Multilevel governance as a strategy to build capacity in cities: Evidence from Sweden

ABSTRACT

Multilevel governance has opened up important new transnational spaces for cities in their pursuit of policy learning and knowledge building. Knowledge and expertise as elements of urban capacity building are becoming more important as cities are now expected to address increasingly complex issues. Drawing on a case study of the policy internationalization of the city of Gothenburg in Sweden, the article argues that joining international projects has provided the city access to networks where knowledge and expertise on complex technical issues are shared among cities through learning and replication. The article draws on analyses of documents from the European Union (EU) and the city of Gothenburg and also on a series of interviews during 2015 with staff at the City of Gothenburg Office and the city’s European Office in Brussels.

This article reports a case study on how a European city engages international networks and European Union (EU)–sponsored projects in order to enhance its governing capacity—its knowledge and expertise on complex, technological issues—in the area of urban sustainability while at the same time sharing its know-how with other cities. We are particularly interested in the processes through which cities in Europe use these networks to increase their capacity to address climate change and sustainability issues (see Wang, Hawkins, Lebredo, & Berman, 2012). We will argue that many local governments in Sweden and elsewhere increasingly use internationalization as a means of building capacity to address these and other issues that are salient at the urban level.

The city of Gothenburg, Sweden, which is our empirical case, seeks to enhance its governing capacity in the area of environmental sustainability and to bolster its competitive strength, its “brand recognition,” and its reputation as a knowledgeable and credible network partner. These qualities are essential to cities that aspire to become part of European city networks and to secure EU funding for their environmental projects. The purpose of the article, against this backdrop, is to explore to what extent transnational networks allow cities to acquire capacity to address issues related to sustainability and climate change. The research questions we will address are the following: What are the key incentives driving cities to join these collaborative projects? How do they balance the need for collaboration with the competitive nature of EU policy vis-à-vis cities and regions? How congruent are transnational, national, and subnational policy objectives in the EU model of multilevel governance?

Urban sustainability is in vogue, not least in Europe. Many national governments implement programs to aid cities seeking to address issues related to climate change. In addition, the EU employs a variety of instruments such as regulation and funding to address issues related to the environment. The availability of funds provides incentives to cities to commit themselves to sustainability programs, although there seems to be significant variation in terms of which cities follow that path and those that are less active in this policy area. There is also variation among cities in terms of the credibility of such commitments (Krause, 2010; Wang et al., 2012; Zemmering, 2014a; see also Pagano & O’M. Bowman, 1997). As Eric Zeemering (2014a, p. 2) points out, “Some cities will use urban sustainability as a buzz word to trumpet scattered environmental initiatives, but cities truly working to be more sustainable will use the concept as a strategy to guide policymaking, growth, and community development.” Though there is political and electoral support to be harvested from a posture of environmental awareness, a serious, long-term engagement in these issues requires know-how, expertise, funding, and political commitment. This raises the question of which strategies cities employ to build capacity on these issues.

The article first discusses multilevel governance in the EU space and the opportunities that this governance arrangement offers to cities in terms of capacity building in areas such as sustainability and climate change. We then turn to our empirical case—the city of Gothenburg. This analysis first reviews recent surveys of urban internationalization in Sweden before it looks more specifically at the international strategies pursued by the city of Gothenburg. We study how the city maneuvers the complex EU multilevel governance context, particularly its involvement in an EU-sponsored climate change program, “Smart Cities and Communities” (European Union, 2016).

Multilevel governance and the logic of international urban collective action

The past couple of decades have seen a gradual transformation in the domestic institutional hierarchies of the EU member states. These hierarchies have evolved into a more complex multilevel governance system where EU institutions and subnational structures engage each other directly while central government prioritizes regulatory and monitoring roles. As a result, intergovernmental relations are becoming more negotiated (Peters & Pierre, 2004); cities and regions are increasingly expected to be more self-reliant and less dependent on central government support; and top-down hierarchical control is evolving into a division of labor between cities, regions, and central government (Bache & Flinders, 2004; Hooghe & Marks, 2003; Le Galès & Lequesne, 1998; Piattoni, 2010; Pierre & Stoker, 2000).

Though these developments challenge institutions on all levels of the political system, perhaps their strongest impact has been on the city level. The emerging institutional arrangement incentivizes cities and regions to explore international arenas and collaborative arrangements in order to support a shrinking domestic revenue base (Le Galès & Lequesne, 1998; Peters & Pierre, 2001; Pierre, 2013; van der Heiden, 2010). When the EU gained increasing importance for coordination, regulation, and funding, multilevel governance emerged as a governance paradigm integrating the EU’s consolidation with the institutional change in its member states (Bickerton, Holson, & Puetter, 2015; Newman, 2000; Piattoni, 2010; Pierre & Stoker, 2000).

