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Connecting Cities for Growth

Parul Agarwala's picture

The emergence of mega-regions, as metropolitan areas merge to form a system of cities, has demonstrably contributed to growth in the developed countries. With South Asia experiencing one of the highest urbanization rates, connecting cities presents opportunity to mobilize people, goods and services, and develop supply chains over larger spatial areas. However, this also implies unraveling overlapping commuting patterns, economic linkages, social networks, multiple jurisdictional boundaries- which add to the complexity of decision-making for policymakers and practitioners.

Do Cities Matter?

Ejaz Ghani's picture

It is a paradox that India which is among the most densely populated countries in the world, is also among the least urbanized. The figure below compares urbanization rates with income for more than 100 countries. It shows that an increase in urbanization rate is positively associated with real per capita income. This is the iron law of development—i.e., growth is associated with the reallocation of labor and capital away from traditional (rural) sectors to modern (urban) sectors. Spatial transformations that give rise to urbanization accelerate growth because households and firms benefit from scale economies, mobility, and specialization. Increased urbanization contributes to growth, job creation and poverty reduction. This can indeed become a virtuous circle.