Impact of COVID-19 on investment promotion – Virtual meeting of European city/region-based IPAs, 17 June 2020

Impact of COVID-19 on investment promotion – Virtual meeting of European city/region-based IPAs, 17 June 2020

“A famous quote by the Greek philosopher Aristotle says that people come together in cities in order to live; they remain together in order to live the good life.

Before the COVID-19 virus spread it was evident that the role and power of cities in the global economic ecosystem was growing rapidly. It was widely recognized that local communities, regions and cities will be the hotbeds for future innovations, R&D, start-up hubs and public-private partnerships. The world required pragmatic action, level-headed approach to testing and quick reaction times. Cities and local governments are for many reasons better equipped for this than nation states.

In numerous global happiness reports quality of life has been hailed as one of the main determining factors of the success in global competition. After COVID crisis human capital and social capital have been named as central resources. In the future, competitive advantage will have more and more to do with quality of life than quantity of people, or some other more traditional measure. This means new frontiers also to attracting new business or investments.

As dense communities of people cities function as platforms for many interconnected transformations currently impacting our world. Digitalization, climate change and urbanization not only keep developing, but are accelerated by the COVID epidemic. The epidemic enforced the good and bad in communities. In some ways it will speed and enforce our commitment to green infrastructure investments and green jobs. In other areas it might slow down urban investments due to lack of money or change of planning strategy.

The complex, interconnected web of COVID-19 impacts and all the other transformations of the world means that we must develop an even more comprehensive view of our strategies and an even more holistic take on our leadership.

When you put COVID together with digitalization, climate action and urbanization it is evident that re-building and re-structuring cannot be done through individual programs or projects. We must take a new look at our whole ecosystem, core strategies and position in the post-corona world.

What do I mean by that?

Climate crisis, digitalization and the current corona epidemic have been in their turn seen by many as the “last straw” of urbanization; a force that will turn people away from cities towards a “simpler” lifestyle. History of mankind has shown us that this will most likely not be the case.

This crisis has many faces. It is simultaneously a health crisis, social crisis and economic crisis. All these aspects are most felt in big cities. In Finland the epidemic is overwhelmingly a Helsinki Metropolitan area issue.  It attacks the most fundamental core structures of cities – community, mobility and encounter-based economy.

Helsinki is one of the most successful start-up hubs in Europe and the center of innovation corporations in Finland. Now many newly founded companies are under threat. Helsinki is the leading congress city in the Nordic countries and travel has been steadily growing for the past 5 years. Now just hotels have lost 90% of their capacity in a few weeks. All events have been cancelled until summer. Europe’s busiest passenger harbor in Helsinki has quieted down.

The road to recovery – and an even better future – is to concentrate on the strengths already associated with most European cities. In a post-corona world our ability to offer relatively safe and stable investment ecosystem, transparent and open governance, and a highly skilled workforce will make a difference.

More specifically, to rebuild better, we should concentrate on few essentials: local differentiating factors, global outlook, advances in digitalization, legacy in functioning public-private partnerships and re-affirming resilience.

Local differentiating factors

As a Mayor of a fairly advanced, transparent and high-functioning city build on substantial level of trust I see the path to re-building as a more of a practical exercise. We must ensure that collaboration between state governments, municipalities, cities and the private sector works better in the future. We must keep our essential infrastructure in a good shape. The basic supply chains feeding our cities must endure disruptions. Resilience and preparedness must be built by providing access to information but also basic protective gear at all situations. We must ensure that services to vulnerable people and communities are secured at all times. We must not loose what makes our cities unique.

Cities will keep flourishing due to their economic, social and cultural power. They will keep growing due to people’s desire to gravitate towards like-minded communities. Capital will move towards clusters of innovation, inspiration and capabilities.

Global outlook

City to city collaboration, global city networks and partnerships with global NGO’s like the World Economic Forum and Bloomberg has helped Helsinki find new paths in navigating the crisis. Even before COVID we were eager advocates for the global urban collaboration and in crisis this has proven fruitful.

I believe that the future of investments is closely related to how innovative and active a city’s re-building strategy will be. Finland is leading the amount of foreign investment in the Nordic countries. It has been estimated that an overall 66% of companies expect a decrease in the 2020 investment plans. This is substantial, since Europe had one of its strongest years ever in terms of Foreign Direct investments in 2019. In invest-in functions global outlook is essential. Strengthening the joint European marketplace will grow the pie for all of us.

Advances in digitalization

Digitalization and data will transform the way we move, live, work and play. Every area of life will be affected by our ability to make the way to a true digital revolution. By opening more data and joining forces in MyData and other data ownership, storage and management related issues we are able to create a platform for many new test cases and R&D initiatives in Europe.

Open data has been one of the most important differentiating factors in Helsinki when we compete in getting more innovation labs and test cases. Urban drone delivery systems tests and self-driving cars are examples of major future opportunities completely depended upon data and regulation.

Stable and transparent approach to data policies combined with predictable governance will be a major differentiation factor in the future.

Legacy in functioning public-private partnerships

Functioning public-private partnerships are well developed in Europe. Further opportunities in, for example, R&D, health tech and urban mobility can be successful if cities, private sector and academic institutions are able to join forces.

Cities will be the largest clients for smart city solutions in the future. In order to fully take advantage of the investment opportunities this creates systemic models for public-private partnerships must be further developed.

Re-affirming resilience

Remote work, virtual experiences, new post-COVID concepts of urban space and infrastructure investments needed for the future of health care put cities to the forefront of resilience building. What will the cities of the future look like, if majority of people will work remotely at least part time and the future of urban mobility will result in zero carbon footprint?

Resilience in cities is not just about flood waters or food supply chains. It is also about ensuring that mobility, housing and work will function under extraordinary circumstances. COVID-19 has shown us that beyond preventing casualties, returning to “normal life” conditions as fast as possible is essential. Being safe cannot mean being lifeless.

Resilience building is an over-arching theme that will impact our ability to attract foreign investments in the future. A credible, functioning plan for resilience, infrastructure and mobility will mean that a city will stay more stable during a crisis.

These examples prove that investment promotion in the future is a much more complex and holistic issue than before. We must still offer sound business opportunities. But we must also be able to offer functional and reliable circumstances for business making and everyday life.

I strongly believe that the course of urbanization and the age of cities will not alter due to this crisis. Innovation, creativity and capital will keep gravitating and drawing people towards cities. People will keep having a continuous need for a community and each other. Digitalization will offer new solutions that will make the global community of cities even more interconnected.

The pressing global issues of this century – whether dealing with the refugee crisis, climate change or ravaging epidemics – have thrust cities into taking more and more of a global leadership role, on issues that were traditionally the remit of national governments.”

Photo: Jussi Hellsten