I try to focus on cities, but last post I talked about Norway, and today I will talk about Spain. I also think that national policies can teach us lessons about local economic development.

A few weeks ago Richard Florida informed me (and to his 60,000 followers in Twitter :), that Newsweek came out with a new ranking for countries. Newsweek it’s the type of outlet that when I’m living for a few months in the US I feel they’re in the left, and that once I live in Europe a few months, I consider them as a conservative piece of work. Anyways, I always like to take a look at these rankings. I think they made a good job overall. I always like to see how the countries that interest me, the US, Denmark, Bolivia, Ecuador and my native Spain score. There was something that striked me about Spain. I mean, I knew it, but it seemed so clear.

Why the education system in Spain sucks and the healthcare system is so good?

Both, are mostly public, with some private activity though. Both, had the same governments, and similar policy makers, similar history, similar environment, similar population (now 45 million), similar civil servants, similar everything! But why they’re so different??.

The healthcare system in Spain, of course it’s not perfect, but citizens overall are proud of it. That is, universal healthcare, including the 5 million immigrants in the last decade, no waiting lists longer than any other country (or different waiting time than in the US – I tell you this if you’re American), and good quality for all. Great doctors by the way. Also many other countries try to learn from us.

In the other hand, the education system after the golden Spanish era, a few centuries ago, it has been quite bad compared to the rest of advanced countries. 20 years ago it seemed it was taking off, but again is doing really bad. In primary, secondary and university level.

One day I will find out why both systems have such a different results. If you have any idea, please share. I think this gives an important lesson on economic development and policy, even on similar circumstances a mostly public field (there are competing private schools and health care provides but they are the minority) can thrive while other fail, when compared to the rest of the world.

p.s. Here is this ranking, and this opinion to complement the one of Newsweek, which point out Spain’s healthcare top position. I will not post about Spain’s position in education, but you can trust me on this one.

Books recently read

July 20, 2010

Books I’m about to return to the library (actually 4 different ones) on the Berkeley campus:

  • Goodman, Robert, (1979) The last entrepreneurs : America’s regional wars for jobs and dollars [In the book he refers to the local and state government workers, and how they act as bad entrepreneurs. I quoted him here once talking about energy]
  • Richard D. Bingham, Robert Mier (1993) Theories of Local Economic Development: Perspectives from Across the Disciplines. [I started reading their books in 2006, and I love their different perspectives. When I grow up I want to be like them]
  • B. Joseph Pine and James H. Gilmore (1999) The Experience Economy: Work Is Theater & Every Business a Stage [If you want to know more about this, see my slides about it]
  • Daniel Hjorth and Monika Kostera (2007) Entrepreneurship and the Experience Economy [Their point of view on “The Rise of the Experience Economy”]
  • Norman Walzer (2009) Entrepreneurship and Local Economic Development. [Very good book, with out of the box ideas. Recommended reading for LED specialists]
  • Henri L. F. De Groot, Peter Nijkamp, Roger R. Strough, and Roger Stough (2004) Entrepreneurship and Regional Economic Development: A Spatial Perspective [It includes 25 contributors, including my affiliated supervisor Phil Cooke. It has a focus on quant research]
  • Jane Jacobs (1983) Systems of Survival: A Dialogue on the Moral Foundations of Commerce and Politics. [She should have got the Nobel Prize in Economics, even if she was not an economist. Here I comment on one of her books.]
  • Jeffrey Scott Luke, Curtis Ventriss, Betty Jane Reed, and Christine Reed (1988) Managing Economic Development: A Guide to State and Local Leadership Strategies (Jossey Bass Public Administration Series) [This book is made by these four authors. I recently commented on this book]

  • Richard Walker (2007) The Country in the City: The Greening of the San Francisco Bay Area [This is from my advisor here at the Dept. of Geography in Berkeley. He recommended to me, in order to learn more about the efforts that the Bay Area have had on trying to promote a more cohesive regional government. Too bad they failed. See more on chapter 6. The book explains why San Francisco has so many parks (relatively) and nature around. I theorize this makes it different and attracts people. Excuse, DW, to mention Richard Florida, but he would say that these outdoor amenities attract the creative class. And I think it’s right in this one. It’s a good reminder for cities to keep green places.]

