Cities with a story to tell

By Greg Clark, Tim Moonen, and Jake Nunley.

The findings, interpretations and conclusions are those of the authors and do not necessarily reflect the views of the European Investment Bank.

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Vienna

Austria’s historic capital and largest metropolitan area, Vienna, is consistently recognised as one of the highest-achieving medium-sized cities in the world. Its economic institutions, cultural diversity, investment potential and attractive lifestyle place it firmly among Europe’s most important and dynamic cities.

In the early 20^th century, Vienna was widely heralded as one of the world’s greatest cultural and commercial centres. However, war and the destruction of its Jewish population badly damaged the city’s confidence in the post-war period. Between the end of the First World War and the fall of the Berlin Wall, political instability meant that Vienna’s international status waned and many of its leading intellectual and business figures emigrated. The city ultimately became peripheral to a thriving post-war Western European economy. ^[1]

In the 1970s, the arrival of the UN headquarters marked the beginning of a turnaround for the city. The fall of the Iron Curtain in 1989, and Austria’s subsequent accession to the EU in 1995, led to a dynamic development over the past two decades. The city gradually established itself as Central and Eastern Europe’s pre-eminent global city, and the easing of labour movements throughout the 1990s pitched Vienna as an important transnational gateway to and from the East of the continent. ^[2] But Vienna’s outreach has also been held back over the past two decades, primarily by national political hostility and inconsistent financing partnerships with adjacent Eastern European states. Regional cross-border co-investment efforts have been constrained by a lack of consistency in neighbouring governance processes and tension in interstate relations.

In this context, Vienna’s growth trajectory over the past 25 years has been based primarily on major investment in infrastructure, transport and social housing. Since 2008, all four major railway stations of Vienna have been reorganised, modernised and upgraded, and non-stop connections to the airport have been established. ^[3] Vienna airport capacity has increased substantially to manage the increased demand from both west and east. Extensions to the wider Vienna region, including St. Pölten, Loosdorf, Ybbs, Amstetten and Linz, are improving the integration of the city-region, while links to the wider Austrian and Central European systems of cities also continue to improve, allowing Vienna to play a leadership role.

At the same time, Vienna has maintained an outstanding system of affordable housing, enabled by ongoing upgrades to stock and wider regeneration, and has successfully pivoted its economy towards science, innovation and technology. The city established an international reputation for life science laboratory research and grew its base of international students and faculties at its universities through investment in expanded institutional space and capacity. ^[4]

Since 2000, the city of Vienna has grown by 250,000 inhabitants, and is forecast to grow to 2 million over the next 10-15 years. ^[5] With more than 200 regional headquarters, Vienna is also now working to grow its retail, tourism, finance and legal sectors, and has made remarkable progress as a business location for start-ups. Vienna has firmly established itself as one of the leading European regions in terms of research output, scientific publications and R&D personnel. ^[6] Recent funding and organisational arrangements have also placed innovation higher on the agenda.

Today, the city enjoys a strong reputation across several different sectors. Its public transport system is regarded as one of the best in the world, in the density of the network and the number of stops, quality of service and affordability. The city’s unusually high housing affordability remains the envy of other European cities, as does its reputation for consistently meeting targets of ambitious environmental programmes and its effective implementation of a vision of the smart city. ^[7]

London

Europe’s largest metropolitan area has undergone profound changes over the past fifty years, effectively evolving from an under-governed and depopulating national capital to a diverse global centre that benefits from high-quality integrated systems management.

In the 1970s, London felt the effects of deindustrialisation first-hand, as its principal ports moved downstream. As the city’s manufacturing base declined, thousands lost their jobs, setting in train a process of mass emigration. By 1981, over 2 million people had left the capital, and the containment of growth by London’s Green Belt encouraged "leap frog" development into towns far beyond the city limits. The 1970s also saw a cycle of rapid social housing construction, which later became inextricably linked with disaffection, poverty and crime and resulted in outbreaks of violence and rioting into the 1980s. ^[8]

By 1985, London’s population had reached the lowest level seen in 100 years, and in 1986, city-wide government was abolished, leaving the city without a central administration. Recognising the urgent need for action, central government established a new urban development corporation to activate growth in derelict brownfield areas. It was in this context that London became the poster-child of post-industrial development.

