A Losing Brown Field, Recolored Or Reshaped?
Yee-Chaur Lee, Lih-Horng Chen1
Abstract
Brown field in most of the developing countries are competing with time and tide
nowadays. As competitors all over the world advance with hi-tech industries, brown
field in old industrial area has situated in a dilemma while its competitive advantage
can no longer be maintained. As worldwide competitions become more intense and
immediate, old industrial areas, which are aimed by the government to enhance their
competitiveness, may pursue to the redevelopment strategies including land use
rezoning (recolor) and production revitalization/innovation (reshape). This article,
mainly deals with brown field that normally cannot develop its competitiveness, is
aimed to establish a mechanism for sustainable advantage of which a losing brown
field may compose as capacities. A qualitative model is formulated to specify the
critical point where reshape and recolor is split based on the land use intensity and
thereby land use tax. Please be noted that some research spots proposed herein are
seen from the authors’ view as a request for further comments and suggestions rather
than being treated as conclusions to this article.
Keywords: brown field, land use plan, land use tax, urban redevelopment, Laffer
curve, critical point, innovation
Were Industrialization and Urbanization Attributed to the Brown Field?
Ever since the industrialization of modern cities in the late 19th century, cities
were rapidly changed with production and population patterns. Farming was replaced
with manufacturing whereas land use intensity was rapidly changed and upgraded. It
is common that the more industrialized a city, the predominant the urbanization it is
(Chen, 2002). As manufacturing industries grow and acquire more land, population
and income normally increase simultaneously. Consequently a city expands with
industries of diversity shown as Table 1. This table shows the different transformation
patterns of industrialization along with the enhancement strategies on the
corresponding time-frame stages. The “production chain” is found to tie up with the
“income and population level” within a city. Confronting with the world tides of swift
production patterns, traditional manufacturing industries within inner cities or isolated
1
Yee-Chaur Lee, Chung Hua University, Hsinchu, Taiwan. Email:joeychuc@yahoo.com.tw.
O:03-5186651, Add: 707 Wu-Fu Rd. Sec.2, Chung Hua University, Hsinchu 300, TAIWAN.
Lih-Horng Chen, National Cheng Kung University, Tainan, TAIWAN.
1
industrial parks have been losing their competitive advantages. Internal enclaves were
found in old industrial areas and thus “brown fields” were found.
Table 1 Industrialization Development Process and Enhancement Strategies
Industry Pattern
Transformation
Industrialization
Development Process
Factory Initiated
Farming with Light Industry
Farming with Manufacturing
Industry
Enhancement
Strategies
Farming support
industry
Cities support industry
Individual production
unit
Development without
regulation or planning
Factories Established
Factories Clustered
Intensive Labor Industry
Manufacturing Mixed with
Residential/Urban sprawl
Industry
agglomeration
Planning mechanism
Land use restrictions
Industrial District
Import Replacement Industry
Over Developed / Environmental
Concerns
Hardware framework
enhancement
Zoning
Decentralization
Industrial Park
Heavy and High Tech Industry
Transformation of Industrial Area
Software framework
enhancement
Zoning regulation
Function improvement
Sustainable Park
Knowledge-based Economy Industry
Demand diversified
Large-scale land needed
Redevelopment of Old Industrial
Area
Industries for Sustainability
Coordination
Revitalization
Innovation
Ever since the Ruhr area in Germany was successfully transformed by IBA and
made itself a world famous revitalization project, brown field became an issue that
2
attracts the spotlight of planner from private and public sectors. Accompanied with
old residential area in a city, brown field becomes an issue of urban infill. Brown field
can be classified by its definition and formation. It implies to the area where
previously developed, normal production decreasing or ceased, land use less intensive,
and business downwardly reversed. It may be located around the periphery of or
inside the city, and very often the existing industrial infrastructures are deteriorating
or not in current use. Brown field may therefore include abandoned railway, station,
factory, wharf, housing, and industrial facilities. All of which, as Roger Trancik (1994)
put, are seen as “lost spaces” in today’s city. For the improvement of lost spaces,
theoretically the “figure-ground”, “linkage”, and “genius loci” are proposed as
planning and urban design strategies for urban redevelopment (Tancik, 1994).