Ok, I admit it, I have not read the whole books. But I tried to find the useful things for my project and papers I’m working on now.

“Effective economic development strategies must be customed-designed to meet the unique strengths and opportunities of local and state economies”.

Luke, Ventriss, Reed & Reed argue on page 175, as the editors of the book Managing Economic Development – A guide to State and Local Leadership Strategies (1988). My first impression when I read this, is the striking resemblance of what I must have written a few years ago for a paper conference or project. That is, one should be careful with the ‘one size fits all’ approach than many economists have. I completely agreed with that. That is… agreed. Because now I’m kind of skeptical of this local oriented approach that treats all communities if they were in the same line of the race track.  I keep reasoning in my head:

For example, in the case of Vallejo, they can make the best possible study looking at their financing, regulation, infrastructure, public services, human capital, etc… to tackle their Local Economic Development (as the mentioned book does in chapter 9).  However, no  matter what these cities do, their options will be very limited because theyir economy is quite dependent on the city-region (the San Francisco Bay Area), State of California, etc.

I think to my self that reviewing this book is not going to be very helpful. I keep reading;

“ (…) As a result of the growing economic interdependence, there has been a significant decline in state and local governments’ capacities to unilaterally develop an implement economic development policies and programs. No one government department or individual public manager can effectively act single handedly. This situation forces the invention of new collaborative mechanisms and collective development strategies.
Successful economic development strategies not only precipitate from an intergovernmental contest of cities, counties, COG’s (Council of Governnments), and state and federal agencies, but also emerge from intersectoral collaboration between the public, private, and non profit sectors. Each sector depends on the vitality of the other (…)”

This book is better that I though!, this are so much in line with one of my working papers!. Let’s continue.

“In such an interconnected policy context, a new type of public leadership is required – catalytic leadership. Chapter Eleven examines this trend and shows how, unlike charismatic leadership, which rallies people around the leader’s vision, catalytic leadership facilitates cooperation among a group of leaders and stimulates the pursuit of a goal that is created collectively by the group”.

A pretty nice book, with good complementary articles.

Again, I remembered that one should never judge something for the first paragraphs one reads. Specially from old fellows…

Obama believes States and Cities need urgent help

I’m currently studying the city of Vallejo, California, because it is so far the biggest city of California (and I think in the USA) to have filed for bankrutcy so far. For my PhD I learn about the “do’s”, but I also have to learn about the “don’ts”, so the case of Vallejo it seems it’s a good one to look at some “don’ts”. But, it’s not only California, all across the USA, Europe and Japan, cities now are seriously struggling. Many has been said about the countries, but as Jane Jacobs and Robert Lucas clearly pointed out, the economic development and innovation does not come from the coutries, but more precisely, from the cities. So, in my opinion, we should pay more attention to the cities, even if the neo-classical economists and the different national media across the countries only look at the national level.
Unfortunately, we have had not to wait too long to start paying attention to the economy of the cities. They have been getting into trouble, and this last Friday, President Obama talking about the American cities expressed the urgency to focus on them: 

I am concerned … that the lingering economic damage left by the financial crisis we inherited has left a mounting employment crisis at the state and local level that could set back the pace of our economic recovery. Because this recession has been deeper and more painful than any in 70 years, our state and local governments face a vicious cycle. The lost jobs and foreclosed homes caused by this financial crisis have led to a dramatic decline in revenues that has provoked major cutbacks in critical services at the very time our Nation’s families need them most. Already this year, we have lost 84,000 jobs in state and local governments, a loss that was cushioned by the substantial assistance provided in the Recovery Act. And while state and local governments have already taken difficult steps to balance their budgets, if additional action is not taken hundreds of thousands of additional jobs could be lost. (….) Because the urgency is high—many school districts, cities and states are already being forced to make these layoffs,”

(Barack Obama, 12 June 2010)

Then according to the media he’s asking for $50 Billion in this emergency fund. Something that of course many policy makers can hardly support, not so much because of the 13 trillion debt the USA already has, but because it’s an election year and this looks a risky move. Obama in order to get the monies he continues, a) “I have called for a three year freeze in non-security discretionary spending”, b) put a “a fee on the largest Wall Street firms”, and c) put “agency incentives to identify ways to save money”.

