Urban Planning: Coping with Emerging Challenges
URBANIZATION
Talking Points
Indermit Gill and Chorching Goh
We will combine the presentations on urbanization strategy and on successful urbanization experiences into one.
With the help of pictures, maps, graphs, and movies, I am going to take you through the parts of the 2009 World
Development Report that deal with the issue of urbanization—that is, how to make towns, cities, and metropolises
work for development. I think this is one of the most important policy issues confronting the world today.
Three places
Let me start by telling you about three places—one is a town, the second is a city, and the third is a metropolis.
All three are in Asia, where urbanization is taking place at an awesome speed and size.
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The town is Sriperumbudur, in Southern India. It is a small place and until 1990 few people knew of it,
because it was just a village. In 1991, India’s prime minister Rajiv Gandhi was killed here. Because of its
location near Chennai and Bangalore, it became the home of Hyundai. In 2006 Rajiv’s widow, Mrs. Sonia
Gandhi, watched as the millionth car was made.
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The city is Shenzhen, in Southeast China. In 1980, it was just a fishing village. Because of its location near
Guangzhou and Hong Kong, it was chosen as a special economic zone in 1980.
By 2006, it had 7 million
people, and its exports were greater than all of India’s combined.
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The third place is Seoul, the capital of South Korea. In the 1960s, it was a slum-ridden place. By 2006, it
was the metropolis which made Korea the largest originator of patents outside of the US, Germany, Japan and
Taiwan. Along the way, it had cleaned up its slums, and led Korea into high income.
Here are some pictures of these places.
This is Sriperumbudur in 1991. The reason why I am showing you these gruesome photos is that the other
pictures we could find of Sriperumbudur some years ago just had fields and cows.
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This is the town today, the home of big corporations like Hyundai and Motorola, linked both to Bangalore and the
port of Chennai. The place has gone from cows and killings, to cars and cellphones in less than a generation. But
it is still a town of between 40 and 100 thousand, depending on how you define the township.
These are pictures of Shenzhen in 1980.
This is what it looks like today. It specialized in providing the people and public services that were needed by
multinationals producing electronic goods of all kinds.
Most of its population is young and
has—naturally—migrated here from somewhere else. It has good roads, and its container port is one of the biggest
and the best in the world.
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This is a picture of a street in Seoul in the 1920s.
This is the same place forty years later.
This is the same street, Sejong-Ro, another forty years later. It is the busiest in Seoul. And as I said, Seoul is at
the center of an area that is one of the most innovative in the world.
I am showing you these pictures because of two reasons: because they show that function—not size—is important;
and that places have to be flexible to prosper.
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Places of different sizes do different things. Sriperumbudur helps Hyundai and others operate big plants, but
it is not a big city. Shenzhen is a big city, but it has specialized in a few industries, mainly electronics.
It
has helped firms produce electronic goods in large quantities, and access world markets in an efficient manner.
Seoul has an industrial diversity that has fostered innovation in manufacturing and attracted finance from
around the world. And despite many attempts to curb its size, it has grown to 12 million, with a quarter of
Korea’s population, and more than half its Gross Domestic Product. But what is most important about these
places is their function, not their size.
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The second reason is that as you can see, these places have had to do very different things over time. The
same bits of land have housed everything from fishing huts and palaces to big factories and skyscrapers.
What this tells you is that land use has to be flexible for places to do well. So besides function, these places
have shown flexibility.
By doing this, these places have facilitated the growth of what is called “economic density”. Economic density is
measured as production or wealth per square kilometer. It is a fundamental concept for urbanization. And the
function and form of urban settlements must facilitate it for countries to prosper.
I am going to show you three maps of economic density, and then a short film.