Diagram 1. Definition and Scope of Brown Field
Previously developed
Rural and urban (location)
Land and / or buildings
Is
Not in current use
Brown Field
Land contamination
Partially occupied
May Be
Vacant
Statutory contaminated land
Derelict
Green Belt
Sandra, Victoria, Peter and Nathan (2000) The Definition of Brownfield
Given that brown field may make city space fragmented and malfunctioned, the
redevelopment of brown field and old industrial area is normally treated by
articulation of urban function for sustainability. With diverse modes of production,
articulation is a conjuncture of large-scale society strengths: specific time frame along
with space configuration and industry formation. As brown field may be a reflection
of industrialization and urbanization process, the redevelopment strategies that would
apply to the old industrial area may not simply the issues of industry transformation
and environment protection. Instead, it would be pursed from the perspective of urban
function with articulation on economy, society, and civilization. Brown field, which
turned out to be lost space as Trancik put in “Finding Lost Spaces”, becomes a place
where previous urban function nowadays has deteriorated. However, these areas, from
the authors’ viewpoints, are the places where the advantage of proximity to the center
and the accessibility to the resources from existing periphery is maintained. The goals
3
for the redevelopment of brown field may include but not least to protection,
revitalization, preservation, and therefore the comprehensive amenity of a city.
Diagram 2. Goals For Brown Field Redevelopment
Environmental cleanup
& protection
Neighborhood
revitalization
Brownfield Redevelopment
Tax base growth utilization of existing infrastructure
Green space
preservation
Civilization
revival
Job creation
Sandra, Victoria, Peter and Nathan (2000) The Definition of Brownfield
Literature Review On Regional Development Differences
Brown field redevelopment issues have been reviewed from variety of
perspectives. For years many studies have investigated spatial differences in old
industrial areas of economic and urban redevelopment (Gehrke and Legler 2001,
European Commission 2003). Some of the viewpoints are recognized:
‧ Old industrial areas have been identified being less innovative thus less productive.
A focus is placed on incremental and process innovation due to a pre-dominance
of mature industries and externally controlled firms (Tichy 2001).
‧ One concentrated industry area would be helpful for the spill over of technology,
and the effect of redevelopment and innovation can be spread over to the nearby
areas. To incorporate the benefits of innovation, reinvestment can enhance the
R&D capacity of a firm, and thus incorporate the external benefit internalized.
(Romer, 1986)
‧ Research activities are usually highly concentrated in larger agglomerations
(Gehrke and Legler 2001, Simmie 2003) whereas brown fields were commonly
clustered around the heavy industrial metro areas such as Chicago, Pittsburgh in
the US (General Accounting Office, 1995).
‧ Competition, specialization, innovation can promote the industry growth and the
competitiveness of an industry, whereas diversification would relieve the stress for
innovation (Glaeser et al, 1992).
‧ Jacobs (1966) reminded us that technology improvement would shift and spread
among the industries, which would enhance the growth and innovation of the
industries. Competition and diversification would be helpful in maintaining the
4
competitiveness of an industry whereas specialization would to the contrary
hamper them.
‧ Whether or not specialized or diversified agglomerations are conducive for
industrial redevelopment. Porter (1998) argued for innovation advantages of
specialization, while others state diversification is more favorable.
From the viewpoint of dynamics of a city history, industries developed
accompanied with a city. City by its nature is a place affluent with information, capital,
population, and commodities. Due to its comparative advantage of proximity and
locality, the land rent and economic activity are usually much higher and active. This
explains the spillover effect of industry agglomeration. As an old industrial area
gradually loses its competitiveness, and if a redevelopment stitch cannot be made in
time, there finally we will see an “in-piece” city with inner decay.
The main characteristic of many industrial institutions on periphery is that urban
redevelopment prerequisites are constructed weakly as there is a lack of dynamic
clusters and of support organizations. In these old industrial areas, industrial activities
are generally at a lower level in comparison to more central and agglomerated areas
(EC 2003). This does not rule out the possibilities that there are innovation and
productivity prevailing in such areas, but often the critical mass for a dynamic cluster
development is not reached. If there are clusters in the brown field, they are often in
traditional industries with little R&D and innovation activities. Whether or not brown
field may therefore dwells upon a critical point where reshape with innovation or
recolor with rezoning based on the industrial thickness. That deals with the locality of
“center and periphery” that each brown field may inherit from urban economy and
geography viewpoints.
