Urbanization in Asia

A Strategy for Inclusive Urbanization

Indermit Gill and Chor-Ching Goh

The World Bank

Three places
Sriperumbudur. A town of about 100 thousand on the Chennai-Bangalore highway
In 1991, a village where Indias prime minister was assassinated. By 2006, Hyundai had produced one million cars there.

Shenzhen. A city of 7 million near Guangzhou and Hong Kong

In 1980, not much more than a fishing village By 2006, its port shipped exports greater than all of Indias.

Seoul. A metropolis of 12 million, for many years mainland Asias most prosperous city
In 1970, a squalid slum-ridden place. By 2006, the largest originator of patents after the US, Germany, Japan and Taiwan (China).
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Sriperumbudur in 1991
Just a small village where Prime Minister Rajiv Gandhi was assassinated

Source:s http://

Sriperumbudur today
The home of Hyundai and others on the Chennai-Bangalore Highway

Source:s http://

Shenzhen in 1980
A fishing village of several thousand near Guangzhou

Source: http://www.newsgd.com/specials/30yearsreform/achievments/content/images/att achement/jpg/site26/20081126/0010dc53fa040a9730a527.jpg

Source: http://4.bp.blogspot.com/_Kp1mQeobrgo/SZvXBdJBxlI/AAAAAAAAAJU /U7clXduYE9E/s1600-h/shenzhen+farm.jpg

Shenzhen today
A city of 7 million, specializing in electronic manufacturing

Source: http://al.chinaembassy.org/eng/zggk/W020081223055375525157.jpg

Source: http://www.littleredbook.cn/wpcontent/uploads/2009/02/littleredbook_dot_cn_citysnapshot_shenzhen.jpg

Seoul in 1925
Gwanghwa Gate, the main entrance of Gyeongbokgung palace

Source:s http://

Seoul in 1962
Sejong-Ro: Same location, same street

Source:s http://

Seoul today
Same streetSejong-Rothe busiest in downtown Seoul

Source:s http://

Sriperumbudur and India

Economic density in India, a country still ambivalent about urbanization

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Shenzhen and China

Economic density in China, a country in the midst of an aggressive urbanization

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Seoul and South Korea

Economic density in South Korea, a country that has seen the fastest urbanization of all time

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The 2009 WDR

Chapters 1, 4 and 7 develop an Urbanization Strategy

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An Urbanization Strategy
Should be realistic
Must recognize some stylized facts observed for early, recent, and late urbanizers

Should be rigorous
Must be informed by economic analysis that identifies the drivers of these changes

Should be implementable
Must identify a sequenced set of public policies for places at different stages of urbanization
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The Elements of an Urbanization Strategy

1. Recognize stylized facts
A summary of Chapter 1: Density. A summary of Chapter 4: Scale Economies and Agglomeration. A summary of Chapter 7: Policies for an Inclusive Urbanization.
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2. Utilize insights from analysis 3. Identify practical policies

The Facts
Urbanization is fastest at low income levels.
Because the sectoral transformation from agriculture to industry happens early.

Todays urbanization is not unprecedented.

The pace and pattern of urbanization is similar for early, middle, and late developers.

Portfolios of settlements tend to be stable.

Metropolises, cities, and towns appear to serve fundamental economic functions.
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Urbanization happens early

Much of urbanization happens before countries get to $5,000 per capita

Source: WDR 2009.

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The pace of urbanization has not changed much

Urbanizations speed is not different from that in the 19th century

Source: WDR 2009, Chapter 1.

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Nor has its distribution

The relative size distribution of urban settlements is stable over time

Source: WDR 2009, Chapter 1.

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Primate cities are similar

A rapid rise in size, then a leveling off

Source: WDR 2009, Chapter 1. 20

What is different? Size

The absolute size of the worlds largest cities is much larger today

Source: WDR 2009.

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What is not? Slums

Early, middle, and later urbanizers all had slums
The houses are poky and ugly, and insanitary and comfortless distributed in incredibly filthy slums in London. --George Orwell The first encampments of Baltimores poor were at the waters edge. Time and again, outbreaks of yellow fever, malaria, cholera, typhoid fever swept the town. By the 1890s, Polish immigrants had supplanted the Irish and Germans, creating a ghetto of a new dimension. In the 15 years between 1930 and the end of the war, the population of Singapore doubled to a million people. The physical condition of much of the existing housing was dismal. 22

Slums have precedents

Early, middle, and later urbanizers all had slums
Although this is a hugely expensive area in Paris to live today, in Victor Hugos day it was a slum area, close to the Bastille Prison.

