Cities must make room for new businesses

Remote working, online shopping and the economic recession are challenging the competitiveness of cities. Cities need a strong business policy.

Sometimes, a city’s business policy might have been enough to designate an area in a plan that said “business district” and then hope that companies would come there. Today, competition is fierce, and cities must both attract new companies and keep existing ones vibrant.

The challenge is the constant change in business activity. Should we protect the existing business base or let new innovations tighten competition?

You don’t have to look far for examples: Should traditional taxi entrepreneurs be protected or should more flexible so-called “applicationtaxis” be allowed on the market, or can the market area be put out to competition again if certain companies have been in the best locations there for decades? Can startups be offered cheap office space in the city’s business incubators, or can existing transport companies be required to provide better service or more environmentally friendly operations in the tender process, and should the city offer established companies warehouse or freezer services at lower than market prices?

Whenever a city is making changes to the existing situation of companies, there is strong resistance. However, urban economic policy must be seen as the development of industries. Traditional pro-business economic policy, i.e. supporting existing entrepreneurs against changes, at worst weakens the entire city’s business activities and its competitiveness.

A functional solution to a development-friendly and competitive urban economic policy is the development of industries – not individual entrepreneurs. Public debate should not be given too much space, but the cornerstone of economic policy is to be able to see the development opportunities of the market and give room for new activities, even if it challenges existing entrepreneurs.

This opinion piece was published in Kauppalehti on 17.6.2025