This coincided with the "big bang" deregulation of financial markets, which enabled London to leverage its strategic location in the European and African time zone and its proximity to European markets. London quickly established itself as one of the world’s three leading financial centres. By the latter part of the 1980s, population decline had stabilised, and the economy had begun to grow again, as gradual improvements in schools, safety and public spaces began to attract talent back to the urban core. But governance was still a pressing issue, and it was increasingly apparent that the city’s infrastructure was not of a scale or quality that could match its emerging status as a global financial hub.

Infrastructure became a key priority in the decades that followed. Throughout the 1990s, large-scale projects focused primarily on improving the city’s transport infrastructure, by introducing new metro-rail links (such as the Docklands Light Railway) and extending and expanding the city’s airports. By the late 1990s, projects also included high-speed rail links, including the Heathrow Express and the Channel Tunnel Rail Link, which were designed to further increase the connectivity and accessibility of the city, particularly to Western European centres such as Brussels and Paris.

In recent years, infrastructure delivery has been scaled up once again. Innovative funding mechanisms have been introduced as a result of the increased costs the scale-up has entailed. Crossrail, Europe’s largest ever construction project, has been delivered through an innovative mix of business rates levies, developer contributions, and predicted future revenue. The increase in scale of these transport improvements has also necessitated the supplementing of transport infrastructure with other critical infrastructure. Recent years have therefore seen a renewed focus on social and affordable housing and the construction of a new mega-sewer tideway tunnel designed to enhance water treatment in the city.

Over the past decade, the UK government has decided to manage the stresses of London’s world city growth path, rather than to intervene and change the formula for success. ^[9] It has focused primarily on promoting London as an international city and has sought to manage the growth it brings by improving public service delivery, social inclusion, and quality of life. This has been greatly aided by a coherent metropolitan-level government that has gained incremental powers since its formation in 2000.

By 2015, London’s population had reached 8.6 million – the highest level recorded since 1939 – and was growing by 100,000 people per year. Notwithstanding the uncertainties surrounding Brexit, London continues to maintain its position as the world’s leading investment destination, with more international retailers and ultra-high net worth individuals than any other city worldwide. It is also routinely ranked among the top performing large cities in terms of quality of life, infrastructure and accessibility.

Warsaw

The metropolitan Warsaw region is today the ninth most populated capital city in the EU, with 3 million residents. But it has undergone a series of far-reaching changes to its economic structure over the past fifty years to attain this status.

When Warsaw returned to a market economy in the 1990s, it inherited a unique set of conditions. These included ubiquitous pre-fabricated housing blocks, a distinct lack of single-family homes, numerous empty spaces, a very complex ownership pattern with hundreds of historic property owners demanding restitution from the new state, and almost no legal or regulatory instruments to prevent sprawl. ^[10] This in turn led to a cycle of haphazard development, sprawl, and a proliferation of low-density suburbs, particularly as the previous planning office was replaced by private companies that lacked planning experience.

Over the past twenty years or so, however, Warsaw’s economy has bounced back. This recovery is due primarily to a cycle of investment in infrastructure that emphasised the metropolitan scale of development and avoided the car-dependent model of growth. It also benefited from Poland’s accession to the EU in 2004, which facilitated free movement of European labour and capital into the city.

Key interventions have included investment in the construction and modernisation of sewage treatment plants and railways, the procurement of new modern rolling stock for the city metro network, and the construction of a city ring road to relieve congestion and link the city to other major European centres including Helsinki, Berlin and Gdansk. ^[11] The EIB has been instrumental in enabling such interventions. Since the beginning of EIB activity in Poland in 1994, over 40% of loans have focused on transport. Over time, investment has also emphasised improvements to the city’s healthcare, social and education services. ^[12]

Today, Warsaw is recognised as an alpha global city, a major international tourist destination and a significant cultural, political and economic hub. It is expected that by 2019, the city’s GDP will be 50% higher than in 2008, making it the wealthiest capital city in Central and Eastern Europe, alongside Berlin. ^[13] Warsaw is also currently in the middle of a surge of new commercial development and has some of the best medical facilities in East-Central Europe, including one of the largest and most modern oncology institutions in Europe. ^[14] The imminent extension of the city’s second metro line is unlocking major opportunities for housing development, while a series of densification projects triggered by universities and other cultural anchor institutions, such as the new Powisle project, is re-activating the street-life of key riverside districts. ^[15]

Paris

Paris has been one of Europe’s foremost centres of finance, commerce, fashion, science and the arts since the 17^th century.