Katajanokkas transformation from a low-income housing area of Helsinki. A former slum had become a prestigious residential area for the privileged classes. Melbourne's most infamous slum, Little Bourke Street, by the 1880s was completely filled up with all kinds of filth comprising garbage tips, putrid liquid, straw rags, and other rubbish

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The Analysis
Human settlements serve market needs.
Just as firms and farms provide goods and services, settlements provide services too.

Urban settlements are complements, not substitutes.

Most countries need a full complement of settlements.

Policies should address function, not size, of settlements.

Manage the full portfolio of places.
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Settlements serve different market needs

Towns and small cities allow firms and farms to exploit internal scale economies, which are low in light and high in heavy industries. Medium-sized cities facilitate localization economies which arise from sharing inputs and close competition among firms within the industry. Metropolises facilitate urbanization economies which come from industrial and cultural diversity that fosters innovation.
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Towns: internal economies

Towns facilitate internal scale economies which come from large plant sizes and are high in heavy industries, and low in light industries

Source: http://

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Cities: localization economies

Cities facilitate localization economies that come from sharing inputs and infrastructure, and competition among firms in the industry

Source:s http://

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Metropolises: urbanization economies

Metropolises facilitate urbanization economies which come from industrial and cultural diversity that fosters innovation

Source:s http://

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The Policies
Recognizing complementary functions of places helps to make urbanization inclusive.
Principle: maximize agglomeration economies through economic integration.

Policies become complex as urbanization advances.

Principle: More policy instruments are needed in places where urbanization is advanced than where it has just begun.

Prioritization helps to facilitate inclusive urbanization at all stages of development.

Principle: Start with common institutions, then also connective infrastructure, and only then targeted interventions.
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Integration gets harder

. as urbanization advances, and more policy instruments are needed
Institutions to encourage density in Popayan, Colombia Institutions and infrastructure to encourage density and reduce distance in Bucaramanga, Colombia Institutions, infrastructure and interventions to encourage density, reduce distance, and lower divisions in Bogota

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An Urbanization Strategy
For areas of incipient urbanization: Indicator: Urban shares of 25 to 50 percent Priority: Neutrality between rural and urban areas Instrument: Spatially blind institutions
1. Provide basic social services such as schooling, sanitation, streets and security 2. Ensure functional rural and urban land markets

Areas in Korea

Principal responsibility: Central government.

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An Urbanization Strategy
For areas with intermediate urbanization: Indicator: Urban shares of between 50 to 75 percent Priority: Connectivity between urban and rural areas, and within urban areas. Instruments: Institutions, and spatially connective infrastructure
1. Provide basic social services 2. Ensure functional land markets 3. Invest in rural-urban and inter-urban infrastructure

Changsha in China

Principal responsibilities: Central and state governments

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An Urbanization Strategy
For areas with advanced urbanization:
Indicator: Urban shares of >75 percent Priority: Livability of urban areas. Instruments: Institutions, infrastructure, and spatially targeted interventions
1. Institute basic social services and ensure functional land markets 2. Invest in rural-urban and inter-urban infrastructure 3. Intervene to integrate slums and improve the environment

Bogota in Colombia

Principal responsibilities: Central, state, and local governments

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Calibrating policies
An I for a DAn instrument per dimension of urbanizations difficulty Stages: Goals: Instruments: Institutions Infrastructure Interventions

Incipient
Build density

Intermediate
Build density Reduce distance

Advanced
Build density Reduce distance Eliminate division

 

  

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Institutions
Land tenure security and property rights
England 16th century: enclosure movement in 1500; Enclosure Act 1604 Denmark 18th century: Abolition of villenage in 1760; communal to private land holdings USA 19th century: 1862 Homestead Act the foundation of property rights
Frihedssttten (the pillar of freedom) in Copenhagen, commemorating the abolition of villenage 35

Institutions
Ease of land use conversion, basic services
England: 18th-19th century: Land Enquiry Commission; 1832 Reform Acts; Land valuation decrees Sweden, 1960s-70s: Royal Housing Commission in 1945; Million Homes Programme Hong Kong, 1930s-70s: 1935 Housing Commission and Town Planning Ordinances; first land-use strategy Zoning Plan in 1963 Republic of Korea, 1980s-90s: basic amenities and property rights
Frihedssttten today 36

