The debate ‘Capitals should be key drivers of countries’ economic development’ was organized by the Foundation for Effective Governance and Intelligence Squared in cooperation with the Kiev City Administration within the framework of presentation of the Kiev City Development Strategy draft for public discussion. Mustafa Nayem, a well-known Ukrainian journalist, moderated the debate.

Capitals often turn to be the places of concentration of infrastructural, financial and human resources. A capital city could be turned into a globally competitive center of attraction for talent and investments much more easily than any other part of a country. It would definitely spur economic growth within the capital. But would it also benefit the whole country or make it more economically vulnerable by depriving other regions of adequate growth?

The panel FOR the motion asserted that prioritizing the capital in regional development would allow the whole country to benefit from its prosperity as it would positively effect other regions, through innovation and investment transfer. The panel AGAINST attacked the motion from two different standpoints. First argument was for the need of diversification of economic activity within the country for risk management purposes, although it still favored concentration but in more than one center. Another argument was more radical as it insisted on equal distribution of resources within the country to allow for equal opportunities. The panel against the motion won the debate turning initial 28% support into 54% during the course of the debate.

This series of Public Debates serves as a social forum for discussion of issues important to Ukraine’s economic development. The project is designed to foster a culture of constructive and substantiated debate, and to assist in forming public awareness on the key economic challenges facing Ukraine.

www.debaty.org

May 31st, 2011 Teacher’s House, Kiev, Ukraine

CAPITALS SHOULD BE KEY DRIVERS OF COUNTRIES’ ECONOMIC DEVELOPMENT PUBLIC DEBATE BRIEF

Speakers FOR the motion Speakers AGAINST the motion

Martin Raiser Country Director

World Bank Regional Office for Ukraine, Belarus and Moldova

Evgeny Orlovskiy Senior Project Manager Monitor Group

Volodymyr Groysman Mayor of Vinnitsa

Fred Eisenberger Рresident

Canadian Urban Institute, ex-Mayor of the city of Hamilton, Canada

Martin Raiser: “The concentration of economic activity in big cities is a good thing as it allows you to attract talent from all over the world and use economies of scale. If you look at the map of Eurasia, Ukraine is a flat landscape, Kiev is a little hill compared to the big mountains, which you find in Western Europe and Japan. It should become a bigger mountain - it will be good for Kiev, but it will be also good for Ukraine. It does not always have to be a capital city, but when you have a city like Kiev with its brand and historical heritage it makes sense to use it”.

Evgeny Orlovskiy: “Concentration of resources in one place is wrong, we should diversify instead. The whole country should not depend on the wellbeing of one economic center. Moreover, Kiev is already rather developed, if we invest more the effect would be marginal. Furthermore, look in the European Union, its Neighborhood Policy is the world best practice. The EU invests into its neighbors as it realizes that it benefits the member countries. It is also in Kiev’s interests to have its neighbors develop in accord with itself!”

Volodymyr Groysman: “It is wrong to develop just Kiev without paying attention to what is going on in other cities because I believe all development processes are interrelated. If Kiev starts growing too fast, the quality of life here will be substantially worsened. We should not try to build a mountain out of Kiev, instead we should elaborate development plans for all the cities of Ukraine to develop the whole country. It’s not just Kiev where people live, in other cities people also want to have access to decent life standards”.

Key Statements

Q&A Session with the Audience

Voting Results

Q: “I think that national economy should diversified geographically. Why not follow the example of Europe?” A: Martin Raiser: “In the case of regional policy, in my view the European model is very expensive for Ukraine. What Ukraine really needs is foreign direct investments to become globally competitive. And you don’t do that by spreading it across 50 different locations, you do that by creating one or two centers where investors will come. And in my view Kiev is one of them… In Europe there are lots of programs to try to keep people where they are, but Europe can afford this. In Ukraine you should instead facilitate people’s mobility to come here, so that they go where jobs are, rather than spending a lot of resources to bring the jobs where people are. That’s much less effective.” Q: Andriy Shevchenko, MP of Ukraine: ”Please name the exact cities to which you think central government should pay more attention then to Kiev. Because otherwise it sounds more like ‘spread the butter equally over the bread’.” A: Volodymyr Groysman: “There is a theory that apart from Kiev we should pick up 5 more cities with high growth potential in the east, west, south, north and center of the country. Those cities would develop and therefore foster the development of neighboring regions so that the whole country will be developing.” A: Evgeny Orlovskiy: “We should not try to spread all our limited resources equally over all the regions of Ukraine. That would not be effective. The question is rather about sequencing in distribution of resources. Currently we invest into the 4 cities which will host the EURO-2012 championships. Then we can pick another 4 and then another 4 and so on. What is important is that we don’t spread the butter equally but first decide what will be the key development drivers in each region, which initiatives will provide highest returns and invest into them.”

Fred Eisenberger: “If you don’t have strategic planning in place in your other communities then let Kiev lead the way and its lessons can be shared all the way across the country to the benefit of the country as a whole. Kiev is one of those areas where you have talent, so industries want to gravitate there to take advantage from it. It will generate activity and attract investments from around the world which will drive Kiev forward, but will drive the entirety of the country’s economy forward all at the same time”.

Further information and the video version of the debates are available on:

www.debaty.org and www.feg.org.ua

FEG, 23-F Kudryavska str., Kiev, 04053, Ukraine tel: +380 44 501 41 00

feg@feg.org.ua