On June 12, World Trade Centers Association Day, the WTCA published its second annual WTCA Trade & Investment (T&I) Report: Navigating Uncertainty. This year’s report investigated how cities are pursuing trade, investment, and growth amidst heightened geopolitical and economic uncertainty. It follows last year’s inaugural report, which found that a majority of WTCA members expected economic uncertainty to increase in the coming year. Marrying city-level data analysis and in-depth interviews with WTCA members from around the world, the report highlights concrete and replicable strategies that cities are undertaking to continue to deliver growth and prosperity.
Around the world, WTCA Members surfaced important insights that informed this year’s report. They identified escalating trade tensions, major economic slowdowns, and geopolitical conflict as significant factors contributing to uncertainty when polled at this year’s General Assembly (GA) in Querétaro, Mexico. Interviews with WTCA Members grappling with how to operate and compete in this “new normal” revealed that the economic impacts from heightened uncertainty may be even worse than earlier estimates. They reported a surge in trade over the past year as businesses sought to lock in deals before Brexit and before trade tensions between the United States and China intensify further. For example, Karen Gerwitz of WTC Denver highlighted how companies were stockpiling aluminum and steel before the tariffs hit. From North America to Europe to Asia Pacific, members also underscored the impact that heightened uncertainty is having on foreign direct investment — with greenfield projects declining and investments in manufacturing and other sectors shifting to markets perceived to be lower risk. These dynamics are not only disrupting supply chains, but intensifying local competition for limited and increasingly selective Foreign Direct Investment (FDI).
On multiple fronts, global uncertainty is escalating. In the months since the 2019 GA, several news stories have echoed the sentiments of those polled. The report’s launch coincided with a further escalation in trade tensions between the United States and China, for example, despite previous indications that a deal to end a trade war was imminent. U.S.-Mexico trade tensions have also created new questions regarding the ratification of the United States–Mexico–Canada Agreement. In the Middle East, heightened geopolitical conflict between the U.S. and Iran is creating volatility for oil prices. And in the U.K., Brexit negotiations have been prolonged with no clear path forward. These global uncertainties make the need for replicable coping strategies all the more urgent and findings of the report timely.
So, how can cities defy the odds? The 2019 WTCA Trade and Investment Report found that resilient cities — defined as those that outperform their countries during economic slowdowns — possess a consistent set of characteristics. Regardless of their location or size, these resilient cities all have diversified economies, strong service sectors, educated and global populations, and robust transport infrastructure. Resilient cities are also FDI magnets, and on average have FDI as a percentage of GDP that’s twice as high as non-resilient cities. Cities’ investment in these core factors could strengthen resilience, and foster growth and competitiveness even in the midst of challenging circumstances.
Interviews with WTCA Members shed light on the specific strategies these cities are employing to navigate the uncertainty. They emphasized that city-to-city diplomacy, direct dialogue, and human connection are more important than ever. With political turmoil fracturing long-held political or economic relationships, city leaders are engaging in international diplomacy to demonstrate credibility and instill confidence with old and new trading partners, and deepen economic ties. WTCA Members also shared that their cities are looking for opportunities to leverage geography, language, political ties, and other strengths to seize new opportunities. Without exception, they considered economic orientation toward innovative, high-tech industries and clusters to be a key competitiveness and resilience strategy — with support for SMEs and entrepreneurs vital for economic transformation.
WTC Members also shared best practices for how their organizations are providing businesses with the tools they need to navigate uncertainty. Knowledge, preparedness, and agility are essential for businesses to remain competitive in the increasingly complex global economy — and WTC services have been crucial in arming businesses for the unexpected. WTCs are helping their local businesses more effectively assess complex risks, game out alternative scenarios, and seize emerging opportunities through briefings, trade training, and partnerships. Their services such as export assistance, offices and direct networking facilities, partner identification, trade missions, and conferences were identified as the most demanded by business and helpful for providing support.
WTCs are uniquely positioned to arm their members with real-time information that is often not public knowledge or available elsewhere, and help them craft a rapid and appropriate response. Updates from experts and partners on the ground in other markets can help give businesses a competitive edge in their decision making. Responding to members' concerns over U.S. sanctions on Iran, for example, WTC Rennes Bretagne developed a “Practical Guide to Better Understand the Business World in Iran” and is continually updating their website with information pertinent to their members as sanctions-related issues continue to evolve.
Tapping the insights of its global network of trade and investment-focused professionals in 325 cities that together constitute more than 35 percent of the global GDP and are home to nearly 1.24 billion people, the WTCA’s annual Trade and Investment Report brings a uniquely global and local view to the state of the economy, emerging trends, and best practices. WTCA Chief Executive Officer Scott Ferguson points out that “because our Members are deeply involved in helping their local companies and municipalities find new opportunities abroad, they provide a meaningful vantage to think about how the far-reaching changes we hear about every day are affecting communities on a local level.” The resiliency factors and growth strategies outlined in this year’s Trade and Investment Report not only illustrate what is working, but also represent tools and templates other cities can leverage for greater resilience and growth in the uncertain times ahead.
On June 12 WTCA held a live launch event featuring a panel discussion on the report's findings. Pictured on the cover is Rani Dabrai of WTC Dublin, and Rolf Alter, Senior Fellow at the Hertie School of Governance in Berlin, and Former Director, Public Governance, Organisation for Economic Cooperation and Development.
This article was made possible with the support of FP Analytics, the research and analytics division of the FP Group, publisher of Foreign Policy Magazine.