People say a lot

So, I just watch what they do

 Lecture – 11
Urban Economy, Urban Economics
and Urban Services

Urban Planning and Development

[GPA-316]
 Outline

◼ Urban Economy

◼ Urban Economics and Urban Financial Management

◼ Urban Services
 Urban Development

◼ Urban Development Dimensions

Physical Political
Development Development

Social Economic
Development Development
Urban Economy
 Urban Planning and Development

◼ Urban Planners and Developers invariably Plans for

Urban Economy to create livelihood for Citizens

◼ Urban Managers are required to manage the Urban

Finances
 Urban Economy

❑ Urban Economy is divided into a formal and informal

Economies
❑ Formal Economy: Registered, regulated economic
activities, part of GDP and paying taxes to state
◼ Informal Economy:

◼ Grey Economy: Existence of an unorganized,

unregulated ,mostly legal but unregistered sector ,
that significantly contribute to urban labor force

◼ Black Economy: Existence of an unregistered,

illegal economy in city (under world)
 Urban Economy – Informal Sector
◼ Informal Sector Characteristics:
 Large number of small scale producers -- Individual or family owned.
 Productivity and income low, as compared to the formal sector.
 Lack of job security, poor working conditions, long working hours ,women
and children work for survival etc.
 Labor intensive and obsolete technology
 Lack of formal education and are skill.
 No access to financial capital, urban Services.
 Informal sector provides cheap inputs/ Goods / Services for the formal
sector production like yarn manufacture, power looms etc.
 Mostly inhabit in self built shacks in the slums and squatter settlements
lacking electricity, water, drainage, etc.
 It is estimated that 40-50 % of the urban labor force is engaged in the
informal sector.
 Rural Vs. Urban Economy
Both Rural and Urban markets are important and complementary
Rural Urban
Structure/Type Primary + Secondary Secondary + Tertiary + Quaternary
Deals in Unfinished products Finished goods, Value Added Goods
Sells Raw material Finished Products, Stock, Services
Trading Commodity market Money market
Marketing No marketing carried out Based on modern principles of marketing

Consumer behavior Saving/Simple Consumption/Complex

Market structure Predominant Predominately Retail
wholesalers
Market Reach Extensive Predominant relationship based
(customers)
Socio-Cultural Less adaptable to change Highly flexible
Infrastructure Less developed Modern
 Urban Economy
◼ What drives the Urban Economy, huge demand?

 Demand Side

 Huge Consumption / Culture of consumption

◼ Utilities, Energy, Food,
 More employment opportunities, better wages
 Technology intensive, need knowledge and skills
 Economy of scale
 High demand because of Economic Efficiency [Productive
(Production efficiency) and Allocative (Relating to distribution
and allocation of resources in society) Efficiency]
 Urban Economy
◼ What drives the Urban Economy, robust supply ?

◼ Supply Side

 Efficient markets, mass movement of goods

 Labor productivity high
 Availability of Financial Capital
 Research & Development
 Mechanization of Production
 Efficient industrial operations
 Cities Engine of Economic Growth

◼ Economic growth depends on cities, cities create demand and

supply products
◼ 21st Century Economy
◼ Knowledge and information based
◼ Technology and communication intensive
◼ Globally networked/oriented
◼ Competitive advantages of city lies in the accumulation of capital
(Human, Financial, Infrastructure)
◼ Cities create economics opportunities through Job creation, wealth
generation, produces goods and services for entire nation
◼ Economic potential of country is directly related to economic
potential of cities
◼ Mutually beneficial positive relationship exist between Urbanization
and Economic Growth
 Cities Engine of Economic Growth

◼ Range of specialized knowledge (Manufacturing) and economic

institutions (Stock exchange, Banks, Insurance) are in city.
◼ Vital facilities and services (Energy, Labour exist in city)
◼ Urbanization supports Economic Growth through

