Winning Global Markets: How Businesses Invest and Prosper in the World's High-Growth Cities

Chapter 6How a Nation Can Help Its City Economies

In stressing the growing importance of cities and metropolitan (metro) centers undertaking more responsibility for self-development and self-improvement, we don't mean to understate the role that the nation has to play in aiding city development. Government units on the federal or state level can either aid or stall cities in accomplishing their objectives.

Consider the current situation with Detroit, which declared itself bankrupt in July 2013. This may be the biggest American city to declare bankruptcy, but it is not the last. The common notion is that a city like Detroit is too big to fail and must be rescued. If Detroit doesn't pay its bills to suppliers and investors, they won't lend more money, and Detroit may become a city without adequate electricity, water, infrastructure maintenance, and public workers. The pensions of Detroit government workers may have to be reduced, not to mention other drastic adjustments.

Should Detroit's fate be left in the hands of the state of Michigan, a state that also lacks money and has a number of other cities that might object to their budgets being cut to help Detroit survive? Or should the U.S. government adopt the role of savior, and with what conditions? The U.S. government has given relief for locations afflicted with a natural disaster, but it has not aided a fiscal disaster. Is Detroit entitled to emergency funds from the U.S. Treasury? Should this also apply to other already-bankrupt ...