Multilevel governance with its relaxed vertical governance has engendered new forms of collective action among cities. The institutional collective action (ICA) framework elaborates how collaboration among autonomous actors can generate outcomes that are more advantageous to individual actors than had they not collaborated (Feiock, 2007, 2009, 2013). Such collective action is usually seen as situated in a finite geographical space like a metropolitan region where the involvement of all actors is required to solve collective action problems and deliver governance in the absence of a higher level authority (Feiock, 2007, 2009). For instance, by collaborating in public service delivery, geographically integrated local authorities can generate economies of scale. Feiock (2013) argues that such arrangements are sustained by mechanisms such as embedded networks, mutually binding contracts or agreements, delegated authority, or imposed authority.

Feiock (2013) also points out that ICA has not just horizontal but also vertical and—particularly relevant to the present analysis—functional manifestations; “functional collective action problems are defined by the connectedness of services, policies, and resource systems as externalities occur between functional areas and policy arenas as well as governmental units” (p. 398). This aspect of collective action speaks directly to the present analysis because collaboration in the EU-sponsored networks is functionally, not geographically, defined. Thus, different forms of collective action draw on different types of incentives. In metropolitan governance, collaboration emerges among neighboring municipalities with a view of cutting costs by creating an economy of scale; for example, in emergency services, secondary education, water and sewage systems maintenance, or services requiring highly qualified staff (for instance, child psychologists) where municipalities need to collaborate to provide service. In Feiock’s (2013) “functional collective action,” cities have incentives to cooperate, not because they are located in the same metropolitan region but because they are facing similar problems.

In order to reduce transaction costs, functional collective action requires venues where cities can share information about the specific challenges they face in service delivery or development. For example, the cities of Gothenburg, Amsterdam, and Copenhagen share very similar problems with rising sea levels due to global warming, but they need a venue where they can inform each other about the nature of the problems they are facing, the technology they have developed to address those problems, and the efficiency of those technologies. EU-sponsored networks can help facilitate functional collective action by providing such venues. True, there is delineation roughly equal to the EU space, but the key deciding factor whether cities seek to become involved in the EU-sponsored networks seems to be the degree to which the issues that the networks address and the technologies they seek to disseminate are also relevant to the city in question.

The ICA framework predicts that choices regarding whether a city should join a network are based in the expected costs and benefits of such collaboration while containing free rider problems. We will return to this issue when we present our case study.

Alongside the vertical modes of interaction, specialized international networks provide horizontal collaboration among cities (Betsill & Bulkeley, 2006; Bulkeley & Betsill, 2003, 2005; Bulkeley et al., 2003; Kern & Bulkeley, 2009). Many cities in Europe have a long tradition of international exchange and collaboration, as we will discuss later. However, multilevel governance has helped open up international arenas to cities in a new and more strategic way. A large number of European cities—not all—have embarked on a strategy toward internationalization, including joining networks specialized in addressing climate change and sustainability issues, exploring partnerships and export markets for local businesses, joining strategic networks and formal organizations to lobby the EU and other transnational institutions for resources, and strengthening local professional expertise and capacity to address salient issues in urban governance.

EU governance in the environmental policy and sustainability sector is a textbook case of multilevel governance. Such governance arrangements emerged already in conjunction with the Agenda 21 initiative and the Kyoto Protocol in the 1990s but has since then been further elaborated (Jasanoff & Martello, 2004; Lafferty & Eckerberg, 1998). For instance, in the Covenant of Mayors initiative, cities could commit themselves to go beyond the environmental protection targets in the EU’s 2020 goals. In this process, the EU targeted the cities directly, not the member state governments. Though multilevel governance can be seen in conventional processes developing regulation, it is particularly evident in projects that the EU organizes, inviting cities and regions to compete for funding toward specific outcomes. Cities are becoming an increasingly important level of environmental protection and climate change issues because, as an interviewee (G2) put it, “It is here that you find both the problems and the solutions.”

In Europe, the emergence of multilevel governance is often related to the continuing integration of the EU (Hooghe & Marks, 2003; Piattoni, 2010). But that is only part of the story. Cities both within and outside the EU are increasingly pursuing their interests in international forums and arenas. Thus, though the EU multilevel governance incentivizes cities to position themselves internationally, similar incentives are present in jurisdictions outside the EU. The literature identifies different explanations to this pattern, including a growing emphasis on “urban competitiveness” (Gordon & Buck, 2005; Parkinson & Judd, 1998); corporate pressures on the city to help identify overseas markets; intercity collaboration aimed at mobilizing financial resources from international organizations; and cross-border collaboration between cities to stimulate trade (Aldecoa & Keating,1999; Alger, 1998; Beauregard, 1995; Beauregard & Pierre, 2000; Clarke, 2003; Marcuse & van Kempen, 2000; Sassen, 1996; Savitch & Kantor, 2002; specifically on the United States, see Fry, 1998; Hobbs, 1994; Jesuit & Sych, 2012; Wang et al., 2012; Zeemering, 2014b; on Japan, Sweden, and the United States, see Pierre, 2013).