Center vs. Periphery on the Redevelopment of Brown Field
A city can be perceived as a center/periphery dichotomy where the center has a
level of dominance over the periphery, which is reflected in business intensity,
population, transportation, and land use pattern. Accessibility is higher within the
elements of the center than within the periphery and most of the high-level economic
activities and innovations are located in the center. This pattern was particularly
prevalent in the pre-developing countries which favored the accessibility of the center
to resources and markets of the periphery, a situation that endured until 1970s. In
between the center and periphery of a city, the semi-periphery has a higher level of
autonomy and has been the object of significant process of economic development in
the countries with rare resource of land. The accessibility of the semi-periphery
improved, permitting the exploitation of its comparative advantages in labor and
resources.
The problem regarding center and periphery is emphasized on incremental
5
innovation system. The low level of productivity does not only hamper the internal
innovation activity in a region, rather it leads to a low absorption capacity of the
industrial institutions. The low level of industry clustering and agglomeration implies
an “anti-thickness” and less specialized structure of knowledge suppliers (Todtling
2003). Knowledge spillovers can be observed in industrial clusters and
agglomerations, and they are constrained to a certain geographical distance from the
centers (Baptista 2003). As Feldman (1994) and Fritsch (2000) pointed that peripheral
regions are regarded as less innovation in comparison to agglomerations because of
less R&D intensity and lower shares of product innovations.
Old industrial regions and industries represent another type of problem area where
learning and innovation has been insufficient, despite of efforts of renewal in recent
years (Rehfeld 1999, Todtling 2003). In contrast to peripheral regions, where the lack
of clusters appears to be an important development barrier, old industrial regions face
the opposite problem of too strong clustering as crowded with mature industries
experiencing decline (Tichy 2001). These regions have been confronted with the
negative issues of clustering which leads to a loss of regional competitive advantage
and innovation capacity. This can/could be observed in areas hosting heavy industries
like Ruhr area in Germany, Wales in UK, Pittsburgh waterfront in US, Kobe seashore
in Japan, Pusan harbor in South Korea, Taipei metro in Taiwan and the others in the
world. Old industrial regions often have a highly developed and specialized
knowledge generation and diffusion system. What appears to be problematic is that it
is usually oriented on the traditional industries and technology fields (Cooke et al.
2000).
The analysis of the main redevelopment barriers of old industrial regions shows
that there is no single best practice policy approach addressing the problems and the
challenges. A general view of redevelopment process is seen as being essential when
it comes to formulate political initiatives adequate to foster learning process. This
means that focusing only on technological aspects of redevelopment strategies is often
not enough (Cooke and Memedovic 2003). They, according to Cooke, should be dealt
with organization, financing, education and innovation techniques. Redevelopment
can be well processed with physical capital such as R&D and technology
infrastructure, human capital (training of employees) and social capital, namely the
formation of trust-based relationships between regional actors (Nauwelaers 2001).
Competitive Forces of Brown Field
With respect to the relational assets of old industrial areas, it was found that a key
feature of these regions is that they suffer from various forms of “lock-in” (Grabher
1993), which seriously curtail the development potential and innovation capabilities.
Analyzing the adaptation and innovation problems of the Ruhr area, Grabher (1993)
6
identified “lock-ins” on the respect of function, cognition and politics. It was observed
that too rigid inter-firm networks, homogenization of worldviews, and strong
symbolic relationships between public and private key actors hampering industrial
restructuring. Phenomena like these have been observed in many old industrial areas
worldwide.
In general, metro areas are regarded as centers of innovation, benefiting from
scale economies and agglomerations. However, not all metro areas are such centers of
productivity. Despite these areas usually have highly developed organizational
infrastructures of innovation, the problem of lack of networks and interactive learning
seems to represent an important innovation barrier in such areas. As a consequence,
the development of new technologies and industries as well as the formation of new
firms are often below expectations. This phenomenon can be derived from the old
industrial areas depending upon the locality of center and periphery.
The main policy agenda usually is the strengthening and upgrading of regional
economy. For old industrial areas, redevelopment policy should give priority to
organizational and technological “catching up learning”. The target efforts may
include the introduction of up-to-date management technique, product and process
technologies enhancement, and organizational restructuring and practicing. To reshape
the old industrial firm with support of formation and enhance the
redevelopment/innovation capabilities of existing companies can be important
(Todtling & Trippl, 2002). In many cases such as the Ruhr area in Germany and the
Bay area in the US, an approach combing endogenous and exogenous elements seems
to be workable. This includes linking regional old industries to new business partners
and knowledge sources both inside and outside the periphery of old industrial areas.
