Cooperation vs Competition: What is the Right Investment Strategy Model for the Baltic Sea Region

1
Cooperation vs Competition What is the Right
Investment Strategy Model for the Baltic Sea
Region?

• Some insights from the BaltMet
• Invest project
• Alf Vanags

2
Some issues/questions

• What can the city council do?
• What it cannot do
• Do cities compete?
• What factors are important for city
  attractiveness
• What does current development tell us about
  Baltic metropolises ?

3
What can the city council do?

• City government has both direct and indirect
  roles in city economy
• Direct role includes
• Owner/instigator of projects
• Provider of land for private projects
• Employer
• Indirect role includes
• Planning (spatial and other)
• Image creation

4
What the city cannot do

• Cannot do everything!!
• Cannot substitute for the market
• Should not try to pick winners

5
Do cities compete?

• Are cities rivals in the same ways as firms in a
  given market?
• Answer no!
• Cities have multiple objectives
• Cities are inherently interdependent if Vilnius
  or Tallin grow then this is likely to benefit
  Riga (and vice-versa)

6
Interdependence and overlap
7
What does current development point to?

• Baltic capitals are already dominated by the
  service sector
• Growing integration of Baltic economies
• Low migrant population

8
Degree of specialisation (location quotient)
9
Integration trade

• Trade partners 2005
• Exports Imports
• Latvia Lithuania 10.8 (1) Lithuania 13.7 (2)
• Estonia 10.8 (1) Estonia 7.9 (4)
• Estonia
• Latvia 8.7 (3) Lithuania 6.0 (5)
• Lithuania 4.6 (6) Latvia 4.7 (6)
• Lithuania
• Latvia 10.3(2) Latvia 3.9 (4)
• Estonia 5.9 (5) Estonia 2.8 (10)

10
Integration FDI

• Much common FDI
• Banking
• Telecommunications
• Outward FDI by Baltic countries
• Other Baltic countries are the main receiving
  countries
• One third of Latvian FDI goes to Lithuania and
  25to Estonia
• One third of Estonian FDI goes to Latvia and
  another one third to Lithuania
• More than 40 of Lithuanian FDI is in Latvia and
  about 6 in Estonia

11
Migrants

• Migrants historically a force for city dynamism
• London
• New York
• Baltic capitals have very low levels of migrant
  population

12
Migrant population
13
Factors promoting city attractiveness

• Identity People want to live and work in cities
  with a distinct identity EC Working Paper on
  Cohesion Policy and cities
• Access good connections with other cities and
  countries
• Long distance rail/air
• Mobility good internal city transport
• Modern trams/light railways
• Availability of workforce/services
• Peripheral location not a barrier
• Eg Dublin, Helsinki

14
Towards a cooperative strategy

• Exploitation of common assets
• Baltics often perceived as single unit make an
  asset of this!
• Common tourist space
• Long term ambition of a common economic space
  now a reality!
• Mutual learning
• Many common problems