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제7회 LH 글로벌비즈니스컨벤션GBC 2 2 기조연설2 – Transcript
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Yes, please. Thank you very much. I mean, thank you very pleased to be here at this conference and thank you also for inviting me It's a great honor for me to be here what I'm trying to do today is about to talk about drivers of uncertainty in in cities and Obviously, there are a whole lot of them But I've tried to group them basically in three areas because I think that helps to facilitate the thinking about them and so basically I'm going to talk about economic shocks and
For example, you know lots of I mean oil being stranded in the street of hormones is example COVID tariffs Technological change AI. I mean that's that's all potential economic shocks that may affect your city Then I'm going to talk about disasters and more generally changing environments You know, we have seen this summer a lot of wildfires a lot of flooding recently earthquakes So I mean that that's all examples of that and then lastly the third point I'm going to talk about the third tribe of uncertainty is a tax
That's something that we're seeing increasingly you're seeing increasingly digital blackmail attacks We are especially seeing an increasing amount of hybrid warfare attacks There's a picture of a reason one in Poland and on my slide here So I will start by giving you some data from one of our flagship publications I you will see doing my presentation They're often kind of like, you know
basically covers of OCD work OCD reports and That are links to the underlying work that I'm talking about and I assume that my presentation will be made available online after my presentation and so you can just go there click on those and then you can get more information that is Confirming and that is deepening the information that I'm giving here here in the 15 minutes that I have to talk and what I just Wanted to show you here is basically that was the
Increase in hot days per year that we had by roughly the early 2020s and you see that historically speaking this increase had been relatively modest Now if you're looking at what we are projecting with what now basically is a relatively it was called middle of the road but by now that's rather a Optimistic scenario I would say for carbon emissions you see a very massive increase in the number of hot days all across the globe and
So in a way you may think what we've seen this summer the heat waves this summer may have been exceptional No, that's the new normal and probably in the new normal is even a lot hotter than what we had this year So just to give you an you know any concrete example basically what this means that It's not a naturally sasta that's hitting you at a certain point in time But it's something it's a change that's happening of our you know over years or decades But that obviously needs a response from the cities to increase their resilience in phase of this
so As I mentioned I have this basically three groups of drivers of uncertainty And so I'll be talking about resilience economic shocks first Then I'll be talking about resilience to disasters and changing environments And then I'll be talking about resilience when you're under attack and the whole idea is basically what I'm trying to do You ask you give it to give you a framework how to think about all these things
One very important point before I start is like In most cases there are some exceptions and I'll mention them specifically in most cases resilience is not for free So resilience has a cost Resilience is a bit like insurance You know you're not expecting if you're getting a car insurance that it's coming for free You need to pay for that and that's what you also need to do for resilience in normal times You pay for that for example by having lower productivity
You pay for that by having higher fiscal costs. I mean there's various ways how you pay Basically when you're thinking about resilience you should generally assume in most cases it has a cost and that also means basically you're not Aiming for maximal resilience because you're not trying to get maximal insurance because it'll just ruin you so you're thinking about What are the risks how likely is the risk has it happened every five years?
Does it happen every 500 years if it's every 500 years? I mean it's a totally different thing than for insurance wise than if it's more frequently basically How large is the risk is it's going to ruin you as is something that you can kind of like in your shoulder basically? Also important how much outside help can you expect if you're hit by a certain shock and here?
