Mark RobertsSenior Economist ,GSURRSouth Asia Urban Team

Insights from the SAR Urbanization Flagship Report

Leveraging Urbanization in South Asia for Improved Prosperity and Livability

Divergent Cities ConferenceSt Catharine’s College, Cambridge

16th July, 2015

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Despite impressive progress, South Asia remains home to world’s largest concentration of poor people

Region remains at incipient stage of urbanization

Spatial & urban transformation have potential to alleviate extreme poverty & contribute to shared prosperity

How spatial & urban development occurs will have important implications for achievement of twin goals

This presentation: Overview of patterns of spatial & urban development Main policy challenges

Introduction2

Urbanization & Structural Transformation in South Asia

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Incipient stage of urbanization4

8 countriesAfghanistanBangladeshBhutanIndiaMaldivesNepalPakistanSri Lanka

Relatively slow overall pace of urbanization

Historical: Urban share growth rate compared to developed countries

130 million people added to urban areas, 2000-2011

Source: World Bank staff based on WUP data and Bairoch(1986)

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Service-led economic transformation

Sources: World Bank staff based on WDI & GMR data; Rodrik (2013)

2000-2010: Growth rates of sector shares in GDP

Peak manufacturing employment share

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Aim to create urban environments conducive to growth of higher value-added tradable services & revitalization of manufacturing

Patterns of spatial & urban development in South Asia

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The Prosperity Index

• Measures performance across three dimensions:

• Poverty: Reflects ability to generate widespread prosperity & avoid extreme income deprivation – indicator: % population living on less than $1.25 per day

• Productivity: determines long-run competitiveness – indicator:intensity of night-time lights per km²

• Dynamism: dynamic areas will achieve greater progress in raising prosperity over time – indicator: GDP growth rate, 1999-2010

• Follow Henderson et al. (2011, 2012) in use of lights data• Index constructed at Admin-2 (“district”) level (n = 699)

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Using night-time light intensity to proxy GDP

(a) SAR countries

(b) Indian districts

Levels of GDP

ALB

DZA

AGO

ARM

AZE

BGD

BLR

BLZBEN

BTN

BOLBIHBWA

BRABGR

BFA

BDI

KHM

CMR

CPV

CAF

TCD

CHN

COL

COM

ZAR COGCRI

CIV

CUB

DMA

DOMECUEGY

SLV

ERI

ETH

FJIGAB

GMB

GEOGHA

GRD

GTMGIN GNB

GUYHTI

HND

HUN

IND

IDN IRN

IRQ

JAM

JOR

KAZ

KEN

KIR

KGZ

LAO

LBNLSO

LBR

LBY

MKDMDG

MWIMYSMLI

MHL

MRTMUS

MEX

FSM

MDAMNG

MNEMAR

MOZ

NAMNPLNICNER

NGA

PAK

PLW

PAN

PNGPRY

PERPHLROM

RWA

WSMSENSRB

SYC

SLE

SLBZAF

LKA

LCAVCT

SDN

SUR

SWZ

SYR

TJK

TZA

THATMP

TGOTON

TUNTUR

TKMUGA

UKR

UZB

VUTVEN

VNM

YEMZMB

ZWE-.5

0.5

11.

5C

hang

e in

Ln(

GD

P, L

CU

)

-1 0 1 2 3Change in Ln(Night Time Lights)

Growth rates of GDP

(c) LICs & MICs

(d) Indian districts

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Large cities perform strongest overall

Best overall performers are districts which contain large cities;weakest performers tend to be rural places

Source: World Bank staff estimates

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Cities vary considerably in their dynamism

Source: World Bank staff estimates

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Cities vary considerably in their dynamism12

Chennai, Delhi, Dhaka, Hyderabad, Kolkata and Mumbai –slower than expected rates of GDP growth, 1999-2010

Source: World Bank staff estimates

Cities vary considerably in their dynamism13

Bangalore, Colombo and Islamabad –faster than expected rates of GDP growth, 1999-2010