For the first, I think that’s fantastic, although the main chunk of the discretionary budget is the military, so if this is not even discussed to be frozen then it does not go too far. In fact I think the US should not have a freeze but to reduce the whole thing. The question is, Does the American people prefer to keep having a huge military force or teachers in their towns and cities? The fact is that the majority of the people believe that education should be the priority, but the choice it’s not that easy, even if the US military budget sums more than the next 16 countries altogether. For the second measure, it seems that the majority of the people won’t have any problem on taxing the big ones in Wall Street. I mean, it’s like one of the wildest dreams of the middle and poor class. The third sounds like empty words, that I can not even say it is a good try.

Anyways, I don’t want to get into US politics. The main point here it’s not if they’re going to be able to do this, but to say that it seems that the US Government is realizing about the importance of the state and local level. From my view, this is very positive, even if it might be too late. They should have let bankrupt some companies, but cities can not and should not go bankrupt.

p.s. Having said that, I of course have to acknowledge that leading-Republican American guys really think Obama wants sincerely to destroy the nation, as well as the leading-Democrats though Bush wanted the same.

I rarely talk about energy, however today I’m going to transcribe a section of the book “The Last Entrepreneurs” (1979) by Robert Goodman, now a Professor at Hampshire College, MA (I tell you where he’s now because there are many Robert Goodmans). I like the book on how it criticizes many of the strategies taken by local governments. It’s somewhat similar to David Harvey idea on Urban Entrepreneurialism (1989), but if focus a lot on solutions for local governements, and even supports the idea of “Regional Socialism” (I told you similar to Harvey :)   However I’m going to type down this part about energy, because I found it very interesting. It kind of makes me think why we don’t have on the top of the roof here in California a simple solar water heating device.

3000 thousand years ago, the King Solomon was supposed to have said “There is nothing new under the sun” (Bible, Ecc. 1:9). So when we talk about energy, we all know that today’s use of energy comes from an evolutionary process. I remember when I spent the summer as a kid in my grandmas pueblo in Spain, that she put the plastic bath tub during the siesta in the sun. I remember the water was cold when she put it, but it was later quite warm to take a good bath!

Anyways here is these paragraphs:

The Short Life of Solar Energy. The development of regional energy systems was shaped not simply by what most naturally available, but by what was useful to the large energy companies. The “new” solar energy systems of the 1970s actually began to develop in California and Florida as early as the 1890s. But growing private energy companies, exploring for gas and oil in the 1900s, were able to nip that development in the bud.

The technology for present-day systems was patented in 1891 by Clarence Kemp, a Baltimore inventor who put four galvanized iron water tanks in an insulated pine box covered with glass. By the early 1900s thousands of solar water heater users in California were saving about 75 percent on their gas bills for heating water. By the 1910s at least 4000 known solar water heaters had been manufactured, and uncounted others were being produced by local plumbers and tradespeople. By 1920 one small company was selling 1000 units a year. Florida saw an even more impressive boom; by 1941, at least 60,000 solar water heaters had been installed in that state.

In the 1920s, the gas utilities expanded their energy role in California. As the companies made new discoveries, for a time they dropped prices drastically, helped finance the sale of gas units, installed them free, and sometimes even carried the loans of the gas heaters for a few years. A similar kind of promotion was used by the electric utilities in Florida in the late 1940s and 1950s.

With the demise of solar development, the technology for gas and electric heaters improved. Electricity and gas became standard, solar energy as exotic, and increasingly nonexistent, alternative. As people became locked into their electric and gas system, the utilities could raise their prices. The effect of the energy company action was virtually to eliminate the development of solar energy, lock users into fossil-fuel systems, and accelerate our depletion of those fuels.” (Goodman, 1979)

I find interesting that the Home Depot, close of where I live, they have a big banner by the highways that says Go Solar.

I believe today I have practically finished my qualitative work in the city of Vallejo. Although I might visit it again with my wife and daughter just for fun. I have interviewed a lot of people from different important sectors. I think this relates in certain way to my interest in the theory of Systems of Innovation, even though it’s not used too much for local level. For this theory it’s crucial to understand the Actors, the Institutions and Networks. So that’s why I interviewed people from different sectors.

