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Somik Lall, World Bank, during the World Bank's Special Session during Economic Geography Conference in Seoul, Korea_June 29, 2011
Citation preview
UR Seoul, 29 June 2011
Image source: NASA
Urbanization ReviewPrioritizing Policies For Urbanization
World Bank, Finance Economics and Urban DepartmentState Secretariat for Economic Affairs, Switzerland
Cities AllianceKorea Research Institute for Human Settlements
Image source: NASA
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Outline
• Framework
• Diagnostics
• URs in action
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FRAMEWORK
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A paradigm shift in considering urbanization policies
From targeted interventions to economic and social integration
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Policy challenges become more complex as urbanization proceeds
Accra
Kolkata
Sao Paulo
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Consider Accra – Ghana’s primate city .. Where economic shadow of Accra is dominated by small towns and rural areas
6
Peak PPP$ 607,000/ sq km; G Econ Database, Yale Univ
Institutions for land registration have been set up, but land transactions are still constrained
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Disconnect between poor people and basic services
Source: UR team estimates using ‘poverty mapping’ methodology; GLSS4
Institutional priorities of fluid land markets to encourage economic concentration along with improving basic services everywhere
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Now consider Kolkata .. One of India’s largest metropolitan areas
• Kolkata’s spills over municipal borders and is surrounded by smaller cities, towns and rural areas
• Institutional rigidities in land use conversion
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Most poor people are still in rural areas, with limited access to basic services
• Most poor people are still in rural areas, with limited basic services
Rural XS S M L XL0%
10%
20%
30%
40%
50%
60%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Water within premises (%) Total number of poor ('000)
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Transport connectivity can help integrate product markets
• Manufacturing is suburbanizing outside the core metro area
• But transport costs are particularly high between metropolitan core and periphery Source: Economic Census 1998
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High metropolitan transport costs reducing economic integration potential
• Freight rates for short distance (less than 100km) transport is on average as high as Rs. 5.2 per ton km (US$ 0.12) between large cities and their immediate hinterland
• Use of old trucks + high rates of empty backhauls
Survey along 45 Routes
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Sao Paulo’s landscape is dominated by dense urban settlements
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Prosperity and Poverty are concentrated in large cities and the metro area
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Sao Paulo has put in place the core institutions and connective infrastructure for successful urbanization
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Basic service delivery
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Remedial interventions now needed to improve livability and integrate slums with
formal settlements• Sub-standard living
conditions– Poor service delivery – Hazard vulnerability– Crime and violence
• How to integrate slums with the rest of the city?– Land markets and housing
services– Urban transport– Targeted interventions
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Sequencing soft and hard structures
• Soft structures – when considerable uncertainty on whether a place will take off– Focus on preparing for potential urbanization– Information, property rights , land markets, health, education, water,
sanitation
• Hard structures – often justified in rapidly urbanizing places – attracting skilled workers and private investment– where land is scarce– fiscal capacity is sufficient
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Framework for sequencing policies and investments
Recognize the most important market forces; Release constraints on the key factor markets
Institutions Infrastructure(public and private sectors)
Interventions(Correcting government failures and managing market failures)
Early
Intermediate
Advanced
Connective infrastructure– hard structures
Enable private markets, provide social services – soft structures
Compensating and countervailing interventions
Accra
Kolkata
Sao Paulo
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DIAGNOSTICS
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Compiling and analyzing credible data
Create a common data platform for analytic work –
• High level of spatial detail
• Spatial trends of people and economic activity
• City-level data on economic, social, environmental indicators
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System of indicators
• Salient– distill key insights from influential analytic work
• New Economic Geography• Urban Economics • World Bank’s operational experience
– Helps in identifying tradeoffs
• Standardized– measured in a consistent manner to facilitate comparison across
places and over time
• Simple– easy to communicate
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Roles of Indicators
• provide preliminary assessment or "quick-tracking" at a lower cost than in-depth analyses
• not substitutes for a comprehensive assessment where fundamental issues and trade-offs must be evaluated
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Diagnostic focus • Common Institutions – Fluid land markets: economic concentration– Basic services: convergence of social indicators
• Connective Infrastructure – Extra urban: product market integration– Intra urban: labor market integration
• Targeted Interventions– Remedial: identify government failures visible in
slum formation– Social: identify market failures such as emissions and
unsustainable urban form
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Consider urban land markets
• Urban Form and Efficiency
– Residential prices in CBD vs the urban fringe– Average commercial prices/ sq meter– Density Regulation (height restrictions, set backs,
minimum lot size)– Geographic Constraints (water, mountains, steep
slopes)
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Consider institutions governing use of land : Office rents reflect a city’s attractiveness
• Office rents – What
businesses are willing to pay for being in a city
Ahmedabad
Chennai
Hyderabad
Kolkata
Pune
Bangalore
Mumbai
Delhi
0 200 400 600 800 1000 1200 1400
Office Rent ($/m sq)
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Excessively high rents could signal market distortions
• Delhi – 80 percent of Tokyo’s
office rents; 10 percent of income (India)
• Mumbai– 124 percent of
Singapore’s office rents; 12 percent of income
• Bangalore– 75 percent of New York’s
office rents; 8 percent of income
• Supply constraints?– e.g. FAR and other
property development constraints
Ahmedabad
Chennai
Hyderabad
Kolkata
Pune
Bangalore
New York
Seoul
Singapore
Mumbai
Paris
Delhi
Tokyo
0 200 400 600 800 1000 1200 1400 1600 1800
0 5000 10000 15000 20000 25000 30000 35000 40000
National income per capita ($ ppp 2003) Rent ($/m sq)
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Hints that land market distortions are reducing efficiency and welfare
Source: Bertaud and Brueckner (2004)
Tota
l Pop
ulati
onDistance from City Center
A Simulation for Bangalore
HYDER
ABAD
BANGALORE
BOMBAYPUNE
CALCUTT
ADelh
i
AHMADABAD
NEW Yo
rk0
2
4
6
8
10
12
14
16
India -- Maximum FAR
Non-Residential
Residential
FAR
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Now consider connective infrastructure• Scale of Interaction– volume (tone/pax-km, by mode)
• Cost of Interaction – average freight transport costs (per tone-km),
total freight costs, travel time to the nearest regional hub and port (roads or railways)
– transport costs/travel time/quality (roughness) of roads connecting the city to the nearest trunk transport network
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In Vietnam, a large share of freight is moved among cities in the same or nearby provinces
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But freight transport costs particularly high on short trips between large cities and their hinterlands – potentially
reducing trade and specialization
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URS IN ACTION !!!
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Pilot Urbanization Reviews– Uganda (early)– Sri Lanka– India – Indonesia– Vietnam– China (intermediate)– South Africa – Brazil (advanced)– Colombia– South Korea
Incipient
Intermediate
Advanced
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Thank you
• Somik V. Lall ([email protected])• Henry Jewell ([email protected])• Austin Kilroy ([email protected])• Nancy Lozano ([email protected])• Hyoung Gun Wang ([email protected])