Finance

How the Recession Beefed Up Sister City Relationships

U.S. cities traditionally develop relationships with foreign cities for diplomatic, cultural or educational purposes. But more and more are looking to them for economic development.
by | August 28, 2014
The National Harbor in Prince George's County, Md., (left) and the Great Wall of China in the Changping District of Beijing (right) have become tourist attractions for each.
The National Harbor in Prince George's County, Md., (left) and the Great Wall of China in the Changping District of Beijing (right) have become tourist attractions for each. Wikimedia Commons; FlickrCC/Ronald Woan
 

Since 1995 Victor Hoskins has traveled to China many times in his various roles with the state of Maryland and later as the economic development chief of Washington, D.C. Now a top official with Prince George’s County, Md., Hoskins’ next trip to China with other county officials and business representatives contains a new twist. The new sister county agreement to be signed next week between the county and the Changping District of Beijing will solidify not just a cultural relationship, but specific economic development goals as well.

Prince George’s is just one example in part of a larger shift in sister city (or in this case, sister county) relationships that have traditionally been developed for diplomatic, cultural or educational purposes: in today’s economic climate many governments see a need to expand such partnerships for economic development. Sister Cities International reports that in the past several years more and more cities have been approaching the organization asking for help to expand their existing partnership toward economic development. When Hoskins worked for the District of Columbia, he found on a trip to Beijing in 2012 that the opportunity existed create more exact economic and business ties. Whereas before the largely cultural and arts/focused agreement had led to things like one city hosting another's performing arts groups or cultural centers in each place, officials on both continents wanted more formal business ties.

“What we discovered was that this agreement could drill down into very specific areas and [Beijing officials] had wanted to but we just hadn’t moved in that direction,” Hoskins said. “So we crafted a new agreement that benefited us both economically. It’s good to start with the cultural but eventually you have to move it into an arena that ties the nations together.”

The shift began following the Great Recession, when many local governments began an earnest push to expand economic development and business opportunities beyond not just their immediate borders, but across international borders, said Adam Kaplan, membership director at Sister Cities International. Cities that already had sister city relationships began asking if those relationships could be used to stimulate trade and whether they could do so on their own, without the federal government’s help.) Among some of the larger examples, in 2013 Chicago and Mexico City entered into a first-of- its-kind trade agreement with the goal of increasing employment, expanding certain industries and strengthening global competitiveness. The agreement could lead to Chicago streamlining permitting and procedures to facilitate foreign investment or help small and midsized firms in each city's top industries find more customers in each market.

More resources have popped up to encourage this shift. In March of 2012, the Brookings Institution and JPMorgan Chase launched the Global Cities Initiative, a $10 million, five-year project aimed at helping the leaders of metropolitan areas strengthen their regional economies by becoming more competitive in the global marketplace. (The Chicago-Mexico City agreement is a result of this program.) The program provides officials with ideas on how to expand the global reach of their economies and creates an international network of city leaders. For example, San Francisco’s ChinaSF initiative has worked with its offices in Shanghai, Beijing, and Guangzhou to help 30 primarily high-tech companies set up U.S. headquarters in San Francisco. In Phoenix, Arizona State University forged a partnership with Tec de Monterrey, which has led to joint master’s degree programs in aerospace logistics and the creation of a Global Institute of Sustainability that examines cutting edge approaches to regional water management issues in both markets.

As far as choosing a sister city, Kaplan said they often are of a similar population size and share at least one other meaningful characteristic such as being port city or having a similar economic base. In some other cases the U.S. counterpart may be home to a population from its international sister city. He added that sister cities make natural economic partners because relationships and trust are an underpinning of business. “People want to do business with people they know and a lot of times in international business, there’s so many uncertainties [like the local reputation of a potential partner],” he said. “These relationships are about building an intimate knowledge of a community.”

The Prince George’s County trip, led by the county executive, will start in Beijing where officials will sign a memorandum of understanding. The memo will outline economic development goals, including foreign direct investment from China to Prince George’s and expansion opportunities for county businesses in the Changping District and vice versa, and will touch on tourism and cultural goals as well. The delegation will also attend an international conference in Xiamen (about 1,200 miles south of Beijing) where they will promote six projects in the works across the county for investment, as well as about $10 billion in projects in the pipeline. The trip will conclude in Shanghai, where they will do the same in one-on-one presentations to investors and large corporations.

The results of Washington, D.C. codifying its economic relationship with sister city Beijing in 2012 include a tri-continent business school program between D.C.’s Howard University, a university in Beijing and one in Africa. Graduate students spend six months at each school, learning about the business and cultural processes in that country. D.C. is also working to attract some of China’s tech companies to open satellite offices in the nation’s capital and the District is planning on opening a second office in Beijing that will act as a soft landing space for companies looking to expand to the U.S. and help acclimate Chinese companies to the Washington-area business scene.

“Those are kinds of things that come almost immediately out of this process,” said Hoskins. “This is all potential for Prince George’s County.”

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