Development measures for old industrial areas should be strategically oriented
on facilitating the renewal of the regional economy. Redevelopment policy in this
context is encouraging transition to new fields and trajectories and stimulating product
and process innovations for new markets. In the old industrial area, core issues for
redevelopment include both the restructuring/revitalization of old industries and the
development of clusters in new or related industries or technologies (Todtling and
Trippl 2004). As Cooke put in 1995, there is little evidence so far that old industrial
areas can “leapfrog” successfully into high tech sectors. Instead the “reshape”
strategies may support the diversification and modernization activities of existing
firms and the formation of new enterprises. However, such an endogenous approach
may often not be sufficient to foster structural change in old industrial regions.
Therefore, the feasible strategies for redevelopment should move to attract more
foreign direct investment bringing complementary knowledge to the “reshape”
clusters. The brown field and city redevelopment interaction circle is shown below on
diagram 3. The impacts of the existing brown field on city, both on economy and
7
environment, may include externality and income decrease, which in the long run
would affect the livability of a city.
Diagram 3. Brown Field and City Redevelopment Interaction Circle
ECONOMY
productivity
deterioration
cost
adjustment
economy
decline
income decrease
Brown
Field
society
conflict
Livability
security
issues
City
externality
pollution &
contamination
space
capacity
energy I/O
& waste
ENVIRONMENT
A Trial Empirical Study – Brown Field at Hsinchu Taiwan
To identify the issues of redevelopment in brown field, the authors hold a survey
on Hsiangshang Industrial Park (HIP) at Hsinchu Taiwan, where host mostly
traditional manufacturing firms. The results show that more than 40% of the factories
are vacant or abandoned, which suits HIP a brown field and needs account of either
recolor for rezoning or reshape for regeneration. It is realized that more than 40% of
the respondents unsatisfied with the current situations of the Park. Amongst the “lack
of comprehensive planning” is mostly complained. Respondents agree that “rezoning”
and “tax relief” are two effective measures for brown field redevelopment. Meanwhile
around 60% of the respondents believe that the HIP has contributed to the local
economy, would it be continued for manufacturing use. However, being asked for
rezoning, about 70% of the respondents stand for “commercial” and “residential” with
higher intensity land use. Given the existing facilities at HIP may not meet the needs
of the firms, there are 70% respondents who are satisfied and confident with the
8
current business situation. As a whole, more than 80% of the respondents would stay
at the Park and maintain business. Around 30% of the firms say that they would
increase investment in HIP for the coming 3 years. Being asked what would be the
considerable ingredients for effective production auras, “employee quality”,
“transportation convenience”, “production machinery”, “government mechanism”,
and “financing institution” are amongst the priority selections.
It should be noted that about 90% of the respondent firms hiring less than 50
employees, 83% of which claiming its annual business turnover less than 50 million
NT dollars (approximately 1.4 US dollars), which is about equal to the registered
capital volume2. The result of this survey considerably fits well with the current
situation in today’s brown field in Taiwan. It should be noted that the majority of the
manufacturing firms in old industrial area in Taiwan is normally belonged to the
“small business”, which hires lesser employees with smaller business volume and
least R&D activities. They are usually clustered by business train and vulnerable to
the fluctuations of foreign currency exchange and domestic economy. As the
competitiveness of the firms are no longer existed, business will be forced to close
waiting for recolor or to reinvest for reshape.
Some research studies suggest there are three different dimensions to the cluster
concept, related to space, business function and government policy. Making explicit
distinction between these three dimensions may contribute to the dynamics of spatial
issues in old industrial areas. Turning to the case of the traditional manufacturing
industry at HIP Taiwan, there is a stronger emphasis on clusters as sets of functionally
interrelated industries and supporting institutions (Lee 2003). This allows for the
analysis of relations and other interdependencies across industries that may be
important for identifying the sources of competitive advantage but not necessarily fit
into a spatially defined territorial system. Then the problem rises: on what critical
point would the firms in an old industrial area would pursue to the different brown
field redevelopment strategies, reshape or recolor? Nevertheless, it is not necessarily
to say that the preceding survey and situation analysis would apply worldwide. To
adopt an explicit cluster strategy seems to be a crucial step in this context. Relevant
policy actions are to identify newly emerging regional complexes of related industries,
which have a strong local knowledge base in the region and to promote their growth
and dynamic development. In order to enhance the synergy potential in old industrial
areas and to improve international visibility measures directed towards redevelopment,
complementary activities that both private and public sectors can exert for the best
interests for the region are strongly recommended.
