Kala S Sridhar

Institute for Social and Economic Change, Bangalore, INDIA

 

This presentation focuses on urbanization in the global south, and in particular in China, India and Brazil (CIB). These three countries have been selected as being representative of Asia and Latin America, and subject to availability of data.

 

There are many similarities across the three countries—India started its liberalization in 1991, while China started much earlier, in 1978, and Brazil joined the party with its economic reforms in 1994. India is only 31% urban as of Census 2011, two decades after its economic reforms began, but recent research (Sridhar (2019) finds that if India were more liberal in its definition of what is urban, then more than half of India would be urban today. China, on the other hand, has experienced a much different, and chequered urbanization process since its liberalization in 1978 when its urbanization was only 20%, 36% at the turn of the millennium (in 2000); and rose more rapidly to 56% in 2018. Brazil has been always more than 80% urban, but the creative abilities of its cities to unleash growth has been recognized only post-1994, the year of economic reforms in that country.

 

Few countries have become high income without also becoming adequately urban, as Spence, Annez and Buckley (2008) point out. While Brazil has the highest per capita income among the CIB countries, it is also unsurprisingly the most urban, with China in second place, and India last, being the least urbanized. For the 1960-2018 period, based on data from the World Bank, we find the highest correlation between urbanization and per capita GDP in the case of China (0.96), followed by that for Brazil at 0.95, and for India at 0.91.

 

In each of these CIB countries, the number of cities at the apex of the urban hierarchy is lower than that at the bottom of the hierarchy, as predicted by Christaller’s central place theory and Zipf’s law. While undoubtedly cities contribute the most to the GDP of every country, they have to be made economically efficient and egalitarian. Economic efficiency is defined by the number of jobs accessible within a certain commute which refers to the city’s effective labor market, as per Bertaud (2014). We find that the accessibility of jobs within a 30-minute commute is the highest in Bangalore, when compared with selected North American cities for which the data are available. No doubt, Bangalore is projected to have the highest per capita GDP ($12,600) by 2030, as per McKinsey Global Institute (2010).

 

As a measure of the egalitarianism of a city, we examine the population living within 10 KMS of the central business district (CBD) as this reflects the city’s sprawl, presumably caused by urban development policies. On this measure, Seoul, South Korea is the most egalitarian, followed by Bangkok, Thailand and Shanghai, China, where roughly 50% of the metropolitan area’s population lives within 10 KMS of the CBD. Indian cities are the least egalitarian from this viewpoint, where urban policies distort household location away from the CBD where jobs are located. This may also be seen in the floor area consumption in cities around the world, which is the highest in cities such as Copenhagen, but the lowest in Indian cities. One possible reason for this is the strong land use regulations (as seen in unduly low Floor Area Ratio (FAR)) in India’s cities, compared with that for other cities around the world. The impact of FAR limits on city suburbanization, sprawl and spatial area is well established (Sridhar (2010)), Brueckner and Sridhar (2012), Bertaud and Brueckner (2005)).

 

The logical fallout of strong land use regulations in cities of the global south is obvious—they are environmentally not sustainable. This may be seen in the carbon emissions globally, whereby China and India are the highest contributors to global emissions, along with the US and EU. Therefore, urbanization has to be managed well, to make it egalitarian and environmentally sustainable. Otherwise we are throwing the baby out with the bath water.

 

References

 

Spence, M., Annez, P. C., & Buckley, R. M. (Eds.). (2008). Urbanization and growth. World Bank Publications.

 

Bertaud, Alain (2014), Cities as labor markets, Marron Institute on Cities and the Urban Environment, WP #2, New York.

Bertaud, A., Brueckner, J.K., 2005. Analyzing building-height restrictions: predicted im- pacts and welfare costs. Regional Science and Urban Economics 35,  109–125.

 

Brueckner, Jan and Sridhar, Kala Seetharam (2012). Measuring welfare gains from relaxation of land-use restrictions: The case of India’s building-height limits, Regional Science and Urban Economics (Special issue in honor of Jacques Thisse), 42 (6) (2012): 1061-67. DOI: 10.1016/j.regsciurbeco.2012.08.003

McKinsey Global Institute (2010) India’s urban awakening: Building inclusive cities, sustaining economic growth, April.

 

Sridhar, Kala Seetharam (2019). Is India’s urbanization really too low? Some evidence, Area Development and Policy, forthcoming. DOI: 10.1080/23792949.2019.1590153

 

Sridhar, Kala Seetharam (2010). “Impact of Land Use Regulations: Evidence from India’s Cities,” Urban Studies, 47 (7) June 2010: 1541–1569.