries, have come to view green jobs as a central part of their economic recovery plans. Increasingly, they believe that a competitive advantage can be gained by developing a city knowledge base to leverage into other markets.

Vision
Asked to list their three main reasons for taking the job, the city leaders we spoke to put forward an eclectic mix of motivations. It is interesting to note that fewer than 10% gave answers that could be seen as furthering their own political careers. As for their vision for the city, tackling social inequality and reinventing their city as a global center of excellence shared top billing. These targets were then followed by sustainability and economic development. We also asked what these leaders wanted their cities to be famous for 10 years hence. Much like the results of the question regarding why they took the job, we received a range of personal commitments.

City issues
Although the strong recovery we saw in the emerging markets contrasted with a slower one across the developed world, wherever a city is located, its leaders have been tapping into support from national governments and nancial institutions in a bid to restore scal strength. We looked at what city leaders see as their most pressing and challenging policy areas. Reecting the straitened economic times in which we live, economic progress and development emerged as a key priority. However, the diversity of responses underlined how important it is for a mayor to gather a team of like-minded experts to deliver their priorities. While no politician should be expected to master every detail surrounding each of their policy agendas, it is incumbent on them to attract high-caliber specialists in their eld to drive each policy forward.

Strategy
The question How on track are you to successfully delivering the current strategy resulted in divergent results between mayors and their deputies. The mayors are clearly more optimistic, reecting the fact that they tend to be politicians and perhaps less risk averse than public servants, who were more cautious in their responses. For example, some 50% of mayors

Sustainability and economic development

As is made clear in the analysis on pages 3031 of this edition of Citizen Today, the priority given over to sustainable development by todays civic leaders is one of the most striking outcomes of this research. With 84% of respondents revealing that they have a specic sustainable development policy in place, a number of different implementation activities are occurring.

Ambition/aspiration
Dened as the clear articulation of a future state bought into by all stakeholder groups. To make the journey to the future state a reality, it will be championed by great leadership, embraced by the body politic and supported by the governance hierarchy, donors and investors.

City sustainability Ambition/aspiration

Build stakeholder condence through delivery Introduce powerful, accountable leadership and governance Visionary Embrace the future to stretch ahead Dened as the ability of a city to manage and grow its resource base social, economic and environmental. A sustainable city will be well run and nancially sound, growing in size by citizen numbers and businesses located there, and in harmony with its local/regional environment.

Why do cities need to change and move toward the top right corner?
Action needed to back up the words and move across

Stymied

Incremental Transformational

City sustainability

Stymied

Harness popular support and drive change

Ambition/aspiration

Visionary

Pull ahead and stay ahead

Re-energize with leadership and move up

Popular support but no leadership to harness it and move up

Incremental Transformational

City sustainability

It is equally important for them to build effective and efcient working relationships with public servants in each city. Very often, these individuals possess the experience and expertise that can make the difference between an effective execution of a policy, and a policy which has minimal impact.

Summary
What do these results mean?
So what has our research uncovered? We believe that there are seven key insights which have emerged.
1. Competition for resources is global, not local, because people and capital are highly mobile. City leaders must therefore outline a vision that appeals to citizens and investors alike, in order to attract and retain the resources they need for the city to grow. 2. The respective size of a city is not important; all have the capacity to deliver a vision and attract resources, and in doing so become the best that they can be. The vision and the strategy needed to deliver it must be sustainable and ambitious and underpinned by strong leadership. 3. However, many cities and national governments continue to face intense funding difficulties as a result of the financial crisis. Because financial sustainability is vital, a mixture of different funding mechanisms both public and private must be considered. 4. Consequently, a world-class financial management capability is essential. Managing the numbers, modeling options, optimizing resources these will enable city policy-makers to assess different funding scenarios and consider the implications they raise. 5. Some cities have pinned their hopes on large infrastructure projects; to kick-start economic activity, and to attract business, investors and talent. But the competition for capital and developers is now global, and investor appetite will not meet current demand. So city brand is critical, and a unique offering may be the deciding factor. 6. Prioritizing the allocation of resources to meet strategic goals is needed, along with innovative thinking about service design and delivery models. Income earning city enterprises, either co-owned and or co-delivered with the private sector, are a better way to generate funds than raising taxes. 7. Investors and donors, as well as businesses and citizens, will expect city leaders to ensure that maximum stakeholder value is assured. A world-class financial management capability will build stakeholder confidence in the leadership and the administration, which must strive to be transparent in its reporting and welcome accountability to citizens its voters. If it is doing a great job, it should tell the voters and welcome the scrutiny that will follow. In undertaking this survey, Ernst & Young selected respondents from a wide range of cities from around the world, as the summary below of certain of their characteristics demonstrates. The population size of the city or urban areas surveyed varied from 350,000 to 8.8 million and some cities were quite specific about not including the population of the wider metropolis. The average was 2.75 million. The employment base within our sample of cities ranged from 250,000 to 4.5 million, with the average being 1.4 million. Migration into the city from outside on a daily basis for work varied from 50,000 to 1.26 million, with an average of 425,000. The budgets available to city leaders to run these cities ranged from US$33.5m to US$40,425m, with the average being around US$8,040m (all local currencies were converted into US dollar equivalents to allow comparisons to be made). We hope the results of the survey will help provide city leaders everywhere with the knowledge and insights required to inuence the developing city agenda. To read more, visit www.ey.com/government

The priority given to sustainable development by todays civic leaders is one of the most striking outcomes of this research
Governance, accountability and stakeholder engagement
In response to the question on How is the voice of the citizen represented, and how frequently can they be heard? we learn that some 26% of city leaders in our survey are not directly elected, 31% of respondents do not elect local/district councils, and 51% do not utilize community action committees. When asked who held them to account a board of directors, an executive committee, an elected legislature and citizens it was surprising to nd out that only 71% and not 100% of respondents stated they were held to account by citizens. Such a nding serves to highlight the diversity that courses through city systems wherever their geographic location.

April 2011

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The vision
What motivates someone to take the job of mayor? In many cases, they will stand for election to secure a popular mandate, and be open to media scrutiny not all of it pleasant. We asked each mayor or city leader this question, and it is interesting to note that fewer than 10% gave answers that could be seen as furthering their own political careers. They gave a variety of reasons for why they took on their current role, a selection of which we recorded (anonymously) in three broad categories.
To deliver change and make a difference
I think the opportunity of being a mayor gives you a chance to implement everything you wanted to toward transforming a city. To build the citys economic capacity up to a world-class level. To continue bringing innovation to public management. I wanted an opportunity to be involved with change, improvement and re-direction, especially enterprise services. To deliver a better form of governance model the Council is currently not optimized for decision-making. My experience in public administration led me to assume a personal commitment to the building of a different future for the city. To get this city moving which was my campaign slogan. To ensure that the city is a growth engine for the entire region. This city is already great but still has great potential; economically, socially, culturally. To contribute in an effective way to change our political and organizational culture.

The diversity of these responses is perhaps somewhat surprising. After all, as Marc Lhermitte makes clear on page 24 of this edition of Citizen Today, irrespective of their size and location, cities today are facing the similar challenges of spurring economic growth while addressing climate change and the public decits caused by the nancial crisis. The range of ideas and ambitions reects two realities. Firstly, city leaders are different. What drives them, and what gets them to work every day, differs from city to city. And secondly, cities themselves are different. While obviously sharing some similar characteristics, their individual strengths, social mix and variety of resources within their borders means that no two cities are the same.

thing
A personal afnity with the city
This is my city. I have a tremendous opportunity to make an impact and a difference in the community I love. I have worked in this city for 25 years: being its mayor is one of the most demanding jobs in the country. It is an honor to be Mayor of one of the worlds leading cities. To do something for my home city, to help shape it. I love politics, I love my country, and I love my city.

A passion for serving

A public service ethos combined with a passion for strategy. I love public service I have spent 18 years in an elected office. A great personal challenge as it is the most exciting political position in our country. My previous success in business proved to me that I can set and attain ambitious goals so I decided to go for it. My strong political vocation. Normal political career planning.

April 2011

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A city where the world comes together

Antonio Ramn Villaraigosa, Jr., the 41st and current Mayor of Los Angeles, tells Ernst & Young about his role and his plans to shape the citys future
Photograph courtesy of David Starkopf and Ofce of the Mayor of Los Angeles

What makes a global city? Is it a citys heritage? Its worldwide fame and reputation? Its pioneering infrastructure and economy? Or, more simply, does it come down to that difcult-to-dene X-factor, that certain combination of resources, skills and talent that attracts businesses, trade and people to a citys borders time and time again? Whatever the precise criteria, the city of Los Angeles, California, has long been a member of this select grouping. And for Antonio R. Villaraigosa, the citys Mayor since 2005, the opportunity to lead the city in which he was born represents a dream come true. My grandfather arrived here 100 years ago, he says. He came here with the shirt on his back, built up a small business which became a very thriving business before he lost everything in the Great Depression. But America has been good to me and to my family. I dont have any complaints about being Mayor. I love what I do. I embrace the challenges that come with this job, particularly during the worst economic crisis since the Depression. I embrace the challenges without reservation; this is a great city and I feel very fortunate to be in this job. I certainly dont have any problem getting out of bed in the morning!

Los Angeles facts

Totaling 469 square miles, the Los Angeles five-county area has a population of almost 20 million. It includes Los Angeles, Riverside, Ventura, Orange and San Bernardino counties. If the five-county Los Angeles area were a state, it would be the fourth largest in the United States. When Los Angeles was founded in 1781, 44 people (14 families) lived in El Pueblo de Nuestra Seora la Reina de Los Angeles de la Porcincula (Town of Our Lady the Queen of the Angeles of the Small Portion). The population grew, but the name shrank to simply Los Angeles. Los Angeles has more than 80 stage theaters and 300 museums, more than any other US city.
Source: US Census Bureau and LA Tourist Authority

Villaraigosas career in public service began in 1994, when he was elected to the California State Assembly and, four years later, his colleagues elected him the rst Assembly Speaker from Los Angeles in 25 years. He was already well versed in navigating political challenges, having been elected president of a local union representing civil rights workers and lawyers in six states at the age of just 25. He is clear, though, that the position of Mayor is unrivaled. In my opinion, there is no better public service position, he says. This is because, particularly if you are mayor of a global city like Los Angeles, you can actually make an impact in a way that is very different to what you would be able to do as a legislator. You can actually see the things you propose be delivered very quickly. The difference

If you are mayor of a global city like Los Angeles, you can make an impact in a way that is very different to what you would be able to do as a legislator
is that when youre Mayor, you are up close with the people, you are in the neighborhoods. As a result, youre more focused on practical solutions to problems than you might be if you were working in a state capital or national capital.

When asked why he chose to run for the mayoralty, Villaraigosa is keen to highlight the citys depth of diversity. I think the biggest reason was that this is a city where the world comes together, he says. This is the most diverse city in the United States; there are 200 languages and 37 nationalities. I ran because I felt we needed a leader who could unite us under a common purpose of taking forward LA as the city of Americas hope and future. LAs geographic location and ability to act as a hub for goods and people is also crucial, he adds. I feel like we are the Venice of the 21st century; the largest port in the United States of America, the worlds busiest origin and destination airport; a portal to the East and South. There was a real opportunity for us to take our rightful place as a city of Americas hope and promise.