 Agglomeration of economy
 Scale economies
 Access to market
◼ Agglomeration of Economies
 Concentration of market
 Specialization
 Diversity
 Urban Labour Market
◼ Cities develop around concentration of employment generated by
firms concentrated in cities
◼ Economic Growth of a city leads to increase in employment
◼ City’s existing unemployment rate determine the future growth of
City
◼ Increase in labour demand will be fulfilled by increase in labour
supply (migration to cities), means increase in city size.
◼ City’s Tax Policy also determine the increase/decrease in labour
supply
◼ Employment structure varies with City’s spatial pattern
 CBD Office and Executive jobs
 Suburbs Skilled and Semi Skilled Jobs
 Urban Employment
❑ Employment opportunities are concentrated in cities due to
❑ Competitive advantage

◼ Trading Cities.
◼ Transportation Cost.
❑ Internal Scale Economics in Production

◼ Scale Economics in production.

◼ Industries locate close to one another to create localization of
economy.
❑ Agglomerative Economics

◼ Cities develop around industries ( Positive Externality)

◼ Corporate Headquarters located in Cities
◼ High-Tech Environment
◼ Labour Market
◼ Communication
 Employment Growth

❑ Urban Employment Growth is represented by changes in Urban

Labour Market.

 Demand for labour comes from exporters, traders, manufacturers etc.

 Economic Growth leads to Increase in labour demand, urban wages
 Supply of labour from City and suburbs
 Economy of transportation

❑ Employment growth increases real income per capita by

◼ Moving -up in job hierarchy

◼ Increase in Labour force participation rate
◼ High salary increase
◼ Increase economic prosperity of individuals
 Key Drivers of Urban Economy

◼ Competitive advantage of urban market ( agglomeration, economies of

scale)
◼ Highly skilled, talented, mobile worker
◼ Multi-centricity of all economic factors
◼ Social , ethnics and cultural diversity.
◼ Efficient land use - leads to robust urban economy
◼ Modern Transportation – (People and goods are transported efficiently in and out of city)

◼ Technology
◼ Corporate Culture
Urban Economics
Urban Economy and Physical Development

◼ In City, economic activities are spatially placed :

 At a particular place, as per Master Plan

 In a systematic manner

 Properly Regulated

 Carefully calculated position

 Urban Economics
❑ Urban Economics as a discipline is a study of location, choices of
firms households, etc. Other branches of Economics ignores the
spatial aspects

❑ Urban Economics can be divided into four inter-related areas.

 Market forces in the development of Cities.

 Land rent and land use in the Cities.
 Spatial Aspects of Poverty and Housing.
 Urban Finances (Local Government Expenditure and Taxes)
 Rural Areas and Urban Market

◼ Rural land Use is dependent on “Urban Economy”

◼ Crop pattern in rural area depends on demands of urban

markets e.g. if cities need more flour, more wheat would be
grown in rural areas, if more cotton, sugar like wise

◼ Rural areas produces daily commodities for Urban Markets

 Vegetable
 Milk
 Poultry / meat

◼ Provide dumping sites for urban waste

Economic Consideration of Sub-Urbanization

i. Decrease in Commuting Costs e.g. Metro, Tram, etc.

ii. Central City problems ---- Social tension, urban decay, high
crimes, high taxes.

iii. Sub-urbanization of employment opportunities

iv. Negative Externalities – Pollution, Segregation

v. Advancement in Communication and transportation.

 Economic Limit to Urban Growth

◼ Urban Growth entails Benefits and Costs

Benefits Costs
Scale Economies Higher Property Prices
Localization of Economy Urban Problems / Issues
High Production Longer Commuting Distances
Multiple market nodes Pollution
Provision of Public Goods Congestion and Crime
◼ City growth comparatively slows down when costs are more than
benefits

◼ Economically, unviable to use Land for some particular purpose at

some location in the city
Urban Financial Management
 Urban Finances

◼ Cities are not financially sustainable, huge funding

requirements , compared with resources

◼ In developing world City Governments do not have enough

funds to spend on massive, costly Urban Development and
Re-Development (Urban Renewal Programs out of Public
Funds.