Throughout the 1960s and 1970s, Paris was a fast-growing urban region with low- and middle-class families migrating to the suburbs into new social housing estates, low-rise residential allotments and planned New Towns partly inspired by the Swedish model. The population of Paris declined from around 2,850,000 in 1954 to just 2,150,000 by 1990, while the population of the region increased from 7,320,000 in 1954 to 10,660,000 by 1990. The city was hit hard by deindustrialisation in the 1970s, as technological advances relocated thousands of manual jobs. Migration was particularly dramatic between 1962 and 1975, when deindustrialisation was accompanied by a spike in affluence among working class families and rapid gentrification of inner-city quarters. The loss of Paris’s manufacturing jobs continues to this day. Between 1990 and 2010, the number of manufacturing jobs dropped by 64% within the city and by 48% region-wide.

With a now much-reduced manufacturing base, the municipality of Paris was able to leverage new transport and cultural infrastructure to attract young professionals and to quickly establish itself as a key node in the new service economy. Throughout the 1970s and 1980s, the opening of two new international airports, a new high-speed train between Paris and Lyon, and the connection of the metro with regional RER lines vastly improved the connectivity of the city to the rest of Europe and the world. These improvements, together with new flagship cultural attractions in the 1980s, such as the Musée D’Orsay and the Louvre Pyramid, proved key in attracting transnational companies to relocate to the region. Between the 1970s and the 1990s, the regional economy shifted from industry to high-value-added service industries and high-tech manufacturing, including electronics and aerospace.

As Paris continued to grow in scale throughout the 1990s, brownfield redevelopment emerged as a key means of accommodating sustainable growth. The Paris Rive Gauche and Plaine Saint-Denis projects became a guiding example for this process. In the Plaine Saint-Denis, 750 hectares of brownfield land just north of Paris was in the mid-1990s regenerated into a new major multi-event stadium for the Paris region, new metro and RER stations, and associated new housing development, kickstarting a major new cycle of real estate investment in the north of the city. ^[16]

In recent years, the impetus for brownfield development has been strengthened further by the Grand Paris project, the largest European urban development strategy in recent decades including a new 200-km automatic regional metro system. The Grand Paris project, effectively a response to the recent slowdown in the Ile-de-France’s economic competitiveness in relation to emerging economies, involves two major components: major extensions to the metro system to improve connectivity between business districts, airports and universities; and extensive suburban brownfield development to create regional activity hubs and a new metropolitan identity. ^[17] Other key motivations of the project include reducing traffic jams that contribute to smog and improving suburb-to-suburb accessibility, which is particularly incisive, given that over the last decade many large international corporates have left the central office markets to relocate to the suburbs. ^[18]

Today, the Ile-de-France has a population of over 12 million people, more than three times as many as in 1900. Due to high property prices, many residents have had to relocate to 30 kilometres outside the city with poorer transport connections. ^[19] Nevertheless, a new metropolitan-level authority is helping to coordinate infrastructure improvements across the region – particularly the Grand Paris project – while ambitious city-centre initiatives, such as the Vélib bicycle sharing scheme and the pedestrianisation of the left bank of the Seine, have resulted in a fresh wave of tourism and city-centre living. ^[20]

Barcelona

Barcelona has become a global poster child of urban transformation in the 40 years since Spain’s transition to democracy. The city had always been a major centre of Mediterranean trade and industry, with a distinct vernacular thanks to its design by Ildefons Cerdà in the mid-19^th century. But by the late 1970s, it was beset by unemployment, political instability, a decaying physical environment and few cultural projects.

Upon Barcelona’s return to democracy, the city benefited from the existence of a powerful Metropolitan General Plan. This plan not only overcame strong opposition from vested interests, but also provided the basis for rational and attractive urban development. This allowed Barcelona to achieve its potential while also enabling important devolution of powers to its region of Catalonia.