Urban capacity building through multilevel governance

A general trend in urban governance is the growing disjuncture between the increasing need for advanced knowledge and information on the one hand and the capacity of the local state to create and sustain such expertise on the other. The demand for specialized knowledge is increasing; it is not an exaggeration to argue that local government is going increasingly high-tech. The days when cities and municipalities were mainly concerned with water and sewage systems maintenance, waste collection, and street maintenance are long gone; today they are asked to address issues related to climate change such as renewable energy processes, district heating systems, and recycling systems. Cities are also deeply involved in developing systems for service delivery that are sustainable, digitalized, and user friendly.

However, maintaining specialized expertise in a wide range of fields accommodated in-house would not be cost efficient; hence, there is a need to acquire information, knowledge, and expertise either from the market or from other cities. There is also a management problem present in this development; as cities become more specialized, they also tend to become more organizationally fragmented.

Thus, contemporary cities are facing a steep learning curve where knowledge and expertise are in high demand. This is the backdrop against we can understand the increasing tendency in Europe toward developing cross-national networks of cities addressing complex issues associated with climate change and sustainability. We conceive of the acquisition of knowledge, expertise, and information as integral elements of urban capacity building (Wang et al., 2012; Zeemering, 2014b). These networks provide excellent opportunities for cities’ capacity building through emulation, learning, exchanges of experiences, and replication (Betsill & Bulkeley, 2006; Bulkeley & Betsill, 2003, 2005; Bulkeley et al., 2003; Kern & Bulkeley, 2009).

Like multilevel governance, these networks are sometimes associated with the EU, but their logic and functionality are quite different from such governance. If multilevel governance represents a new model for organizing the vertical relationship between cities, nation-states, and transnational institutions, these networks structure horizontal relationships among cities. Thus, intermunicipal networks are not incompatible with multilevel governance. To the contrary, they seem to thrive in environments where institutional hierarchies are relaxed and actors create forums where knowledge and specialized expertise are shared (see Haas, 1992).

Multilevel governance and intermunicipal networks have created an arena for cities that is both competitive and collaborative, as we will discuss later. Indeed, in the EU system of supporting the development of new technological concepts in key policy areas, cities have to collaborate in order to become competitive as a collective. As instruments of ICA, such collaboration can be supported by “embedded networks” of autonomous actors in the pursuit of collective goals (Feiock, 2013).

Blurring institutional boundaries and roles

The EU plays a key role in facilitating and—on a competitive basis—funding intercity networks and collaborative projects bringing together practitioners and researchers. This governance arrangement thus ties together the supranational and the subnational levels of governing (see Adger, Arnell, & Tompkins, 2005). The significance of this arrangement is that policy and governance evolves not from agency at any particular institutional level but rather through negotiated interactions among actors and institutions on two or more levels of the state and transnational actors (Torfing, Peters, Pierre, & Sörensen, 2012).

We see similar patterns of interlocal collaboration across national boundaries elsewhere, too. For instance, subnational internationalization has been an important component of the consolidation of the East Asian region for the past 15–20 years (Pempel, 2005). This development has not been opposed but rather encouraged and supported by central government (Pierre, 2013). Domestic policies encouraging competition among cities (Gordon & Buck, 2005; Parkinson & Judd, 1998) are consistent with this development, as are the cutbacks in central government subsidies to subnational government in many countries (Pierre, 2013).

At the same time, however, cities are competitors in the EU sphere and constantly have to weigh the expected returns of collective, collaborative strategies against their own, individual advantage and edge. Indeed, a number of cities have set up their own offices in Brussels to monitor the EU, especially the European Commission. For instance, the “House of Cities, Municipalities and Regions” in Brussels, inaugurated in 2006, hosts the local and regional associations of 17 countries and officies for seven cities. In addition, a number of cities (Gothenburg being one) have set up their own independent offices.

Collective action in the EU multilevel governance context

Cities in the EU have found a way of combining competition for EU funds with functional collective action (Feiock, 2013). Subnational governments act collectively in different networks and organizations; for instance, the Eurocities network, set up by six cities in 1986 but today hosting 130 members; Eurotowns, created in 1991 to organize medium-sized cities; and the Council of European Municipalities and Regions, created already in 1951. The Council of European Municipalities and Regions works mainly as a lobby organization in Brussels. In addition, there are a number of more specialized networks for cities in the union; for example, the “Polis” network, which is a forum for the management of public transport issues, or “Reves,” which brings together cities and regions with an interest in “social economy.”

The consolidation of intermunicipal networks is related to the continuing integration among the EU member states and institutions. Interestingly, continuing integration of the union after the Maastricht Treaty was signed in 1992 has been built primarily on compliance, consensus, and the empowerment of new institutions and only to a very limited extent on increasing the strength of supranational institutions. This “new intergovernmentalism” (Bickerton et al., 2015, p. viii) emerged because “policy-makers remain willing to pursue collective solutions to shared problems but they have become more reluctant to delegate new powers to supranational institutions along traditional lines.” Thus, because institutionalized collaboration is viewed with some skepticism, the continuing saliency of “shared problems” drives the development of other, less coercive, forms of ICA.

