better cities, better economies
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8/12/2019 Better Cities, Better Economies
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12 Asia-Pacifc
Housing Journal
Urban population grew from 220 million to
2.8 billion in the 20thcentury. The next few
decades will see an unprecedented scale of
urban growth. By 2030, this is expected to
expand to about 5 billion.
Such rapid urban expansion will be
particularly notable in Africa and Asia whereurban population will double between
2000 and 2030. By 2030, the towns and
The world reached a turning point in 2008. For the first time in history, more than half its
human population, 3.3 billion people, lived in urban areas.
cities of the developing world will make up
81 percent of urban humanity.
Economic growth and urbanization are
often positively linked. Cities are the driving
force for economic development. Economic
growth also stimulates urbanization. These
positive relationships are clear in manycountries.
Xing Quan Zhang, PhD
1This story is adapted from Zhangs article in Urban World, Volume 2, Issue 4, September 2010
Better cities,
better economies1
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Better Cities, Better Lives
Urbanization andabsence of economicgrowth
Urbanization can occur in the absence
of economic growth. For example, in some
sub-Saharan African countries, urbanization
occured without of economic development.
Its processes and patterns are differentiated
by institutional settings and policies from
country to country and region to region.
Despite the growing importance of cities
in world affairs and national economic
development, the citys position is regarded
as marginal to current debates and
development controversies. Negative
over-urbanization impacts such as the
concentration of poverty, slums and social
disruption in developing cities are often
overemphasized.
Cities the best hopeHowever, cities represent the best hope
for growth and opportunities as engines
of national economic development.
They provide large efficiency benefits, which
result in unprecedented productivity and
competitiveness gains. They are centers of
knowledge, innovation and production and
services specialization.
Cities facilitate creative thinking andinnovation. High concentrations of people in
cities generate opportunities for interaction
and communication and promote creative
thinking, knowledge spillovers, new ideas
and technologies.
They also provide more learning and sharing
opportunities and facilitate trade andcommerce by providing large market-places.
Cities are production and services centers
because goods and services are more
efficiently produced in high-density urban
environments.
Cities also provide consumers with more
goods and services choices and they are
the agents of social, cultural, economic,
technological and political change.
These advantages make cities more
productive than rural areas. No country
has achieved sustained economic growth
without the growth of cities.
Driving force of nationaleconomies
Cities are the driving force of national
economies.
They generate a disproportionately higherrate of economic growth than rural areas.
In developed countries, cities have higher
productivity per capita than rural areas.
For example, Tokyo has 26.8 percent of
the national population and produces
34.1 percent of national GDP. London has
20.3 percent of the population and accounts
for 25.4 percent of GDP. Paris, with 16.2
percent of the national population, accounts
for 26.5 percent of the national GDP.
Dublin with 25.9 percent of the population
generates 32.8 percent of GDP. Auckland,
Vienna and Helsinki generate about 50
percent higher GDP than their respective
population share.
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Engines of migrationCities in both developed and developing
countries play crucial roles in driving
national economic development.
Statistics show that cities are much
more productive than rural areas in
developing countries.
However, this does not mean that cities
are more productive in developing
countries. Productivity, is generally
higher in developed countries cities.
However the productivity gap and
inequality of development between cities
and rural areas are much larger in
developing countries than in developed
countries.
The large economic productivity gap and
imbalance of development between cities
and rural areas in developing countries lead
to enlarged rural and urban income gaps,
which in turn encourages migration tocities to search for better opportunities and
prosperity.
The massive influx of rural populations to
cities creates resource shortages to provide
housing and services in cities. The engines
of economic development then become
engines of migration.
Migration that out-paces economic
development often results in urban slums.
Manila, Karachi, Nairobi, Dhaka and Mumbaiare engines of economic development but
they are also cities of slums.
National economic growthThe contribution of cities to national
economic growth is very significant in
developing countries. The economic future
of developing countries is highly dependent
on the growth of its cities.
However, cities are seriously under-resourced
to fulfill their potential as drivers of national
economic development and prosperity.
Cities face many challenges, fromaccelerating growth, massive influx of
rural migrants, deteriorating infrastructure,
environmental degradation, social exclusion,
violence, under-investment, lack of fiscal
freedom and policy choices.
Municipal governments often lack financial
means to address the vast challenges facing
them. For example, of the total government
revenues in Canada, the federal government
receives 39 percent; provincial governments
receive 50 percent and municipal governmentsonly get 11 percent.
Municipal governments in most countries
have less than a quarter of total government
revenues. In many countries such as
Afghanistan, Armenia, Australia, Chile, Cyprus,
El Salvador, Greece, Honduras, Iran, Jordan,
Lesotho, Malta, Mauritius, Mongolia, Morocco,
Paraguay, municipal governments receive
less than 10 percent of the government
revenues.
The international development community
also ignores the needs of cities. For example,
the total urban assistance to developing
countries from 1970 to 2000 was about $US
60 billion, about $US 20 per capita - less than
a dollar per capita per year.
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Cities need powers togenerate revenue
To maintain vital economic growth and
competitiveness cities (1) should have the
power to generate revenues and make
development decisions; (2) have sufficient
investment to provide adequate infrastructure
and services, such as transportation,
communications, power supply, water and
sanitation, housing, as well as financial and
business services; (3) should develop and
attract high quality human resources fortechnological innovation, entrepreneurship,
and knowledge development; (4) should
provide an enabling national environment
for market development.
Should we focus our attention on the
development of cities and ignore the
development of rural areas? The answer
is no.
The huge disparity and divide between
cities and rural areas in terms ofproductivity and wealth are often signs of
under-development. Developed countries
experiences indicate that more balanced
development between cities and rural
areas occurs when national development
reaches a higher level.
Cities work better if they have between-cities
efficiencies but also in-cities efficiencies.
City regions
City regions have emerged as most
important growth poles. Transport and
communications technology improvements
stimulate rapid city region developments.
As modern products and services become
increasingly sophisticated, producers and
service providers gain significant advantagesfrom new transaction networks.
These networks facilitate products, services,
technology and market information
exchanges, and foster economic creativity
and innovation. Network participants
receive tremendous efficiency boosts by
being part of tightly-linked and spatially-
concentrated clusters.
These networks, production and services
modes foster the development of urbanagglomerations and city regions. Today,
city regions have emerged as economic
development driving-forces in many
countries.
For example, the Tokyo city region has more
than 40 cities and towns with a population of
33.2 million, and generates more than 34
percent of national GDP.
The Pearl River Delta in China has a
population of 30 million. New York cityregion has a population of 22 million;
Sao Paulo, 17.7 million; Mexico city region,
17.4 million. Changjiang River Delta in China
has emerged as the worlds largest city
region with a population of about 100
million, generating 26 percent of national
GDP.
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