The first map is one of India, which has until recently feared economic density. We had to put a dot to show
you where Sriperumbudur is, because it is a small place. But you can see that it has helped Chennai show up
on this map. And towns like Sriperumbudur are helping Bangalore also grow big and tall.
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The second map is of China, a country which is facilitating the growth of density and agglomeration. You
cannot see Shenzhen here because it part of the big economic mountain of Guangzhou, which is circled in the
map. But without places like Shenzhen, Guangzhou would not be so big and prosperous. The other big
mountains in China are Shanghai and Beijing.
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
In this third map, you can clearly see how Seoul dominates South Korea’s economic landscape. South Korea
has accomplished a fantastic urbanization, going from being mainly rural to mainly urban in less than 50 years.
A big part of this story is the rapid concentration or agglomeration in Seoul. But the bigger part may be what
happened outside, as the government helped institute education, health and other services across the country.
That is what made a high quality and inclusive urbanization possible, and this in turn has helped the country
reach per capita income levels of nearly 20,000 dollars in a hurry.
Here is a short clip that explains what economic density is.
India, China, and Korea have dealt with the issue of density and urbanization differently.
In fact, the experience
varies a lot across the world. These issues of density, agglomeration, and urbanization are the subjects of detailed
study in the 2009 World Development Report. Chapter 1 summarizes the main facts, chapter 4 distils the insights
from economic analysis, and Chapter 7 proposes practical policies for doing urbanization well.
I will give you the gist of these three chapters.
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By the way, Chorching Goh was the main author of these chapters, and she also prepared this presentation. I hope
that you can find the time to read these chapters—I think they are very well written.
They also provide a lot of the information we need. It turns out that these three aspects of urbanization—the facts,
analysis, and policies—are the main building blocks of any urbanization strategy.
A strategy should be realistic,
and must recognize the main facts about urbanization. It should be rigorous, and utilize the insights from research.
And it should be reasonable, in that it should ask policy makers in poor countries to do what they can actually can
with the resources they have.
In the rest of this presentation, I will first summarize the facts, then the analysis, and then the policies. Then I’ll
finish with three stories from India, China and Korea.
Facts
What are the facts we must recognize? Essentially three:
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The first is that a large part of urbanization is over by the time a country reaches middle income. So a large
part of this transformation has to be carried out while countries have low incomes and low capacities.
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The second is that this is not a new phenomenon. This is essentially what happened in Britain and France,
then in the US and Australia, and then Korea and Singapore. What has changed is that later developers have
accomplished development in shorter and shorter time spans.

The third is that most countries need all three types of places that I told you stories about—large metropolises,
big and medium sized cities, and big and small towns.
Let me show you some graphs and pictures that illustrate these facts.
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Here is a graph that shows two things. The first is that urbanization increases rapidly between incomes of a 100
and a 1000 dollars. In fact, by the time a country reaches upper middle income levels of 4000 dollars, a large part
of urbanization is over. So countries have to handle these changes when they don’t have much wealth. The
second is that no country gets to high income without also urbanizing, unless it finds lots of oil like Norway or
Saudi Arabia. Even then, at least half of the population is urban. In general, high income countries have urban
shares of 80 percent.
The reason is quite simple.
To grow to middle income, countries have to move from being agricultural to being
industrial. And this means moving to towns and cities. To grow even more, economies become service-oriented,
and services are even more concentrated than industry. And services tend to be located in bigger urban centers than
what is needed for industry.
The richer an economy, the denser it is.
But are countries doing this too fast today? Here is a graph that plots the speed of urbanization during the last two
decades in low and middle income countries, and contrasts it with the decades during which today’s rich countries
had similar income levels, which is about a century ago. The pace of urbanization is similar.
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The next graph shows that even the relative size of metropolises, cities and towns is similar for low, middle and
high income countries, and stays roughly the same over the last fifty years. So whether you’re looking at the
distribution of the urban population in settlements of different sizes in low income India, middle income Brazil, and
high income America, there seems to be a law that leads to similar size distributions—something very fundamental
about what these settlements do for an economy.
There are some other things that make people worry. The first is that many countries in the developing world rely
on just one really big city, like Santiago in Chile or Seoul in South Korea. This chart tells you that this is normal
for small and medium sized countries.
The next thing that worries people is that cities in the developing world are just way too big. London was the
biggest city in the world in 1900, and it had just 7 million people. Tokyo is the biggest city among high income
countries today, and it has more than 30 million. Mexico City is the biggest city among middle income countries,
and it has more than 20 million; Mumbai is the biggest among low income countries, with the same number of
people. This is a fact, and it is because of advances in medical and transport technologies.
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What is it about big cities in developing countries that really frightens people? I think it is the big slums that they
have.
Slums are something that should concern policy makers very much. But while listening to the warnings of people
from rich countries that something better be done about them and soon, it should be kept in mind that today’s rich
countries also had slums, and not so long ago. The word “slum” originated in London, and slums were a feature
of urbanization in both the old and new worlds. Paris had slums until just a few decades ago, and so did
Stockholm. And New York and Melbourne had miserable slums too.
So whether it is Britain, the US, or Singapore, or France, Finland and Australia, today’s shining world cities were
miserable slum infested places not so long ago. “Cities without slums” is a comforting vision, but it risks being
the same as “development without urbanization”. And this is simply unrealistic.
Here is a short clip from a documentary on the WDR that shows the same thing rather nicely.
Analysis
The work of researchers over the last generation tells us some useful things. The first is that urban settlements
provide economic functions, the second is that different types of settlements provide different services, and the
third is that one shouldn’t become obsessed with the size of places. It is their function and their form that really
matters, not their size.
What is it that towns, cities, and metropolises actually do? The analysis from the last two decades gives us a
general answer: urban settlements allow people to exploit “economies of scale”. These are the benefits that come
from large plants and places.
What does this really mean? Let me show you some pictures.
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
Towns like Sriperumbudur allow firms and farms to exploit plant level scale economies by providing roads for
moving inputs and outputs and schools for the families of workers.
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Cities like Shenzhen allow producers to benefit from being near each other because they can choose workers
and materials from a bigger pool, and they also lead to beneficial competition between producers because they
can shop around. These are called localization economies.

