The Urbanization Imperative

In the February 2010 issue of Pragati I argue why India needs new livable, sustainable and well-managed cities. The text of the article appears below, for the record.

The bidirectional link between industrialisation and economic development is urbanisation. Like conjoined twins, urbanisation and development are never observed alone. The story of economic growth and human development is the story of civilisation, the growth of cities. All human achievements are the result of ideas, and the city as an idea must rank among the greatest and the most ancient of ideas.

It is an analytically and empirically verifiable fact that cities are the engines of growth that power all economic development. Therefore it is argued that for catalysing economic development, a policy of assisting the inevitable (and indeed desirable) urbanisation through the creation of liveable, deliberately designed cities is effective and efficient.

The development of economies largely follows a predictable trajectory where the majority of the labour is first employed in agriculture, then in industry, and finally in services. With rising productivity, agriculture releases labour to industry, which in turn through the use of technology becomes more efficient and releases labour to the services sector.

The services sector is of particular importance because it is where research in the sciences and development of technologies occur; it is where ideas are generated. Those ideas are critical for greater productivity and production in the two older sectors — agriculture and manufacturing — which consequently release more labour for the services sector. The production, delivery and consumption of services happen more efficiently
in cities.

Humanity is getting rapidly urbanised. About 27 million people — about three percent of a total of 900 million — lived in cities in 1800; by 1900, 10 percent of 1.6 billion were urban; now over half of the world’s 6 billion live in cities. It is estimated that over 70 percent of the world’s 10 billion people of 2050 will be urban.

Despite all the negatives such as crime, pollution and overcrowding one associates with them, cities are disproportionately productive. Today around the 1.2 billion people living in 40 mega regions of the world produce two-thirds of the world’s output of goods and services. They also produce more than 85 percent of all global innovation. A person living in a mega-region compared to a person not living in a mega-region is eight times as productive in terms of goods and services, and about 24 times as productive in terms of innovations.

Cities “manufacture” wealth. This is literally true as most manufacturing occurs in urban locations. That is why rich economies are predominantly urban, and those economies that are largely rural are relatively poor. The transition from a poor economy to a rich one depends on the transition of the majority of the population from being rural to urban. The central concern of economic growth is the development of people. The development of rural populations must not be conflated with the development of rural areas and the rural population cannot be—and must not be—confined to villages. The rural population has as much right and the aspiration to live and work in cities as anyone else. In fact, rural populations will get urbanised whether one likes it or not. There is an instinctive drive which motivates people to seek greater opportunities in places where there are greater choices. As the great scholar of urban areas Jane Jacobs put it, “The point of cities is multiplicity of choice.”

Building from scratch India’s urbanisation cannot be accomplished with the stock of existing cities. They are already bursting at the seams and cannot conceivably accommodate the 300 million estimated to be added to the urban areas by 2030. There is an urgent need to create new urban centres that are designed to be efficient, human centric, and liveable.

That is the greatest opportunity India has — of building from scratch to take advantage of all the knowledge of how to build cities and specifically to avoid the mistakes of the previous generation of cities — which is not available to any developed economy such as the United States. American cities are notoriously inefficient in terms of resource use and sustainability. Their legacy urban centres will burden the transition to living in more sustainable cities.

Just like India leapfrogged the expensive landline era and became a leader in the use of cheaper, modern and more flexible wireless telecommunications, India can urbanise more efficiently and faster by building new cities instead of the costly exercise of giving old cities and towns expensive face-lifts.

This author has proposed that India needs are new “designer cities”: cities that are deliberately designed and that have a distinct character to them. Complex artefacts such as computers and commercial jetliners are the product of deliberate design learned over generations of hard work. Cities are some of the most complex creations of humans and must be designed to be good.

The distinctive characters of cities arise from the major functions that cities serve such as commercial, financial, educational, recreational, pilgrimage, art, manufacturing, and hundreds of other activities. Singapore, for example, serves as a financial hub for South East Asia much as London and New York do for the Western world. It was deliberately designed to be one. Similarly a city could be designed with the primary purpose of hosting a set of great universities, and so would need all associated supporting services such as theatres, art, museums and sports. A city whose core function is manufacturing would have different needs such as access to ports, vocational institutions and transport hubs.

There are many interesting ideas on how to enable urbanisation. Paul Romer, senior fellow at Stanford University, has been promoting the idea of “charter cities.” A charter city is a green-field project that starts off with a constitution or a set of rules. People and organisations which like the charter come together to build the city. Mr Romer says, “…[P]roposing some new rules [in a charter city] and then asking who would like to opt in—who would like to live under these new rules—could give us a mechanism to reform the rules under which we live, to change them, to improve them much more rapidly.”

India is at that stage of its development where bold policy decisions have the potential to accelerate its economy and thus lead hundreds of millions out of poverty and into prosperity. The time is ripe for a national policy that allows new cities to develop and permits the market mechanism to fund them. India needs to adopt big ideas because the idea of India is too big to be paired with little ideas.

10 thoughts on “The Urbanization Imperative

  1. Dear Atanu,
    The issue is always land acquisition. What is your take on solving that problem? Will a farmer give up his land for creating a city?
    Umesh

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  2. hey atanu dey

    good to read ur writings. Some knowledge there. But , my friend, it’s easy to talk . Just like when u r a kid…u criticize ur parents…it’s easy to criticize government sitting in ur bedroom. Ek baath batha yaar…what did u do for India except finding out the faults.