April 2011

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A city where the world comes together

Policy priorities
Upon his election, Villaraigosa made public safety one of his top priorities. In 2005, LAs police force of approximately 9,100 ofcers was tasked with patrolling a city with approximately four million residents and, with this in mind, the Mayor has sought to recruit 1,000 more police ofcers, in so doing building the force to its largest size in history.

leading to a 57% reduction in gang-related homicides in SNL neighborhoods. Education, though, is the No. 1 item in his in tray. While my priority is public safety, my passion is public education, he says. Since Ive been Mayor, we have doubled the number of charter schools [independent public schools that are free to be more innovative and held accountable for improved student achievement] in the city of Los Angeles, and we have more than any other school district in the country. I selected the lowest performing schools in Los Angeles and over the last two years we have outperformed the school district and the state on the academic performance index. We know that we can make strides and improve academic performance if you set high expectations and involve parents and teachers in decision-making.

ahead of schedule. So there are a number of areas where LA is absolutely leading the way. Villaraigosa, who is becoming President of US Conference of Mayors in June, believes the environment is a perfect example of how cities can prove more adept than national governments in addressing a challenging issue. I think cities in the United States and around the world are incubators of innovation, he says. They are lling a vacuum left by national governments that have often failed or been slow to act in times of change and crisis. Look at the Copenhagen conference in December 2009. There, you saw mayors try to outdo one another and proposing initiatives to address climate change while federal governments were scrambling to do as little as they could to address this crisis. Among the more recent environmentally friendly initiatives in LA is the citys bike plan, which the Mayor says has largely been inspired by similar programs in Copenhagen, Bogot and Mexico City. The plan which was unanimously approved by the city council sets a long-term goal of some 1,680 miles of interconnected cycle paths and calls for 200 miles to be added every ve years. The city currently has fewer than 400 miles in a patchwork of segments. Clean technology, too, is crucial to the citys future, adds the Mayor. We are also the cleantech capital of the United States and are launching a lot of clean technology initiatives in the city, he says. His vision is to establish a Clean Tech Corridor and, in doing so transform the downtown industrial core into an incubator for green jobs and technology. The Corridor will bring together researchers, designers and manufacturers dedicated to the development of clean technology products and solutions to climate change challenges.

I feel like we are the Venice of the 21st century; the largest port in the United States of America, the worlds busiest origin and destination airport; a portal to the East and South
Crime is down every year since Ive been Mayor, he says proudly. When I was elected, the homicide rate was 488 homicides; last year, it was at 287. The authors of a Harvard study last year concluded that the Los Angeles Police Department enjoys more support across every community including ethnic minority communities than they have any time in modern history. Asked to pinpoint the main factors behind this success, he highlights the community involvement. Our police forces motto is To protect and serve, he replies. We put as much effort into serving as we do the protecting. Our policing model is very heavily dependent on community policing and collaborating with our communities. For example, our anti-gang efforts are considered among the best practices in the country. Our Summer Night Lights (SNL) program keeps parks open till midnight from Wednesday to Sunday during the summer. The 24 participating parks up from 8 since its launch in 2008 attracted 700,000 people,

Going green
One of the international images of Los Angeles together with more positive scenes such as the Hollywood sign and the glorious Pacic Ocean beaches is, or used to be, the smog that often clogged the downtown skies. Perhaps using such evidence of pollution as a call to arms, Villaraigosa has made clean technology and the environment major planks of his policy agenda.

I think cities in the United States and around the world are incubators of innovation
Five years ago, we said we would make LA the cleanest and greenest city in the country, he says. Weve gone from 3% renewable power to 20%. We recycle more trash (65%) than any city in the United States, we use the same amount of water as we did 32 years ago, and we conserve 19 times the energy we did ve years ago. Our effort to clean up our port is the most far reaching in the world: we have reduced diesel emissions by trucks by 80% and we met the Kyoto targets for reducing greenhouse gases four years

Future goals
Mayor Villaraigosa believes his city can look to the future with condence, even though its nances like so many other cities and governments have been seriously impacted by the depth and scale of the nancial crisis. Although a recent report from City Controller Wendy Gruell that revealed the city is facing a US$350m decit in the next scal year underlined the scale of the challenge, the Mayor is keen to highlight LAs enduring strengths. In the future, I think you will see LA continue to build on its role as the mover of people and goods, he predicts. We move 44% of all the seaborne goods entering the United States. We are the largest port complex in the United States, and more people come here and leave here via our airport than any other in the United States. Ours is the sixth busiest airport in the world for passengers and ranks 13th in the world in air cargo tonnage handled. We are the small business capital of the United States. Were the minority business capital too as many of our immigrants start small businesses here more so than in any part of the United States. So we need to continue to nurture innovation and entrepreneurship in this city. And our diversity and proximity to the East and South means that as Asia rises, so too will Los Angeles.

City focus

City spotlight: Perth

What is your vision for the city; can you name three wow factors and explain them?
1. To make better use of our beautiful natural setting between Kings Park and the Swan River
There is not enough of a strong correlation between our city life and the adjacent beautiful setting. Our core objective is to make projects such as Perth Waterfront, Concert Hall Precinct, Point Fraser and Waterbank come to fruition to achieve this goal and to change the mindset about river use from the river being a passive backdrop to an active water playground.

The capital and largest city in the state of Western Australia, Perth is the fourth most populous city in Australia. The city is experiencing substantial growth in terms of inner-city living, development and industry, serving 100,000 daily visitors and workers in addition to its 15,000 inner-city residents. Here, Lisa Scafdi, Lord Mayor of Perth, talks to Heidi Riddell about the future for her city

Barcelona
1. Successfully built on a major event such as the Olympics to develop and diversify the citys economy. 2. The local culture encourages a 24-hour active and safe city. 3. Achieved great innovation in architecture and public spaces throughout the city.

Melbourne
1. Been innovative in projects such as CH2 (the new Council House, which was Australias rst six-star green star-rated building), its laneways projects and attracting major events to the city. 2. Recognized that change doesnt happen overnight and put in place a long-term strategic vision, and has been making steady improvements for 20 years now.

2. Diversity of experience
The economy of the central city is based fundamentally on being fully engaged with its metropolitan constituency, yet suburban Perth does not relate well enough to central areas and signicant numbers of people never venture into the city. A central city must be different from its suburban competitors with their very controlled 9:00 a.m. 5:00 p.m. environments. Diversity comes from the different built form, including heritage assets and high-quality contemporary buildings and public places, different businesses attracting different people at all times of the night and day.

What are the top three issues you are facing?

Firstly, encouraging the State Government to be interested in the central city is an ongoing challenge that occurs with governments of all political persuasions. While at the moment there is signicant interest in major infrastructure in the city with the completion of the new railway project from Mandurah to Perth and the Perth City Link and Perth Waterfront projects, other decisions by State Government, such as moving signicant government departments out of the central city area, undermine these projects. Secondly, despite being the fastest-growing local government area in Australia, with just 17,500 people living in central Perth there simply isnt enough people at present to create diversity in the local economy, which is still dominated by the 110,000 mostly ofce workers moving into and out from the city each day. Signicantly increasing the inner city residential population and providing them with a range of supporting community infrastructure is one of the main challenges for Perth. And thirdly, we want to change the culture of movement in the city. Perth remains a car-dominated city. Very few parts of the central city feel that the pedestrian experience comes before the motorcars interest. Great cities of the world support the pedestrian experience rst, and this is slowly changing in Perth.

3. People
Positive interaction with people is the main dening element that people remember about any place even more than a citys physical setting. This is also often referred to as a sense of place. Establishing a positive service culture, a friendly and welcoming community spirit and encouraging a positive yes we can culture will make a signicant difference to the way people perceive our city.

What cities around the world do you view as your role models and why?
Shanghai
1. Managed unprecedented urban growth. 2. Encouraging and achieving innovation in architecture and public spaces. 3. Creating a city with a real sense of buzz (that even rivals New York). 4. A vibrant nighttime economy.

Vancouver
1. Achieved signicant growth in central city residential population. 2. Provided wide variety of community and family infrastructure both within developments and in the city to help attract families to live in the city. 3. Been successful in encouraging active use of its attractive river setting.

What do you want the city to be famous for in 10 years time?

We want to be seen as the best small city in the world. A city that provides its hard-working citizens with good infrastructure from light rail and good public transport of all types through to good recreational facilities and, generally speaking, liveability. And be a city that utilizes its beautiful natural setting on the Swan River, along with the presence of the creative sector attracted by the opportunities that arise from the states successful and growing economy, harnessing that entrepreneurial can-do spirit that Western Australia is famous for.

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Cities of gold
Barcelona
Barcelona emerged as the most admired city in our survey by some distance. Some, but not all, of the reasons given reect how the city used its Olympic legacy to accelerate city development. For example: A similar scale used for Olympic Games to develop, drive entrepreneurship strongly, strong focus on job creation and urban renewal. The city is also seen as a step forward compared to the rest of all Latin cities and a great example of a global city at a regional level with a good talent attraction policy.

Copenhagen
Copenhagens success in achieving a high degree of sustainability has prompted much admiration from around the world. The city is admired for the way it has successfully managed a structural change without losing its own special character. It has adopted an interactive approach to engaging with its citizens, especially about development and the environment. Longterm goals have been formulated and communicated to support long-term decisions, such as the desire to be carbon-neutral by 2025.

Frank Jensen, Lord Mayor of Copenhagen: Jordi Hereu, Mayor of Barcelona:

The metropolises of our times are admired when they become places where people live with a free and open spirit, and when people see progress in their personal or professional aspirations. Whether they are visitors at a trade fair or entrepreneurs in a technology center, cities offer the people a physical, social and symbolic environment that they see as optimal for their projects. When a cycle closes and cities grow in parallel, it is thanks to the progress of people. Barcelona has been very successful thanks to continued efforts to maintain its attractiveness, both in terms of its physical assets (international connections, public space, housing and innovative technological districts) and in terms of social issues (quality cultural offer, cohesive social values, shared values), the promotion of institutions that have a global interest, everything from FC Barcelona to the system of universities and business schools. The world positioning of Barcelona has been helped by hosting big, worldwide sports, culture and business events, like the Olympic Games, the Final Four, the World Mobile Congress or Sonar festival. Im extremely happy to be recognized for our green efforts and for our ability to involve the citizens. We are committed to involving the Copenhageners face to face not least in the development of our city. A case in point is the development of a whole new carbon dioxide-neutral area, Nordhavn, where we encourage the local people to provide input. It is important to bear in mind, by the way, that Copenhagen has a long tradition of collective solutions. One example is district heating, where the public sector provides an infrastructure that is so nancially attractive and so up to date in terms of climate standards that 98% of the Copenhagen population has chosen to join it. The district heating system is one of the main reasons why we have been able to reduce carbon dioxide emissions by 20% over the past 10 years. We are now building on that success to introduce district cooling, which also has the potential to excite international interest and attention. We keep the commitment of the Copenhageners by working to provide a good everyday life where it is easy to be climate friendly: we build bicycle lanes, we establish waterfront baths and we lay out new beaches. We are also planning to establish a ski slope on the roof of our new waste incineration plant. That is how we combine modern solutions with quality of life. Our goal is to turn Copenhagen into the rst carbon dioxide-neutral capital in the world. We plan to use this to attract green investments and facilitate partnerships between Danish and international universities, businesses and us as local authorities. We want not only to develop the city in a climateneutral direction we are also going to invite the world to test tomorrows green city solutions in Copenhagen. We want Copenhagen to be one of the worlds leading green laboratories, stimulating Danish growth businesses and attracting international investments and knowledge environments.