These are the people I have talked to:

Representatives from:

  • City Management
  • Chamber of Commerce
  • Solano Community College (Center in Vallejo)
  • Schoold District
  • Historic Museum
  • Visitors Bureau (Tourist Office)
  • Great Vallejo Recreation District
  • Firefighters
  • Local Media
  • Citizens Groups
  • Vallejo Economic Development Commission (former members)
  • Vallejo Business Incubator (now extinct)

Individuals:

  • Around 30 individuals in the waterfront, streets and businesses.
  • Several business owners (accountants, lawyers, restaurant, retail, etc.)
  • UC Berkeley students who were originally from Vallejo
  • Around 15 people from the Bay Area, and Northern California in general.
  • City librarians
  • Bank workers
  • Construction workers

Academic support:

  • My advisor: Prof. Richard Walker
  • Several PhD students from different departments, but specially my colleagues from Geography.
  • Presented a seminar about my PhD project, in the Dept. of Geography last week, and I got feedback from UC Berkeley faculty and students

I always took notes, and in some occasions emails have been exchanged.  A couple of times it was done by telephone, but I always preferred face by face meetings.

There are two groups of people I have not been able to formally interview: The Policy and City Council. Regarding, the Police, two friends, who were family of police officers of Vallejo, gave me their emails and I asked them for interviews. I have not an answer since March. But I have informally talked about the issues to other cops. Concerning the City Council I have sent a few emails to the official addresses. I have not received an answer, but I understand it, as they might be full of spam or/and these elected politicians might be very busy.

Secondary sources, have come from a dozen of books citing Vallejo, most of them found in UC Berkeley (Public Policy and Bancroft Libraries) and the Library of the Naval and Historic Museum of Vallejo. Of special interest has been the outstanding XIX century newspaper publications of the city, Images of America by Jim Kern, and the official documents of the mid XX century with planning and local economic development plans. For most recent material, I have also gathered information from city publications and 11 newspapers with online edition (having read over 60 articles about Vallejo) and TV segments in youtube.

I have attended an key City Council, in which they Firefighters contract was renewed. To complement the qualitative research I have visited and observed the city several times for the last 3 months. As I can drive to Vallejo in less than 30 minutes from Berkeley.

Most of the sources have been used to understand the current situation, but I have also inquired about the historical development of the city.

This is the first time that I write in Danish for this blog. But I have some parts that were going to be for a book that most probably I will not use.  This is a book on the Experience Economy in Denmark, it will be published this year in Danish. I’m grateful to Birthe Ømark to assist me with the translation. I hope that one or two Danes enjoy reading this.

Indledning
Byen Frederikshavn kan kort karakteriseres på følgende måde: Den er lille (færre end 25.000 indbyggere). Den ligger i et udkantsområde. Det er Danmarks nordligst beliggende kommune. Industrien er traditionel med skibsværfterne, som var de største arbejdspladser i byen i det 20. århundrede.

Lysfestivalen skal ses som et projekt, der er knyttet til begrebet oplevelsesøkonomi. Ikke kun fordi festivalen stræber efter at lave sjove og mindeværdige oplevelser for såvel byens indbyggere som for besøgende, men også fordi projektet er organiseret af folk, der iøvrigt også er dybt involveret i oplevelsesøkonomien. Der tænkes her især på flere lysproducenter, der er involveret i eksperimentel arkitektur, show-business firmaer samt folk, der underviser i oplevelsesbelysning.

Lysfestivalen kan siges at have dybe historiske rødder, idet mennesker i Norden traditionelt har et særligt forhold til lys. Således er mange festivaler og aktiviteter i de nordiske lande dedikeret til lys i dag. I Danmark kan man nævne ”Lysende Vejle”, ”Lys over Lolland” og ”Lyslydprojektet i Høje Tåstrup”. I en brandingsammenhæng anvendes begrebet Lysets Land om den nordlige del af Nordjylland, som Frederikshavn også tilhører. Dette kapitel beskriver, hvordan Lysfestivalen i Frederikshavn har udviklet sig siden 2004 fra at være en kulturfestival til at være et projekt, der er målrettet iværksætterdynamikken i en sektor i den lokale økonomi, som er baseret på belysningsindustrien. Projektet vil blive diskuteret ud fra et lokaludviklingsperspektiv med særligt fokus på den lokale iværksætterdynamik og den politik, som sigter mod at støtte iværksætteri.