2
This survey was undertaken in May 2004 and sponsored by Hsinchu City Government. Totally 62
out of 166 existing firms were interviewed. More details can be referred upon request.
9
Critical Point for A Brown Field to Recolor or Reshape
Spatial analysis related to the industry development is a central area of research
for planners. It deals with core concepts in economy and geography, as the role of
space for industrial location and transformation is frequently discussed. It seems to be
a commonly held opinion that our understanding of the causes and economic impact
of spatial analysis still limited or at least not crystal clear. There is one question that
should be considered in the old industrial areas: what has to do with the difficulties
concerning empirical validation of the advantages of recolor or reshape? Theoretically
some spots from economics can be applied for this concern. The critical point for a
brown field to recolor or reshape is compared to the situation that at this point, there
exists no difference either for recolor or for reshape. It is commonly pursued by the
firms that the purpose for business activities is aimed for maximization of the benefit,
namely the bottom line. Taking the whole old industrial area, the total productivity
and the benefit normally would be maximized if only if the bottom line of each
individual hits the ceiling.
Despite the land use pattern may in some sense change the land use intensity, an
old industrial area can be evaluated by the critical point where the marginal utility of
manufacturing equals to the marginal utility of non-manufacturing (usually residential
and commercial). This implies that a “parabolic” curve with a maximization value of
reflection point can be attempted to formulate. Given that the land use plan is an
independent valuable, the business totality can be seen as a dependent variable that
would change with land use plan3. Presumably, the authors reviewed some of the
articles that would basically fit the preceding situation. Given that the preposition of
marginality and the fact that land use pattern and intensity is somewhat paralleled to
the land use tax rate, Laffer curve is adopted for transformation. Because of its
explanation ability on the cause and effect of the variables, the structure of Laffer
curve can be reformed and incorporated with reshape and recolor issue.
Laffer curve4 is a curve which supposes that for a given economy there is an
optimal income tax level to maximize tax revenues. If the income tax level is set
below this level, raising taxes will increase tax revenue. And if the income tax level is
set above this level, then lowering taxes will increase tax revenue. Although the
theory claims that there is a single maximum and that the further one moves in either
3
For the purpose of analysis simplicity, the authors would instead propose a more generalized
prototype of parabolic, which needs more empirical examination with reliable data and details.
4
The Laffer curve is aptly named after Professor Art Laffer, an former advisor to President Reagan in
the early 1980s. Laffer and other right-wing economists used the curve to argue that taxes were
currently too high and should therefore be reduced to encourage incentives and harder work.
10
direction from this point, the lower the tax revenues will be. In reality this is only an
approximation. The Curve suggested that, as taxes increased from fairly low levels,
tax revenue received by the government would also increase. However, as tax rates
rose, there would come a point where people would not regard it as worth working
hard. This lack of incentives would lead to a fall in income and therefore a fall in tax
revenue. The logical end-point is with tax rates at 100% where no one would bother to
work and so tax revenue would become zero. Thee Laffer curve is illustrated below:
Diagram 4. The Laffer Curve
Tax Revenue
Tx
tax rate (%)
T* represents the optimum tax rate where the maximum amount of tax revenue can be collected.
One might think that doubling the tax-rate would double the taxation revenue.
Mathematically it is true, but this is not so in reality. As tax-rate increases, people just
choose to quit, because it is not worth their while. This is called dead-weight loss. If
we introduce a tax and increase it slightly from very low tax rate, taxation revenue
normally increases. But if the tax rates are already very high and increased, the tax
revenue raised by the government actually goes down, because of the “drop-out” from
the trading system. It takes a number of forms, such as leaving jobs and drawing
welfare, or making things at home for free tax.
There is a point on the Laffer curve at which the taxation revenue is maximized.