Under Pasqual Maragall, the mayor from 1982 to 1997, the city council’s administrative structure was overhauled. His pragmatic and inclusive leadership built a positive new vision for the city and fostered productive relationships with trade unions, civil society and businesses. Maragall also worked successfully with the government of Catalonia, which had recently gained enhanced powers in infrastructure and land development. In this phase, Barcelona de-prioritised large-scale road projects and instead shifted towards encouraging public transport and customised interventions in public space in both the city centre and the suburbs. ^[21]

The award of the Olympics in 1986, in the same year as Spain’s accession to the EU, proved to be a defining moment in Barcelona’s transformation. Not only did it trigger a historic cycle of investment in the built environment, telecommunications systems and airport connectivity, but it also strengthened the region’s self-confidence. Eliminating the rail line that separated the city from the sea helped give continuity to Cerdà’s original design and activated new urban areas close to the beaches. Improvements to the city’s road and sewerage infrastructure, together with new public spaces, proved critical in generating incentives for private investment, especially in the tourism sector. The Olympics not only helped to enable a collaborative ethos to be forged between the public and private sectors, but also encouraged the private sector to become a much more active investor and leader in the region. ^[22]

By the late 1990s, Barcelona had become an established destination for media, arts, education, food, design and tourism. Pioneering development agency Barcelona Activa started to help encourage a new generation of entrepreneurs to start businesses in the city. Meanwhile, city government adopted a sequence of forward-thinking strategies stating a clear international ambition to become a top European location for events, students, trade, and innovation.

In the years after 2000, Barcelona witnessed a rapid surge in immigration, especially from Latin America and Asia, and its export and investment links with Europe and China grew substantially, aided by development of the city’s port and logistics capabilities. Passenger numbers through its main airport rose from 5 million in 1977 to 33 million by 2007, while the number of hotel rooms doubled between 1990 and 2004. ^[23] The high-speed rail line linking the provincial capitals of Catalonia with Zaragoza and Madrid and to the north with France has also been instrumental in the transformation of Barcelona’s mobility and business environment. In 2017, the line carried 4.1 million passengers, making it the busiest high-speed railway in Spain.

In recent years Barcelona has had to manage not only the externalities of its growth and success, but also the double burden of chronic youth unemployment and other structural macroeconomic challenges arising from the global economic recession. In order to drive growth and combat out-migration, city leaders have increasingly focused on supplementing Barcelona’s very strong visitor brand with an improved business and investor brand, while also protecting quality of life for local communities amid concerns about "over-tourism".

An inherited challenge for the City of Barcelona is its relatively small administrative area. The Metropolitan Corporation – created in 1974 and reformulated in 2010 as a Metropolitan Area consisting of 35 municipalities – has helped to coordinate a wider group of local governments on issues of planning and economic development. ^[24]

Consistent infrastructure investment has been particularly important in enabling the city to become not only the European city with the best investment prospects, but also one of the most attractive cities worldwide. ^[25] But this appeal has generated externalities, such as rising rents and opposition to perceived "over tourism".

Barcelona’s Metropolitan Area's current aim to strengthen its position as Europe’s southern gateway and leading Mediterranean logistics hub requires additional investments in the port area and further development of the airport. But it also requires the conclusion of major projects such as the central part of metro line 9, the rail connection to the airport and the renewal of the suburban rail lines, in order to cope with growing public transport demand and the creation of new affordable social housing geared towards young families and the elderly. ^[26] The city is also now pivoting into smart city and mobile technology as a vehicle for creating new jobs in high value-added sectors, improving urban efficiency and exporting expertise abroad.

Burgas

Burgas, Bulgaria’s fourth largest city, has long been a nationally important industrial, transport and cultural centre. Today the country’s largest port and the centre of Bulgaria’s fishing and fish processing industries, Burgas has undergone profound changes over the past fifty years—not least due to its transition from a Soviet era in the early 1990s—and increasingly proves that it deserves to be called one of Central Europe’s smartest cities.