◼ Mostly around the world state and federal Governments funds

the massive and costly Urban Development Programs, as the
same provide them political mileage by showcasing their
development projects in major Urban Centers.
 Public Levies
◼ Taxes (Income , Property Tax, Sales Tax/VAT)

◼ Duties (Import, Tariff)

◼ Cess ( Local tax, Irrigation, education, land tax, sugar cane)

◼ Fees (Licenses, Permits, Transfers)

◼ Surcharges ( Temporary, specific Purpose, like Flood ,

earthquake, Iqra Surcharge etc.)
 Local levies

◼ A local business tax/Local VAT

◼ A business license fee

◼ Property taxes
◼ A fee/surcharges on municipal services, such as
electricity and water

◼ Tax sharing of an existing revenue base, such as fuel

levies or property transfer taxes

◼ Fuel levy / Carbon Tax

 Urban Revenue

◼ Toll Tax ◼ Wholesale Markets like Sabzi

◼ Property Tax Mandis
◼ Water Charges ◼ Itwar and Jumma Bazars
◼ Conservancy Charges ◼ Parks and Zoo Fees
◼ Building Permits
◼ Parking Fees
◼ Sanitation Fee and Challans
◼ Business License fee
◼ Business Taxes
◼ Fascia
◼ Bus, wagon Addas/Terminals
 City Expenditure

◼ Provision of Municipal Services (Public Goods)

◼ Maintenance and up keep

◼ Salaries and wages of Staff

◼ Development of City

◼ Utility Charges
 Provision of
Urban Services and Amenities
 Urban Services

◼ Types of City Services

 Utility Services

 Municipal Services
Urban Services
 Community Services

 Emergency Services
Urban
 Rest and Recreation Services Amenities
 Utility Services

◼ Utilities – (Private Goods) – City Government provide

against specific charge/fee:

 Electricity
 Water Supply
 Gas
 Cable
 Internet
 Telephone
 City Municipal Services

◼ Services city Government is required to provide (Public Goods), against local

taxes and fees, some are mentioned hereunder:

 Street Lights
 Waste collection, Street sweeping , Waste disposal and Snow clearing
 Sanitation (Sewerage and Drainage)
 Building and Land Use Control
 Primary / Secondary Education and Basic Health Care
 Advertisements (Bridge Panels + Billboards+ Digi-screens +
Streamers/banners/Pole signs)
 Parking and Traffic Control
 Graveyard and Burial Services
 Tree plantation, pruning and removal
 Food Inspection
 Community Services
◼ Shelter homes for homeless people
◼ Safe homes (Refuge for domestic violence) / Dar-ul-Amaan(s)
◼ Orphanage (Sweet Homes)
◼ Senior Citizens Services, Old-Age Homes
◼ Disability Services
◼ Correction Centers
◼ Birth , Death and Marriage Registration
◼ Libraries, Post offices
◼ Mosques
◼ Day Care Centers
◼ Community Center
 Emergency Services

◼ Fire & Rescue -1122

◼ Pie/Astray Dog/swine shooting

◼ Ambulance Service

◼ Crime Reporting -15

◼ Emergency weather services
(Hurricane, Dust / Snow storm, exceptional rain )
 Urban Amenities

◼ Urban Amenities:

 Things people appreciate in their urban Environment

 Tangible
◼ Urban Services like shopping center, Parks, etc.

 Intangible
◼ Feeling of Safety

◼ Sense of community

◼ Clean air etc.

 Urban Amenities

◼ Natural:
 River
 Lakes
 Shores
 Weather
◼ Artificial:
 Parks
 Theatres
 Cinemas
 Rest and Recreation Services /
Urban Amenities
◼ Amusement Parks
◼ Roller Coaster Rides / Ferris Wheel
◼ Cinemas , theatres
◼ Museum
◼ Art Galleries
◼ Festivals and Circus
◼ Fine Dinning Restaurant
◼ Sports Gymnasiums
◼ Clubs and Cafes
◼ Zoo
 City Municipal Services

◼ Other City Services

 Adopt a street/park

 Festivals and event management and Monitoring

 Hazardous material treatment and disposal

 Grafiti removal and prevention

 Recycling stations

 Abandoned vehicle complaint and Towing services

Common
 Pet services (Lost & Found, license, adoption) in West
Thanks