How do we go about bringing shared prosperity and ensure that development benefits the broad swath of population- and especially the bottom 40 percent of people living under 4 dollars a day? It is by no means an exaggeration to say that the path to shared prosperity inevitably runs through cities.
Today we are witnessing an unprecedented demographic and economic transformation. Some 2.7 billion more people will move into cities by 2030, mostly in developing countries and particularly in Africa and Asia. It is estimated that some 4 million people move to cities every week. They come to cities filled with hope and looking for opportunities.
Cities hold the key to jobs, housing, education, health. They also provide basic services such as water and sanitation and decent transport which are often missing in rural areas. So can urbanization be the platform to deliver these diverse goals? What makes some cities more competitive? Why do entrepreneurs and workers get attracted to some cities? Why do industries and services locate in one city and not another? Will mega-cities or intermediate-sized cities deliver these goals? What can policy makers do to improve the flow of goods, people, and ideas across cities? And what can be done to reduce fragmentation, segmentation, and social divisions within cities across formal and informal sectors, the rich and the poor, how do we ensure that cities are gender inclusive ? How does one tackle problems of air pollution, crime and violence, and the slums that one third of the world’s urban resident’s call home. Cities have not performed as well as can be expected in their transformative role as more livable, inclusive and people-centered places, and they face massive challenges from natural hazards and the impacts of climate change.
Cities today are the holders of immense promise, but they are also places to be feared – from the scourge of water-borne diseases, mountains of garbage and open sewers, and crime and violence to traffic-choked streets and smog and pollution. So how do we rethink cities and imagine a brighter urban future – a future that will affect all of us and help move the world toward shared prosperity?
To do that, we need to understand the economic promise of cities. Cities are agglomeration economies. The proximity of people to each other increases the ease of moving goods, people, and ideas. Cities remove the physical spaces between people and firms, and connections are easier. Urban areas in the developing world therefore have an edge in manufacturing and business services, and people living there have greater opportunities to prosper, and education and skills are key drivers of income. And cities attract entrepreneurs - generators of local success and economic vitality . Successful urban entrepreneurs can earn millions, but urban success requires that prosperity come to more than just a few.
How do we make cities inclusive? Inequality is a long-standing feature of urban life. As far back as 363 BC, Plato wrote, “Any city, however small, is in fact divided into two, one the city of the poor, the other of the rich.” A more inclusive city is not without slums and poverty, but it does manage to regularly enable poor people to escape poverty. It creates jobs and provides ladders of wealth and occupations that provide a means of moving toward prosperity. To be inclusive, a city needs to provide more than just decent wages to its poorer workers; it needs to provide core urban services as well, such as clean water and sanitation. Workers need safety and decent commutes too, and they need decent housing. Often basic services are concentrated just in the city core.
A shortage of affordable housing is perhaps the most obvious feature of rapidly growing cities in developing countries. Today some 1 billion people live in slums. Housing involves structures as well as land, and the quest for better housing also involves innovative means of delivering inexpensive structures. It is hard to imagine that cheap housing structures will solve the problem of affordable urban housing unless the legal infrastructure is also effective and sensible. Ideally, land use planning should aim at providing safe, affordable housing in a connected city, with functional transport corridors and easy connections between jobs and housing.
Are todays burgeoning cities livable? Air quality, water pollution, and green spaces are three primary local concerns that help determine the local quality of life. For cities to be pleasant as well as productive, they must pursue policies that counter these costs of dense living. However, private individuals tend to ignore the local impacts of their actions, such as when they deposit waste in common land areas, contaminating it, or drive polluting cars. As resource constrained cities burst at the seams struggling to provide basic services to its inhabitants, getting the best from existing infrastructure is critical. Too often governments invest too much in new infrastructure and too little in maintaining existing infrastructure. Can they do more with less? Getting the most out of existing infrastructure can include policies such as congestion pricing, which efficiently rations access, but politics tends to resist such charges. The infrastructure needs of developing world cities are among the greatest challenges of the developing world.
Urbanization today has the potential of transforming the developing world and creating shared prosperity. That’s why getting urban policies right is so important. For more on this topic, please see this article.