South Asia’s urban population grew by 130 million – more than the population of Japan – between 2001 and 2011, and is expected to rise by almost 250 million people by 2030. If recent history is any guide, this trend could propel the region toward greater growth and prosperity.
A key characteristic of urbanization is that the coming together of people and enterprises in towns and cities -- a process known as agglomeration – improves productivity and spurs job creation. That’s particularly the case in manufacturing and services. Over the long term, successful urbanization is accompanied by a convergence of living standards between urban and rural areas as economic and social benefits spill beyond urban boundaries.
So how is South Asia doing in realizing the potential of its cities for prosperity and livability? What are the challenges facing the region’s countries as their urban populations grow? Are they meeting those challenges or are policy reforms needed? And, if so, what type of reforms?
On September 24, the World Bank will release a new report titled, “Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability.”
This blog is part of the series #OneSouthAsia exploring how South Asia can become a more integrated, thus more economically dynamic region.The blog series is a lead up to the South Asia Economic Conclave, an event dedicated todeepen existing economic links through policy and investments in regional businesses.
Which South Asia do you live in? The one which offers world-class metros and malls, super-specialty hospitals, gourmet eateries and designer homes where servants make your meals, drive your car or clean your mess?
Or do you live in the South Asia where sanitation, water and electricity are a luxury, where filth, ignorance and violence means death comes early and more frequently from illness, poverty and natural disasters? Statistically, the latter is more likely.
Having lived in Southeast Asia, where the emergence of the Tigers has transformed the lives of millions of poor through investment in human development, infrastructure and exports producing high growth rates, the visible poverty and chaotic streets of South Asia are troubling. So, too, is the contrast provided by India's dollar billionaires -- the third-largest rich man's club in the world.
More than half of the world’s population lives in Asia and its robust growth is supporting the world economy. After weathering well the 2008 crisis Asia is now in the spotlight with currencies depreciating and capital markets in retreat. One widely voiced concern is rapid expansion of credit in the past decade fueled by abundant liquidity. Globally, and in Asia, regulatory response to the 2008 crisis has been to strengthen financial regulation and de-risk financial intermediation. Yet the reality of credit markets in most Asian economies is quite different from that in high income economies. While domestic credit by financial sector represented on average over 100% of GDP for high income OECD countries, emerging Asia’s average in 2014 stood at 60%. The differences across countries are substantial in this diverse region, but in two thirds of Asian economies domestic credit is less than 60% of GDP. The reality for most economies in Asia is that of limited and often inefficient financial markets which do not serve fully their growth needs. Low level of financial inclusion is a major contributing factor and a major challenge.
In high-income countries, learning outcomes have improved as a result of an intervention that increases transparency and accountability through the use of test scores. In a previous blog, I mentioned examples of ‘high-stakes testing’ accountability systems, such as No Child Left Behind. A high-stakes test has important consequences for the test taker, school, or school authorities. It carried important benefits if the test is passed, such as a diploma, extra resources to the school, or a positive citation. Some of these interventions also follow the “naming and shaming” of school leaders, which is done in England.
There is also evidence that suggests that even just providing information on test scores will lead to improvement. This is the case in school choice systems such as in the Netherlands.
Economic and social development should not be left to economists and specialists only.
This message is manifested in “Window of Opportunity,” a video highlighting the ambitions and goals of the World Bank’s 2015-19 Country Partnership Strategy in Pakistan.
Truck drivers, entrepreneurs, doctors, teachers and thousands of other citizens from Pakistan shared their ideas and helped identify opportunities and challenges to guide future policies and action areas.
These individuals come from a myriad different backgrounds but are united by a common drive to open up windows of opportunities for Pakistan.
A boat trip from Port Elizabeth to Kingstown, in the Caribbean country of Saint Vincent and the Grenadines, is a one-hour trip that locals take several times a day. It was during one of these journeys that the boat of Kamara Jerome, a young Vincentian fisherman, ran out of gas six miles from Bequia City in what is termed locally as the "Bequia Channel." While waiting for help with strong wind gusts and the sun on his head, the idea of developing a boat that would run with wind and solar energy was born. Soon after, the idea became a prototype; a boat using green technology was on the water making 20-year-old Jerome a winner of international innovation competitions and a role model to other Caribbean youth.
In Mexico, young engineer Daniel Gomez runs a multimillion bio-diesel company originally conceived as a research project for his high school chemistry class. Gomez and his partners - Guillermo Colunga, Antonio Lopez, and Mauricio Pareja - founded SOLBEN (Solutions in bio-energy in Spanish) in their early twenties.
Although Daniel and Kamara have different educational backgrounds, they do share one important skill, the ability to identify a problem, develop an innovative solution, and take it to the market. In other words, being an entrepreneur, an alternative to be economically active, that seems to work and not only for a few.
