THE EMERGING ROLE OF METROPOLITAN REGIONS

As globalisation progresses, urban regions are emerging as key players in the world economy. Therefore, the pursuit of competitiveness in urban regions has become a major local and national policy objective. Cities increasingly compete with one another, and with other cities around the world, to attract innovative investments and knowledge activities. Meeting the challenge of competitiveness requires certain conditions, among which:

• Support clustering and innovation.
• Develop links between institutions of higher education, research institutions, private industry and government.
• Supply skilled human capital that can operate effectively in the knowledge and information-based industries.
• Strengthen communication- roads, airports, railroad links and electronic communications.
• Develop an international strategy and international networking.
• Cities are for living in as well as working in. The quality of life of a city is a key factor of competitiveness. Competitive cities need the economic, social, environmental and cultural conditions, which will attract and retain a potentially mobile workforce and capital. In particular, this includes:

• An attractive physical environment where urban sprawl, congestion and pollution, as well as distressed neighbourhoods, are limited.
• A cultural environment characterised by the richness of natural and cultural amenities.
• A right social environment. Social cohesion and economic competitiveness are mutually sustaining, not mutually exclusive. High social disparities and poverty within metropolitan regions pose a major threat to social capital, a factor of economic growth.

The ability to meet all these challenges will depend upon substantially on the institutional capacity to mobilize public, private and community resources in the long term. Therefore, the success of the implementation of policies and strategies strongly depends on the governance framework.

Main challenges of metropolitan governance

The governance structures in place in the metropolitan areas of the EU are generally, outdated and not well adapted to the tasks they face. Among obstacles to better governance are:

• Fragmentation of administrative jurisdictions, which results in a lack of correspondence between administrative and functional territories. One important consequence is that in many countries, metropolitan areas still function with a minimum of co–ordination and strategic planning at the local level.
• Strain on the financial and fiscal ability of local authorities in metropolitan areas. Metropolitan areas face four major financial and fiscal issues: They must adjust to decentralisation and fiscal federalism; increase local autonomy while reducing fiscal disparities within metropolitan areas; improve their access to investment capital; and integrate the private sector as an investment partner and service provider.
• Lack of transparent, accountable decision-making processes. “Who does what” and at what level? Implementing decentralization and the principle of subsidiarity at the metropolitan level has led many EU governments to:
  1. introduce national legislation or institutional reform to strengthen governmental structures for metropolitan areas at the urban or wider regional level;
  2. adapt structures of urban public finance to better espouse new or modified institutional structures and responsibilities of different levels of government. This is taking place within an overall context of constraints on public expenditures whereby municipal and metropolitan authorities are being asked to do more with less;
  3. modernise local government in order to improve the level and quality of services across the metropolitan region; and assess the impact of policies through performance evaluation;
  4. replace hierarchical structures by new flexible forms of horizontal and vertical co-operation (partnerships involving several levels of government, or involving similar jurisdictions within a metropolitan area, sometimes with the participation of the private and/or the voluntary sectors);
  5. introduce greater transparency and accountability in decision making processes; improve the access of the public to information and public services; enhance local democracy through improved election procedures;
  6. develop better frameworks for long term strategic planning; allow local authorities to take the initiative in the domain of economic development strategies and to work in partnership with the business community and jobseekers.

 Main trends in metropolitan governance reform

New modes of urban governance, involving reform of traditional institutional and financial structures of major urban centres, are an arduous task. They pose a multitude of problems relative to the roles and responsibilities of different levels of government operating in metropolitan areas, intergovernmental co-ordination, and new relationships with the private sector and civil society.

The lack of correspondence between administrative and functional territories has resulted in a complex policy environment in which area wide consensus is difficult to reach on important multi-faceted medium and long term goals such as economic development and competitiveness, social cohesion, equitable public finance, and effective public services across the urban region.

While there is a need for area-wide structures which enjoy legal capacity and greater authority, it is, however, clear that a uniform model of general application is not appropriate even within one single country. There has been several experiences in the EU countries to create or reinforce area-wide metropolitan governments. One option, surely the most radical one, has been the amalgamation, i.e. the mergers of municipalities. Amalgamations are promoted on the grounds that bigger metropolitan governments will improve competitiveness of metropolitan areas. With amalgamation, upper level of governments try to overcome the combined pressure of metropolitan fiscal fragmentation, in some cases off-loading of certain responsibilities, and limited powers at the municipal level. A further objective is to re-balance population growth and the patterns of social structure within metropolitan areas. Pro-amalgamations argued that this formula can reduce duplication, produce economies of scale and scope for service provision, improve accountability, enable a more equitable sharing of the burden of taxation, and contribute to improved spatial planning capacity.

While the amalgamation process can probably lead to reduced fiscal competition and less social segregation along geographical boundaries, many of the objectives can be achieved through voluntary inter-municipal collaboration on functional grounds. Merging financially stressed municipalities does not necessarily create one single strong city. Finally, amalgamation in new large cities might, in the long-run, reduce the influence of the citizen at the municipal level. A positive aspect, nonetheless is that amalgamation helps to increase awareness of urban problems at the upper levels of government.