Metropolises like Seoul provide the urban diversity that encourages learning in large universities and business
districts, and connect people to the whole world. They provide what is called urbanization economies.
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Most countries need all three types of places, because they do different things. And we should worry more about
helping them do these things well, rather than worrying too much about their size.
Policies
These are useful insights, but they seem a bit theoretical.
A good strategy has to be practical. In fact, there are
practical implications that come from the facts and analysis I just summarized. A strategy should recognize that
urbanization happens fastest when the capacities of government are weakest.
It should recognize that it is
function that matters, not size. It should tell us what to do about slums. Because it is a strategy for effecting a
transformation from mainly rural to mainly urban, it must give us principles that is applicable in places that are
mostly rural, in places that are urbanizing rapidly, and in places that have already urbanized.
Based on the facts and analysis that I have summarized, and based on the experience of successful urbanizers, a
good urbanization strategy seems to go something like this:
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In places mainly rural, set in place the common institutions related to regulation of land markets and the
provision of basic social services like schools, sanitation, and security.

In places that are rapidly urbanizing, besides putting in place the institutions governing land markets and the
provision of social services, invest also in connective infrastructure so that the benefits of economic density
are more widely shared.

In places that have urbanized, start to address the problems of slums through targeted interventions. But
don’t forget the common institutions and connective infrastructure. Without them, these interventions—such
as slum upgrading programs—simply don’t work.
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This graduated set of priorities recognizes that the problems get harder as urbanization advances. Here are three
slides that summarize the priorities:
Institutions to encourage
density in Popayan,
Colombia
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Institutions and infrastructure to
encourage density and reduce
distance in Bucaramanga,
Colombia
Institutions, infrastructure and
interventions to encourage density,
reduce distance, and lower divisions
in Bogota
In places that are mostly rural, policymakers should be as neutral as possible between rural and urban areas,
and set in place the foundations of a good urbanization. This is done by taking care of the basics in towns
and villages: functioning land markets, and schools, sanitation, and security. These aren’t things that local
governments can do themselves—they are mainly the responsibility of central governments. Governments in
Korea and Costa Rica, for example, took care of their responsibilities well even at low levels of income.

Governments have to do more things to keep urbanization healthy and inclusive in places that are urbanizing
rapidly—places like Changsha in China.
In such places, connectivity quickly becomes an issue, and
infrastructure—both rural-urban and intra-urban—becomes a policy priority. This usually requires both central
and state governments to work together.

