Buenos Aires turns to industry clusters to boost innovation

BUENOS AIRES -- Watching the modern undulating roof of the new Norman Foster-designed headquarters of Banco Ciudad rise over the low-slung houses in Buenos Aires' blue-collar neighborhood of Parque Patricios is a study in incongruity (see slide show). But it's also the clearest example of how the Buenos Aires government is trying to turn the oft-forgotten southern side of the city into a chain of innovation hubs.

Since arriving in office in 2007, the administration of Mayor Mauricio Macri has pursued a strategy of creating industry-themed neighborhoods. The neighborhoods receive infrastructure and security improvements, and businesses that move into the neighborhood get tax breaks and development loans from the city-run Banco Ciudad. Within the next five years, the city's Investor Assistance Center (or CAI, for its initials in Spanish) foresees at least seven such clusters, including ones for technology, design, arts, audiovisual production, logistics, pharmaceuticals, and entertainment/sports, covering more than 7,500 acres and employing over 150,000 people.

The concept appears to be working. Not counting the recently inaugurated audiovisual production cluster--which has existed in an organic form for years--the Parque Patricios technology district, home to the new Banco Ciudad headquarters, is the first cluster built from the ground up. Since its 2009 launch, it has gotten 115 tech business employing some 9,000 people to sign on. Almost 60 businesses with 3,600 employees have already moved in.

The idea of creating thematic clusters was imagined as a way to package the city's educated and creative classes in a way that would create self-sustaining business hubs--thus increasing investment--while at the same time help develop the city's poorer neighborhoods. All of the new thematic clusters will be placed in city's south as a way to help "level" the income disparity between Buenos Aires's rich northern and poor southern halves, says José Nuñez, coordinator of the CAI.

Instead of creating business campuses, the goal is the make the clusters part of the neighborhoods by encouraging businesses to build or renovate structures inside the neighborhood. "These are open, not closed, spaces. We want to keep the local identity but add businesses and academia," says CAI director Damián Specter. "These neighborhoods were deteriorating. Previous governments built public works for the photo ops, but no one used them."

To improve its Parque Patricios proof of concept's chance of success, the city opened the H subway line through the area; refurbished the Parque Patricios park; moved some 325 members of a new municipal police force into the zone;and began to build its Banco Ciudad heaquarters (originally pegged at 200 million pesos, or about $45 million), which will house some 1,350 workers in 115,000 sq. ft. of offices. So far, well-known companies that have moved offices to the area include Tata Consultancy Services and Iron Mountain.

When asked why the city of Buenos Aires opted for themed innovation neighborhoods instead of starting a program like Start-Up Chile (see SmartPlanet story here), which awards money to technology entrepreneurs who apply to move to Chile for six months to build a business, Specter said that the Chilean program had yet to have great success creating the kind of hub the Buenos Aires government wants. "What we want is to achieve a community like Silicon Valley, that creates a sense of belonging," he said. "Not to pay you to come. The attraction here isn't giving you money."

With the Parque Patricios technology district launched, the city has turned its attention to the other thematic zones. Though the design district has yet to be inaugurated, in 2010 the city opened its anchor, an incubator for Buenos Aires's design trade in a remodeled 150,000 sq. ft. fish market in the warehouse-filled Barracas neighborhood.

In March of this year, Buenos Aires officially inaugurated the audiovisual district, and in May the city opened the 160,000 sq. ft. brick Usina del Arte (or Art Power Station; see pdf description here), a nearly century-old Italo-Argentine Electric Company power station in the immigrant neighborhood of La Boca that will now serve as an arts space (replete with 1,200 person theater) and anchor for the new arts district, to be launched at the end of July.

And at the end of June, the city announced a new $10 million long-haul bus station in the neighborhood of Villa Soldati. The 270,000 sq. ft. building is expected to handle 700 buses per day.

While the city's initiatives are noble and appear well designed, issues of transportation and image still need to be worked out. In a May story on a Buenos Aires hackathon that took place in the city's Barracas design incubator, programmer José Escalante told SmartPlanet how hard it was to get to the area: "This place is incredible," he said, about the remodeled fish market. But it will only work if they improve the public transportation. It's very hard to get to.

Both the design zone and the new transportation hub will require new subways or other transport networks to be built, daunting long term investments in crisis-prone Argentina. And even then people might not be eager to move to areas that many see as undesirable. In 2010, some members of a Banco Ciudad union insulted Mayor Macri and attacked his car, angered by the headquarters move and what they said was a contract bidding process lacking transparency.

This post was originally published on Smartplanet.com