At this point the government actually reduces its revenue either by increasing or
decreasing tax-rates. The dead-weight losses at the Laffer curve maximum are beyond
expectation. Once a government hit the Curve maximum, taxpayer would pay the ever
most taxes if they cannot be aware of this situation (ie. they are locked in instead of
drop out). Then government cannot raise more tax revenue. It must either get by with
what they already have, borrow money, or increase the country's income. At this point,
dynamic optimization between tax rate and tax revenue is reached. The Laffer curve
simplified a situation that the tax revenue is the consequence of articulate
manipulation of government. The authors then further examine the concept of Laffer
curve and find that to address the problem of brown field, the structure of the curve
may be transformed as such. Details follow.
11
Diagram 5. Genres of City Development
Donought City (center decay)
land use intensity
(%)
Dumpling City (center clustering)
(%)
center
distance to the center
(%)
As a city is a reflection and a consequence of the industry development, land use
intensity may dominate the pace and pattern of a city. There are two typical genres
that can be classified based on the development intensity of center. The majority goes
with the “dumpling city”, where the more close to the center, the higher land use
intensity it will be. However, a “donought city” goes reverse, in which inner city
decay is detected. Given other things being constant, the strategy that a brown field
may pursue for redevelopment would depend on the genre and the locality that can be
measured by the distance to the center. From diagram 5 we learn that the land use
intensity is comparatively high in a “dumpling city”, where spatial clustering and
agglomeration would occur around the center. To the contrary, a “donought city”,
which is not quite common, represents an industrial thinness around the center and in
some sense implies a phenomenon of urban sprawl with inner city decay.
Diagram 6. Development Intensity vs. Land Use Tax Rate Decreasing
development intensity
Cx
land use tax rate decreasing
from the center
This diagram represents the land use intensity along with land use tax rate decreasing from the
center, where C* has the highest land use intensity and land use tax.
Given that the land use tax rate is positively compared to the distance to the
center5, the first major assumption in this article, we can redraw diagram 5 to diagram
5
In this paper, only the city development lands are considered, not including the green land and
agricultural area. Besides, only the “dumpling city” is considered since the “donought city” is not
12
6. This stands quite natural. Wherever there is no development intensity, there should
be no tax. It should be noted that the development intensity is somewhat in relation to
the land use intensity, which is normally represented by floor area ratio (FAR) and/or
building coverage ratio.
The second major assumption in this article is that the business amount is
directly or indirectly confined to the land use (or development) intensity. We may as
well derive diagram 7 from diagram 6. It should be noted that for an old industrial
area, if the land use intensity is lower than the critical point (as C denoted in the
diagram), the reshape strategy is pursued whereas land use intensity is higher than C,
the recolor strategy would apply. However, this critical point, like the optimal tax rate
in Laffer curve, is not easily identified in practice. It varies and is confined with the
other elements beside land use tax rate. Nevertheless, the development intensity is
specified within a land use plan, which is a tool that can be manipulated by the
government. This implies that, if other things being equal, to manipulate the land use
intensity up to the critical point may offer the firms in brown field an opportunity to
select “reshape” or “recolor” for redevelopment.
Diagram 7. Business amount vs. Land Use Intensity
business amount
(tax revenue)
Reshape
Recolor
C
land use (development)
intensity
The advantage of this measure is that each individual firm may determine its goal
out of its best and maximum interest. In other word, at this point there would be two
alternatives that would bring forward the same business amount. However, it should
be noted that the tax revenue collected from the firms may not be the same as either a
reshape or a recolor strategy is pursued. “Government subsidy” tells the difference6.
That is a quite common strategy in the countries where the so-called “hi-tech” are
regarded as prime industries. However not every firm in a brown field has the
commonly perceived.
6
Some countries offer tax reduction mechanism, such as intended low corporate tax rate, by endowing
the hi-tech firms with tax subsidy. Therefore the taxable corporate income differs between diverse
industries.
13
capability to select, let alone advance itself up to the “hi-tech club”. It should be noted
that if the willingness and preference is against “reshape”, then the selection is limited.
The buck is back to the government: the critical point should be manipulated either by
lowering the tax (from diagram 6) or increase the development intensity (from
diagram 7).
Be reminded that as utility maximization is pursued at the critical point and is
based on the self-interest of each activist, other things being equal, the redevelopment
strategy that a firm in a brown field would pursue would formulate an indifference
curve below. At this point, there it makes no difference whether reshape (innovation)
or recolor (rezoning) is pursued. However, the total utility can be increased on the
condition that the curve itself is move outwardly (utility curve II). What would
constitute the strategies that will feasibly push out the curve to increase the utility?
