As the world urbanizes rapidly, – it is estimated that only 1.5% of the world’s land is home to about half of global production.
Such economic concentration is a built-in feature of human settlement development and a key driver of growth. However, while some countries have succeeded in spreading economic benefits to most of their citizens, many other countries have not.
Especially outside the economic centers that concentrate production, there are “lagging areas” with persistent disparities in living standards and a lack of access to basic services and economic opportunities.
Over one billion people live in underserved slums with many disparities from the rest of the city in terms of access to infrastructure and services, tenure security, and vulnerability to disaster risk. A further one billion people live in underdeveloped areas with few job opportunities and public services.
How can countries address the division between the leading and lagging regions?
As discussed at the Ninth Session of the World Urban Forum (WUF9) in Kuala Lumpur, Malaysia,
The idea of territorial development is to ensure that within a geographical area – at provincial, regional, metropolitan level, or even at the neighborhood level – urban planners take an integrated planning approach to prioritize and sequence spatially coordinated, multi-sector investments in the territory. A territory here means not just space, but also economy, society, and the built and natural environment related to the space.
Essentially, the territorial development approach spans “3I’s and 1P” – Institutions, Infrastructure, Interventions (the three pillars of the World Development Report of 2009: Reshaping Economic Geography), and People.
The territorial development policies should start with conducive institutions that expand basic services to all and enable economic agglomeration and spatial mobility of labor. This requires institutional devolution from central to local levels and institutional integration across sectors at all scales.
The World Bank has worked on a series of urban local government operations through its new financing instrument of program-for-results (PforR) to incentivize spatially integrative policy outcomes and drive such institutional changes at both national and subnational levels.
In Ethiopia, the World Bank has partnered with the government since the early 2000s in support of its urbanization. The latest Urban Institutional and Infrastructure Development Program (UIIDP) PforR, built on the success of the Urban Local Government Development Program (ULGDP) PforR, continues to support the national strategy for sustainable urban development and expands service delivery investments through performance grants to 117 cities that potentially benefit over 6.6 million people.
Territorial development provides a more coordinated and “spatially awhere” approach to prioritizing and planning infrastructure investments. Strategic infrastructure projects that connect lagging regions to economic centers can be prioritized to enable access to markets and opportunities. Within the lagging regions, other infrastructure investments need to be prioritized to provide basic services and equalize living standards across territories. Strategically, infrastructure planning is also necessary to foster economic production.
The World Bank is supporting countries to realize the full potential of major connective infrastructure investments, such as the ambitious Belt and Road Initiative (BRI) possibly reaching 4.4 billion people and leveraging 40% of the world's GDP, as well as the corridor known as Ruta 34 in Argentina which connects lagging regions in the north of the country.
Throughout such interventions, it is important to ensure that the benefits extend beyond the communities at both ends of such corridors. It is critical to bring multidimensional benefits to communities along economic corridors through better spatial and land-use planning, improved policy and regulatory frameworks, enabling environment for private sector engagement, strengthened trade and logistics capabilities, secondary and tertiary roads from cities and small towns to the major corridors, and basic infrastructure services.
Spatially targeted and coordinated interventions can provide tailored solutions to lagging areas for economic growth and improved living standards. Such interventions need to be strategically selected by examining the territory as a whole and applying an integrated, cross-sectoral approach to planning and financing.
The World Bank’s Competitive Cities framework can help cities identify challenges and opportunities in their authorizing and business enabling environments, and design a sequence of interventions to maximize competitiveness.
In Kenya, the World Bank is investing 20% of its current $5.5 billion commitment in the country’s lagging north and north-eastern counties, which have recently formed a regional bloc for spatial coordination. The Bank is systematically supporting these counties to create a spatial data platform, develop a spatial framework to prioritize and coordinate investments, as well as to prepare a blueprint on transformative interventions to integrate the region to national and global markets.
Building human capital through systematic investments in education, skills, health, and social protection is critical to preparing people for more active economic participation – and in the longer term – alleviate poverty and stimulate prosperity.
In China, human capital has set the foundation for the country’s unprecedented development. The World Bank has partnered with China on human capital development since the early 1980s. Along with China’s rapid urbanization, the Bank’s recent policy advisory service on urbanization in China included reforming the “hukou” (household registration) system to increase labor mobility in the lagging regions and to allow rural-urban migrant workers equal access to urban public services such as basic education, vocational training, social security, healthcare, and affordable housing.
Integration is key
Leaving no one behind doesn’t mean doing the same everywhere. Countries must improve the economic integration of all territories to spread the benefits of economic growth and improve living standards for all.
Such an integrated territorial approach can help national and local governments prioritize and plan investments, and ultimately build inclusive, resilient, and sustainable communities for all.