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Urban Development

Making cities competitive – What will it take?

Megha Mukim's picture

Cities are the future. They are where people live and work. They are where growth happens and where innovation takes place. But they are also poles of poverty and, much too often, centers of unemployment.

How can we unleash the potential of cities? How do we make them more competitive? These are urgent questions. Questions, as it turns out, with complex answers – that could potentially have huge returns for job creation and poverty reduction.

Cities vary enormously when it comes to their economic performance. While 72 percent of cities grow faster than their countries, these benefits do not happen uniformly across all cities. The top 10 percent of cities increase GDP almost three times more than the remaining 90 percent. They create jobs four to five times faster. Their residents enjoy higher incomes and productivity, and they are magnets for external investment.
We’re not just talking about the “household names”among global cities: Competitive cities are often secondary cities, many of them exhibiting success amidst adversity – some landlocked and in lagging regions within their countries. For instance, Saltillo (Mexico), Meknes (Morocco), Coimbatore (India), Gaziantep (Turkey), Bucaramanga (Colombia), and Onitsha (Nigeria) are a few examples of cities that have been competitive in the last decade.
So how do cities become competitive? We define competitive cities as those that successfully help firms and industries create jobs, raise productivity and increase the incomes of citizens. A team at the World Bank Group spent the last 18 months investigating, creating and updating our knowledge base for the benefit of WBG’s clients. In our forthcoming report, “Competitive Cities for Jobs and Growth,”* we find that the recipe includes several basic ingredients.

In the long term, cities moving up the income ladder will transform their economies, changing from “market towns” to “production centers” to “financial and creative centers,” increasing efficiencies and productivity at each stage. But economic data clearly shows there are large gains to be had even without full-scale economic transformation: Cities can move from $2,500 to $20,000 in per capita income while still remaining a “production center.”  In such cases, cities become more competitive at what they already do, finding niche products and markets in tradable goods and services. Competitive cities are those that manage to attract new firms and investors, while still nurturing established businesses and longtime residents. 
What sort of policies do competitive cities use? We find that leading cities focus their energies on leveraging both economy-wide and sector-specific policies. In practice, we see how successful cities create a favorable business climate and target individual sectors for pro-active economic development initiatives. They use a combination of policies focused on cross-cutting issues such as land, capital markets and infrastructure, while not losing focus on the needs of different industries and firms. The crucial factor is consultation, collaboration and partnerships with the private sector. In fact, success also involves building coalitions for growth with neighbors and other tiers of government.

Ensuring robust water management strategies in Lima-Callão, Peru

Laura Bonzanigo's picture
Canto Grande, Lima, Peru. 
Photo Credit: Andrew Howson / Creative Commons

How can water resource agencies make smart investments to ensure long-term water reliability when the future is fraught with deep climate and economic uncertainty? Water resource agencies around the world are grappling with this question at a time of unprecedented water stress, growing demands, uncertain climate change, and limited budgets. We helped SEDAPAL, the water utility serving Lima, Peru, answer this question by drawing on state of the art methods for decision making under deep uncertainty.

Lima is home to approximately 9.8 million people. It is the fifth largest metropolitan area in Latin America. With average precipitation of just 6 mm per year, it is also the second largest desert city in the world. A rapidly growing population with approximately one million underserved urban poor, current water shortages, competition for water between sectors, wide rainfall variation due to El Niño effects, and long-term climate change impacts may leave the region under perpetual water stress.

Recognizing the urgency of Lima’s water situation, SEDAPAL has developed an aggressive multi-billion dollar Master Plan to implement 14 large and diverse infrastructural investments projects between now and 2040 at a total cost of US$2.7 billion. Together, the investments are designed to meet the 30 percent increase in water demand that SEDAPAL projects for the coming decades.

Livability is an economic imperative for cities

Sangmoo Kim's picture
Sarbamati Riverfront Development before
Sarbamati Riverfront Development before
Sarbamati Riverfront Development after
Sarbamati Riverfront development after

Robert Solow once said: “Livability is not a middle-class luxury, it is an economic imperative.” But how related are livability and economic development?  Furthermore, how can we define and measure livability?

Recently as part of the South Asia Urbanization Flagship Report, Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability, our team compared a sample of South Asian cities with peers from around the world. The report’s framework considered livability (along with prosperity) as being a key outcome of urbanization.

We wanted to highlight that while urbanization has undoubtedly contributed to economic growth in South Asia, its impact on livability is more complex. As they have grown, South Asian cities have faced challenges arising from the pressure of their populations on basic services, infrastructure, land, housing, and the environment.  This has helped to give rise to what the report terms “messy” urbanization, characterized by slums and sprawl, not to mention levels of ambient outdoor air pollution that rank amongst the highest across cities globally.

The report suggests that to have a full understanding of the urbanization process in South Asia, it is necessary to discuss not only the positive productivity benefits that are associated with urban size and density, but also the negative “congestion” forces.  How successfully South Asian cities manage these forces will help to determine the quality of life not only of the region’s current half a billion urban residents, but also of the additional 250 million that will be added over the next 15 years.

“What Makes a Sustainable City?” – Join us online Saturday, Oct. 10 for the answer

Claudia Gabarain's picture

With most of the global population and capital goods now concentrated in urban areas, cities are key to social development and economic prosperity. Urbanization, globalization, and climate change are interacting in a way that is unprecedented, and urban service delivery systems are becoming increasingly interlinked. 