Observed from the city level, this argument makes very much sense. Cities are keen to learn from each other and to “pursue collective solutions,” as Bickerton et al. (2015) put it, but they appear to prefer a form of collaboration that builds on voluntarism, consensus, and incentives rather than formal-legal coercion. Through this process, cities develop knowledge about the efficiency of various policy instruments and approaches; for instance, in policy areas such as the environment or public transport, which is then shared among cities and regions within the EU and beyond. Unlike many other types of resources, knowledge and information can be shared without depreciation, which aids the collaborative process. In addition to a top-down implementation process, we are witnessing the production of knowledge among cities, with the EU Commission playing the role of facilitator and funder rather than that of a regulator.

Thus, EU policymakers and the EU Commission have had to develop alternative and more subtle regulatory strategies. Developing venues and arenas for the exchange of ideas, knowledge, expertise, and technological solutions has been a key element of that strategy. In the Smart Cities program, the EU plays an essential role in funding projects to encourage replication; cities should not reinvent the proverbial wheel but instead learn from other cities how they have addressed similar problems. Perhaps more important, these projects are a way for the EU to shape behavior on the ground in a context where they have some, but not full, regulatory authority. As one Gothenburg city official commented, “These projects are an important strategy for the EU in its pursuit of the “20-20-20 goals” (G3).¹ Because the EU does not have full regulatory power on issues such as district heating, the union incentivizes cities to consider such infrastructure investments and foster networks so that cities whose remote heating projects are still in their infancy can learn from cities with more developed systems (see Andrews et al., 2012). That having been said, the EU exercises real regulatory influence by issuing directives in the environmental protection area; for example, the 2012 Energy Efficiency Directive (2012/27/EU) and the Packaging and Packaging Waste Directive (94/62/EC) issued in 1994 to provide regulation.

Building policy capacity from international collaboration: The case of Gothenburg

We will now observe the EU multilevel governance and collaborative project strategy from the vantage point of the city of Gothenburg in Sweden. This case offers a good illustration of the challenges and opportunities that the practice of multilevel governance offers to European cities. We will first briefly discuss the Swedish institutional and policy context related to subnational government, after which we describe the strategy pursued by those governments in relationship to the EU. The third section of the case study is focused on the city’s activities in EU networks for local governments, particularly the Smart Cities program, and the fourth section discusses the extent to which the city builds policy capacity through its strategy in the EU multilevel governance and international networks.

Institutional context

Founded in the 17th century, Gothenburg is by European standards a young city. The population in 2016 was about 550,000 in the city proper and 975,000 in the metropolitan area. Internationalization has been high on the city’s agenda for a long time. After the Second World War, sister-city agreements were signed with Bergen, Norway; Turku, Finland; and Aarhus, Denmark. These sister-city contacts have gradually decreased in scope and intensity. Instead, a network of partner cities (Lyon, France; Shanghai, China; Chicago; and Nelson Mandela Bay Municipality, South Africa) was created during the 1980s and 1990s with a view to help develop the local business community and to facilitate the exchange of knowledge and experiences in areas such as air quality, energy, and integration.

Sweden has been described as a decentralized unitary state (Ansell & Gingrich, 2003; Feltenius, 2015; Loughlin, 2000) where intergovernmental relationships have historically been characterized by a strong central government coupled with an extensive autonomy of cities and regions. Local and regional government have been integral to the implementation of extensive welfare-state programs defined by central government. Thus, although nominally autonomous, subnational governments have seen some three quarters of their budget stemming from transfers from central government in return for their delivery of social and other central government programs. Furthermore, central government has for several decades implemented programs aiming at ensuring balance and equal standards of public service across the territory.

This fairly stable and functional institutional arrangement characterized much of the postwar period. The 1990s would, however, witness the emergence of two developments that over time drove a process of institutional transformation. One was a gradually increasing level of competition among cities and regions in Sweden. Around 1990, central government declared that the state was reassessing its regional policy and that henceforth each region should “develop according to its own preconditions” (see Johansson, 1991). The subtext to this policy was that local and regional governments would henceforth witness decreasing subsidies from central government and therefore would have to develop strategies to mobilize their respective territories and to explore alternative sources of funding.

The other major development was the Swedish EU membership, which came into effect in 1996. Though joining the union and engaging the process of transnational integration and regulatory harmonization is a challenge to any state, it may well have been particularly difficult for Swedish institutions. As we will see below, Swedish bureaucrats are not always comfortable with the more limited transparency and contextual design of decision-making processes that characterize the union’s handling of many projects.

