Leveraging Urbanization in South Asia

Summary

Urbanization provides South Asian countries with the potential to transform their economies to join the ranks of richer nations in both prosperity and livability, but a new World Bank report finds the region, while making strides, has struggled to make the most of the opportunity.

One big reason is that its urbanization has been messy and hidden, according to the report titled, “Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability.” Messy urbanization is reflected in the widespread existence of slums and sprawl. Sprawl, in turn, helps give rise to hidden urbanization, particularly on the peripheries of major cities, which is not captured by official statistics. Messy and hidden urbanization is symptomatic of the failure to adequately address congestion constraints that arise from the pressure of urban populations on infrastructure, basic services, land, housing, and the environment.

South Asia’s policymakers, the World Bank report says, face a choice: Continue on the same path or undertake difficult and appropriate reforms to improve the region’s trajectory of development. It won’t be easy but such actions are essential in making the region’s cities prosperous and livable.

Key Findings

• South Asia’s urban population grew by 130 million between 2001 and 2011 – more than the entire population of Japan – and is poised to rise by almost 250 million by 2030.
• Productivity linked with the growing number of people living in the region’s towns and cities also increased, but South Asia’s share of the global economy remains strikingly low relative to its share of the world’s population.
• A key trait of urbanization is that so-called agglomeration economies improve productivity and spur job creation, specifically in manufacturing and services, and indeed those two areas now account for more than 80 percent of the region’s GDP.
• Inadequate provision of housing, infrastructure and basic urban services, as well as a failure to deal with pollution, are constraining the potential of the region’s cities to fully realize the benefits of agglomeration. The struggle to deal with these congestion pressures is a failure of both the market and policy.
• The share of the region’s population officially classified as living in urban settlements increased only marginally from 27.4 percent in 2000 to 30.9 percent in 2011, an annual growth rate of 1.1 percent.  By contrast, when it was at a level of urbanization similar to that in South Asia today, China experienced growth in it urban share of population of 3.1 percent a year in moving from 26.4 percent in 1990 to 35.9 percent in 2000. Likewise, Brazil’s urban share grew at 2.5 percent a year between 1950 and 1960, while moving from 36.2 percent to 46.1 percent.  Going back even further, for the United States, the urban share rose from 25 percent to 35.9 percent between 1880 and 1900, for growth of 1.8 percent a year. 
• South Asia’s urbanization has been messy as seen in the widespread prevalence of slums.  At least 130 million South Asians—equivalent to more than the entire population of Mexico—live in informal urban settlements characterized by poor construction, insecure tenure and underserviced plots.  
• Some of South Asia’s urbanization has been hidden, stemming from official national statistics understating the share of the region’s population living in areas with urban characteristics.

Recommendations

• To ease key congestion constraints, policymakers must address three fundamental deficits facing local government – in empowerment, resources and accountability.
• Intergovernmental fiscal relations must be improved to address empowerment.
• Practical ways must be identified to increase the resources available to local governments to allow them to perform their mandated functions.
• Mechanisms must be strengthened to hold local governments accountable for their actions.
• Three other interrelated areas for policy action are also instrumental to address congestion constraints and help further leverage urbanization to improve the region’s prosperity and livability: connectivity and planning; land and housing; and resilience to natural disasters and the effects of climate change.
• Planners and government decision-makers need to invest to strengthen intra- and inter-urban connectivity of South Asian cities, adopt forward-looking planning approaches to guide expansion where it is most rapid on cities peripheries, invest in better quality public urban spaces to enhance pedestrian walkability and livability, and utilize granular spatial planning approaches to permit greater variation in land uses.
• To turn back the tide of proliferating slums, South Asian cities must embark on land and housing policy reforms and foster innovative housing finance.
• The first step in developing a resilience strategy in the face of natural disasters and the effects of climate change is to accurately identify and quantify the risks at the national, subnational and city levels. The next step is to build a national geo-referenced hazard exposure database, which includes public and private assets. Additionally, cities should revisit the design and enforcement of building codes and land use plans to avoid building further in risk-prone areas.