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Urbanization in South Asia: How is it going?

Mark Roberts's picture
 World Bank
Street in old Delhi, India. Credit: World Bank
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.
Urbanization in South Asia Report Cover
Urbanization in South Asia Report Cover.
Credit: World Bank

Which South Asia do you live in?

Prabha Chandran's picture

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 deepen 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.

Crossing the Hindukush mountains in Afghanistan

Luquan Tian's picture
A panoramic view of the Salang Pass in Afghanistan
Panoramic view of the Salang Pass in Afghanistan. Credit: World Bank

The Afghan Government takes full ownership of a new project to rehabilitate the Salang Pass Highway

If you had travelled along the silk route to Afghanistan over a hundred years ago, your caravan would have encountered some formidable mountain terrain.  Crossing the treacherous icy passes was one of the greatest dangers, and could only be undertaken during the summer months.
Things did not change much until the 1960s.  That was when the Soviets built the sturdy two-lane Salang highway across the Hindukush mountains and bored a 2.8 km long tunnel at the Salang Pass at 3,400 meters above sea level. The Salang tunnel - the world’s highest road tunnel at that time - was a feat of engineering.

Five lessons of regional integration from Asia, America, and Africa

Sanjay Kathuria's picture
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.

In Afghanistan, new technologies for doing business in the 21th century

Ikramullah Quraishi's picture
The Enterprise System is handed over to Hashim Naeem Tailoring Company and its employees, Parwan, Afghanistan
The Enterprise System is handed over to Hashim Naeem Tailoring Company and its employees, Parwan, Afghanistan

Sail Food Production Company is one of the largest food manufacturing factory in Nangarhar Province, Afghanistan. Despite countless hours spent on manual bookkeeping, its owner always complained about errors when reporting profits and losses on the company’s balance sheets.

At the close of each monthly accounting period, the company was always late in submitting profit and loss statements to the Provincial Department of Finance. Similarly, there were many inefficiencies in production and raw material tracking due to the absence of a proper inventory control system.

The scarcity of information technology integration within business operations has limited the development of Sail Food Production and many other Afghan small and medium enterprises (SME) as they are trying to remain competitive in a global business environment. How could this be improved?

Afghanistan debt - when words get lost in translation

Paul Sisk's picture
Photo Credit: Rumi Consultancy/World Bank


One of the many successful fiscal initiatives implemented in Afghanistan was the HIPC, the Highly Indebted Poor Country program, a joint IMF–World Bank effort to reduce the public debt of poor countries. We called this the forgiveness of debt.
At an early stage in this work I had to meet with a senior Afghan government official to explain the program. The official, the Deputy Auditor General, was a dedicated, serious man who had trained in the former Soviet Union as an engineer and did not speak English, so we relied on an interpreter.

In those days any Afghan who spoke some English could find work as an interpreter, and ours was a medical doctor. He told me he was anxious to find work in his own field but in the meantime was willing to work anywhere, even interpreting in this arcane field of auditing, although he was unfamiliar with the jargon. The conversation was not to be long; just outline that the external public debt, which was mostly Russian debt from the communist era, would be absorbed by a trust fund and hence “forgiven” if Afghanistan met the program requirements – basically good fiscal transparency and discipline.

The fumble that may have saved his life

Alexander Ferguson's picture

Ahmad Sarmast may owe his life to a fumble with his cellphone. He bent down in his seat to pick up his mobile just as a suicide bomber detonated his charge behind him at a music and theatre performance at the Institut Français d’Afghanistan in Kabul.

The founder and director of the Afghanistan National Institute of Music survived the December blast that killed one and injured more than 10. Dr. Sarmast suffered perforated ear drums and shrapnel in the back of his head.  But the experience has not deterred him from his ambition of reviving and rebuilding Afghan musical traditions through establishing and leading the country's first dedicated music school.

“Music represents the right to self-expression of all the Afghan people,” he told me during a tour of the modest building in a suburb of Kabul where ANIM is housed.

girl playing piano

The institute’s young musicians, many of them former street vendors or orphans, have toured the world to showcase Afghan music and present a more positive face of the war-torn country. An ensemble played at the World Bank in 2013 and went on to perform amid great acclaim at the Kennedy Center and Carnegie Hall in New York.

Wanted! Your proposals on Regional Integration in South Asia

Sanjay Kathuria's picture
Wanted! Your proposals on Regional Integration in South Asia

Home to Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, South Asia is one of the fastest growing regions in the world and yet one of the least integrated. Intra-regional trade accounts for only 5% of South Asia’s GDP, compared to 25% of East Asia’s. Meanwhile, with a population of 1.6 billion, South Asia hosts one of the largest untapped talent pools.

To encourage young researchers in the region who aspire to use their research to inform policy making, the World Bank Group calls for research proposals on South Asia regional integration. Proposals will be carefully reviewed and the most suitable proposals (no more than five overall) will be awarded with a grant based on criteria listed below. An experienced researcher from the World Bank’s research department or an external academic will mentor and guide the young researcher in the implementation of the research.[1]

Will South Asia make the most of cheap oil?

Markus Kitzmuller's picture

The world economy today presents itself as a diverse canvas full of challenges and opportunities. Advanced economies continue to struggle towards recovery, with the US on its way to tighten monetary policy as the economy picks up while a still weak Eurozone awaits quantitative easing to kick in. At the same time, plunging oil prices have set in motion significant real income shifts from exporters to importers of oil. Astonishingly, amidst all this turmoil, South Asia has emerged as the fastest growing region in the world over the second half of 2014. Led by a strong India, South Asia is set to further accelerate from 7 percent real growth in 2015 to 7.6 percent by 2017, leaving behind a slowing East Asia gradually landed in second spot by China.

While bolstered by record low inflation and strong external positions across the region, the biggest question yet to be addressed by policy makers in South Asia will be how to make the most of cheap oil.
All countries are net oil importers as well as large providers of fuel and related food subsidies, therefore bound to benefit from low oil prices. However, the biggest oil price dividend to be cashed in by South Asia is one yet to be earned, and not one that will automatically transit through government or consumer accounts. The current constellation of macroeconomic tailwinds provides a unique opportunity for policy makers to rationalize energy prices and to improve fiscal policy. Decoupling external oil prices from fiscal deficits may decrease vulnerability to future oil price hikes – something that may very well happen in the medium term. Furthermore, cheap oil offers a great opportunity to introduce carbon taxation and address the negative externalities from the use of fossil fuels.

The World Bank’s latest South Asia Economic Focus (April 2015) titled “Making the most of cheap oil” provides deeper insights regarding South Asia’s diverse policy challenges and opportunities stemming from cheap oil.
A first major realization is that the pass through from oil prices to domestic South Asian economies is as diverse as the countries themselves, thanks to a variety of different policy environments across countries and oil products. This is also reflected in recent dynamics, seeing India taking determined action towards rationalizing fuel and energy prices, even introducing a de facto carbon tax and beginning to reap fiscal and environmental benefits. Other countries have so far shown less or no enthusiasm towards reform, in spite of significant and/or increasing oil dependency (particularly in electricity generation, one of the region’s weak spots).