Institutions and Infrastructure

Land markets, transportation
Greater London, 18th-19th century: Land valuation decrees; underground; The Housing of the Working Classes Act 1890 and Cheap Trains for London Workers Bill 1890 New York Area, 19th-20th century: 1916 zoning resolution; 1938 City Planning Commission; 1961 zoning law. Hong Kong, 1930s-80s: 1935 Housing Commission and Town Planning Ordinance (amended overtime); 1963 first land-use strategy Zoning Plan. Bangkok Metro Area, 2000s: zoning and parking spaces; traffic demand controls.
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Institutions, Infrastructure and Interventions

Land use conversion, transport, housing
London, 19th century: ease of conversion rules, expansive transport infrastructure, affordable housing near London. New York, 19th-20th century: zoning rules which respond to market needs, integrated transport networks. Hong Kong ,1930s-80s: responsive land market institutions: evolving Town Planning Ordinances amended over time to address transport and housing needs. Singapore, 1960s-80s: responsive zoning laws (reflected in rising floor-area ratios), expanding transport links, public housing programs. Seoul, 1980s-90s: universal basic amenities; property rights; and credit for slum dwellers to become home owners.
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Conclusion: 3 Asian stories

India: fighting urbanization.
The story of Mumbai since 1980.

China: facilitating urbanization.

The story of Guangzhou since 1980.

South Korea: successful urbanization.

The story of Seoul since 1950.
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Mumbai: fighting density

With poor land use regulations and poor infrastructure

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Mumbai: Infrastructure
People die every day on Mumbais trains

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Mumbai: Social services

Squatting and squalor

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Mumbai: Slums
Half of Mumbais citizens live in slums

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China: Facilitating density

Nanzhongzhou Street, Beijing 1980s

Nanzhongzhou Street 2007

Guangzhou: Then and Now

Street scene, 1978 Street scene, 2008

Haikou, then and now

Binhai Avenue, 1990 and 2008

Haikou, then and now

Financial District 1990 and 2008

Seoul in the 1950s

Cheonggye river, and the biggest slum in Seoul

Source: Aving,network 48

Seoul in the 1970s

A highway is built on the river, through and over the slums

Source: Aving,network 49

Seoul in the 1980s

More infrastructure and new businesses next to Cheonggyecheon, the slums were moved to other parts of the city

Source: Aving,network 50

Seoul in 2009
Cheonggyecheon in 2005: Mayor Lee Myungbak, the current president of South Korea, removed the highway and recovered the riverfront

Source:

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An Urbanization Strategy
Has to recognize some stylized facts
A large part of urbanization is over by the time a country reaches upper middle incomeviz., levels of per capita income of about $3,500. The relationship between income and urbanization is not different for early and later developers. The relative size of urban settlements within a country is similar for countries at different levels of income, and so is stable over time.
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An Urbanization Strategy
Should be based on rigorous analysis
Towns like Sriperumbudur enable firms and farms to exploit the advantages that come with size internal scale economies Cities like Shenzhen allow firms in similar industries to localize and become efficient localization economies Metropolises like Seoul encourage learning and innovation that comes from industrial diversity urbanization economies
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An Urbanization Strategy
Must identify policy priorities
Incipient urbanizers should lay the institutional groundwork for the provision of basic and social services and to ensure functional land markets, in both rural and urban areas. Intermediate stages of urbanization require, in addition, investments in connective infrastructure to widen access to advantages of growing economic density. Advanced urbanization often requiresin addition to institutions and infrastructureplace-based interventions such as slum development programs.
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Prioritization: An I for a D
Calibrating the Policy Response Stages: Institutions Infrastructure Interventions

Incipient

Intermediate

Advanced

 

  

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Conclusion
Recognize that urbanization is necessary.
Dont fight, facilitate.

Recognize that urbanization becomes more complex as it advances.

First the institutions, then the infrastructure, then targeted interventions where necessary.

Recognize that urbanization will not be clean and orderly.

The goal should be an inclusive urbanization.
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For more information

World Development Report 2009: Reshaping Economic Geography www.worldbank.org/wdr2009 Indermit Gill igill@worldbank.org Chorching Goh cgoh@worldbank.org

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