Internationalization and Europeanization

The decrease in central government subsidies to local and regional governments and the EU membership provided strong incentives to cities and regions to explore EU arenas. In 1999, a third of the Swedish local governments claimed to be highly active in relationship to the EU. Seven years later, close to 50% saw themselves as highly active vis-à-vis the EU (Berg & Lindahl, 2007). Local and regional governments along the Swedish west coast (Gothenburg being the biggest local government in that region) had had some previous experience in establishing contacts with the EU through a joint representation office (Berg & Lindahl, 2003), although the EU membership was obviously critical in opening up new channels into the EU.

More recently, Pierre (2013) reported a survey among city managers in all Swedish local authorities on the significance of internationalization to their respective cities. The survey shows that 53% of the city managers agree that building partnerships with local governments in other countries has become more important over the past decade. Another 7% state that creating such partnerships has always been important. Thus, it is fair to say that internationalization is now a prioritized activity for many local authorities in Sweden. That said, Pierre’s (2013) survey also shows that 32% of the local authorities indicate that cross-national partnerships were “never important” to them and 6% think that internationalization is irrelevant to them. The surveys by Berg and Lindahl (2003, 2007) and Pierre (2013) thus substantiate the argument that though international involvement is considered important by many cities, a fair number apparently see few gains to be made from overseas activities or little need to acquire the capacity that such activities might generate.

If the sister-city network arrangements drew on Scandinavian cultural affinity, the partner-city network is more strategic and geared toward economic development and the exchange of knowledge and experiences in a wide variety of areas, including social issues, economic development, integration, environmental issues, etc. However, this arrangement, too, is now fading in importance; “We do not sign this type of agreements any more. Today, we are only interested in project collaboration with fixed starting and ending dates” (G3).

Such projects are mainly conducted under the auspices of the EU. Gothenburg significantly strengthened its channels to the EU when the City of Gothenburg European Office was opened in Brussels in 2008. The office identifies issues of significance to the city of Gothenburg. The key mission of the office is to closely monitor developments in the EU sphere (“monitoring the environment” or in Swedish omvärldsanalys) and to identify emerging important issues and appropriate targets in the EU administration for the pursuit of those issues. This involves careful strategic planning and selecting issues that could be promoted. A current example is the “Fairtrade Town” concept. A Fairtrade Town certification first appeared in Britain in 2001. Today there are some 1,700 Fairtrade Towns around the world. The Gothenburg European Office is promoting the idea that the EU should establish a prize for Fairtrade Towns in the EU.

The main target of the Office is the EU Commission. They also monitor the European Parliament, particularly early signs of legislation that will be important to Gothenburg. Lead time is essential and so it is crucial to conduct analyses of the institutional environment early, before information has been posted online. It is important to know when early memos are released, “to find and understand the information” (G1).

The EU’s nonhierarchical, contextually defined multilevel governance arrangements are ripe with opportunities for political and bureaucratic entrepreneurship. A senior official at the City of Gothenburg European Office provides an intriguing account of how a skillful actor can play one against the other and align with other actors—at times even your competitors—in the pursuit of his objectives:

Member states are very difficult to work with. However, you can drive some issues together with national government against the EU. Other issues you can drive together with the EU against the national government. The objective is that we should have sufficient consensus in Sweden so that we can influence the EU but sometimes you have to work the other way. Other cities can be partners in that process. (G1)

For similar strategies of playing EU institutions against central government in Spain, see Dudek (2005).

The same official notes that working only for the city of Gothenburg is much easier compared to the previous arrangement, the so-called West Sweden joint representation office that had 72 local governments as members, all wanting information and attention (Berg & Lindahl, 2003). Today the Västra Götaland region has its own office. Still, “cooperation and the sharing of information are essential” (G1).

Navigating the EU multilevel policy environment seems to come easier to actors from some administrative cultures than others. The Swedish administrative tradition that emphasizes equal treatment, predictability, and due process does not correlate very strongly with the competitive and negotiated nature of EU multilevel governance; in the words of a senior Gothenburg office working with international issues,

Old, reactive [as opposed to proactive] institutions like Swedish local governments have problems with the EU. We are not used to playing a game, of thinking of ourselves as pit in a competitive context, or of marketing ourselves in order to be attractive to other cities. … The competitive application process is suboptimal. I do not trust the process. It is not a transparent process. Factors like good contacts and lobbying are extremely influential in deciding who gets funded and who does not. If you are well connected you will have access to vital information earlier than your competitors. It is all very … what’s the word I am looking for … un-Swedish. (G2)

A similar philosophy is also articulated with regard to the need to enhance the international visibility of the city in the international arena:

We believe it is extremely important to be visible as a city. We have not been very good at showing what we do. We need to present ourselves as an attractive city. Visibility helps make us attractive as partners. At the same time it is important to know what it is that you want to achieve and prioritize so that you do not try to get involved in all sorts of projects. (G2)

Again, this need for marketing the city and its pursuit of environmentally friendly strategies of development is in many ways alien to the traditional Scandinavian way of thinking about public organizations whose main concern to deliver services to the citizens of the city. That having been said, there are also positive aspects of the EU competition model. “Everything is connected. A strong environmental profile is good for local businesses and for tourism” (G2).