When the Communist Party came to power in 1944, Burgas was a prime example of a flourishing European multicultural town. However, the beginnings of socialism brought about profound changes to the city’s urban fabric. New rulers, insistent on developing heavy industry and constructing vast swathes of pre-fabricated multi-storey housing estates, damaged or destroyed much of the city’s previous heritage. This, together with a national drive for Turkish minority inhabitants to assimilate and adopt Slavic names, resulted in much of the city’s Turkish and Greek population emigrating to resettle in their home countries. ^[27]

Following the fall of Communism, Burgas began to experience a new influx of primarily Bulgarian immigrants from rural areas and the surrounding smaller towns, attracted by the city’s decades-long entrepreneurial spirit and the prospect of securing higher-paid work. This meant that although the population of the city itself has stayed relatively stable at around 200,000, the population of the entire metropolitan area has grown substantially to around 300,000, putting pressure on the city’s relatively underdeveloped infrastructure. From 2001 to 2011, GDP per capita, corrected for purchasing power, more than doubled, from EUR 5,600 to EUR 11,400. ^[28]

In more recent times, Burgas has garnered a reputation for its smart city vision and solutions. One of the city’s key priorities in its transition to a capitalist market economy has been to improve its mobility and infrastructure platform so that it is able to “catch up” with other Western European cities. ^[29] Burgas is famously the first city in Bulgaria to entirely transform and modernise its public transport system. Sustainable mobility has been on the city’s agenda since the mid-2000s, when Burgas launched an integrated public transport plan. ^[30]

Over the course of its transformation, Burgas has closely cooperated with top European cities such as London and Milan on the implementation of smart mobility solutions. It has also used EU funds to develop an integrated transport system with car-free zones, dedicated bike lanes and eco-friendly buses. Paid parking has been introduced to central areas to encourage pedestrianisation, while special mobility services for disadvantaged people, including children, the elderly and those with disabilities, have recorded an uptake of over 20,000 trips per year. ^[31] As a result of these interventions and others, the share of roads deemed to be in acceptable condition has increased from less than 10% in 2006 to 42% in 2016.

Other priorities for the city in the recent period have included the rehabilitation of railway infrastructure and the promotion of energy efficiency. A recent upgrade of the Plovdiv-Burgas railway line has reduced journey times between Burgas and Sofia and has improved regional connectivity, while the city’s inclusion in schemes such as the Covenant of Mayors and the Sharing Cities Programme has encouraged the upgrading of the city’s public buildings to make them more energy efficient. ^[32] JASPERS assistance and the JESSICA funding mechanism have been fundamental to the success of these initiatives. ^[33]

Today, investments in infrastructure are having positive spillover effects. The economic potential of Burgas now places it second among all Bulgarian municipalities, and more than 16,000 companies operate in the city. Employment is on the rise, and in 2016 was higher than the national average for the first time in ten years. ^[34] Meanwhile, GDP per capita is rising twice as fast as the national average, and passenger traffic at Burgas airport is increasing at an annual rate of over 20%. ^[35]

This increase in wealth further boosts demand for infrastructure. A new ferry route from Burgas to Georgia marks the city’s ambition to become a major logistics centre at the crossroads of Southeast Europe and Western Asia, and low-cost airline Ryanair recently chose the city as its second base in Bulgaria following an investment of €80 million. ^[36] This all ties into a new city plan which is designed to open up the city to the sea by designating several new residential neighbourhoods and highways.

Győr

Situated within the Budapest-Vienna-Bratislava triangle, and at the intersection of mainland and riverine trade routes, Győr is, despite its relatively small size, arguably the most important city in Northwest Hungary. ^[37] Designated as one of the seven main regional centres of the country, in the current European urban hierarchy system Győr and its surroundings are classified as a functional urban area of national and international importance. ^[38] Like many other central European cities, Gyor has undergone profound changes to its urban fabric and economy over the past half-century.

Since the 1970s, Győr has grown quickly and has been targeted by foreign direct investors at a rate disproportionate to its small size. A leading factor in this economic development has been the city’s historically strong and well-developed automotive industry, but other factors, such as high rail and road accessibility and a better developed infrastructure platform than the Hungarian average, an embedded culture of equal opportunities and high standards of education and training, have also been important.

From the first third of the 1990s, when the majority of Győr’s state-owned companies were transformed into economic corporations, growth accelerated further. Two key watershed moments for the city in this period were the opening of the industrial park in 1992, which has since gone on to achieve global recognition, and the opening of an Audi subsidiary factory in 1994. Today, the industrial park is home to more than 100 companies from fourteen countries. ^[39]

Győr‘s economic growth has also been reinforced by reconstruction of the city centre, which also began in the 1970s. In 1989, the city won a European award for its dedication to the protection and preservation of monuments, although it was only after the millennium that the city embarked on its biggest construction and renovation projects. Some of the most significant projects include the construction of the Nádor underpass and new multi-storey car parks to relieve downtown traffic congestion, the renovation of the inner-downtown district, including several high-profile civic squares, and the launch of a free city bus service which can be used by anyone to get anywhere in the downtown area. The renovated historic monuments and newly refurbished castle bastions have provided new authentic venues for heritage events in the city.