(…)

For ti år siden skabte Pine og Gilmore begrebet ”oplevelsesøkonomi”. Forfatterne hævder, at verdensøkonomien har udviklet sig fra en agrarøkonomi over en industriel økonomi til en serviceøkonomi for endelig at gå over i oplevelsesøkonomien. Pine og Gilmore’s ide er, at produkter og derefter services førhen var vigtigst for befolkningen og økonomien, mens oplevelser nu er blevet langt vigtigere. De foreslår i bogen, at erhvervslivet skal fokusere på at tilbyde oplevelser, fordi denne strategi ”åbner muligheder for ekstraordinær økonomisk ekspansion” (Pine II & Gilmore, 1999). De var imidlertid ikke de første, der fremførte tanken om at tilbyde oplevelser. Tidligere har Alvin Toffler således beskrevet, hvordan ”oplevelsesindustrier” vil blive særdeles vigtige i ”fremtiden” (Toffler, 1970). I dagens Danmark er der forskellige opfattelser af, hvilke brancher der er mest knyttede til oplevelsesøkonomi. Nogle kilder peger på ca. 16 brancher, såsom interaktive medier, events, sport, attraktioner, osv. (Nielsén, 2005).

Pine og Gilmore har aldrig indsnævret Oplevelsesøkonomien til specifikke industrier. De dristede sig endda til at kommentere på feltet planlægning af oplevelser for borgerne. Det følgende eksempel er meget relevant for dette kapitel.

Begrebet oplevelsesøkonomi og lokal økonomisk udvikling gennem iværksætteri
Desuden ”iværksætterforetagender er ikke det samme som små virksomheder” (Hart, 2003), og iværksætteri er hverken synonymt med radikal innovation eller noget helt nyt. Danmark betragtes f.eks. som et innovativt land og samfund (Hansen, 1991) og (Gregersen et al., 2009), men alligevel er innovation mest relateret til trinvis innovation. Langt størstedelen (94 %) af de firmaer, der driver forretning i Danmark, tilbyder produkter og ydelser som er kopieret direkte, eller med små ændringer fra andre (Jensen et al., 2007).

(…)

På tværs af forskellige erhverv i den private sektor bruger mange iværksættere ideer, der er relateret til oplevelsesøkonomi. Også intraprenører i offentlige organer har fået en forståelse for, at borgerne kræver oplevelser og ikke kun basal service. Det betyder, at specielt i Danmarks tilfælde, hvor så mange projekter bliver iværksat af intraprenører, kunne man forvente et samarbejde mellem intraprenører fra den offentlige og private sektor for at skabe flere muligheder for lokal udvikling. Kapitlet illustrerer netop, hvor vigtigt dette samarbejde er blevet i Frederikshavn.

Benneworth (2004) skriver “iværksætteri i udkantsområder er kompliceret, tilfældigt og usikkert” og peger på, at mere forskning i iværksætteri er nødvendig for at forstå lokal økonomisk udvikling i udkantsområder. I den forbindelse skal stedet og dets historie tages  i betragtning. Det følgende afsnit betragter den kontekst, i hvilken den lokale iværksætterdynamik fungerer i forskellige situationer.

’Lock-in’ og måder at undslippe fastlåsheden på

Et berømt eksempel på ’lock-in’ på det teknologiske område er det, der handler om et tastatur. For tiden bruger vi et computertastatur, som har de første bogstaver i det øverste hjørne i rækkefølgen QWERTY. Dette design blev patenteret i USA i 1874. Baggrunden for dette layout var at undgå at de mest brugte bogstaver skulle støde sammen i skrivemaskinen. I dag, hvor vi bruger computere, kunne vi bruge andre tastaturer for at skrive hurtigere, f.eks. Dvorak tastaturer (Dansk Dvorak), men langt de fleste mennesker har lært at skrive i det gamle system, og alle tastaturer laves på den gamle manér. Derfor har vi en historisk betinget ’lock-in’ i QWERTY (David, 1985). Dette paradoks kan også forekomme i den økonomiske udvikling i byer og regioner.