As part of our survey, we asked civic leaders which cities they view as their role models. Here, representatives from some of the most admired cities explain the stories behind their success

Melbourne
Melbournes cultural strengths were frequently cited by city leaders. The citys arts, culture and food, and the promotion of the city as a destination for events is seen as a principal driver for development. Its transport infrastructure, too, is praised as one of the reasons that the city attracts big business stakeholders.

Munich
Munich stands out from several impressive German cities by virtue of its ability to think strategically, according to our survey. Munich knows how to focus. Viewed as a model of innovation policy, the citys knowledge economy has left it positioned as a high-tech and creative city.

Christian Ude, Mayor of Munich:

I am pleased and, of course, heartened to know that the city of Munich attracts the interest of so many civic leaders. Economic success is a key factor if we are to ensure that people from different nations, cultures and religions can live together peacefully, today and in the future. However, the rapid growth of the city also presents us with some major challenges. We have to ensure that the balance between economic prosperity and a sustainable quality of life is maintained. We have set ourselves ambitious goals. For example, we want to enhance our childcare system, particularly day-care nursery places. This will help ease the competing demands of career and family. In addition, we want to develop a better early assistance for children from socially deprived areas a move which will help tackle social cohesion by mitigating the effects of increasingly disparate incomes. We also want to offer our citizens affordable accommodation and further enhance mobility within the city, as the public transport system is reaching its limits, both nancially and in terms of capacity. Sport and culture, too, are important aspects of our plans for the future. We hope to host the 2018 Winter Olympics and want our city to continue to be seen as a center of music, literature, learning and research.

Robert Doyle, Lord Mayor of Melbourne:

Melbourne is very proud to be judged one of the worlds most admired cities. Among the crucial factors in our success, our diversity stands out. This is a tolerant, welcoming, multi-faith city, home to people from more than 200 nations. Style and substance dene the Melbourne of 2011. While our economic and social offer is second to none, we are also enriched by artists, performers and writers of global renown. Certainly, ours is a city with a huge enthusiasm for sport; but in fact more people attend cultural and artistic events in our city. Signicantly, Melbourne is a serious place to do business, and also a wonderful place to live. We are nimble and open to change. Take a look at our history. The City of Melbournes coat of arms, with its symbols of a bull, a sheeps eece, a whale and a ship under sail, reveals our past dependence on primary industries. In the mid-19th century, gold rush prosperity built the magnicent architecture that is still a hallmark of our city. By the 21st century, Melbourne has become a globally recognized knowledge city higher education, clean technology, biotechnology, advanced manufacturing and creative industries will drive our economy, complemented by all the attractions of a stylish and cultured city.

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Photograph: Michael Nagy/Presseamt Mnche

Paris moving story

Paris may thrill and enchant visitors from around the world but, like so many other cities, needs to upgrade its transport network to safeguard its future prosperity. Here, French leaders Maurice Leroy and Jean-Paul Huchon talk to Patrice Lefeu about Grand Paris, a 32b investment program that will transform the journeys of commuters and tourists alike

Capital gains

Maurice Leroy (right)

Paris, City of Light, is not resting on its laurels. Notwithstanding its enduring status as an iconic world city, its civic leaders are currently hard at work planning its next stage of development as it evolves into a metropolis t for the demands of the 21st century. The plan, entitled Grand Paris, has been four years in the making. In 2007, President Nicolas Sarkozy set out plans to establish a new comprehensive development project of Greater Paris, inviting ten architectural rms to consider how to turn the French capital into a model super-city, uniting center and suburb, and a driver of Frances economic growth. Sustainable development, improved housing and better transport links between Paris and its suburbs are the three themes binding the projects together. Transport, the projects rst chapter conrms French Minister for Urban Affairs Maurice Leroy, is of fundamental importance for three principal reasons.

line routes and constructing new modes of transport, such as tramways, he says. We will also invest more than 20b in delivering the future automatic mtro system. This system, which will link important business and residential areas such as Versailles and the Charles de Gaulle Airport, as well as the suburbs, will be made up of a new train line approximately 140km in length that will operate 24 hours a day. Huchon adds that the new system is specically designed to cater to the needs of communities across the region not just those in Paris itself. Marne-la-Valle, Saint-Denis, Orly and Roissy are linked to the capital by just a few kilometers of bypass. We expect more than one million travelers to use this bypass every day. The whole region of Paris is affected. And the renovation and extension to the west of the rapid transit RER and RER E lines, respectively, will completely change transport conditions which are in part lamentable for inhabitants of the outer ring of Paris.

The transport network will be a framework around which the peripheral areas will develop to create a city of the 21st century
Maurice Leroy
Firstly, we have to modernize the existing transport system of le-de-France [one of Frances administrative regions and primarily made up of the Paris metropolitan area] to quickly improve the quality of life for Parisien commuters, who are affected by transport issues every day, he says. Secondly, we had the largest public debate to have taken place in Europe, lasting six months, and it clearly demonstrated that inhabitants of the region want their elected representatives, whatever their political afliation, to come together to share a vision, and that is exactly what we have achieved with Jean-Paul Huchon [Chairman of the Regional Council of le-deFrance]. And nally, the agreement lays down the foundations for the Grand Paris Express, the new transport network which will be the backbone of the Grand Paris development. Huchon, too, is keen to stress that the project amounts to a revolutionary change for transport in the region. We are going to allocate 12b for modernizing the transport network, relieving the pressure on individual lines, improving the regional RER orbital train

Economic boost
Underpinning this massive investment is the shared recognition among French leaders that a modern and efcient transport network is fundamental to strong economic development. All of the public players have talked to each other and how we have moved away from a strictly political approach to get to the crux of the matter: the common interest, points out Leroy. That was my primary aim, to bring all of the interested parties together, regardless of their political afliations.

Creating good conditions for employees is an absolute prerequisite for a major metropolis
Jean-Paul Huchon
It is perfectly true that the next key chapter of the Grand Paris project is economic development and creating jobs, continues Leroy. In fact, we aim not only to boost economic development, but also to improve employment, housing and the quality of life in general around the capital. The transport network will be a framework around which the peripheral areas will develop to create a city of the 21st century, the global city envisaged by the French President. Beyond that, we know that the dynamism provided by Grand Paris will benet our country as a whole.

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In fact, we reject the idea that Paris is an ultraspecialized city; we intend to create a city which covers a diverse pool of excellence. That is why services for companies with high value added and the Dauphine university will be set up around the district of La Dfense. In the Seine valley, around the port at Achres and Cergy-Pontoise, a collection of eco-industries will spring up. Plateau de Saclay will become one of the most important scientic and technological centers in the world. A biotech valley with laboratories and pharmaceutical companies will develop around Evry. For Huchon, it comes down to the simple fact that its the people that give an area its wealth. He adds: Creating good conditions for employees is an absolute prerequisite for a major metropolis such as le-de-France, which is the largest region in Europe and an international economic center, not to mention the fact that it is also the most popular tourist destination in the world. This is a signicant asset for attracting new investments, creating new jobs and strengthening the dynamic development of the region around Paris. This translates as 30,000 jobs per year, the development of SMEs and large corporations and support for innovation and new technologies. are emerging worldwide, enjoying incredible growth. In particular, I think of Asia in this context. Exploiting and developing the numerous attributes of the capital region to allow France to maintain its position in terms of international competition. This is the real aim of Grand Paris. This is the reason why the French President wants us to extend our vision to include the periphery, wants us to move beyond the traditional boundaries of Paris, and wants us to build a global city, a city of the 21st century. A global city is one where exchanges take place, a city of knowledge and cultural diversity, a space connected to regional and global exchange networks, which values the potential and wealth of its suburbs and peripheral areas while striving for international economic development; Grand Paris is a global project! With construction having already started, the timeline for the project is ambitious but deliverable, believes Huchon, with the rst new line operational in 2017. Work has started on the northern railroad bypass, known as Tangentielle Nord, between Sartrouville in les Yvelines and Noisy-le-Grand in Seine-Saint-Denis, with eight tramways either under construction or being extended, and work on extending the automatic mtro line 14 will begin in the fall of 2011, he says. So the foundation stone has already been laid; however, it is up to us to press ahead with our efforts and deliver on our commitment. And I am sure that in some ways, that is when the most difcult part will start.

The foundation stone has already been laid. However, it is up to us to press ahead with our efforts and deliver on our commitment. And I am sure that in some ways, that is when the most difcult part will start
Jean-Paul Huchon
But its also an important project to tackle the issue of housing by creating more than 60,000 housing units per year. Furthermore, the future of our region will benet from the reduction in greenhouse gases by a quarter between now and 2030. This is huge; we are talking about the future of 11 million people who will be affected in the region of Paris.

Exploiting and developing the numerous attributes of the capital region to allow France to maintain its position in terms of international competition. This is the real aim of Grand Paris
Maurice Leroy
Elsewhere, the east of Paris will be home to a large industrial and scientic area dedicated to construction, maintenance and city services. The visual creation industry will center around PlaineSaint-Denis, complementing the establishment of the Condorcet campus dedicated to humanities and social sciences. In Le Bourget and extending over to Roissy and Villepinte there will be a center dedicated to aviation and training in the sector, allowing the development of international trade and the logistics industry. By the time its completed, the Grand Paris project will have created almost a million new jobs and brought about an essential new form of growth growth linked to the knowledge-based economy, says Leroy. The stage is set, then, for the next chapter in Paris illustrious history. Haussmanns great work of the 19th century gave Paris the face we recognize today and tomorrow people will talk about Grand Paris, concludes Leroy. This is a project in which we invest our will, our determination and our energy to lay the foundations for the best possible future. Everyone is welcome to join in on this adventure. Its a process of opening up to everyone, and thats why I would like to give this message to all of your readers: welcome to France, welcome to Grand Paris!

Attracting international investment

Once the construction has been completed, the projects leaders believe Paris will be better placed for future success in all its forms, as Leroy explains. Today, France is an interesting location for numerous investors. But will the same be true of tomorrow? Considering how fast things are changing, we could have reason to doubt this, unless we question it every day. Grand Paris is not only a new transport network, its also a vision for the next century. In this context, we have identied project areas to spearhead Frances competitive position, rather than simply restructuring a new city on the foundations of the old one.

Vision for the future

The passion that Leroy and Huchon have for both the project and Paris itself is unmistakable. Paris is a magical city for the whole world, the City of Lights, swathed in history and prestige, says Leroy. However, in terms of development, nothing can be taken for granted. International competition is erce, and numerous areas

Patrice Lefeu is an executive director with Ernst & Young. Based in Paris, he works in the Government & Public Sector practice.

Capital gains

A city on the move

Bogot, capital of Colombia, is experiencing a civic and economic resurgence. Here, city deputy leader Yuri Chilln Reyes, tells Luz Mara Jaramillo about the reasons for its success and ambitions for the future
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Bogot 1993
A city at the heart of Colombias drug trafcking epidemic. As a result, violence was surging, jumping from 22 homicides per 100,000 inhabitants in 1985 to 80 homicides per 100,000 people in 1993, according to Colombias Institute for Legal Medicine and Forensic Science.

