THE AVENUE NOVEMBER 26, 2012
This week, the Global Cities Initiative convenes its first overseas forum in São Paulo, Brazil. As participants from Brazilian city, state, and federal levels gather with counterparts from eight U.S. metropolitan areas, we are grappling with a critical question for our respective countries: How can our cities work together to advance national prosperity?
Our new paper suggests one key answer--trade. From the dawn of civilization in Mesopotamia, to the emergence of the Silk Road in Asia, to the Hanseatic League that linked port cities in Northern Europe, cities sprouted up to facilitate trade, even before there were nation-states. And trade makes cities, regions, and ultimately nations more productive and wealthier; Paul Krugman and his colleagues call a city's exports to the rest of the nation and the world its "economic rasion d'etre."
In the United States, however, city economic growth strategies--especially in the go-go real estate market of the 1990s and 2000s--have relied too heavily on housing, retail, and other consumption-oriented activities. Meanwhile, trade debates at the national level too often ignore the critical role of cities and regions in spurring innovation, productivity, and ultimately exports and foreign direct investment.
In response, a growing number of U.S. cities and metro areas are undertaking purposeful strategies to enhance their global reach and profile--for exports, investment, migration, and the like.
What does this have to do with São Paulo? As the largest metropolis in the Southern Hemisphere, São Paulo is now at a crossroads. It grew in the 18th and 19th centuries through the coffee trade, in conjunction with the nearby port of Santos. And it became Brazil's industrial powerhouse in the 20th century, eventually emerging into Latin America's capital of finance and one of the economic drivers of the "Brazilian miracle" growth of the 1990s and 2000s.
But of late, its growth has faltered. Other parts of the country are growing much faster; and as Brazil's economy cooled off in 2012, São Paulo's economy slowed even more. But Brazil needs São Paulo, which holds 10 percent of its population but generates 20 percent of its GDP. To grow Brazil's economy, São Paulo must build upon its competitive advantages to enhance its position in global trade and exchange, generating new sources of wealth for the city and the nation. Cities and metro areas in Brazil have not typically had a strong voice in these issues, but that may be changing with the election of new mayors and a new agency in São Paulo State focused on metro areas.
Each day this week, we'll look at the challenges and choices facing the 20-million person São Paulo metropolis as it strives to achieve growth and prosperity through trade and global linkages, including with U.S. cities and metro areas. How should it invest in the assets that drive trade, like innovation, skills, and infrastructure? How can it organize itself for trade, working with other players in the region and at the state and federal levels? And how could it network globally to forge strategic economic relationships with partner cities around the globe, including the eight U.S. metro areas represented here at the Global Cities Initiative forum?
The road to global economic prosperity runs through cities, our hubs of trade and commerce. São Paulo is an auspicious place to examine the potential for building a new network of trading cities across the globe.