In places that have reached high urban shares, say 75 percent or more, things are even more complicated. In
such places the top concern becomes livability, which requires good land administration, good schools and
good transport, but also programs to integrate slums into the broader urban landscape. All this cannot be
done without coordination between central, state and city governments.
Hong Kong and Singapore could
do this more easily because the city, state and central governments were essentially the same. But cities such
as Bogota, Seoul and Shanghai show that it can be done even in bigger countries such as Colombia, Korea and
China that have more complicated structures of government.
In the World Development Report, we summarize the rule of thumb for a harmonious urbanization as: “An I for a
D”.
To build economic density, basic institutions.
To build density and reduce distances, institutions and
infrastructure. To build density, reduce distances, and eliminate within-city divisions, institutions, infrastructure,
and well-timed interventions. One instrument per dimension: the more the dimensions of the problem, the more
instruments governments have to use.
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This is not a rule derived just from recent developers in East Asia. Chapter 7 of the WDR discusses the
experience of Europe and the Americas, and shows how this sequencing worked for countries such as England and
France, then how these lessons were applied by their most successful colonies like the US and Australia.

Land market institutions helped England become the home of the industrial revolution in the 17th century,
they helped Denmark in the 18th, and the US in the 19th century. In Denmark they even celebrated such
institutions by building a monument in Copenhagen.

Institutionalizing good land use laws and improving basic services helped Britain advance in the 19th century,
Sweden in the middle of the 20th century, and Hong Kong and Korea in the second half of the 20th century.
By the way, this is the same monument in Copenhagen today—everything around it has change.

A combination of better institutions and infrastructure helped cities such as London, New York and Hong
Kong become world centers of commerce and culture. And they are helping cities like Bangkok today.

And a combination of institutions, infrastructure, and interventions was needed to help London, New York,
Hong Kong, Singapore and Seoul become gleaming world cities.
Three stories
I want to end this talk with three stories, from the same three countries that I started with: India, China and Korea.
These are stories about where urbanization was fought, where it was facilitated, and where it was fast.
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The first story is that of Mumbai, a city that fought urbanization for decades. I will play a short clip that
shows what happens when you fight the forces of urbanization.
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The second is about urbanization in and around Shenzhen, which shows how China is managing the
movement of millions from rural to urban areas. And it shows how it is reducing poverty by the millions. I will
show you a movie about a young lady in Shenzhen.
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The third is that of Seoul, a city that has done very well.
Not coincidently, so has the country. I don’t have a
movie, but will show you some photos of the massive changes the city has made.
Mumbai has not done well in managing urban growth. Take a look at this clip.
Shenzhen has done much better than Mumbai, and China has done better than India. Take a look at this film.
Of course, the story of South Korea and Seoul is nothing short of a miracle. This is a country that has gone from
80 percent rural to 80 percent urban in less than 40 years. It is a country that has gone from a post-conflict to a
post-industrial country within the lifespan of many Koreans.
Let me show you four sets of photos that Chorching found on the internet, of exactly the same place in the Seoul
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Urban Planning: Coping with Emerging Challenges
over the last fifty years. They show what urban transformations such development involves.
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This is what this part of Seoul looked like in the 1950s—crowded slums on the banks of the river that runs
through Seoul. No density, and no beauty.
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
This is what this place looked like in the 1970s, when a highway was built over and along the river.

By the 1980s, this is what you saw in the same place. The slums have relocated to other parts of the city, and
their place has been taken by garment shops.
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
This is what it looks like today. The highway is gone, and the river has been reclaimed. There is both
economic density and natural beauty.
Such spatial transformations are needed for urbanization. They require the institution of land markets and social
services, investments in infrastructure, and well-timed interventions to address slums and squalor.
But not
everything can be done at once; in fact, the sequencing and prioritization is the secret of success.
Conclusions
Let me conclude with a quick recap of the main findings.
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The facts are these: A big part of urbanization happens early in development. Because of that, it is not a pretty
process. But it is necessary for nations to prosper.

The analysis tells us this: countries need both small and large urban settlements—towns, cities, and
metropolises like Sriperumbudur, Shenzhen, and Seoul—because these places provide different and
complementary services. What is important is function, not size.

The policy implications that follow are: don’t fight urbanization, facilitate it. And don’t make it harder by
trying to do everything at once. The sequence is: first common institutions, especially land markets; then
connective infrastructure, especially public transport, and finally targeted interventions, such as slum
integration programs.
If policymakers in Asia and Africa and other developing parts of the world follow these principles, they will help
towns, cities, and metropolises work well and deliver prosperity. They will not succeed in making urbanization
painless, but they will succeed in making sure that it isn’t pointless.
Thank you for listening.
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