Bogot 2011
A city transformed. In addition to strong investment in infrastructure, and a deep commitment to sustainability, crime rates have plunged and it has become one of the most attractive cities in Latin America to do business. How has this change come about?

The transformation of Bogot, the capital of Colombia, from a city beset by crime and disorder into a thriving, bustling metropolis is one of the recent success stories of Latin America. While global attention has focused more on its neighbor Brazils stunning economic surge, Colombias resurgence, too, has been impressive. Bogot, so long ravaged by violent conict involving armed groups and drug cartels, is now on the up. Its performance has roots in the citys ability to look to the future, as well as its leaders determination to establish it as a magnet for commercial and economic development. Thats according to Yuri Chilln Reyes, Secretary General of the Ofce of the Mayor of Bogot. In 2010, Bogot occupied the eighth place in the ranking of Amrica Economa Intelligence of the best cities to do business in Latin America, he says. From this perspective, we understand the need to make Bogot a capital that projects itself internationally every day, so that it gains position progressively, as a city that is a business platform in the region. It has everything to be so. We are planning for our city to be recognized as one of the top ve most important business centers in Latin America, and the most important in the Andean region and the Caribbean, as well as a leader in the quality of life that it offers its residents. It will thus become a city that attracts a large inux of tourists, which will serve as a primary engine of development for the country.

combine the exploitation of global advantages and advances in infrastructure, technology and economic progress, with the requirements of social justice and the principles of equity and solidarity as central components of citizenship. It is clear that Chilln Reyes has high expectations for the continued growth of his city, one that bets Colombias status as the fourth-largest country in South America, the second-largest population and richly endowed with unexploited substantial oil reserves and natural resources. We want ours to be an inclusive city, one that guarantees equity and the full enjoyment of human rights, he says. In practical terms, this will be expressed in equality of opportunity for all, a reduction in poverty, an increase in freedoms and appropriation of the benets of development. Ultimately, we would be a city making progress, focused on placing economic growth at the service of human development.

City vision
Chilln Reyes, aged 47, looks at his role as one of transformational leadership. I want to help build a different future for Bogot, for Colombia and our people, he says. I identify myself with a vision of public management that seeks to

With this goal in mind, Chilln Reyes and his colleagues are placing great importance on technological development, positioning Bogot as an important center of high-tech advances and a provider of cultural, tourism and commercial services. In addition, the infrastructure, public services, security, mobility and regional development system will be served by high environmental sustainability, and management and planning institutions of renowned quality and efciency, he continues. Broad participation by the private sector will be achieved, serving as an example on the continent of strategic alliances for progress, growth and social justice.

Beyond borders
In a move that echoes the dissolution of economic borders around the world, Bogots leaders are keen to strike strong relationships with its neighbors, both in Colombia and

Capital gains

The Capital Region is at the center of economic activity and business in Colombia, accounting for 21% of the population and one-third of national GDP. The new business developments have a strong export-oriented service component, including call centers, software and technology companies, transportation and logistics, aerial maintenance, health services and education. At the same time, new investments are being made in the citys surrounding areas in high addedvalue manufacturing and agribusiness. One of the reasons for the citys progress is the model of cooperation between the public and private sectors, recognized as one of the most successful in Latin America, adds Chilln Reyes. Internationally, Bogot is perceived to have made substantial improvements in its security, business environment, connectivity and quality of life.

the diesel that is consumed in our capital, shows signicant reductions in particulate matter, one of the main pollutants. Other programs include a massive planting of trees in public spaces, the effective control of discharge in our main rivers and the protection of our wetlands.

Looking to the future

For Chilln Reyes and his colleagues, much of their current work is focused toward the year 2019, which is when Colombia will celebrate two centuries of independent political life. This is a historic and symbolic event that will invite us to reect on our potential and future, he says. This entails long-term planning to progressively attain multiple goals and objectives such as the strengthening of the integrated transportation system, which will involve the development of large-scale projects. Chilln Reyes is keen to stress that this vision has captured the imagination of Bogots residents. It has been built with the needs and expectations of citizens in mind. The citizens seek a city that provides them with a better quality of life through access opportunities for all and the enjoyment of rights. Accordingly, the citizen is treated as an individual with rights and as the epicenter of State action to guarantee minimum basic rights. The citizen is also viewed as an active participant who has, in addition to rights, responsibilities to contribute to the political process. Chilln Reyes is right to assert that Bogots resurgence can be traced to a number of factors. The future, too, seems bright. Bogot and its regional area of inuence can successfully build their future, concludes Chilln Reyes. This requires making the most of their competitive advantages in exports, the provision of services, and knowledge industries. We will also be encouraging the creation of microbusinesses in order to generate selfsustaining employment, promoting competitive strategies with specialized talent, and continuing to promote peaceful coexistence in society.

City comparisons
Yet while advances have been made, Chilln Reyes pinpoints four cities (Santiago de Chile, So Paulo, Buenos Aires and Montevideo) from which many lessons can be drawn. They are leading cities in the Latin American economic sphere, especially the productive service sector, he says. They also have a great capacity for attracting large multinational companies by offering them stability in terms of taxation and security for their investments and workers. And the quality of life that they offer to their residents, together with the fact they are cities with broad tourism potential, explains why they have become established as leaders in Latin America. And as for Bogots global city competitors, Chilln Reyes cites Panama City [a city whose strategic location is favorable to the grouping of nancial and tourism rms that provide services to companies] and Lima, in Peru [a very dynamic economy, particularly in its industrial sector, and hosts a great number of services, especially those related to the nancial and tourism sectors.]

further aeld. The completion of the process of integrating Bogot with its neighboring municipalities is crucial for the economic, social and political future of the countrys central zone, which will maintain its strength as the economic axis of Colombia, explains Chilln Reyes. During the past few years, Bogot and its area of inuence have attracted 60% of the foreign investments coming to Colombia, which have been focused on the acquisition of existing companies and the exploitation of the large domestic market. More than 600 multinationals and more than 2,000 companies with foreign capital participation are located in the area comprising Bogot and its adjoining municipalities. The GDP of the region is more than US$44b, which is similar in magnitude to that of Ecuador, and exceeds that of countries such as Costa Rica, Uruguay, El Salvador, Panama and Bolivia.

Sustainable development
Largely due to the environmental challenges of recent years, Bogots current civic leadership has made sustainable development a priority. The commitment that our Government has assumed for the protection and the recovery of the environment is unquestionable, asserts Chilln Reyes. The integral strategy to reduce air pollution, which includes the improvement of the quality of

Bogot facts
Population: 7,379,000 Elevation: 2,546 meters City mayor: Samuel Moreno Rojas, who was elected to a 200812 term. Business ranking: Bogot is the eighth most competitive city for doing business in Latin America.
Source: 2010 edition of Amrica Economa Intelligence

Annual city budget: US$6,2b [2010]

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London, under Mayor Boris Johnsons leadership, aims to be the best big city in the world. Its quite an ambition. After all, think of the prevalence of incredible cities around the world, each of which boasts an array of highly individual characteristics that make them truly outstanding places to live and work. From Sydneys beautiful harbor, to the dynamism of New York, to the sheer energy and ambition of Shanghai, there is certainly no shortage of cities to aspire to. London, though, has many fans, and rightly so. One of the worlds greatest and most successful cities, it is a global leader in business and nance and is the engine of the UK economy. Combine its famous river Thames and its preponderance of parks and green spaces with visitor and retail attractions without peer, it is perhaps no surprise that London is regularly ranked as the No. 1 city for travelers worldwide. And all this with the Olympic Games in 2012 still to come. The Mayors role as the executive of Londons strategic authority is to promote economic development and wealth creation, social development and improvement of the environment. Before using many of his powers, the Mayor must consult with Londoners, and in all cases the Mayor must promote equality of opportunity.

The Mayor has a duty to set out plans and policies for London covering transport, planning and development, housing, economic development and regeneration, culture, health inequalities, and a range of environmental issues including climate change, biodiversity, ambient noise, waste disposal and air quality. Together, these plans and policies must also contribute to sustainable development and the health of Londoners. The Mayor also has various other duties in relation to culture and tourism, including responsibility for Trafalgar Square and Parliament Square.

Crossrail, involving the construction of twin tunnels under central London, will link Heathrow Airport, the West End, the City of London and Canary Wharf
Its a job Johnson has taken to with panache. Having been born in New York, he moved with his family to London when he was ve years old and he has repeatedly made clear his admiration for the city he has governed since May

Capital gains

London calling
Boris Johnson, Mayor of London:
Its an honor to be Mayor of one of the worlds leading cities, particularly leading up to the Olympic Games in 2012. London is an amazing city but we can learn from others. We would like to have the dynamism of New York, the civility of Vienna, the spectacular setting of Sydney and the joie de vivre of Paris. We are also keeping a close eye on the new kids on the block such as Sydney and Singapore. I am excited about the future. In 10 years time, I want Londoners to be able to look back at the Olympic Games and remember how it exceeded expectations; for large employers to all be paying a living wage and therefore for London to be making a genuine contribution to fairness; crime to have continued its downward trend; and for the young to be continuing to engage with the economy, for example, to be the best city in the world for school results.

Mayor of London Boris Johnson says he has the most brilliant job in British politics. Here, Harriet Walker examines why he believes Londoners can be condent about their citys future
However, the Mayor and his advisors are keen to stress that the Olympics make up just one part of his overall vision for London. The Mayor wants London to be a fair city, to make sure young people in London have the same access to choices, chances and support, says Jeremy Skinner, senior manager for Economic and Business Policy. He envisions a city that is still growing and developing indeed, one of the few growing cities in the West. Londons population and economy will grow, and the city will evolve in order to accommodate that growth. For example, the Canary Wharf quarter in the east of the city, once a derelict dockyard, began with a large national newspaper group moving in. It then evolved into a nancial district, and is now a massive retail space. Further evidence of this continuing growth lies in the development of schemes like Crossrail (in addition to Londons existing transport infrastructure). Crossrail, involving the construction of twin tunnels under central London at a projected cost of 16b, will link Heathrow Airport, the West End, the City of London and Canary Wharf and is scheduled to be fully operational in 2017. It is expected to create 70,000 jobs over the lifetime of the project.

There is a formal commitment to reduce Londons carbon emissions by 60% from 1990 levels by 2025
Crossrail is perhaps the most high-prole example of the current program of investment in Londons transport system. As the citys commuters will attest, the daily journey to and from work is often a struggle; with seats at a premium whether one travels by train, bus or underground. With Londons population expected to grow by 1.3 million over the next 20 years, extra investment is evidently vital. One area of focus for the Mayor is London Underground, where the current renovation program will, when complete, provide an extra 30% capacity. Cycling, though, is where Johnson himself a keen cyclist is most closely identied. Under his administration, hundreds of millions of pounds are being spent on bicycle routes, bicycle parking, education programs, adult and child bicycle training and events. The most notable though is a bicycle hire scheme which successfully launched last year. When complete, it will provide 6,000 bikes from 400 docking stations across 9 London boroughs and the Royal Parks. The bikes are free for the rst 30 minutes of use. Keeping a city moving is undoubtedly crucial for any mayor, but for London it is especially important, given the competition that exists between leading world cities. We need to be able to attract the best and most highly skilled people to London from around the world, adds Skinner. Financial services are, and always will be, a core industry for us. So we need to ensure a global level playing eld, a stable industry and to build on and promote the fantastic business case for doing business with, and being in, London. And even with the public nances very stretched, to enhance our status we need sufcient funds to provide the foundations for continued economic growth and ensuring that opportunity extends to all Londoners.