Teaming up with colleagues from other cities specializing in issues similar to those that a city employee is assigned to address can be rewarding in terms of sharing ideas and experiences. The problem with this strategy is that it is at odds with the conventional modus operandi, which is to either wait for signals from central government (or the national association of local and regional government) regarding what to do, and how to do it, or approach any of these institutions and request advice. Going international to some extent means violating the protocol on how to gather information and advice on how to address various issues. Public servants have to subscribe to a different discourse on the role of public organization and, indeed, on the city as a public space as the city becomes involved in international networks and EU multilevel governance. Though the city remains committed to providing services to its citizens, it also finds itself incentivized to respond to cues and signals from overseas networks.

There is a similar issue related to the cost-benefit assessments of internationalization projects. Though the costs are immediate and seemingly easy to estimate, the benefits are more diffuse and often long term. This makes the funding of these projects a sensitive issue as other items in a city’s budget deal with more immediate, tangible, and socially urgent projects (Beauregard & Pierre, 2000). The costs for international networking are obviously opportunity costs; the same money could have been spent on services supported by strong social constituencies. This may explain why internationalization projects often tend to be funded by discretionary funds controlled by the city executive rather than as outcomes of city council budget debate (van der Heiden, 2010).

There are a couple of additional complicating factors in the cost-benefit analysis of internationalization projects. First, as a city official (G2) argues, “Projects can often be justified by pointing out that they intend to do things that the city would have done anyway.” This being the case, the actual costs for participating in international networks are marginal. Secondly, the same official also suggests that “a cost-benefit analysis also fails to account for knowledge and networks which are hard to put a price on” (G2). Both of these arguments suggest that though there is a strong awareness of the cost-benefit aspect of internationalization, there are major problems associated with assessing benefits of building networks of contacts across Europe or of acquiring knowledge that otherwise would have had to be generated by the city itself. Though it is difficult to assess the significance of these complexities, they do provide the internationalization advocates with an argument against cutbacks in the projects’ budgets.

The Smart Cities program and projects

The Smart Cities program is a good example of the project paradigm in EU programs. The program aims at supporting the development toward fossil-free, low-energy-consuming cities in Europe. Cities consume 70% of all energy and account for 75% of all greenhouse gas emissions in the EU. With the continuing urbanization in Europe, transforming and modernizing the cities’ energy systems is a key objective if the EU as a whole is to reach its “20-20-20” environmental and climate policy targets; that is, a reduction of greenhouse gas emissions by 20%; at least 20% of all energy should be renewable; and energy efficiency should increase by 20%, all targets to be reached by 2020 (European Union, 2010).

Disseminating modern technologies for heating, cooling, and heat production is integral to the program because the level of technology varies considerably among the EU member states. For instance, in the case of district heating, 63% of the Danish population is served by district heating. Other Scandinavian countries such as Sweden (52%) and Finland (50%) also have extensive district heating systems. In France, by contrast, 7% are served by district heating and in the UK only 2% are served by district heating (data from 2013; www.euroheat.org). The potential for modernization is thus immense; hence the need for the EU to facilitate venues and networks where the laggards in district heating development can learn from cities that have more extensive district heating systems.

The Smart Cities program seeks to bring urban public actors, applied research, and the market together in order to develop and disseminate ideas and concepts among cities. The program is, in fact, geared specifically at “smart” cities; that is, cities that, for instance, utilize information and communication technology to improve energy systems or traffic planning. As mentioned earlier, the EU’s aim with this and similar programs is to facilitate replication of successful concepts and technologies so that cities that have developed an expertise in, for instance, remote heating can communicate that concept to other cities. More specifically, the program aims at facilitating innovation and dissemination to reduce climate impact. At the same time, these programs are a strategy for the EU to incentivize behavior in areas where it has limited regulatory authority.

Smart Cities is organized in a number of “action clusters” and specific projects. Gothenburg has a Smart Cities project (“Celsius”), funded by the Seventh Framework Programme, together with London, Genoa, Rotterdam, and Cologne. Celsius aims at promoting district heating and cooling. Gothenburg also participates in two other projects: Step Up (promoting energy and environmental issues in urban planning) and EU-Gugle (aiming at reducing energy consumption in existing housing; www.goteborg.se).

Gothenburg’s participation in the Smart Cities projects is driven by several strategic objectives. One is to acquire new ideas and strategies in the environmental work; that is, to “import” knowledge and expertise. Another important objective is to “export” knowledge in areas where the city has developed cutting-edge knowledge; for instance, in the district heating sector. Gothenburg’s corporate community hosts a number of companies in the “green technology” sector—for instance, in waste management, transport, and energy—and the city administration can use networks to promote local companies in the European market.