(…)

Der er to problemer med studierne af innovation og læring. For det første, at mange af studierne ”beror på officielle data og derfor ofte mangler den nødvendige specificering og fokus for at kunne vurdere lokale læringsprocesser” (MacKinnon et al., 2002). For det andet, er det studier, der støtter læringsideerne ”baseret på empirisk evidens fra storbyer og bymæssige bebyggelser” (Fløysand & Jakobsen, 2008). Problemet er, at det ikke er oplagt, at storbyers erfaringer kan overføres til mindre byer, som er anderledes i såvel størrelse som råderum. Det er blevet vist, at læringsnetværk har eksisteret i de berømte italienske industrielle distrikter og allerede i 1970’erne i den private sektor i Norge og Danmark i form af erfaringsnetværk eller læringsfællesskaber (Rosenfeld, 2001).

(…)

Alt i alt er der forskellige strategier som en by som Frederikshavn kan vælge for at undgå lock-in. Talrige projekter er da også blevet gennemført, nogle af dem fortrinsvis rettet mod oplevelsesøkonomien, som f.eks. Lysfestivalen. Festivalens hovedstrategi er at forbedre udviklingen for det lokale erhvervsliv eller iværksætterdynamikken gennem lokale initiativer. For at kunne gøre det, og under hensyntagen til Frederikshavns kendetegn, synes ideen om midlertidig geografisk nærhed for at stimulere læringen blandt byens aktører at være passende. Det er derfor relevant at finde ud af, hvordan denne nærhed er organiseret, hvem der er involveret, hvor lang tid de samarbejder og hvad resultatet bliver.

(…)

Konklusioner
I alle vestlige lande er der mange byer, som befinder sig i en fastlåst situation (lock-in). Akademikere fra forskellige felter har forsøgt at dokumentere og foreslå måder til at slippe ud af denne fastlåshed eller lock-in situation. Desværre findes der ikke megen litteratur, der omfatter provinsbyer. Dette kapitel har fremlagt vidnesbyrd fra en lille by i et dansk udkantsområde.

Det påstås i dette kapitel, at byen har skabt en Lysfestival ved at benytte sig af oplevelsesøkonomien, specifikt i belysningssektoren. Projektet er ikke blot en festival, men har adskillige bestanddele, som har fremmet lokal læring, og i et bredere perspektiv kan det højne den lokale iværksætterkultur og økonomiske udvikling.

Referencer

  • Benneworth, P. 2004, “In what sense ‘regional development?’: entrepreneurship, underdevelopment and strong tradition in the periphery”, Entrepreneurship & Regional Development, vol. 16, no. 6, pp. 439-458.
  • David, P.A. 1985, “Clio and the Economics of QWERTY”, The American Economic Review, pp. 332-337.
  • Fløysand, A. & Jakobsen, S.E. 2008,”Searching for embeddedness of innovations in rural areas: a practice turn”, Conference Paper from Regional Studies Association: “Regions: The dilemmas of integration and competition?” 27-29 May 2008
  • Gregersen, B., Linde, L.T. & Rasmussen, J.G. 2009, “Linking between Danish universities and society”, Science and Public Policy, vol. 36, no. 2, pp. 151-156.
  • Hansen, N. 1991, “Factories in Danish fields: How high-wage, flexible production has succeeded in peripheral Jutland”, International Regional Science Review, vol. 14, no. 2, pp. 109.
  • Hart, D.M. 2003, The emergence of entrepreneurship policy: governance, start-ups, and growth in the US knowledge economy, Cambridge University Press.
  • Jensen, M.B., Johnson, B., Lorenz, E. & Lundvall, B.Å. 2007, “Forms of knowledge and modes of innovation”, Research Policy, vol. 36, no. 5, pp. 680-693.
  • MacKinnon, D., Cumbers, A. & Chapman, K. 2002, “Learning, innovation and regional development: a critical appraisal of recent debates”, Progress in Human Geography, vol. 26, no. 3, pp. 293.
  • Rosenfeld, S. 2001, “Networks and clusters: The yin and yang of rural development”, Exploring Policy Options for a New Rural America, pp. 103-120.
  • Tofler, A. 1970, “Future shock”, London: The Bodey Head Ltd.
  • Nielsén, T. 2005, Kultur- og Oplevelsesøkonomien i Region Nordjylland, Aalborg Samarbejdet.