Boris Johnson

2008. Underpinning his administrations actions is the ambition bring out the very best in London helping its companies to grow, its communities to thrive and its people to prosper. The environment, too, is taking precedence. As part of the Mayors sustainable development policy, there is a formal commitment to reduce Londons carbon emissions by 60% from 1990 levels by 2025. Johnson also wants to encourage activity and investment in projects designed to tackle climate change in order to demonstrate their deliverability and commercial viability to the private sector. This will have the triple effect of boosting Londons low carbon economy, creating jobs and tackling climate change.

A bicycle hire scheme was successfully launched last year. When complete, it will provide 6,000 bikes from 400 docking stations across nine London boroughs and the Royal Parks

Harriet Walker is a senior executive at Ernst & Young in the UK.

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Capital gains

Urban vision
The civic stories of Los Angeles, London and Paris demonstrate that while todays civic leaders need to possess a multitude of skills, a genuine passion for their city is absolutely fundamental, says Marc Lhermitte
Los Angeles, London and Paris. Three global cities. Three sets of challenges. And three sets of leaders who are committed to using the powers of their ofce to grow and strengthen their cities for the future. On the face of it, Paris and London have much in common. And its absolutely true that these two great capital cities share many similarities. In addition to their geographic proximity, both share world-leading arts and culture and diverse business services and are principal recipients of inward investment, to name but a few. But, as our analysis on the preceding pages demonstrates, they are also facing parallel challenges such as creaking infrastructure and wide disparities of income among their citizens. Transport, it seems, is viewed as a key remedy; both Londons Crossrail and the Grand Paris project will create tens of thousands of construction jobs, spur investment and open up previously less accessible areas of the two cities. A mini-globalization, if you will. And Los Angeles, too, is also prioritizing investment in its transport system, with its mayor, Antonio Ramn Villaraigosa, Jr., implementing a bike plan which sets a long-term goal of some 1,680 miles of interconnected cycle paths and calls for 200 miles to be added every ve years. In addition, he cites LAs geographic location and ability to act as a hub for goods and people as integral to the citys future: I feel like we are the Venice of the 21st century; the largest port in the United States of America, the worlds busiest origin and destination airport; a portal to the East and South. This example, one of many, serves to demonstrate that irrespective of a citys size or geographic location, todays generation of civic leaders are more often than not facing similar priorities and frustrations. Certainly, theirs is not an easy job. How to navigate the complex maze of driving economic growth, while at the same time addressing the challenges of climate change and the aftermath of the global nancial crisis and huge public decits, are questions that have taxed the nest and brightest of both the public and private sectors the world over. And, unfortunately, there is no easy answer. Our examples of Los Angeles, London and Paris do suggest, however, that achieving economic prosperity and sustainable growth are goals that are largely dependent on the specic actions and policies stemming from local and regional governments. Effective leadership, then, is vital. So what does this mean in practice? The best city leaders have to possess a variety of talents and strengths. Though crucial, theres more to it than effectively stafng an organization and setting a challenging, yet deliverable, policy course. Effective communication and not just to the media is nowadays a prerequisite. With capital and investment owing in multiple directions, mayors need to be able to project and sell their city to a variety of international and competing audiences. Take Londons Boris Johnson, for example, who frequently travels to other countries in a bid to encourage investment into his city. No doubt he would see this as a core aspect to his determination to help Londons companies to grow, its communities to thrive, and its people to prosper. Among the key success factors for the transformation of Paris and its region is the shared vision among all public stakeholders that Frances capital must invest to remain one of the truly global cities. Whatever the differences of opinion among public leaders at national, regional and local levels there has been, and will certainly be, a continued ambition to make it work for the benet of citizens and companies. And, luckily, we can observe that all public leaders have sought to minimize their political differences and now share the same commitment to renovate the urban environment, engage in sustainable agendas in transportation and energy, and invest in clusters of economic development and advanced research. This shared interest in promoting economic and social development is reected by the evident passion each set of leaders clearly has for their respective cities. Mayor Villaraigosas joy, in particular, comes through loud and clear: I love what I do ... I embrace the challenge without reservation; this is a great city and I feel very fortunate to be in this job. In the nal analysis, perhaps this zeal, this ambition, this essential aim of making a city the best it can possibly be, is the crucial component behind the success of any city administration. Without it, the chance of delivering real change for the better recedes into the distance.

Marc Lhermitte is a partner with Ernst & Young Advisory. He advises corporate clients on international location strategies and public sector clients on economic development, real estate and competitiveness issues.

Boon or burden?
The scale of the nancial crisis has not stopped cities competing with each other to become international nancial centers, says Philip Middleton
Once upon a time, the mayor of every city with aspirations to becoming a World City and the premiers of most countries believed that developing a large and expanding nancial services sector was a primary strand of economic and social policy. It was believed that whereas domestic banks and nancial services companies were to be nurtured and encouraged for their contribution to the real economy, additional prizes lay in developing an international nancial services capability that would lure mobile global rms, talent and capital. The attractions are obvious. Financial services generate signicant skilled employment opportunities for citizens and are pretty much pollution-free. The cluster effects can be immensely important, as nancial rms produce a requirement for everything from accountants, consultants and lawyers to printers, taxi drivers and restaurateurs. In London, for example, it is estimated that the nancial sector (the City) generates almost US$20b in annual demand for non-nancial services companies. The corporate and personal taxes paid by the sector and its employees are immensely valuable to city treasurers and nance ministers alike, as are the contributions to social and political causes. Furthermore, like hosting the Olympic Games, having a strong and ourishing nancial services center puts you on the map and burnishes your international prestige and reputation.

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So whats not to like? The nancial crisis highlighted some of the potential downsides to overenthusiastic expansion into nancial services. For a start, dealing with failed or failing rms on your patch can be messy, expensive and corrosive to domestic public opinion. The expected tax revenues may disappear if rms make losses, or indeed if globally mobile businesses decide to fold their tents and disappear elsewhere. The newly heavy and intrusive hand of global regulatory reform in nancial services is expanding across borders and in some elds trumping sovereign freedom of action. In raising standards, transparency and costs of operating nancial services businesses across the globe, governments and regulators are effectively putting certain types of business model out of business (brass plate, lax regulation, generous tax regime, lack of curiosity about activities) and reducing the opportunity for differentiation in others. In an age of austerity in many countries, voters are also starting to question whether nancial institutions and their employees should be given preferential treatment, and whether the risks of hosting major nancial institutions outweigh the benets.

What is the recipe for success? Some cities, owing to accident of geography and time zone, or to a signicant business and industrial economy on their doorstep, will have natural advantages and a signicant volume of captive nancial services from which to start. Others will have little other than a pleasant climate and an accommodating government. In all cases, an exercise in segmentation will be required to identify natural strengths and weaknesses, and to chart the scope of the possible. Some things are absolutely indispensable, including a well-educated, exible and English-speaking labor pool and the ability to import key skills and workers; an excellent physical infrastructure; a high quality of life; and a stable and predictable political and scal regime. Interestingly, whereas low corporate (and personal) taxes are highly desirable in attracting mobile nancial services businesses, it would seem that this business prize predictability and stability above all.

Whereas low corporate (and personal) taxes are highly desirable in attracting mobile nancial services businesses, it would seem they prize predictability and stability above all
Increasingly, the quality of the overall regulatory regime will be crucial, and jurisdictions that seek to offer a regulatory regime that differs substantially from emerging international norms will have to offer signicant advantages in other areas to retain attractiveness. As cooperation, standardization, and transparency between governments and international bodies increase in the eld of nancial sector regulation and scal regimes, the scope for regulatory arbitrage, while still present, will be squeezed. In addition, the quality and activities of the regulators themselves, and the transparency, cost and perceived equity of the legal regime within which they operate, are crucial. Despite predictions that advances in communications and information technology would sweep away the need for physical concentrations of nancial sector expertise, it seems that precisely the reverse is happening, and that the clusters associated with the nancial sector are growing both in size and number. It is true that a whole new raft of considerations have arisen in the wake of the nancial crisis, but the attractions of hosting nancial services hubs are appealing to many city and national governments, and we continue to see new opportunities emerging around the world.

The desire to build new international nancial centers seems unabated with cities as diverse and important as Moscow, Doha, Toronto and Frankfurt announcing their strengths as nancial services hubs
Hence, the debate over the desirability and extent of the nancial services sector has become rather more nuanced than in the past, and political considerations have become as important as economic ones. Nevertheless, the desire to build new international nancial centers seems unabated, with cities as diverse and important as Moscow, Doha, Toronto and Frankfurt announcing their strengths as nancial services hubs and as potential peers of the traditional centers of world nancial markets, London, New York and Hong Kong. As we witness a shift in global capital markets and growth away from the West and toward other fast-growing economies, it is clear that new centers of nancial power whether in the Middle East, Far East or BRICs (Brazil, Russia, India and China) are emerging and with them new cities as nancial services hubs. Consequently, there is no lack of cities seeking to develop their onshore and offshore nancial services capabilities.

Philip Middleton leads Ernst & Youngs EMEIA Financial Services Government practice, working with governments and regulators across the region on issues relating to nancial sector strategy.

Nurturing sustainable European cities

Supporting economic growth and jobs across the European Union represents a vast challenge. Philip Milne speaks to the JESSICA Task Force from the European Investment Bank about a new form of nancial instruments developed to help fund and kick-start urban development projects

Limited access to bank nance across Europe has resulted in a dramatic reduction in the number of regeneration and urban development projects being taken forward in city regions across Europe. These projects play a vital role in the sustainable redevelopment of the urban landscape. The primary project sponsor is often the public sector but the new austere funding environment means that these bodies are increasingly unable to commit funding, exacerbating the slowdown in the delivery of projects. The European Investment Bank (EIB) and the European Commission, with support from the Council of Europe Development Bank, are responding to the funding challenge by utilizing a number of innovative nancial engineering instruments under the initiative for Joint European Support for Sustainable Investment in City Areas (JESSICA). For Rakesh Bhana and Gianni Carbonaro, who serve as part of the JESSICA Task Force at the

European cities must manage a range of demographic, economic, social and environmental challenges
EIB, the potential of the initiative is substantial; it offers Member States the opportunity to transform some of its Structural Funds that are usually deployed as grants into repayable and recyclable assistance for PPPs and other projects delivering sustainable urban renewal and development. The resources drawn down into Urban Development Funds (UDFs) from the Structural Funds can be match funded by the Member State or through other investors to create the capitalized fund.

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We are working to develop an investment approach where revenue-generating projects can utilize JESSICA support as part of the overall funding package, they explain. Where eligible urban projects are unable to attract the required private sector investment, JESSICA nancing can help address the problem by increasing the supply of investment capital this can take a number of forms, from equity, to either junior or senior debt or the provision of guarantees. JESSICA was initially developed as a concept in 2006 and has since become increasingly relevant to member states with the drying up of public and private sector nancing seen on account of the nancial crisis. Notably, the 2008 publication of the Economic Recovery Plan, which addressed the challenges of the current economic climate, noted that exible funding mechanisms such as JESSICA could be important tools to support urban regeneration.

