Manufacturing Wealth: The Economics of Urbanization

That’s the title of the course I am conducting at the Indian School of Business, Hyderabad. It is a small class of about 15 students. It’s a half-credit elective in the final term of the year.

We have had two lectures so far. I am having fun — which is another way of saying that I am learning quite a bit. I think I will share some of what I have learned on this blog in the next few weeks.
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The Economics of Urbanization

“The Economics of Urbanization” is the title of a course that I plan to teach at the Indian School of Business, Hyderabad, starting next week. I am looking forward to being at the ISB for the next five weeks.

The course is an exploration of the idea (related to the theme on cities and urbanization explored on this blog) that economic growth and urbanization are bidirectionally linked. I hope to argue the case for urbanization of India based on simple economics.
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BBC Program on Cities and Rural Development.

I have been promoting that idea — that the solution to rural development lies in urban planning — for a few years. The RISC model (Rural Infrastructure & Services Commons) is about planting the seeds of in situ urbanization in rural India. Glad to see that the idea that urbanization is essential for development and growth is gaining momentum. One of these centuries, the government of India may even wake up. Although by then, I will be with yesterday’s seven thousand year.
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Rockefeller Foundation: The Century of the City


One in every ten people lived in urban areas a century ago. Now, for the first time ever, most people live in cities. By 2050, the United Nations projects, almost three-quarters of the world’s population will call urban areas home. The majority of this growth is centered in struggling, developing countries of the Global South, but cities in developed (or Global North) countries face increasingly complex challenges as well.

Around the world, unplanned urban expansion is multiplying slums, overburdening housing, transportation and infrastructure systems, stifling economic growth, and leaving millions vulnerable to new environmental and health threats.

To help manage and plan for this accelerating urbanization, the Rockefeller Foundation convened an exceptional group of urbanists–leading policy makers and government officials, finance experts, urban researchers, members of civil society organizations, and other innovators–for a Global Urban Summit at the Rockefeller Foundation Bellagio Center. This book shares their diverse perspectives, creative approaches, and urgent agenda for harnessing the vast opportunities of urbanization for a better world.

[Link for ordering the book free.]

Jaime Lerner: “City is not a problem, city is a solution”

If you needed more convincing on the matter of why India needs to build cities (and not futz around in villages), here’s a video of a TED presentation by Jaime Lerner. A video made more delightful by the way he wanders all over the place.

Thanks to Sudipta Chatterjee for the link.

Urbanization and Development of India

The following is an article by me that appeared in ISB’s in-house magazine insight June 2008 issue.

There is a definite positive relationship between the size of the habitation and the productivity of the population.”

The full article is below.
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19 cities of the world with
20 million people in the
21st century

See 19.20.21 for a quick overview of the defining megatrend of the 21st century: the rise of supercities.

In the year 1800, less than 3% of the world lived in cities. Most people lived their entire lives without ever seeing one.

In 1900, 150 million people live in the world’s cities. That number has now surged past 3 billion and last year crossed another tipping point: more than half the people on earth now live in cities. By 2050 – it will be more than 2/3 of us. Humans are now an urban species, cramming into vast urban agglomerations.

Also from the presentation at the site, I note that in the year 1900, the world’s 10 largest cities were (in descending order of population) London, New York City, Paris, Berlin, Chicago, Vienna, Tokyo, St Petersburg, Manchester, and Philadelphia. The combined population of those 10 cities was approximately 26 million. By 2005, just Tokyo — the largest city then — itself had 35 million people, followed by Mexico City with 19.4 million. Mumbai with 18.2 million is listed 5th.

There is a definite trend and a correlation between the growth of cities and the progress of human civilization. India needs to figure out how to manage the transition of its rural population into livable cities. Without the urbanization of India’s rural population it is not even remotely possible for India to work its way out of poverty.

[For more on this topic, see the posts on Cities and Urbanization.]

Moving Mountains

Golf, not Chess

Economic growth in a sense, and to a much larger extent economic development, is more akin to a game of golf than a game of chess. In golf, the opponent’s moves matter very little; you may as well play by yourself and later compare scores if needed. In chess, your move depends on how your opponent has moved and how he is likely to respond to your move. In other words, chess is a strategic game while golf is not. All this is very broadly speaking, naturally. I don’t mean to imply that there are no dependencies among economies as they grow; what I mean is that, especially for a large economy like India, how much it produces and how determines how materially prosperous it is and is independent of how other economies are growing. For strictly benchmarking purposes, one can glance over at the neighbors. And if one is smart, one can learn from the experiences of those neighbors. Still, when it comes to economic growth, it is largely the case that you are playing against yourself.

Here I want to glance at India’s large northern neighbor and recently a strategic competitor in the fiercely competitive game for control of scarce resources. China has been moving mountains — quite literally as you will soon note — for quite a few years for growing its economy. From an Indian perspective, it is a chilling reminder that there are no shortcuts to economic growth and that it takes something special in terms of will and perseverance to overcome the ill-effects of flawed economic policies and failed leadership. It is also a story of hope and the indomitable human spirit, a story of almost superhuman striving by mere mortals.
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