Thirdly, city officials also point out that

we want to increase the city’s visibility, learn more about working in projects and to build international networks. … Innovation is a major theme but truth is we do not have a solid definition of that concept. Just five years ago no one talked very much about innovation. Today it is a major theme in international and domestic collaboration. (G2)

Innovation requires access to cutting edge technology and expertise, areas where the city is clearly competitive. Equally important, innovation has a commercial element and, again, the city works closely with the local business community to find international markets. The city thus draws on, and incorporates, the business sector in developing its policy capacity on sustainability issues. Such capacity building would most likely not have happened, had it not been for the city’s insertion in international networks of cities committed to sustainability programs where those businesses can find a market.

Building policy capacity through multilevel governance

Throughout the article we study how the Gothenburg administration pursues international networks. The EU system of multilevel governance has enabled the city of Gothenburg to build its policy capacity in several different ways. In a knowledge-intensive sector like urban sustainability, access to information and expertise is a key prerequisite for building policy capacity. Indeed, the development of policy capacity in the environmental sustainability sector—that is, defining policy objectives and the means to pursue those objectives—is directly related to the development of green technology; that is, the means available to attain goals in that sector. Furthermore, joining the EU-sponsored networks appears to have strengthened the interaction between the city administration and private businesses in the green technology sector. Sustainability is a high-tech sector where Swedish, and not least Gothenburg, businesses have proliferated over the past decade or so (www.greengothenburg.se). The city’s insertion into networks and projects is in part aimed at strengthening local businesses in that sector.

Secondly, the city has considerably strengthened its governing capacity by launching its office in Brussels. Opened in 2008, this office is a gateway into the EU bureaucracy and to the information and funding sources it controls.

Third, and more important, the Smart Cities program and the projects it supports has helped connect Gothenburg’s city staff with their functional equivalents in other cities, thus facilitating both the export and import of knowledge on sustainability issues. Again, policy capacity in a knowledge-intensive policy sector requires expertise and knowledge.

Fourth, in addition to facilitating learning and disseminating technologies developed by the city, the strategy pursued by the city aims at enhancing its international visibility. Though visibility per se does not build policy capacity, it is a strategic requirement for being invited to future joint ventures, projects, and networks and to be eligible for EU funding. It also serves to support the internationalization of local businesses in the green technology sector.

Fifth, given its expertise and cutting-edge knowledge on issues that are essential to the EU’s climate change policy, the city is also an important contributor the larger collective project toward increased sustainability of cities in the EU. Thus, the Gothenburg process of policy capacity building is closely related to other objectives sustaining the internationalization effort, such as marketing the city overseas, supporting the local business community, and promoting collective action and learning in the EU toward the union’s environmental policy targets, the 20/20/20 climate change strategy. In terms of urban policy capacity, Smart Cities and other similar programs—the competitive and prestigious European Green Capital Award is a case in point—facilitate the dissemination and replication of strategies and technologies to address climate change issues. In Feiock’s (2013) terminology, the process can be described as collective action toward collective learning; by sharing knowledge about climate-smart solutions in collective heating systems, waste disposal and recycling, and public transport, these programs significantly help build and reproduce urban capacity in terms of providing specialized expertise and knowledge. Furthermore, these dissemination processes mean that cities do not have to make investments in research and development of these concepts because they can be emulated on systems that have proven successful elsewhere.

Concluding discussion

We began this article by discussing the emergence of multilevel governance in the EU and the gradual transformation of domestic institutional hierarchies. From there we analyzed how cities use transnational networks to build capacity in the area of sustainability and climate change and environmental protection issues such as knowledge and expertise on complex issues like district heating, heating storage, recycling, biogas, public transport modernization, and sustainable commuting patterns. We specifically asked what the incentives are for cities to join these networks; how cities balance such collaboration against the competitive EU policy toward cities and regions and how collective action problems are resolved; and how the international involvement of cities impacts domestic policy coordination across institutional levels.

Most of the EU’s programs in the area of sustainability and climate change target cities and regions more than the member state government. The EU’s funds, coupled with the cities’ needs to build governing capacity to deliver sustainable programs, incentivize cities to pursue international networks in the urban sustainability policy sector as a means of developing know-how. Such initiatives are, however, predicated on urban policy choice and resources; some cities are more strongly committed to sustainability and environmental protection than others, just as some cities are more willing to make the necessary financial commitment to embark on internationalization projects than others.

These incentives pit cities in both competition and collaboration with other cities. The EU invites, on a competitive basis, cities to create networks to foster these exchanges of technologies and processes to address climate change–related issues; a city’s competitiveness is determined to a large extent by its capacity to collaborate with other cities in the preparation of bids for EU funds. In the process, the EU incentivizes the adoption of new technologies in an era where it has some, but not full, regulatory authority. Thus, the union solves collective action problems in urban knowledge formation by encouraging cities to collaborate in order to avoid duplication in research and development and at the same time encouraging duplication in the application of new technologies. The process thus combines elements of both multilevel governance and new intergovernmentalism. Both models indicate ad hoc, contextualized arrangements for the EU to provide governance of subnational institutions.