Legacy
Recycling of funds for future projects Potential to invest in large highimpact projects

Public sector control

Increased control of projects due to input of nance Focus private sector investment into regeneration

Catalyzing investment in locations that would otherwise fail

Flexibility
Case-by-case solutions Increase in eligible projects Variety of investment solutions

Involvement of private sector

Access to funding Access to expertise

Complement existing funding Potential benets

Can be used with European regional development fund (ERDF) Can be used with other public grant

Risk reduction
Risk reduction through area improvement over the long term Risk reduction through cross-subsidization between a portfolio of projects and sites

Policy focus Effective costs

Low cost of capital available to encourage private sector investment Interest benets on capital not spent held within operation Regeneration policies addressed through integrated urban development plans Meeting EU requirements to accelerate use of Structural Funds

Ultimately, we are looking to create cities where citizens want to live and work, now and in the future
According to the JESSICA Task Force, key objectives include to leverage private capital into projects and at the same time to increase the efciency of public funding, adds Bhana. From dramatic demographic shifts, to hikes in energy prices, to surges in crimes and high levels of deprivation, European cities must manage a range of economic, social and environmental challenges, all of which require well-dened longterm urban strategies as well as investment to accompany them. Given the increasing pressure on available public and private sector funds to nance this investment, gaps can be seen, some of which could be lled with support from JESSICA funds leveraging necessary private sector investment. We would like to look back on the JESSICA initiative and be able to say that it has helped to create a system of urban impact funds that have reinvigorated the urban development market and have helped to deliver the sustainable transformation of urban areas. The JESSICA Task Force is in the process of selecting UDFs that will be responsible for making the investments and will potentially also recycle the returns.

UDFs can be national, regional or locally focused investment funds, and can be tailored to specic sectors (for example, energy efciency in housing or browneld urban regeneration). At present, we can see some 26 JESSICA funding structures over 11 Member States in Europe representing 1.6b of assets and capital committed. UDFs have now been set up in the UK, Poland, Lithuania, Germany and Estonia. The timescale for the initial investment is driven by rules on the use of Structural Funds, and investment to projects must therefore be carried out by the end of December 2015. Certainly, there is little doubt that it is important to maintain momentum in the urban transformation of Europes cities. There are a number of key social and economic shifts taking place that mean action on urban development cannot stand still. For Bhana, these include planning for an aging population, the population drift across the boundaries of the Member States, the need to increase competitiveness by moving toward knowledge-based economies and

addressing poverty in urban areas. JESSICA is a tool that can help respond to this agenda through promoting innovation in the nancial structuring of projects to deliver smart and sustainable urban growth. The use of JESSICA is also very much viewed as a means of leveraging private investment in the delivery of urban policies across the EU. For the JESSICA Task Force, a focus on citizens is key to ensuring that the social and economic benets for cities are maximized. Ultimately, we are looking to create great cities for citizens. Cities where people want to live and work, both now and in the future. Cities are competing for inhabitants and must think hard about their positioning in order to retain the productive citizens they have and attract new ones JESSICA funds are strategic urban investment vehicles which can play a pivotal role in supporting this process.
Philip Milne leads Ernst & Youngs Urban Regeneration Advisory team in the UK.

City focus

City spotlight: Mexico City

What were your three main reasons for taking this job?
Having worked in Mexico City for 25 years, I would say that 80% of the problems that I come across now Ive dealt with before. Being Mayor of this city is one of the most demanding jobs in Mexico, but I have extensive experience. I have always been involved with the city and have lived through some very tough times, such as the 1985 earthquake and the pollution problem.

The largest city in Mexico as well as the largest city in the Americas, Mexico City is the most important political, cultural and nancial center in the country. Here, Marcelo Ebrard, Mexico Citys Mayor since July 2006, tells Emilio Diaz about his role and his plans for the future

How on track are you to successfully delivering the current strategy?

We proposed 50 measurable commitments, of which 47 have been met. The aim is to conclude them all before my term in ofce ends. We are focusing on a small number of issues because they represent large initiatives, such as the Metrobus.

What is your vision for the city; can you name three wow factors and explain them?
The city is starting a period of economic vibrancy. It has the highest private investment rate in Mexico and will continue to have an accelerated growth rate. A good example of this is the number of transactions in the real estate market (up 21% in 2010). However, private investment in the city for this year will be 2.5 times the amount of public investment. Also, tourism has gone up from 4% to 5%, which makes our city one of the most important destinations both within Mexico and for the whole world. Innovation is another element that helps foster Mexico Citys development, since it increases the number of registered patents. This in light of the fact that Mexico has had less than 600 patents registered per year since 1993. There are very interesting world-class projects in the works, such as the Biometropolis, which is part of our efforts to create a city of knowledge (it is not an industrial park).

Which city is your main competitor at global level?

Miami, So Paulo, Los Angeles and Monterrey.

What are the top three issues you are facing?

One, to keep the city safe. Two, to nish the infrastructure work under way; and lastly, to reach the goals that we proposed for improving the social system.

What cities around the world do you view as your role models and why?
Rather than just using other cities as benchmarks, we analyze all the models that they implement so that we can adopt those measures that match our own vision. For example, we are looking to turn Mexico City into a digital city by having 600 free Wi-Fi hotspots throughout the city for use by all citizens. We have also given much more importance to improving public transportation. Along with analyzing the planning projects of other cities, we maintain a database of studies prepared by companies. Based on these studies, we look for areas of opportunity, especially in terms of safety, mobility, public space and new economy.

What do you want the city to be famous for in 10 years time?

We want the city to have a more competitive economy, and for that we need to meet our goals regarding education, research and development. Our objective is to link the citys development with knowledge, patents and technological development. Twenty years ago, Mexico Citys economy was based on manufacturing and then the nancial, tourism, real estate, education and health sectors took its place. We now believe that there is huge potential to pass on to a new infrastructure that can replace even oil revenues.

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Clean and green: the future of cities

How cities can harness the potential of clean technology is one of the many challenges uniting civic leaders around the world, explains Steven Lang

With the toxic legacy of the global nancial crisis continuing to cast a shadow over much of the world economy, both national and civic leaders are increasingly turning their attention to those sectors that are still able to support growth and generate jobs. Clean technology is just such a sector and the recognition of its potential among city leaders wherever their city is located is one of the key ndings of our global survey. When asked if they have a specic sustainable development policy, some 86% of respondents responded positively. Yet we shouldnt be surprised at such a result. After all, today, cities exist in a highly competitive global marketplace. Shifting economic power from West to East and North to South a process accelerated by the global nancial crisis has meant that cities all over the world are more interconnected than ever before, as capital and people move freely between them. City leaders are therefore looking for an edge over their competitors. The collective realization by city leaders that cleantech can help deliver long-term economic growth, sustainable job creation, energy security and cutting-edge competitiveness was perhaps only a matter of time. When asked which activities they have initiated to support this policy, the degree of implementation by survey respondents varies. Delivering a greener new transport system ranks highest at 86%, followed by emissions reduction (80%) and energy reduction (74%). Given the tight economic position many cities nd themselves in, it is equally unsurprising that only 37% are taking bold action and offering a tax credit for specic green initiatives.

Secondly, Copenhagen in Denmark. The citys Mayor, Frank Jensen, when asked to set out his vision, highlighted green growth, including plans to become CO2 neutral by 2025, as well as proposals to safeguard a transport system where trafc is made up of one-third cars, one-third cycling and one-third public transport. Claus Juhl, the citys Chief Executive, added: Our plans for the city are based on long-term environmental and nancial sustainability. Activities supporting our sustainable development policy include support to batterydriven cars in the shape of free parking and free electricity. Moreover, a number of other green infrastructure projects are in progress such as the Copenhagen Metro, city bikes and cycle tracks. In total, the investments in relation to transport should ensure that the current trisection, having one-third cycling transport, one-third public transport and one-third private cars, is maintained.

economic conditions deeply challenging, leaving the renewable energy market in an overall state of ux. Some countries, though, are prioritizing cleantech as an industry of national strategic importance and investing accordingly. South Korea and China are setting the pace. The South Korean Government has announced plans to double its investment in cleantech research and development in the next few years to US$2.93b by 2013. A staggering US$86b is being committed to cleantech projects by its government between 2009 and 2013, equating to 2% of annual GDP. This includes the ambition of establishing the worlds rst national smart grid. China, meanwhile, is now the clear global renewable energy leader and is still experiencing growth in its wind and solar markets, facts that will no doubt please Chinese Premier Wen Jiabao, who told the 2009 World Economic Forum Annual Meeting of New Champions of his plans: We will accelerate the development of a low carbon and green economy so as to gain an advantageous position in international industrial competition. But for cities and countries that are more nancially constrained, there are three signicant barriers; policy, capital and infrastructure. These barriers are interdependent. Without a stable, long-term policy framework conducive to investment, capital is unlikely to be invested at the necessary scale and so infrastructure such as new energy efciency units for homes and businesses, for example will not be built at the rate required to enable green growth. To break this cycle, the key factor is producing a coherent long-term set of policies that are centered on clear, long-term national objectives for growth, jobs, energy security and carbon reduction. City leaders should also direct policy and nancial support at a few specic technologies, rather than being diffused across a wide range of areas, which can prevent individual technologies from establishing a conclusive competitive advantage. And nally, city residents must be made aware of the potential for new jobs and investment that cleantech represents. However, there is much in our survey to be thankful for. The journey toward a low-carbon, more resource-efcient world has already begun, and cities, it is clear, are proving to be pivotal participants in this global transition.

The collective realization by city leaders that cleantech can help deliver long-term economic growth was perhaps only a matter of time
And thirdly, Vancouver in Canada. There, Mayor Gregor Robertson is working to establish his city as a green capital proving that going green is good for business. Vancouver was recently predicted to have the fastest-growing economy in 2010 by the Conference Board of Canada. Specic programs include doubling the citys bicycle infrastructure budget, setting the highest electric vehicle charging standards for new buildings in North America, and approving laneway housing. Vancouver now has the greenest building standards in North America. These three examples demonstrate how a city can combine a variety of measures to deliver a strategic plan. Certainly, it is crucial for a city to harness its natural strengths to deliver a green future. A strong engineering, science, technology, research and development heritage, together with a nancial services sector and substantial investor base, coupled with access to natural resources, are all signicant drivers when it comes to going green. But what else can be done to pick up the pace? Although new investment in clean energy reached unprecedented levels in 2010 climbing 30% to US$243b, according to Bloomberg New Energy Finance some countries and technologies are nding the

City leaders should direct policy and nancial support at a few specic technologies, rather than being diffused across a wide range of areas
Certainly, though, it is striking how the issue of the environment has surged in prominence. Lets take three examples, all from different continents. Firstly, Cape Town in South Africa. Faced with issues such as population growth and high fuel and electricity prices, an eighth strategic focus area has been added to its ve-year development plan. This focuses on nonfossil fuel generated energy sources, renewable energy and renewable fuels, climate change and global warming, and the reduction of carbon emissions and pollution within the city.

Steven Lang is Ernst & Youngs Cleantech Leader in the UK and Ireland.

