Local government performance: city competitiveness

In a study funded a few years ago by SDA Bocconi School of Management, we started analyzing the factors that make cities competitive. What we immediately realized was that the most common metrics almost exclusively refer to economic variables. But what residents really care most about is the quality of local activities, which include not only businesses in general, but more importantly shops, hospitals, utilities, and so on.

Thanks to a grant from the National Research Foundation of Korea, and in collaboration with Korean and American scholars specialized in government competitiveness, we reviewed extant literature to answer three key questions: What is city competitiveness? How is it measured? What are its antecedents?

Out of thousands of scientific papers published from 1990 to 2019 that ostensibly addressed city competitiveness, we had to condense our sample to 115. In fact, almost all the publications simply took the same (exclusively economic) index used to measure country-level competitiveness and sized it down to a local level. In these cases, competitiveness is equated solely with a thriving local business environment, but this places too much emphasis on firms while completely disregarding the second of the two city stakeholders: citizens.

When we sidestep this trap, city competitiveness proves to be a construct that encompasses the following four perspectives:

• Economic perspective. In the economic literature, city competitiveness is usually referred to as economic performance, measured by location productivity, growth in local income, success in external markets, and employment vitality. The definition of competitiveness from an economic perspective is very similar when referring to a city or a country.

• Performance perspective. This is based on the idea that to some extent changes in the qualities of a city can be attributed to the characteristics and the performance of the public agencies that operate at a local level. First, the structure of the local government, as well as competence and political leadership, can either obstruct or facilitate the policies that have a positive impact on outcomes. Second, local government policies can lead to better services; this in turn makes the city a more attractive place to live.

• Sustainable development perspective. This is depicted as a process of synergetic integration and coevolution among the subsystems that constitute a city (economic, social, physical, and environmental). These subsystems contribute to attaining long-term sustainability in local areas and preserve well-being far into the future.

• Quality of life perspective. City competitiveness here is associated with the quality of city life. This view of competitiveness incorporates individual perception of myriad aspects of life. When people are satisfied with a city’s services and local government, this is a powerful antecedent for competitiveness as quality of life.

Current literature adopts an economy-based perspective of competitiveness for the most past, favoring a greater focus on firms, while seeming to neglect citizens. The remedy here would be to take a more balanced, multi-perspective approach that factors in both firms and citizens. For these reasons, we need to pursue the research path for city competitiveness within the framework of the public administration tradition.

If the performance of the public administration is an essential variable for city competitiveness, local politicians and city administrators must take this into account.

When campaigning in mayoral elections, incumbents and challengers should emphasize how their actions would make their city more competitive when they present their programs and their track records. As far as citizens are concerned, this is essential information which can sway their choice of candidate.

In addition, in terms of the management objectives of city administrators, the performances that have external relevance should carry far more weight, in other words, the performances that citizens and firms care about most.

Finally, at a scientific level, our findings have opened new research streams which we are exploring with our colleagues from the Dondena Center at Bocconi University in the Fast Project, financed by the Cariplo Foundation. Our goal: to establish the metrics that will enable us to understand whether and how much local government performance can convince people to choose one city over another as a place to live.

Greta Nasi, Hemin Choi, Maria Cucciniello & Robert K. Christensen (2023) “A systematic literature review of city competitiveness: A 30-year assessment and future agenda for public administration,” Public Management Review, 25:8, 1562-1586, DOI: https://dx.doi.org/10.1080/14719037.2022.2029550.