The urbanisation imperative

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.

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