The redevelopment of a brown field is not only an economic issue but also a social
problem. Whatever strategies may pursue, that would simultaneously deal with from
the perspectives of economy, environment, and society. For the purpose of brown field
redevelopment, the empirical study at HIP and the qualitative model suggest “tax
relief” may be one of the feasible measures7. The government may make changes in
tax for a number of reasons. A Keynesian government may choose to vary the level of
tax to try to influence the level of aggregate demand and therefore economic growth.
A Classical government would view the role of tax as an instrument very differently.
It would argue that taxation should be as low as possible to create incentives for
people to work harder. Low tax should be encouraging firms as they will not lose
much of the profit in taxation. One point needs our consideration is that what would in
reality a firm would be benefit should there be a critical point? Or what would in
reverse affect a firm if this point does not exist or hard to be set or detected?
Diagram 8. The Indifference Curve at the Critical Point
reshape
(innovation)
utility curve II
utility curve I
0
7
recolor (rezoning)
In practice, many governments will use taxation in a combination of these two ways and will
formulate their policy to fit the prevailing condition.
14
Brown Field Redevelopment Guidelines
The redevelopment of brown field is getting more attention from the public
sectors. It is found that the regional economy, job opportunity, environment quality,
greenbelt preservation would be hampered if the situation worsens. What would be
the strategies that a losing brown field can apply to compete for redevelopment rezone or/and reshape? Brown field redevelopment is an issue of public domain. One
of the key actions is to introduce the resources from the NPO/NGO. With the
assistance from these groups, the interested parties may reach consensus than it
otherwise without. Meanwhile, the public sector is encouraged to prepare the
strategies and guidelines for redevelopment including:
1. Highlights the contaminated and deteriorated areas where are prioritized for
redevelopment purpose;
2. Recognizes the brown fields where the private sectors may be of interest on
redevelopment;
3. Detects the catalyst districts where may be of redevelopment paradigm;
4. Improves the brown field where would create job opportunity;
5. Exerts the spillover effect that would maximize the public welfare.
The knowledge economy and innovation have moved to the foreground both in
regional and industrial policies in the past decade. This paper takes differences into
account by analyzing the strengths and weaknesses of old industrial areas where
redevelopment approach may fail in “organizational thinness” and “fragmentation”.
Old industrial areas often have combinations of reshape (innovation) and recolor
(clustering) barriers. The main problems are the low level of R&D and productivity
due to a dominance of “lock-in” in traditional industries, weakly developed firm
clusters. Critical thresholds for innovation networks for reshape are very often not
reached. For the purpose of reshape, external firms should be focused to embed them
into the old industrial areas. They are encouraged to link to the outside clusters and
resources providers, which would in the long run construct the “multi-mode park”,
where urban functions of livability can be enhanced.
In old industrial areas, there are many firms and dominant clusters, which are too
often oriented on old industries and hi-tech perspectives. The challenge lies in the
business and policy networks. For the purpose of reshape, the old industrial areas
should focus on the reorganization of firms and networks, the attraction and
generation of new firms, and the establishment of research institutions. The key issue
then comes to how to stimulate more innovations and development of new industries,
which should be related to the existing industries. The proposals outlined in this paper
should be considered as basic guidelines for the preparation of a more differentiated
redevelopment policy approach. Each old industrial area should further develop and
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adapt these strategies to its own circumstances. In order to formulate and implement
redevelopment actions, planners must possess a detailed knowledge on the critical
point where old industrial areas would pursue for reshape (innovation) or recolor
(rezoning).
Conclusions
This article attempts to bring out the issues and redevelopment strategies of
brown field where current situation is no longer productive and friendly. Based on the
structure of Laffer curve, the authors propose a similar diagram with a critical point
where the “reshape” and the “recolor” strategies make no difference. A firm in a
brown field can thus determine the strategies that would benefit most theoretically
from the diagram. This paper is by no means a final conclusion. Instead it needs more
effort on quantitative analysis and empirical study for this concern. Without any doubt,
this article requires more in depth research. Therefore the authors would be more than
glad to receive any comments regarding the methodology and framework of this
article.
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