BY CARLOS PIROVANO
One of the great melting pots of America, Buenos Aires combines a European cultural legacy with its own local traditions to create a cosmopolitan city that attracts visitors from all over the world. Tango, soccer, premium beef, good wine, same-sex venues, international cuisine, prestigious universities and academic centers are among some of the attractions that Buenos Aires offers. One would have thought it was more than enough, however, Buenos Aires City government has decided to become a magnet for IT technology as well. Following an international trend towards city-centered economic development, Buenos Aires is launching a project to develop a Technology District right in the heart of the city.
Buenos Aires City, therefore, intends to follow in the footsteps of other cities like Seattle (Washington), home of IBM and a strong biotechnology sector, which seized on the technology revolution as it took shape throughout the 1980s and 1990s and used the momentum from progress in that sector to launch their own metropolitan economic development efforts. Likewise, in Santo Domingo (Dominican Republic) a new tax free zone, Parque Cibernético, has been created and in Recife (Brazil) a very successful technology park, Porto Digital, has been built in a neglected port area. These efforts have marked a change from the past where economic development and job creation were areas typically addressed at the state or national level, not by individual municipalities.
However, when it comes to developing a strong ITC industry, cities offer important competitive advantages such as a cluster-based infrastructure, lower prices and a highly qualified pool of human capital. Cities are often able to exploit these advantages with greater flexibility than state or national entities. This is especially true when looking at Latin America. As is the case in many parts of the world, economic development in Latin America has historically been in the hands of state and national officials. Yet, a trend is emerging for a more city-centered development strategy that capitalizes on the greater flexibility and different opportunities municipalities can provide. With more than 500 major cities throughout Latin America, this shift of focus is likely to have a significant impact on the regional economy, especially when we take into account that large cities like Buenos Aires or São Paulo have budgets ranging in the billions of dollars, and even a smaller city like Cartagena budgeted $305.8 million in 2008.
NOVEL BUSINESS MODELS
Municipalities have evolved from a strictly local vision, handling issues like street repairs and trash collection, to a broader vision that entails fostering economic development within the city, rather than delegating this task to the state or national level. To accomplish this vision, cities are adopting novel business models, taking advantage of public-private partnership (PPP) structures to fund and run projects, partnering with international NGOs for funding and community investment, and creating city offices of international development and investment promotion that can spread the vision throughout the public and private sector at home and abroad.
As regards funding, the Inter-American Development Bank and the World Bank are two key partner NGOs that have the capacity to extend loans or grants of approximately $10 billion and $4.5 billion, respectively, to Latin American and Caribbean nations, providing a wealth of opportunity to secure funding for city economic development. In addition, investment promotion offices from other countries, such as Promadrid in Madrid or AdEuropa in Castilla y Leon (Spain), can provide successful models that can be emulated in Latin American cities. PPPs, which are increasingly being used by state and national governments worldwide to fund projects, provides municipalities with an ideal structure for financing ventures that cities cannot fund single handedly.
As far as human resources are concerned, municipalities in Latin America are beginning to buck previous trends and take a much more active role. While it is still the case that most schools syllabuses in Latin America are designed at the state and national levels, municipalities with the help of NGOs have begun coordinating academic work to meet the needs of the labor market through the use of local incentives and novel funding mechanisms New universities and technical schools have emerged that are generating a highly qualified labor pool and thus positioning municipalities as attractive places for economic investment.
The IT District under development in Buenos Aires is thus part of this growing movement of city leadership. It is both competing with and learning from earlier ITC sites. So what does Buenos Aires City have to offer in terms of competitive advantages? To name but a few, it makes an ideal nearshoring destination on account of cultural affinity and time zone proximity. As for office space, the city government has set aside an area of 500 acres of mixed-use property easily accessible to downtown for the development of the Technology District, and there are also tax incentives for businesses locating there. In addition, Buenos Aires is a city that boasts hundreds of institutions of higher education and about 40 universities that can provide a highly qualified labor pool proficient in foreign language skills, mainly English. As a matter of fact, the initial phase of the project includes the construction of venues for two of the city’s largest universities, ITBA and the Universidad de Buenos Aires. Another important advantage that Buenos Aires offers is the fact that almost all leading IT companies are already located in the city: IBM, Accenture, Verizon, Google, Microsoft, Oracle, Huawei, Tata, and the list goes on.
A city that has it all is hereby inviting ITC businesses to set up in its forthcoming world-class Technology District and, as a side order, allowing them to relish all the things that makes Buenos Aires a favorite tourist destination.
Carlos Pirovano is Secretary of Investment at the Economic Development Ministry of the City of Buenos Aires.