state of the world's cities 2012/2013 - United Nations Sustainable ...

From Comparative Advantage to Urban Prosperitycities, the business environment is bogged down by thelabyrinth of bureaucracy. For instance, it takes an averageof 119 days and 13 procedures to register a business. 35Anyone wishing to start a business will require approvalfrom no less than 12 different government agencies. 36As one store owner lamented: “You need a document.But to have that document, you need to hand in sevendocuments. And to get each of these seven, there’s adifferent demand.” 37Poorly developed human capitalEducation is essential not just for nurturing, but alsofor attracting talents, and bolstering innovation. Thedevelopment of Boston, Silicon Valley, Oxford andCambridge (UK) clearly benefited from the presence ofreputed universities. 39 Availability of highly-skilled humancapital in turn attracts and generates innovative andknowledge-based industries.Within the OECD, the productivity of somemetropolitan areas has been attributed to human resourceendowments. For instance in Montreal, the relatively lowproductivity of high value-added sectors has been linked tolower educational attainment and inadequate investment,particularly in small and medium-sized enterprises. 40Similarly, in Istanbul and Mexico City, productivity andhence, prosperity, is hampered by low skills, as well as theextent of the informal sector, where adult education andskill upgrading are difficult to provide. 41Attracting andcultivating talents hasfactThe myriadof laws, taxesand regulations andbureaucracy involved inregistering or runninga business has beencited as one of themain reasons why40 per cent of Brazilianstartup businesseshardly survive for morethan two years. Thecost of bureaucracyis staggering; in 2010bureaucracy cost theBrazilian economy46.3 billion reals. 38 Thishas implications for theprosperity of cities inBrazil.become common practicefor cities in the pursuitof prosperity. From NewYork, to Boston, Londonto Vienna, Dubai toSingapore, or Bangalore toShenzhen, many cities canillustrate this phenomenon.Munich’s experience withvocational education canbe particularly inspiring.The capital of Bavariaas well as the economic,cultural, technological andtransportation centre ofSouth Germany, Munichis one of Europe’s mostprosperous cities. It rankedfactJust as a favourable business environment enhances theprosperity of urban areas, the high cost of doing businesscan serve as an impediment to cities becoming more prosperous.A high cost of doing business has obvious implications forinvestment, productivity, employment, income, taxation andpoverty reduction – all of which impact on the prosperity of cities.8th for technologicalinnovation (as measuredLow levels ofby international patentpolicy human capitalor labour can hinder urbanapplications), amongprosperity. When it fails tothe 500 sample cities indevelop and nurture humanthe 2010 Global Urbanresources, a city will be lessCompetitiveness Ranking; likely to be prosperous thanits GDP per capita wasthose with highly educatedUSD 58,197 in 2007 withlabour forces.three per cent economicgrowth on an annualaverage basis in 2001-2007. 42 Munich’s manufacturedproducts enjoy a good international reputation and exportcompetitiveness. The city’s large proportion of high-skilledworkers, nurtured through its vocational education system,has been crucial to the city’s prosperity.High crime ratesCrime is a major deterrent to domestic and foreigninvestment and can cause capital flight. In Africa, morethan 29 per cent of business people report that crime wasa significant investment constraint. 43 Investors generallyworry about violent crime for fear of direct losses tobusiness and lack of security for staff.High crime rates can have a crippling effect on theprosperity of cities. In Lusaka, for instance, fear of crime inthe poverty-stricken community of Chawama can preventteachers from showing upat work. 45 In South Africa,a survey of major citiesshowed that over a quarterof respondents would notconsider opening a businessdue to fear of crime, withmore than 25 per centsaying they were reluctantto allow their children towalk to school, while 30 percent stopped using publictransportation. 46 In largefactAccording to thelocal expertssurveyed by UN-Habitat,crime emerges as anothermajor impediment to theprosperity of cities. Nocity can claim to be trulyprosperous if it is crimeriddenand the populationlives in a perpetual state ofinsecurity.101