U rbanization Review

Prioritizing Policies Urbanization

For

Image source: NASA Image source: NASA

World Bank , Finance Economics and Urban Depart

UR

Seoul , 29 June 2011

State Secretariat for Economic Affairs, Switze Cities All Korea Research Institute for Human Settle

Outline
• Framework • • • Diagnostics • • • URs in action UR

FRAMEWORK
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A paradigm shift in considering urbanization policies

F ro m ta rg e te d in te rv e n tio n s to e co n o m ic a n d so cia l in te g ra tio n

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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

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Pe a k P P P $ 6 0 7 , 0 0 0 / sq km ;
G Econ Database, Yale Univ

Institutions for land registration have been se but land transactions are still constrained

Disconnect between poor people and basic services

Source: UR team estimates using ‘poverty mapping’ methodology; GLSS4

Institutional priorities of fluid land markets to encourage economi concentration along with improving basic services everywhere

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Now consider Kolkata .. One of India’s largest metropolitan areas

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• Kolkata’s spills over municipal borders and is surrounded by smaller cities, towns and rural areas • Institutional rigidities in land use conversion

Most poor people are still in rural areas, with limited access to basic services

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• Most poor people are still in rural areas, with limited basic services

Transport connectivity can help integrate product markets
• Manufacturing is suburbanizing outside the core metro area • But transport costs are particularly high between metropolitan UR

Source: Economic Census 1998

High metropolitan transport costs reducing economic integration potential

S u rve y a l n g 4 5 R o u te s o • 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

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Sao Paulo’s landscape is dominated by dense urban settlements

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Pro sp e ri a n d Po ve rty a re co n ce n tra te d i ty n l rg e ci e s a n d th e m e tro a re a a ti

Sao Paulo has put in place the core institutions and connective infrastructure for successful urbanization

B a si se rvi d e l ve ry c ce i

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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


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• 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
Institutions Infrastructure Interventions
(public and private sectors) (Correcting government failures and managing market failures)

Early
Enable private markets, provide social services – soft structures

Accra
Intermediate
Connective infrastructure – hard structures

Kolkata
Advanced

Compensating and countervailing interventio

Sao Paulo

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Recognize the most important market forces ; Release constraints on the key factor markets

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

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– easy to communicate

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 UR

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

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– Remedial: identify government failures visible in slum formation – Social: identify market failures such as

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 busines ses are willing to pay for being in a city

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Delhi

Excessively high rents could signal market distortions

– 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

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Hints that land market distortions are reducing efficiency and welfare
Total Population

A Simulation for Bangalore

Distance from City Center

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Source: Bertaud and Brueckner (2004)

• Scale of Interaction

Now consider connective infrastructure
– 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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Uganda (early) Incipient Sri Lanka India Indonesia Intermediate Vietnam China (intermediate) South Africa Brazil (advanced) Colombia Advanced South Korea

Pilot Urbanization Reviews

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Thank you
• Somik V. Lall (slall1@worldbank.org) • Henry Jewell (hjewell@worldbank.org ) • Austin Kilroy (akilroy@worldbank.org) • Nancy Lozano ( nlozano@worldbank.org) • Hyoung Gun Wang ( hwang4@worldbank.org)

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Main data sources
• Nationally representative census or survey data
– Population censuses, household surveys
• Socioeconomic dynamics and spatial distribution

– Economic censuses, enterprise or industrial surveys
• Urban economic structure, specialization of economic activities, and spatial distribution

Customized small scale surveys
– Route-specific truckers’ survey to reveal the true costs of transporting products across cities – Land and property price data – Doing business enterprise surveys

• •

Aggregated at the lowest subnational level as possible
– to capture urban dynamics in a spatial perspective

Geo-referencing subnational data in a high resolution
– Identifying the location of people and economic activities in a portfolio of places, and proximity to markets and trunk infrastructure

URAnalysis in time and space dimensions and of other benchmarking urbanization experiences