While some countries favour amalgamations of local authorities with stronger metropolitan governments, others reject the introduction of another level of government and favour more fragmented systems, tempered by technical planning structures (often dominated by central government) to achieve area-wide objectives.

Besides amalgamation, there is a range of possibilities for greater municipal co-operation mechanisms. One possibility is voluntary co-operation which unfortunately is often difficult to set up. An alternative is to develop more institutionalised forms of collaborative mechanisms, i.e. a system of programme contracts. New governance systems, involving a wide range of partners which act as networks, are likely in the future to replace the hierarchical structures actually in operation using contractual relationships such as partnerships between the central state and local government (and possibly the intermediate level).

Urban partnerships have been widely used in two areas: to attack the multifaceted problems of “distressed” urban areas and to redevelop urban brownfield sites. Now, it is increasingly agreed that such partnerships should be part of a more comprehensive process, i.e. included in a multi-sectoral and metropolitan area-wide contract that should meet the following criteria:

• They should be multi-sectoral, involve an integrated approach (public-public and public private) to achieve desired outcomes (for example, more sustainable forms of urban development, regeneration of urban brownfields or distressed urban areas) and be handled at the metropolitan level even if they encompass neighbourhood or city-based partnerships.
• They should rise from a negotiated planning process among different levels of government.
• They need to be promoted via incentives.
• They require a structured round of negotiations, with clear objectives and a precise calendar, and with monitoring and assessment components.
• They should be binding and elaborated on a pluri-annual basis.
• They should be tailored to local needs.

Another possibility which is not mutually exclusive with the previous ones is the creation of a super-agency or metropolitan authority whose functions will depend on issues faced by respective metropolitan areas. The idea is that there are some functions which must managed at the regional level, i.e. at the level of the economic functional area.

Many national governments are concerned about metropolitan governance. Some are thinking as well on how to set up a national law so as to strengthen the metropolitan level by introducing incentives.

Finally, improving governance in metropolitan areas is not just about reforming institutions and finance, it is also about changing attitudes and the culture of governance. More “inclusive” and participatory forms of governance are replacing traditional “top-down” rule-driven systems. Achieving change in the culture of governance requires opening up the process to new actors or “stakeholders” who have a legitimate concern about their role and “place” in the urban area. The actors in the governance process now comprise a more socially and culturally diverse population, the business sector, associations, and all levels of the public administration intervening in the urban area. Any type of metropolitan reform should be supported by the citizens.

A key requirement of any metropolitan reform is the recognition by local people of the “legitimacy” of the new institutional structures. Whether concerning new metropolitan level governments or inter-municipal co-ordination bodies, it is preferable to involve referenda or new political management structures, such as a directly elected mayor.

There is a need  for European cities and metropolitan areas to strengthen their cooperation to become more productive and competitive in the international sphere. The future of the world is in cities and their metropolitan areas. Today over 50% of the world population lives in cities, and in 2050 it is expected to be 75%. Because of this, cities and urban areas currently see the highest levels of economic activity, competitiveness, work, innovation and education.

Successful cities attract talented young highly-skilled workers, are centres of innovation and entrepreneurship and are competitive locations for global and regional headquarters. The proximity of universities to research and production facilities means cities are where new products are developed and commercialised.

• A flexible strategic vision is necessary to foster competitiveness, ensure a diversified range interdependent ventures, and information and transportation links between universities, researchers, technicians, and manufacturers.
• Liveable cities with high-quality infrastructure, green spaces, and inner city residential areas and public projects can contribute to economic success, attracting foreign investors as well as highly qualified professionals and tourists.
• Effective governance of cities depends on leadership from the national government to encourage reform, a formal government at the metro-regional level, and lower level local networks that include non-governmental actors, associations and businesses which can deal with social tensions and understand market realities.
• To balance the financial needs of cities with those of the rest of the country, cities can diversify tax revenues with ‘smart taxes’ such as congestion charges and use public-private partnerships to raise money for public projects. Equalisation payments between metropolitan regions can be effective but national equalisation schemes to redistribute resources from richer to poorer regions sometimes disregard the higher spending needs of cities and act as a disincentive to poorer regions to increase tax revenues.

The acceleration of urbanisation has strengthened the weight of large cities, or metropolitan regions which tend to concentrate an important part of their national economic activities. For instance, Budapest,Copenhagen, Dublin, Helsinki, Randstad-Holland and Brussels concentrate nearly half of their national GDP whilst Prague, London, Stockholm, and Paris account for around one third.

Cities benefit from advantages such as more diversified economic base with higher specialisation in productive activities, a strong innovative capacity and a higher level of skills.

The growth capacity of metro-regions should not be overestimated as metro-regions are not always synonymous with success. A number of metro-regions lag behind national average, such as Berlin (Germany), Lille (France), Naples (Italy) and metro-regions still concentrate large and persistent pockets of unemployment.