Source: World Bank staff estimates

Manufacturing is moving-out of major urban centers

0

1

2

3

4

5

0 5 10 15 20 25 30 35 40 45 50

Employment 09Employment 06Employment 01

Dhaka CC

Dhaka Peri-urban

10+ N

on‐Fa

rm Em

ploym

ent (T

housan

ds)

Distance from Dhaka City Center (Km2)

Manufacturing moving out of Indian metro cores Sub-urbanization of garment manufacturing in Dhaka

Declining manufacturing specialization in Colombo Metro Region

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Thriving peripheries, but stagnating cores15

As formal manufacturing has moved-out, Delhi & Dhaka have found it difficult to breed suitable replacement industries at their cores

Bangalore & Colombo - greater success in retaining vibrant cores

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Bangalore - rapid growth of ICT industryColombo – strong transport & communications, & knowledge service industries

Transformation of downtown Colombo17

Overall rapid expansion of lit urban areas

• Overall urban lit area grew at more than twice the speed of urban population

• Heterogeneity across countries:

• Very rapid (> 13 % pa):AFG and BTN

• Moderate (4 – 6 % pa):IND and LKA

• Slow (< 2 % pa):BGD, NPL, PAK

Expansion of urban lit area, 1999-2010

Source: World Bank staff based on the analysis of DMSP-OLS night-time lights data.

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Rapid expansion of urban footprints outpaces urban population growth

Source: IIHS (2011)

(a) Delhi NCT’s built-up urban area in 2010

(b) proportion of built-up urban area & population located outside ULB boundaries, major Indian

cities, 2010

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• From 37 to 45 between 1999-2010• Avg cities per agglomeration from 3.92 to 4.89• India, Pakistan & Sri Lanka well underway• Nepal, Bangladesh & Afghanistan less advanced

The rise of the multi-city agglomeration

Coimbatore agglomeration

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Summary of main policy challenges21

Three main spatial and urban development policy challenges:

How to revitalize stagnating metropolitan cores?

How to promote faster development of secondary cities in lagging areas?

How to better co-ordinate in the face of rapid urban expansion & leverage emerging multi-city agglomerations for improved prosperity?

SAR Urbanization Flagship Framework

Urbanization

City size and spatial structure

Agglomeration economies

Productivity, skills, jobs & innovation

Congestion forces

Pressures on infrastructure & markets

Outcomes

Prosperity Livability

Connectivity & Planning

Governance & Finance

Land & Housing

Urban Resilience

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Expected release: mid-September – www.worldbank.org/southasiacities

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Extra slides

Premature de-concentration?25

De-concentration & stagnation not historically unique:

European & North American cities been through similar processes in last 50-75 years

London, 1961 1981: manufacturing emp. 1.4 m 680,000

But, South Asian cities going through these processes at much earlier stage of development:

GDP pc (*) US, 1961 $11,402 UK, 1961 $8,857 SAR, 2010 (**) $3,126

* 1990 constant international dollars; ** average for BGD, IND, PAK, LKA

Formation of the Delhi-Lahore mega-agglomeration

• Yellow and green areas: urban footprints in 1999• Pink areas: urban footprint in 2010

• Continuously lit belt of urbanization consisting of 67 cities with population of 100,000 +

• Estimated total population = 73.4 million

• Agglomeration has formed despite lack of regional integration

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0

50

100

150

200

250(Number of poor @ $1.25 a day)

Daunting scale of poverty in South Asia 27

Cities benefit from strong agglomeration economies28

• South Asia: doubling of city size associated with 15 % increase in GDP per capita

• Developed countries: doubling of city size increases GDP per capita by 3 – 8 % (Rosenthal & Strange, 2004)

Source: World Bank staff estimates

More urbanized districts have lower extreme poverty

-.50

.5P

over

ty R

ate

-10 -5 0 5 10Ln(Urban Lights,2010)

coef = -.02064529, se = .00290289, t = -7.11

• Rates of extreme poverty significantly lower in districts with more brightly lit urban centers

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