Economic growth, in turn, has created imperatives for a more integrated infrastructure platform for the city, and it is here that the role of the EIB can be most clearly seen. As the city has grown, the EIB has helped finance new rolling stock for the city’s rail connections in an effort to provide higher quality rail services on the Austrian-Hungarian cross-border rail network. It has also assisted in the upgrade and extension of the city’s electricity transmission network, integrating the greater urban area of Budapest with the northwest of the country. ^[40] In recent years, European funds have funded a new research and development centre and library at one of the city’s major universities. ^[41]

Today, Győr outperforms the national average on many measures of economic success. The city’s GDP per capita is 12% higher than the national average, and residential house prices are increasing at a rate of 10% year-on-year. ^[42] Future plans highlight the city’s intentions to continue developing its infrastructure platform, but also to branch out into culture and to consolidate its emerging reputation as a sports city. An inner-bypass ring road is forecast to begin construction in 2019, while the city and regional bus terminal and rail station are to be renovated and integrated. This will help ensure that Győr continues to contribute to Hungary’s economic growth. ^[43]

Meanwhile, the site of a more-than-100-years-old factory close to the historical downtown and the river is to be replaced by a new master-planned community. This is an effort to position the city as a counterpoint to the opportunities offered by nearby Vienna and Budapest. The city has recently been shortlisted as one of the contenders for the 2023 European Capital of Culture. ^[44] The ultimate goal for the city, as outlined by the mayor, is to grow to a city of 300,000, in which tourism, culture and education combine to ensure a liveable environment for all.

Bologna

Although in many ways a typical thriving Northern Italian post-industrial metropolis, Emilia-Romagna’s capital Bologna possesses a number of institutional, spatial and socioeconomic specificities that set it apart from its regional and national context. ^[45] As an important agricultural, industrial, financial and transport hub, Bologna is today Italy’s seventh most populous city, at the heart of a metropolitan area of about one million people.

In the post-war years, Bologna positioned itself as a thriving industrial centre and a political stronghold of the Italian Communist Party. The city has a long history of progressive political thought and had an uninterrupted series of left-wing mayors between 1945 and 1999. In the 1970s and 1980s, Bologna, like many other European cities, was subject to discontentment with deindustrialisation. Between 1975 and 1995, the core city of Bologna was losing around 2,000 inhabitants per year, although the wider province gained around 2,500 per year, as people fled to the suburbs in search of a safer and more pleasant environment. ^[46]

Since the 1980s, Bologna’s urban development has been underpinned by a strong cycle of investment in intra- and inter-city transport links. In the 1980s, Bologna was one of the first European cities to experiment with the concept of free public transport. In the 1990s, investment in the Milan-Bologna high-speed train network cut journey times between the two cities from 105 to 60 minutes, vastly enhancing the attractiveness of inter-city commuting and encouraging inner-city corporate investment. ^[47] Finally, since the 2000s, Bologna has also benefitted from an increased rate of centrally funded investment in highways and motorways. A new Florence-Bologna motorway, to be completed in 2019, will replace the obsolete one built in the 1960s and cut the journey time between the two cities from 90 to 50 minutes. ^[48]

In recent years, the focus has increasingly shifted to honing the city’s inherited strengths in education and resilience. Bologna is unique in that it is home to the oldest university in the world and so has a distinctly cosmopolitan character. A new two-year, multi-sector programme has been launched that focuses on re-affirming this, by making the city a more attractive place in which to live and invest, and by enhancing resilience to earthquakes and climate risks. ^[49] The programme includes renovation of municipal buildings, roads, public spaces and schools, together with the completion of an encircling bicycle path and upgrades to the city’s parks and open public spaces. ^[50] In this context, the EIB, in tandem with various promotional actors such as the university and public utility companies, has been important not only in providing urban framework loans to the municipality, but also in assisting the development of the overall metropolitan area.