For the participating cities, this collaborative strategy offers access to substantive policy capacity and funding from the EU. For instance, the networks facilitate the sharing of knowledge-intensive and applied technologies that will help the cities reduce CO₂ emissions to curb climate change. These are capacities that cities that take sustainability seriously need the most. They are also the capacities that are the most costly to develop in-house or acquire from the market.

There are three sets of issues that raise questions about the rationale of internationalization strategies. One problem is related to potential fragmentation of the city administration, which we discussed earlier. Public servants may experience conflicting loyalty between the city they work for and the international networks where they engage colleagues from other cities sharing their specialized interests. As a result, cities engaging in international networks may experience fragmentation and decreased organizational coordination as segments of the administration take their policy cues—and funding—from overseas sources.

In order to join EU-initiated networks, and in the face of not always very favorable odds, cities must commit significant funds to prepare competitive bids. There are obvious opportunity costs involved here, making these projects politically vulnerable. Furthermore, though participating in the EU programs and inter-municipal networks does provide the city with capacity in specialized and knowledge-intensive sectors of public service, there are other areas of the city’s public service commitment that are not enjoying the same influx of external knowledge. Thus, the internationalization strategy may favor some areas of local public service at the expense of other sectors.

Another problem has to do with the degree of congruence and consistency of sustainability and climate change policies across domestic institutional levels and among cities. As the survey data suggest, there is large variation in cities’ inclination to join overseas networks, and this asymmetry in information complicates collective action on the domestic arena. Networked cities have few incentives to share the knowledge acquired through international collaboration and the costs that are entailed with free-riding cities that did not make a similar investment.

A third issue is related to the degree to which cities’ involvement in international networks disturbs the policy congruence between central and local government. This problem is triggered by the tendency in multilevel governance for entrepreneurial actors to play institutions at one level against those at other levels, as we saw in the case of Gothenburg. Our interviewees in the City of Gothenburg Office in Brussels insisted that they invariably work to promote Swedish interests in EU arenas, but far from all issues are such that they can be used to promote the interests of both the Swedish central government and the city of Gothenburg. Thus, the more cities strengthen their capacity in Brussels, the more autonomous will they be in relationship to their domestic central government.

We should also reflect on what we can learn from the Gothenburg experience. The EU version of multilevel governance is far more complicated to monitor and manage than conventional institutional hierarchies. Multilevel governance offers more opportunities and rewards entrepreneurialism to a larger extent than conventional institutional arrangements. The EU seeks to develop direct interactions with cities and regions, sometimes leaving central governments in a marginalized position. In that scenario, coordinating policy across the nation’s territory becomes a major challenge, and there is a very real risk of a loss of coordination.

In closing, we must remind ourselves that Gothenburg is one of the more active European cities in the areas of urban sustainability, climate change, and environmental protection. These issues are high on the city’s political agenda and the international initiatives are supported by the city’s political and administrative leadership. Not all cities have made a similar choice, whether for political or economic reasons. The EU and central government can impose baseline standards, but the additional entrepreneurial strategy toward urban sustainability remains optional. Meanwhile, many of the specific issues in this policy field are not place bound but global. Here lies an intriguing disjuncture between policy problems and the agency to address those problems.

Acknowledgment

I thank Maja Högvik at the City of Gothenburg’s International Office for help with arranging interviews and comments on early drafts of the article.

Funding

The author acknowledges the support of the New Urban Governance Project by LSE Cities at the London School of Economics and the John D. and Catherine T. MacArthur Foundation. The findings, interpretation, and conclusions presented in this article are entirely those of the author and should not be attributed in any manner to any of these entities.

Additional information

Funding

The author acknowledges the support of the New Urban Governance Project by LSE Cities at the London School of Economics and the John D. and Catherine T. MacArthur Foundation. The findings, interpretation, and conclusions presented in this article are entirely those of the author and should not be attributed in any manner to any of these entities.

Notes on contributors

Jon Pierre

Jon Pierre is Professor of Political Science at the University of Gothenburg, Sweden, and Professor of Public Governance, Melbourne School of Government, University of Melbourne. He is also Adjunct Professor at the University of Pittsburgh. He has published extensively on governance, urban politics, and public administration. His most recent books in English include Governing the Embedded State (Oxford University Press, 2015; with Bengt Jacobsson and Göran Sundström); The Relevance of Political Science (co-editor with Gerry Stoker and B. Guy Peters; Palgrave, 2015); The Oxford Handbook of Swedish Politics (editors; Oxford University Press, 2015); and Comparative Governance (Cambridge University Press, 2017; with B. Guy Peters).

Notes

1. G1, G2, and G3 refer to three different interviewees in the city of Gothenburg administration and its affiliates. Interviews were conducted between February and October 2015. The 20-20-20 goal, defined in the Energy Efficiency Directive, refers to attaining 20% energy efficiency by 2020.