The goal of charter cities is to generate inclusive and sustained economic growth. To support this growth, an industrial strategy guide is needed. While most charter cities will begin at relatively low-income levels, over time incomes will grow as skills transfer, productivity improves, and investments are made. A charter city must plan its industrial development so that it can attract and sustain a sufficient economic base to bolster its long-run economic growth.
To initiate a diversified industrial strategy, a charter city will typically begin with anchor tenants for each industry it decides to develop based on the city’s level of economic development and potential for economic linkages. Anchor tenants are also the first large employers in the city that can help attract the critical mass of residents necessary to justify additional amenities, schools, restaurants, grocery stores, and other ancillary activities. Industry-specific anchor tenants are crucial for the long-run success of a charter city. The workers anchor tenants attract form the labor market of the city, and the supply chains they depend upon become the industrial base and job creators for the city. Attracting anchor tenants in the right industries can plant the seed for future economic success.
A charter city’s industrial strategy should evolve with its growth and should be aimed to foster integration and linkages with other businesses both within the local region and across the globe. Sustained economic growth will be more easily attained if (i) the charter city’s firms establish themselves within global value chains, and (ii) if the same firms exploit dynamic knowledge transfers and opportunities for “learning by doing” embedded in global trade. Doing so will allow firms and industries to move up these value chains to take on higher value-added activities.
This guide gives an overview of what an industrial strategy is and why it matters. It also briefly explores four industry options to foster a city’s economic growth, the evolution of an industrial strategy and its limitations.