Today, Bologna enjoys a reputation as one of Italy’s pre-eminent smart cities and has the third highest total GDP per capita among Italian provinces after Milan and Bolzano. ^[51] The city has affirmed itself as a European leader in the development of innovative transport policies, with zero tariffs during rush hour and special rates for students and pensioners. It is also known for the high quality of its child-care and education services, careful integration of green space into the urban fabric, and the presence of a major university. ^[52]

Bologna has been particularly successful since the global financial crisis. By 2016, the Emilia-Romagna region was posting growth of 1.9%, almost double the Italian average. Local entrepreneurs attribute the city-region’s resilience to its proximity to the creative hub of the University of Bologna and to the fact that its mostly small and mid-sized companies have been able to respond more quickly than multinational corporations to market changes. ^[53]

Stockholm

Stockholm, the economic centre of Scandinavia and Sweden’s commercial capital, has actively pursued a policy of compact city development for the past thirty years. It is now recognised as one of the most successful metropolitan areas in Europe, for its commitment to sustainability and its attractiveness to talent and investment.

In the post-war years, Stockholm, like many other European centres, experienced the effects of deindustrialisation. Companies collapsed, jobs were lost, and inner-city residents increasingly moved to surrounding municipalities. But compared to other cities, the effects were not as severe. The city began repopulating in 1980, far earlier than elsewhere in Europe. There are at least two reasons for this. Firstly, Stockholm’s economy, though based on shipping, also depended heavily on domestic corporate firms, which were to a large extent insulated from deindustrialisation. Secondly, in 1971, Stockholm joined with the surrounding county in a move that formalised county-level coordination of health and transport policies and encouraged greater cooperation over city and regional planning. This, together with Stockholm’s emerging consensus on densification, re-encouraged city-centre living. ^[54]

Over the past thirty years, as the consensus on densification has become more entrenched, Stockholm’s urban structure has evolved in tandem with public transport. The city has effectively pioneered a model of densification that emphasises historic character, public dialogue, and additional green space to compensate for loss of land. In the 1990s, one key project, Hammarby Sjostad, a highly renowned and successful mixed-use, high-density brownfield redevelopment, set the standard for all subsequent developments. ^[55]

EIB lending has been fundamental in enabling Stockholm to achieve its densification targets. The city’s initial phase of densification relied on the EIB-funded “Dennis Package” of transport investments designed to improve spatial integration. The programme, which ran from 1991 to 2005, included three quarters of the city’s ring road, as well as tram, rail and metro and bus line extensions. It proved key in encouraging inner-city, car-free living by unlocking new districts, enhancing connectivity, and increasing capacity. Into the 2000s, investment loans have increasingly focused on fostering the city’s latent innovation potential, especially in the health sector. Investment is helping the city to leverage its unique mix of healthcare institutions, medical industry, and digital expertise and to improve healthcare infrastructure city-wide. ^[56]

Today, Stockholm is one of the most rapidly growing city regions in Europe and is witnessing significant demand from investors, as a result. The city’s long-established comparative advantages in software, gaming, music and architecture are migrating south, while the old central business district is becoming more defined by finance, law and business. Meanwhile, other large institutions are establishing themselves near the central train station, as the city looks to develop a series of new clusters, including digital media and fintech. Stockholm is now home to some of Europe’s fastest-growing start-ups and has the world’s most unicorns per capita after Silicon Valley. ^[57] In 2010, Stockholm was also the first city awarded the title of European Green Capital, thanks to a 25% reduction in carbon emissions from 1990 levels. ^[58]

The findings, interpretations and conclusions are those of the authors and do not necessarily reflect the views of the European Investment Bank.

About the authors

Professor Greg Clark CBE is an honorary professor at University College London and Chairman of The Business of Cities, an urban intelligence firm that works in more than 100 cities worldwide each year. He holds thought-leadership roles at The Brookings Institution, the Urban Land Institute, and JLL Cities Research Centre, and is a Board Member of Transport for London and the London LEP. He is author of ten books including Global Cities: A Short History (Brookings Press), and London 1991–2021, The Making of a World City. With a PhD from the University of Bristol, Tim Moonen is responsible for the strategic management of The Business of Cities research and advisory projects. He has co-authored more than 50 reports, books and chapters on global city competitiveness, governance and performance. Jake Nunley is a lead researcher at The Business of Cities. He studied at the University of Cambridge and Harvard University.