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Competing for growth, cooperating for balance

Greater collaboration will ensure that cities around the world will successfully grow and develop, says Philippe Peuch-Lestrade
Its no secret that one of the common key challenges facing countries around the world relates to the double issue of driving economic growth while simultaneously addressing the threat of climate change. Countries are already working to nd joint approaches to deal with the problem and, as I mentioned in one of my previous articles, the Copenhagen Summit in December 2009 represented an important rst step in the right direction. Nevertheless, these steps are not just for countries alone to take. It is essential to think in deeper and wider terms so as to understand how cities can complement and bolster national strategies. This form of cooperation is absolutely vital and has already started being recognized as such. Cities are integral to the ght against climate change due to their dual role at both national and global level. On the one hand, they represent centers of economic, political and cultural innovation. They are home to over half of the global population and this gure will continue to increase, driven by the general ow of rural-to-urban migration. Furthermore, cities represent the fulcrum of public resources, infrastructure, investments and know-how: they account for about 70% of global GDP and are in competition with one another to capture these resources. As the French demographer Grard-Franois Dumont has phrased it, The growth of cities and their tendency to gigantism has set the course for rural migration. On the other hand, according to recent World Bank estimates, 70% of the worlds greenhouse gas emissions come from cities and over 70% of energy is consumed in urban areas. Indeed, the International Energy Agencys recent study on Cities, Towns and Renewable Energy (2009), calculates that CO2 emissions from energy use in cities will grow by 1.8% per year between 2006 and 2030 (in comparison to the 1.6% global rate), and the share of global CO2 from cities will increase from 71% to 76%. On a similar note, the urban transport sector is estimated (by the World Bank) to account for

a third or more of total emissions of the three most damaging (in terms of climate change) greenhouse gases (carbon dioxide, methane and nitrous oxide). These gures can hardly be ignored: they are crucial to nding the necessary measures to meet emission targets and citizens worldwide are sending their leaders very clear calls for change, especially when realizing the negative impact on their health. This duality, the signicant role that cities play both in terms of climate change and economic growth, places them at the center of the conundrum. Nevertheless, there is much scope for the positive elements possessed by cities, such as the concentration of nancial, physical, intellectual and human resources, to act as a strategic advantage and to successfully inuence and reduce their negative aspects. Indeed, even inter-city competition could be turned to good account. As is written in The World Bank Urban and Local Government Strategy, cities ... serve as catalysts for collective action, decision-making and accountability.

the commitment that already exists among cities and local governments toward meeting the challenges that climate change poses to their growth and prosperity: an impressive number of mayors (representing a total of 146 cities) signed the Mexico City Pact, also called the Global Cities Covenant on Climate.

Transparent reporting is essential to access global climate funds, thus creating a stimulating environment within which cities can work together to address climate change
One of the main components of the Mexico City Pact is the carbonn Cities Climate Registry (cCCR), a reporting mechanism for climate actions of cities aimed at improving global credibility, transparency, accountability and comparability. The number of similar projects based on city rankings and targeted at making the urban response to climate change more measurable, reportable and veriable is increasing, and all of the projects share the important common principles of knowledge transfer and cooperation. For example, transparent reporting is essential to access global climate funds, thus creating a stimulating environment within which cities can work together to address climate change. This cooperative-competitive approach represents an interesting and very powerful mechanism that has been set off and is waiting to be turned up to its full potential. The situation we currently nd ourselves in is far too challenging and complex to be overcome though individual efforts. City leaders are well aware of this and have already selected the path of collaboration.
Philippe PeuchLestrade is Ernst & Youngs Global Government & Public Sector Leader.

The challenge facing city leaders is to strike the right balance between the competition that exists between cities in terms of attractiveness and economic activities, and meeting citizen expectations for sustainable development
Therefore, the challenge facing city leaders, which is very much linked to international concerns regarding climate change, is to strike the right balance between the inevitable competition that exists between cities in terms of attractiveness, economic activities, fundraising and investment, and meeting citizen expectations for sustainable development and going green. Its a question of continuously fueling the economy, but managing to do so with a different set of fuels capable of making the city green and environmentally friendly, therefore improving the quality of life of its citizens and increasing the citys attractiveness for potential future inhabitants. Recent events illustrate how efforts using this approach have evolved. For example, on 21 November 2010, The World Mayors Summit on Climate (WMSC) was hosted in Mexico City. Its timing was crucial, as it occurred mere days prior to COP16 nations follow-up meeting to the Copenhagen Summit. The WMSC is symbolic of

Nevertheless, there are still a number of untapped sources waiting to turn into fruitful partnerships. It entails involving as wide a set of actors and stakeholders as possible, spanning from other cities, through to civil society and across to the corporate world. Cooperation is the key to striking the balance, to grow and be sustainable.

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Cleaning up in Europe
How cities can deliver a low-carbon future is one of the many challenges uniting civic leaders around the world. With clean technology having the potential to become a key contributor to long-term economic growth and job creation, sustainability has evolved into a key priority wherever a city is located. In Europe, the European Commissions Strategic Energy Technology Plan aims to achieve energy efciency through a large deployment of renewable energy in large cities that goes beyond the levels foreseen in the EU energy and climate change policy. Extensive support is available for cities to support them toward a radical reduction of greenhouse gas emissions through the sustainable use and production of energy. Here, Flavia Micilotta speaks to Stefaan Vergote of the European Commissions Directorate-General for Climate Action about Europes deepening commitment to build a green economy, in cities and beyond. What are the next steps for the ETS?
In the past, EU Member States have been pushed toward a policy of over-allocation which favored some specic sectors of their economies. Such free allocation, based on historical emission levels, has led to windfall prots placing companies either in more advantageous or disadvantageous positions. In order to correct this situation, companies will now receive a set number of free allowances only up to a benchmark, which will reect the average greenhouse gas performance of the 10% most efcient installations in specic sectors in the years 2007 and 2008. This will encourage ETS installations to cut emissions and improve energy efciency. Only the most efcient installations will receive all needed allowances for free the rest will have to improve or buy additional emission rights from others.

Why did the European Commission create a separate directorate for climate change?
The establishment of DG Clima in February 2010 illustrates the importance of this issue to the European Commission; it will also help increase accountability and coordination across the Commission to strengthen the ght against climate change. We are currently focusing on the continuing implementation of the Emissions Trading Scheme (ETS), which is the largest multinational emissions trading scheme in the world. Under this framework, large emitters of CO2 within the EU must monitor and annually report their CO2 emissions, and they are obliged every year to return an amount of emission allowances to the government that is equivalent to their CO2 emissions in that year.

What were the implications of the Cancn Climate Change Conference for ETS and for the related work carried out at the European Commission?
We have noticed an increased level of attention on monitoring, reporting and verication of emissions and action also on the part of developing countries, which will now be required to report every two years on their progress. We are impressed by the fact that the work we are carrying out is carefully followed up by China, which looks up to our achievements and strategy. All ETS-related technology is crucial to Chinas goal of reducing its carbon intensity by 40% to 45% by 2020. In addition, Chinas latest Five Year Plan is putting much more emphasis on new low-carbon technologies, an area where the EU has been leading, but where we see that many countries, including China and Korea, are now putting much more emphasis on developing these technologies and competing for these new growth markets.

What is the future role of the private sector in combating climate change?
Companies will continue to become more and more active in the consultation process. They are already working with European Commission directorates to nd climate-efcient solutions to their business needs. Companies are also getting organized in industries and associations trying to nd suitable efcient solutions.

City focus

City spotlight: Curitiba

What were your three main reasons for taking this job?
I have served the city as a public servant for the last 24 years, rstly as a doctor and then as Health Secretary and now Mayor. I think the opportunity to be Mayor gives you a chance to implement everything you wanted toward transforming a city. I am the rst Mayor who comes from a medical background in Curitiba, and I really want to bring in new ideas to help make citizens happy such as improving social housing, safeguarding education opportunities to children or providing an adequate health system. There is no better motivation than being part of this transformation of lives. I also want to continue bringing innovation to public management and making Curitiba one of the most innovative cities in the world.

The capital of the Brazilian state of Paran, Curitiba is southern Brazils largest city and economy. Here, Mayor Luciano Ducci tells Claudia Valenzuela about his plans for the future

What are the top three issues you are facing?

Urban violence this is a huge problem that is being faced by most large cities in the world. This is a problem that concerns local, state and federal governments. There must be more investment to increase the number of policemen on the streets. Our problem is clearly lack of security personnel to ght against crime especially drug trafcking. Urban mobility although we have such huge improvements in this area, it is important that people can have quality transport throughout the city. The number of cars has signicantly increased, and in this point I also highlight the need to improve the quality of infrastructure. Need to integrate cities in the metropolitan area metropolitan problems have to be dealt within a group of cities and not in an isolated way. There are examples of integration (such as garbage consortia and health groupings), but there needs to be strong improvement in terms of legislation and practices.

What is your vision for the city? Can you name three wow factors and explain them?
Curitiba is a city with a good urban infrastructure, one that for the last few years has beneted from good government. We have been investing in urban infrastructure such as health, education and food supplies in order to improve the lives of our citizens. We are also investing a lot in housing developments partnering with the federal government. The city is well cared for and will continue to be. Curitiba has one of the best health systems in the country and has the best education in Brazil. This is not an ambition it is shown in the indicators. Our infant mortality rate is 8.9, a level that can be compared with European indexes, and maternal mortality is around 20 considered a developed country rate. Curitiba should continue to improve its standards in this way.

Which cities around the world do you view as your role models?
There are no individual references to a model city as a whole, but I can highlight some experiences of London, Madrid, Paris or even Asian countries. Curitiba has developed partnerships with Durban in South Africa (due to Brazil hosting the World Cup in 2014), Lyon, in France, and the countries of South Korea, Colombia, Dominican Republic and others. A Chinese delegation has just left our building, having come here to learn about our transport system.

What do you want the city to be famous for in 10 years time?

In 10 years I hope that Curitiba continues to ensure that its citizens live well, with children continuing to be provided with a good education. I want it to be a safe city, with IT access for all; a city that our local residents can be proud of. I also hope that Curitiba continues to be seen as a model city in terms of sustainability, innovation, environment and organization of its urban infrastructure. This is a process, and we need to be permanently improving.

