Varieties of capital cities: Explaining locational policies in four secondary capital cities

Kaufmann, David (2016). Varieties of capital cities: Explaining locational policies in four secondary capital cities. (Dissertation, University of Bern, Faculty of Business, Economics and Social Sciences)

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This Ph.D.-dissertation studies the locational policies agendas of four secondary capital cities, namely Bern, Ottawa, The Hague and Washington, DC. Secondary capital cities are defined as capitals that are not the primary economic city of their nation states. Economic globalization challenges the primacy of capital cities and it pressure secondary capital cities to enter a globalized and increasingly knowledge-intense interurban competition. Cities aim to enhance their economic competitiveness by identifying, developing, and exploiting the place-specific assets that are considered to be most competitive through the formulation of locational policies.
This dissertation brings two core types of locational policies agendas to light. The first is geared towards the physical development of the city and the attraction of public funds. It can empirically be found in Ottawa and The Hague. The second locational policies agenda is geared towards maximizing tax revenues, and it is predominant in Bern and Washington, DC. The emergence of these two different locational policies agendas can be explained by four factors, namely, local tax autonomy, the development stage of the RIS, capital city specific constraints, and vertical institutional fragmentation in combination with the degree of local tax autonomy. The degree of local tax autonomy is the best predictor of locational policies as it sets up the structures under which cities can raise funds. Thus, institutions seem to matter when explaining the variance of urban policies. The findings show that cities face similar pressures due to economic globalization. However, their policy responses to cope with these pressures do not converge. Instead, they are diverse because they are mediated by place-based institutional constraints and opportunities.
Cities can exert agency when they formulate innovation policies to alter economic institutional constraints. Secondary capital cities have some locational policy options at hand to assert their position in the globalized interurban competition. Furthermore, politics is a factor in its own right. Urban governance arrangements in secondary capital cities seem to be distinct from those in other types of cities. Secondary capital cities are government cities that lack an industrial tradition. In such a context, local governments take a leading role in urban governance arrangements and developers are the only important business actors that engage in the formulation of locational policies.
Secondary capital cities cannot escape their destinies as government cities, but they can formulate a variety of locational policies in order to supplement their capital city function with an economically promising profile. This two-dimensional positioning strategy – as a capital city and as a business city – can be achieved by a careful and strategic crafting of innovation policies that try to activate knowledge circulation within their knowledge-intensive economies.

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