Join us for a live online session this Saturday, Oct. 10 at 11:30 a.m. ET (15:30 GMT) straight from the Bank-IMF Annual Meetings 2015 in Lima, Peru. A discussion with senior leaders and government officials about how to support cities in becoming more socially, environmentally, and fiscally sustainable.

The event will be livestreamed in five languages and live tweeted and live blogged. We’ll have English and Spanish-speaking urban specialists joining our live blog to address your comments and answer your questions as the session progresses –and the panel in Lima will take a few questions from our online audience.

To see the list of panelists and other details, and to watch and join the live discussion, please go here (also in Français, español, Português and العربية )

Plus, follow the event on Twitter with #cities4future #ciudadfutura   #cidadesdofuturo   #AvenirUrbain  #المدن_المستدامة

Weekly wire: The global forum

Roxanne Bauer's picture
World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

If Everyone Gets Electricity, Can the Planet Survive?
The Atlantic
Last week, the vast majority of the world’s prime ministers and presidents, along with the odd pontiff and monarch, gathered in New York to sign up to the United Nations Sustainable Development Goals (SDGs). Across 169 targets, the SDGs declare the global aspiration to end poverty and malnutrition, slash child mortality, and guarantee universal secondary education by 2030. And they also call for universal access to modern energy alongside taking “urgent action to combat climate change.” These last two targets are surely important, but they conflict, too: More electricity production is likely to mean more greenhouse-gas emissions.

Special Report: Connected Citizens - Managing Crisis
Developing Telecomms
As connectivity extends to the remotest parts of the world an unprecedented and transformational development of ICT knowledge and skills is taking place. This is resulting in an urgent reappraisal of the ways in which crisis situations are managed and to the concept of 'disaster relief'.  Connected citizens become proactive partners in crisis management and recovery, finding ICT based solutions to problems, guiding and channelling emergency relief efforts and leading rebuilding activities.

Can better spatial planning and management transform South Asian cities?

Jon Kher Kaw's picture
Aerial view of Dhaka
Aerial view of Dhaka

South Asia’s urbanization has been described as “messy, hidden and underleveraged." A lot has to do with how South Asian countries manage their cities’ spatial development.

Having visited many cities in South Asia, the sight of the built environment in the region is a familiar one–a rapid expansion of built-up areas and an accompanying low-density sprawl that has, all too often, gone hand-in-hand with poorly managed transportation systems, planning constraints, underutilized land, and a lack of institutional capacity and resources. These forces result in high land and rental costs that make it extremely challenging for cities to support affordable housing and commercial space, and to maintain a livable public realm.

South Asian Urbanization: Messy and hidden

Mark Roberts's picture

South Asia is not fully realizing the potential of its cities for prosperity and livability, and, according to a new report by The World Bank, a big reason is that its urbanization has been both messy and hidden. Messy and hidden urbanization is a symptom of the failure to adequately address congestion constraints that arise from the pressure that larger urban populations put on infrastructure, basic services, land, housing, and the environment.

South Asia Urbanization Infrastructure infographic

Cities: the best place to strive for sustainability

Xiaomei Tan's picture

Also available in: Español | Français | العربية

Cities are a puzzle for some and inspiration for others. As engines of economic growth, they are also hubs of rapid urbanization, a rising middle class, and a growing population. These three mega-trends drive global environmental degradation yet are only part of the important challenge facing cities today.

While consuming over two-thirds of global energy supply and emitting 70% of all carbon dioxide, cities are also uniquely vulnerable to climate change. Fourteen of the world’s 19 largest cities are located in port areas. With sea level rise and increased storm activity, these areas are likely to face coastal flooding, damage to infrastructure, and compromised water and food security. Under these conditions, meeting urban population’s growing production and consumption needs for food, energy, water, and infrastructure will overload rural and urban ecosystems.

To tackle these issues, the Global Environment Facility (GEF), in collaboration with the World Bank Group (WBG), launched the Sustainable Cities Program to engage 23 cities in 11 developing countries. Hailing from one of such countries, two urban development specialists working on each side of the Program explain why making cities more sustainable appeals to them.

Imagine a South Asia without borders

Annette Dixon's picture
Cranes in Bangladesh Harbor
Cranes in Bangladesh Harbor. Credit: Eric Nora / The World Bank

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 to deepening existing economic links through policy and investments in regional businesses.

Imagine a South Asia without borders. People, industries, goods and services flow freely in the most profitable way for all. Imagine that necessities sorely needed in one area are freely available from areas where there is plenty. South Asia’s story of poverty amidst plenty would begin to change.

Sustainable Development Goals and Open Data

Joel Gurin's picture
Sustainable Development Goals. Source:

The United Nations (UN) has developed a set of action-oriented goals to achieve global sustainable development by 2030. The 17 Sustainable Development Goals (SDGs) were developed by an Open Working Group of 30 member states over a two-year process. They are designed to balance the three dimensions of sustainable development: the economic, social and environmental.

To help meet the goals, UN member states can draw on Open Data from governments that is, data that is freely available online for anyone to use and republish for any purpose. This kind of data is essential both to help achieve the SDGs and to measure progress in meeting them.
Achieving the SDGs
Open Data can help achieve the SDGs by providing critical information on natural resources, government operations, public services, and population demographics. These insights can inform national priorities and help determine the most effective paths for action on national issues. Open Data is a key resource for:
  • Fostering economic growth and job creation. Open Data can help launch new businesses, optimizing existing companies’ operations, and improve the climate for foreign investment. It can also make the job market more efficient and serve as a resource in training for critical technological job skills.