As Pakistan readies to celebrate its independence day, we can all feel satisfied about progress in restoring macroeconomic stability, but should also realise that the country can and should do much better. Pakistan has many assets, of which it can make better use — from its vast water and river endowment, to its coastline and cities, to its natural resources. And there are upsides: a growing middle class, a lively informal economy and a strong influx of remittances. Pakistan can also be proud of the first peaceful transfer of power between two civilian governments. But to reach its full potential, Pakistan needs to focus on two critical areas, both obvious and urgent. It needs to ensure that its people have the means to fully participate in and contribute to the economy. And it needs to integrate itself more, globally and regionally.
The first challenge is demographic. As a result of rapid population growth, 1.5 million youngsters reach the working age each year. The question is, will the private sector be able to provide the jobs they need and want? And will the youth have the skills to get good jobs? Pakistan must do far better in education. Primary school net enrollment is about 57 per cent, well below other South Asian countries. Enrollment drops by half in middle school, with much lower levels for girls and children from poor families. This is not a good foundation to build on.
It is not surprising then that Pakistan also struggles to give all its citizens the opportunity to participate in building better lives for themselves. Only 25 per cent of women participate in the labour force, compared to 50 and 80 per cent in most developing countries. Women and girls deserve better. Research shows that girls with little or no education are far more likely to be married as children, suffer domestic violence, and live in poverty. This harms not only them, but also their children, their communities and the economy. Greater gender equality can enhance productivity and improve development outcomes for the next generation. It is smart economics.
Pakistan has taken steps to empower women. The Benazir Income Support Program, supported by the World Bank, has provided millions of women with national ID cards and makes direct payments to them, strengthening their ability to take decisions and move out of poverty.
Many parts of the development community have long embraced the following narrative: When nations are young and poor, they are willing to sacrifice natural resources—dirtying their water and their air—to promote economic growth and meet their population’s basic needs. Then, once these nations achieve a certain level of wealth, they become less concerned with accumulating material goods and more concerned with quality-of-life issues, and only at that point are they willing to spend money—or sacrifice growth—for benefits like clean air.
However, a recent resolution by the World Health Organization's (WHO) governing body shows that this narrative is beginning to change.
More than 50% of today’s international trade goes through regional trading arrangements. While trade is a critical component of regional integration, integration has several other dimensions including energy cooperation and intra-regional investment, to name a few. After carefully examining cases of regional integration in Southeast Asia, the Americas and Africa, we present five lessons for South Asia.
Lesson 1: Facilitate trade in goods and services
Despite falling tariffs, there is still a large gap between the price of the exported good and the price paid by the importer, largely arising from high costs of moving goods, especially in South and Central Asia. On a percentage basis, the potential gains to trade facilitation in South and Central Asia, at 8 percent of GDP, are almost twice as large as the global average. High trade costs have contributed to South Asia being the least integrated region in the world.
FIGURE 1: Intra-regional trade share (percent of total trade), 2012
In the ASEAN region, most countries have established either Trade Information Portals or Single Windows that have enhanced trade facilitation, reduced trade costs and enhanced intra-regional trade. A Trade Information Portal allows traders to electronically access all the documents they need to obtain approvals from the government. A Single Window (a system that enables international traders to submit regulatory documents at a single location and/or single entity) allows for the electronic submission of such documents. These single windows, using international open communication standards, facilitate trade both within the region and with other countries using similar standards.
In services, one barrier to trade involves the movement of skilled workers, accountants, engineers and consultants who may move from one country to another on a temporary basis. The Southern Common Market (Mercosur)’s Residence Agreement allows workers to reside and work for up to two years in a host country. This residence permit can be made permanent if the worker proves that they can support themselves and their family.
Turkey has radically transformed its land title registration system, and decreased the turnaround time for recording property transactions to just two hours.
I just returned from Turkey where I visited the Turkish Tabu Cadastre Agency (Land Registration Agency of Turkey). The agency had changed so much that I did not recognize it.
I remember my first visit to the agency in 2007. The agency is heavily staffed (15,000), has more than 100 branches and its main headquarters had once almost fallen apart. In my first visit, the head of the agency gave me a nice surprise: he showed me a land book that dated back to the 18th century, and included a record of my great-great-grandfather’s land title in Palestine.
The head of the agency had great plans to transform the agency by improving land records, introducing computerization and integrating the system into the overall e-government program, and setting a time limit of one day to register land transactions. Based on that an ambitious reform agenda, we worked together over a few months’ ‘time to prepare the cadastre modernization project. The Bank partly financed this reform through a $100 million loan, while the Turkish government funded the rest of the program. The project started in 2007, and I moved on to other positions later that year.
This time I had a second surprise. The institution is completely transformed. The main office has been completely and beautifully renovated. It now resembles any other government office in the US or Europe. The agency presented its achievements. It was amazing to see what had been accomplished in 8 years. The government is about to complete the renovation of the cadastre and the computerization of all land records, including historical records from Ottoman times. Service delivery has improved dramatically, with property transactions now being registered within 2 hours. They also integrated cadastre registration into the overall e-government program, which allows any Turkish citizen to access the record of their land/property online. Above all, customer satisfaction has reached 97% — something unheard of for land agencies, often known to be among the most corrupt agencies in many countries.