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We look at the latest Ernst & Young thought leadership

Hot off the press

Winning in a polycentric world
Globalization and the changing world of business Winning in a polycentric world shows how businesses need to respond to four core priorities to succeed in a polycentric or many centered world: Redefine global and local Develop a polycentric approach to innovation Rethink relationships with government and tax administrations Build diverse leadership teams with strong global experience The report, which was produced in cooperation with the Economist Intelligence Unit, shows that, after a brief pause in 2009 and a modest rebound in 2010, the worlds 60 largest economies will continue to globalize steadily between now and 2014, driven by the continued global economic recovery, technological innovation and the rise of the emerging markets. The study also highlights the tension between the attening effect of globalization and signicant variations across international markets. The report draws on two sources of original research: Ernst & Youngs Globalization Index, which measures the worlds 60 largest economies according to their degree of globalization relative to their GDP, and a survey of more than a thousand senior business executives worldwide, conducted in late 2010, canvassing their thoughts on globalization. James S. Turley, Chairman and CEO of Ernst & Young, comments, The enormous opportunities in emerging markets, the ever increasing power of technology and a gradual international economic recovery will ensure that globalization continues to deepen over the coming years. That said, it is incumbent on business and governments to continue to make the case for globalization as a positive force for economic and social good and avoid any descent into protectionism. Read more at www.ey.com

Spotlighting innovation in the EU

All around the world, governments are looking for opportunities to foster economic recovery. Everywhere, innovation is evoked as a principal means to achieve economic growth and competitiveness. For example, in his 2011 State of Union Address US President Barack Obama warned of a Sputnik moment in calling for the US to confront international economic competitiveness and innovation policy challenges. Similarly, European Commission President Jose Manuel Barroso stressed the need to speed-up investment in future prosperity through new sources of growth, in particular by supporting business and investing in the growth industries of the future like green energy, innovative start-ups and advanced manufacturing. How the European Unions myriad innovation initiatives are perceived by the private sector, and how governments can foster an entrepreneurial and innovation-driven environment, are just two of the questions explored in Ernst & Youngs new report, The next generation innovation policy. Based on a study conducted in cooperation with the Centre for European

Policy Studies, the report, which will be published in May 2011, suggests that the greatest challenge for governments is anticipating current developments and crafting forward-looking policy actions that will not become obsolete when they nally enter into force. This is a signicant hurdle, especially in the EU, where multi-level governance often signicantly slows down the policy process. Certainly, there is scope for improvement. Over the past 20 years, the gap between Europe and other regions of the world in terms of growth and competitiveness has widened. The European Commissions Innovation Union Scoreboard 2010 recently conrmed this trend, showing that the US and Japan are far ahead of EU member states. At the same time, the BRIC economies are quickly catching up and seem likely to overtake the EU in the next few years. In order to nd adequate solutions, governments need to improve their ability to understand market developments. This will involve strengthening the dialogue with market players and enabling information sharing between private parties to gather information on market trends and future industry and consumer needs. The report also examines the state of innovation in Europe from a global perspective, as well as the evolving trends of innovation in our globalized world. And it discusses the results of a survey of industry experts, scholars and civil servants, who were interviewed on how to improve the EUs approach to innovation in the years to come.

Finance forte
The future of nance leadership Finance forte the future of nance leadership, suggests there is a correlation between strong company performance and the extent to which CFOs and their organizations take a formal approach to talent development and succession planning. However, only a minority of companies are currently adopting such a formal approach. This new report from Ernst & Young is based on a survey of more than 530 CFOs and their direct reports across Europe, Middle East, India and Africa, as well as in-depth interviews with CFOs from companies in the region such as Reed Elsevier, UBS, and Unilever, among others, and experts from academia and the executive search industry. Les Clifford, Chair of the Ernst & Young CFO Program in the UK and Ireland, says: This study indicates the leading companies think ahead by nurturing their CFO talent with structured internal development. Since the 2008 nancial crisis, the role of the nance function and the CFO in particular in guiding company growth and strategy has increased dramatically to meet challenges such as increasing volatility in nancial markets, regulatory change, globalization and the rise of emerging markets. Organizations risk jeopardizing their future and ability to meet such challenges if they leave CFOs development to chance. Companies with revenue growth of 5% or more over the past 12 months are considerably more likely to have identied potential successors to the CFO. Just 28% of companies surveyed for this study have either identied a specic candidate to succeed to the Group CFO position or have several candidates in mind. The need for formal succession planning is also emphasized by the survey nding that companies performing strongly are more likely to recruit internally. The study identies nine key areas a potential CFO should develop to ensure he or she is well prepared to meet the future challenges of the role, of which three of the most important include building a breadth of nance experience, experience of shared services center implementation, and international experience particularly in emerging markets. Read more at www.ey.com

Eurozone Forecast Spring 2011

The Eurozone economy is growing at a much slower pace than expected at this stage of a recovery with GDP estimated to increase by only 1.5% this year and 1.7% in 2012, according to Ernst & Youngs quarterly Eurozone Forecast (EEF). GDP growth this year, as with last, is expected to be mainly accounted for by exports, with world economic performance likely to remain robust, driven by both emerging markets and the US. Assuming that the nuclear situation is brought under control, the recent events in Japan are unlikely to have a signicant impact. However, rapidly rising ination is causing concerns, breaking the 2% barrier in December 2010, the rst time since late 2008, and increasing further to 2.6% in March. Unemployment across the area is also likely to remain stubbornly high. Even in 2015 EEF forecast unemployment to be around 14 million, still well above 2007 levels. Mark Otty, Area Managing Partner for Europe, Middle East, India and Africa, Ernst & Young says, Despite a pick up in the global economy, the Eurozone continues to face a challenging combination of concerns over sovereign debt, political instability and rising prices. Such an uncertain economic environment is continuing to put the brakes on business investment by corporates and subsequent job creation. Eurozone countries must also contend with the implementation of scal tightening. EEF believes that governments currently underestimate the negative impact of scal retrenchment on growth. Fiscal tightening on the current scale in so many countries at the same time has never happened before and even our relatively cautious assumptions about the negative growth impact could prove far too optimistic. EEF welcomes the decision to make the European Financial Stability Facility permanent and to increase its effective size. However, its mandate should have been widened to allow it to purchase government bonds under less restrictive conditions. Short of signicant steps towards closer scal union, imbalances and crises similar to the ones we have just seen will remain signicant. Closer scal union would imply a loss of sovereignty that Eurozone governments do not seem ready to accept. Read more at www.ey.com

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Spotlight on Germany
Germany has the largest economy in the European Union and the fourth largest in the world by nominal gross domestic product (GDP). It is also the worlds second-largest exporter. Made in Germany stands for quality, innovation and advanced technology as well as for a highly skilled and well-trained workforce. Major sectors of the German industry are mechanical engineering, the chemical/ pharmaceutical sector, the automotive industry and electrical engineering. In addition to wellknown global players such as Daimler, Siemens or Volkswagen, Germanys industry-driven economy is also characterized by many small and medium-sized enterprises. Governments around the world have been surprised by the swift recovery of the German economy following the recent nancial and economic crisis. A recent report published by the German Federal Ministry of Economics and Technology (Germany in Recovery Securing Prosperity for Tomorrow) shows that the countrys economy is in excellent shape and that all indicators are pointing toward a continued upswing in 2011. The foundation for this positive outlook was laid in 2010 as the German economy surged forward out of the crisis and posted a real GDP growth rate of 3.6%. Growth of 2.3% is expected in 2011. Employment is higher than at any time since reunication; and the economic upturn promises higher incomes, growing domestic demand and rising tax revenues. After the recovery was initially mainly sustained by exports, it now has an increasingly broader base that also includes the domestic market. What are the reasons for Germanys quick recovery? Like many governments around the world, the German Federal Government launched economic stimulus packages worth billions of euros. The emergency parachute for banks prevented further turmoil in the nancial sector. Equally important, short-time working rules prevented mass redundancies. Now, during recovery, this enables businesses to rapidly meet the increasing demand. During the crisis, small and medium-sized enterprises yet again emerged as the backbone of German industry. They make up considerably more than 90% of all companies in the country and employ 65% of the workforce. Many of them are family businesses and characterized by continuity and long-term planning, not short-term pursuit of prot and frequent changes of strategy. However, while the improving economy has resulted in an overall increase in tax revenue, many German cities and communities are struggling to recover from the downturn. The economic crisis led to a dramatic drop in tax revenue; by the end of 2010, the decit of the local governments amounted to 11b. One in three municipalities even had to submit a budget consolidation plan which means that they could not present a balanced budget and were forced to submit their budget to a supervisory authority for approval. A recent Ernst & Young study based on a survey of 300 German municipalities sheds light on the still-precarious nancial situation of many German cities and local governments. The study shows that while there is a rise in tax revenue, at the same time, expenditures such as social spending and labor costs are also increasing. Therefore, cities and other local governments will have to continue to cut red tape, increase municipal taxes and reduce services. HansPeter Busson, Leader, Government & Public Sector (GPS) for Ernst & Young in Germany, Switzerland and Austria, says: Germanys local governments are more deeply in debt than ever before in the history of the Federal Republic of Germany. Despite the upswing, the long-debated reform of local nances has lost nothing of its urgency. Local governments need to have more freedom of action and more control over their tax revenues and expenditures. Ernst & Youngs GPS practice works with national, regional and local governments as well as with not-for-prot and education entities. We are aware of the growing pressure on our clients to deliver more and better public services for less cost and at the same time to increase public value. In addition to providing audit, tax and real estate services, we help to implement policy as well as drive benets and growth through nancial effectiveness and operational performance efciencies.

Population: 82 million Head of state: President Christian Wulff Head of government: Chancellor Angela Merkel Political system: Parliamentary Democracy 16 states: Baden-Wrttemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, Hesse, Mecklenburg-Vorpommern, Lower Saxony, North Rhine-Westphalia, RhinelandPalatinate, Saarland, Saxony, SaxonyAnhalt, Schleswig-Holstein, Thuringia

Birgit Neubert and Dr. Jens Heiling are senior associates in Ernst & Youngs Government & Public Sector practice in Germany.

Contacting our team

Global Government & Public Sector Center
Philippe Peuch-Lestrade
GPS Leader Paris la Dfense, France

Alessandro Cenderello
GPS Markets Rome, Italy

+33 1 46 93 72 62 philippe.peuch-lestrade@fr.ey.com

+39 066 7535 531 alessandro.cenderello@it.ey.com

Area contacts

Uschi Schreiber
Area Leader Asia Pacific Sydney, Australia

Nobukazu Kato
Area Leader Japan Tokyo, Japan

+61 2 8295 6706 uschi.schreiber@au.ey.com

+81 3 3503 1137 kato-nbkz@shinnihon.or.jp

Alessandro Cenderello
Area Leader EMEIA Rome, Italy

Marc E. Andersen
Americas Leader Washington DC, USA

+39 066 7535 531 alessandro.cenderello@it.ey.com

+1 703 747 0825 marc.andersen@ey.com

Citizen Today team

Matt Mercer
Chief Correspondent

Gemma Williams
Development Director

+44 (0)20 7951 3772 mmercer@uk.ey.com

+44 (0)20 7951 0694 gwilliams3@uk.ey.com

Chris Staerck
Strategic Analyst

Henri Yan
Graphic Designer

About Ernst & Youngs Global Government & Public Sector Center

Around the world, governments and not-for-prot organizations are continually seeking innovative answers to complex challenges. They are striving to provide better services at lower costs and to ensure sustainable economic development, a safe environment, more transparency and increased accountability. Ernst & Young combines private sector leading practice with an understanding of the public sectors diverse needs, focusing on building your capability to deliver improved public services. Drawing on many years of experience, we work with you to help strengthen your organization, deliver value for money and achieve lasting improvement. Ernst & Youngs Global Government & Public Sector Center brings together seamless teams of highly skilled professionals from our assurance, tax, transaction and advisory services. We are inspired by a deep commitment to working with you to help you meet your goals, achieve your potential and enhance public value. Its how Ernst & Young makes a difference.

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Ernst & Young attractiveness series 2011: India, Africa and Europe

Discover what the worlds leading business executives think about: Locating, investing and growing in India, Africa or Europe What governments can do to make these regions more attractive and competitive How they compare with each other The worlds innovation hot spots and most admired cities

World Investment Conference,

La Baule (France), 2527 May 2011

To register: www.worldinvestmentconferences.com Tel.: +33 1 4693 8886

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