It's going to make a big difference if for example a shock hits just you as a city or it's how it's basically all the Cities in our countries just imagine there's a blackout if you have an electricity blackout for a week in one city That's not great But basically you can get help from all the other cities around now imagine having a blackout like not only your city But also know the other cities forget about help. I mean if you can't solve it yourself I mean nobody's going to be there to help you
So I mean all these questions are very important and you really need to ask them yourself and what's also important is kind of like These factors can change and they do change over time So it's not you cannot do your assessment like you know tomorrow and then you are done for the next 20 years you do read Periodically you need to reassess these risks and you do see how they've been changing and Also very importantly
You need to be aware that not all the risks are known and not all the risks can be ensured against that That's really important. So you have to understand that and I'll be coming back to that later on in my presentation So first talking about resilience to economic shocks Typically shocks are hitting certain sectors more than others So an obvious resilience strategy is trying to say I mean we are trying to diversify our economy We're trying to be in a lot of a lot more sectors
Now that's true and that makes you more resilient, but that also has a cost And that's coming from the fact that there is basically critical mass there's economies of scale and the literature shows that if you have a sector That's roughly twice as large as somewhere else then your sector is going to be five percent more productive So basically when you're kind of like having a lot of different sectors Then basically you are having a productivity cost that you're paying each year for that resilience now
Obviously there is a critical mass So once you have a certain sector size and adding another enterprise to that sector is not going to get you a lot more productivity So if you are a large city you're having a very large advantage in that sense if you're a large city You can have you know relatively large you have a lot of relatively large sectors So we have a high level of productivity But especially when you have a smaller city when you're a smaller city then the straight-off between resilience and productivity is much
More prevalent and you have to think about that So what that concretely means when you're trying to diversify you shouldn't try to diversify in as much sectors as possible But you should try to diversify in a sufficient number of sectors But make sure that each of these sectors you have a sufficiently large size so that you also still have sufficiently high productivity levels and Just in time production is another of these typical trade-offs
It is more at the enterprise level, but basically I mean when you're having less just in time then you're more resilient But you're also less productive No, there's a couple of areas where actually you don't have the trade-off One is if you have better education level of your population in your city Or people are less specialized that means basically there's a kind of a shock and they need to change sector then that's easier for them So there's there's no not really any cost of that. So that that that's beneficial then also
When you're having structural policies or regular regimes that allow a smoother transition for people between sectors or for enterprises between sectors Then that also is good for resilience and you also don't have a negative cost of productivity if anything that's also good for your productivity and That's basically what I'm talking about here is for example planning regulations You know the ease of doing business recognition of qualifications and things like that
Now the last point and that may be a bit unusual as really what's really important as well are your governance structures and I'll say more about that on the next slide Because there is a direct link between governance structures and both productivity and also your resilience and for example Municipal fragmentation has been shown by a team in the OCD that
It has a very negative effect when you're having too much municipalities in a in a large I mean in a larger metropolitan area and and This but this reduction in productivity You can overcome to certain degree when you're having governance structures that increase the municipal corporation with it within your Municipal sorry within your metropolitan area and my point here is basically more generally speaking that governance structures are really important
they're typically under appreciated by economists and And when you are thinking about your resilience in your city you really should be very carefully thinking about the governance structures you're having and I'll give you some more concrete examples afterwards and We have been writing about governance structures very extensively at the OCD and That is for example publication where you can find some information on that but there are others
So it come coming now to the second part Well, I'm looking at basically resilience to sources and to changing in trimmings and that basically there's two parts to that the first one is to prepare and the second one is to react to these disasters and changing environments and When I'm talking about preparation and then I'll talking about reduction of risks and
Now you're telling me well reduction of risk. That's pretty obvious and I say yes, that's true But then still If you're looking at the data you see that over the last decades The strongest population growth has been in areas that are most of risk of flooding So basically even though that's pretty obvious that's a very bad idea in an area where you're having increasing sea levels and
Increasing floods all over the world that basically more evil more people living these flooded flooding areas But that's still what's happening a lot of countries on the ground Then similar to that You also want to try to have mitigation when you're struck by disasters now one example for that is If you're in an area where you have regular earthquakes Then you probably want to have buildings that are relatively earthquake resistant Now that also sounds evident
But basically whenever you have earthquakes and that's not only in the fabric and front countries But you also had this in Italy what you found is that a lot of buildings in those regions where their earthquakes Were likely to happen were absolutely not built to withstand nurse quake That may be the case sometimes because you don't have the regulations that ask for that But often you have the regulations and because of you know corruption poverty whatever those regulations were not implemented
And then when the disaster strikes when there are space come then literally thousands of people die because of those failures then What is also important when you're struck by disasters? How do you react?
Now obviously it is extremely important that you repair that you kind of like you know have Conditionally plans for the for the important known risks that you're facing But you cannot prepare for everything. It's just not possible and when stuff happens There's always stuff that you didn't expect either because you didn't expect it to happen at all What didn't react you didn't expect to happen in that way?
There's always new things and that's when the better governance structures will really kick in so if you have thought about How you're setting up your governance structures in advance so that they are in the event of that There's stress that they can then well function that you have for example, municipalities that work together I mean then you have a much better reaction against these Resilience disasters and I mean this has been also shown in certain publications that we've been done
then the third point I want to talk about this resilience under attack and The most important party is being proactive and I mean being germ I allow myself to criticize my home country I mean Germany is an perfect example of we should not do basically Germany has been Incredibly lucky recently because basically they were a drone was attacking a major airport and
The only reason why there wasn't a huge explosion was huge amount of damage on that airport is because the incendiary device didn't function So when I mean everything we basically the drone was Bunting and bumping against the plane. It just didn't explode. It had like huge amount of I mean explosives with it it just didn't happen and And and the reason is basically because I mean there wasn't enough planning for those kind of like I mean cyber attacks I mean give you another one basically