    Even a beggar can do what u r doing…stop :””%ing urself n others with ur smart hypocrisy….cos the need of the hour is a politician who backs his words into actions. We both know, we can’t do nothing to improve this :”*ed up country…..only a big earthquake will do good by making it alert n killiong a few million. Let them sleep my friend…let them :”&* each other.

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  3. Harsha, are you an apologetic of the Indian Government? The sucessive Congress lead governments in India have failed us miserably on many fronts. Yes you are right that things are not so easy to accomplish, however they are not impossible either.
    Sixty years is a pretty long time for any country to come on its own. Most of these sixty years were unwisely spent on failed socialist models of governance. If Anatu’s concerns don’t make a difference then your rants don’t make any difference either. You seem to be one of those silent suffering variety of machoists.
    Our sucessive Governments have failed on too many fronts and it is high time that we assert ourselves by every legitimate and constitutional means to make ourselves.
    I say let us not be sensitive to our problems and rather go ahead and face our problems headon and find a solution to them at our own individual levels as well as on a larger social level.
    One more thing, as a tax paying citizen I feel I have every right to protest if my hard earned money is not being utilized in the right fashion.

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  4. Dear Nag,

    Thanks for your reply. The main issue with this is that just as agriculture require a certain type of land, so do cities.

    a)Every urban area requires huge amounts of water infrastructure. This effectively translates into a requirement of fertile land since, water sources are nearby. The Problem with all big projects today is that, they have water requirements , which necessiates arable land.

    b) The implicit requirement is also that one needs to move people from rural jobs to urban jobs. The disparity between rural share of GDP Vs the rural employment %age of total employment is the crux of our poverty problem. How do convince a farm owner to leave his land in hope for a better, but, intangible future?

    The answer might be to pay him huge amounts. Then the next question is that, Do we have the money to pay that kind of compensation.(a la 20 crores an acre, this was in Hyderabad)

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  5. Dear Umesh,

    a) Israel is a good example where desalination plants have worked. It may not always be necessary to locate a city near a fresh water source. Point being, there are alternatives and we need to explore them.

    b) There are two issues raised – migration and land acquisition. My perception is that in India, migration from rural to urban areas has always happened and is an ongoing process. Building better cities with more opportunities will accelerate this process.

    For better or worse, people in our villages and towns seem to believe that cities offer better opportunities to survive. I am certain there are examples we can relate to in our own families, friends and extended families where people have migrated from villages and towns to cities in search of better education, jobs or livelihood.

    I admit land acquisition is a thorny issue and needs to be addressed. As Atanu often writes, incentives work and we may need to be creative enough to work out options.

    The bottom line though is that our policy makers need to first decide to build new cities and the issues can then be tackled.

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  6. Making new cities will mean lot of capital investments, from where will that come.
    The Charter cities example talks of Chinese building HongKong like cities but that means export oriented nature keeping local wage poor and chinese saving being consumed by Americans which is not sustainable. US and European cities came up on slaves, killing of red Indians and money looted from colonies. The reason that the serfs were released from farm land to work in industries was because the europeans had looted lot of wealth from South America and had lot of capital so needed labourers in a big place and the migration happened.
    These possibilities or cheap source of energy are ruled out and there is not much capital in India. Government does not have so much money to do it.
    What model do you suggest for this transformation to happen.

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  7. I agree with everything mentioned in the article. As far as economical
    growth is concerned, it is 100% correct. All about manufacturing, service
    sector, transfer of labor etc, everything is correct. Cities are engines of growth.
    A person living in a city consumes so much that the cites are bound to become engines of growth. It is in city’s lifestyle that consumption is high. Its totally unavoidable. Try compare resource consumption of a person living in village and that of a middle class person of a city. I am sure ,you would not compare to a slum dweller. The consumption of an urban dweller is at least ten times more than that of a rural dweller. Some estimates have also put it at 30 times.

    I wish 100% population of this country live in cities.
    But the question arises; does the planet have enough resources to provide for so much consumption? If not, then we have to look at sustainable means of employment and lifestyle. In a village, you are employed in agriculture,which in comparison to industry, is more sustainable with nature.
    I have a question-
    Why 10 million people left cities and migrated back to villages, when
    recession affected China. If cities are sustainable, this would have never happened. There is something terribly wrong with concept of unhindered urbanisation. Urbanisation has to be tolerated as a necessary evil, only to some extent.

    In my opinion, even the present urbanisation in India or China will not sustain. West urbanised and continue to remain so not because it is sustainable but because it draws resources from far away third world countries. It is being able to do because because of its technological advancement, which enables it to buy labor and raw materials in return for technology.
    The planet is on its brink.It is not so because of tribals or rural people. All these factories running around the world are running to satisfy the appetite of urban world.
    The day we build cities, which have same per capita consumption as that of a typical village, I would say, lets urbanise the entire country. Otherwise, we all are falling in a self made death trap.
    To think holistically is our responsibilty. There is no use of repenting after having lost. One third of living planet has finished in last 40 years.
    (UN Millennium report). It’s we who have to find solutions; especially we ,who live in urban areas because we are part of the problem.

    Diwan Singh

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