World Cities Summit
Singapore
June 25, 2008
James Adams
Vice President for the World Bank’s East Asia & Pacific Region
Mr Chair, Mr Kuroda, ladies and gentlemen:
It is with great pleasure that I take part in this important Summit dedicated to the challenges and opportunities of an urbanizing world. I am especially pleased to be able to represent at this event the Bank’s President, Mr Robert Zoellick – who has expressed considerable interest in the issues being raised here in Singapore. The summit is timely and relevant for many reasons – not least because in this rapidly growing East Asian region, we are expecting to see 25 million more people moving to cities every year for the next two decades. This is already a massive challenge for this region so this gathering of global experts is the right event at the right moment. I have worked at the World Bank for over 30 years and I remind my colleagues often of the importance of institutional memory and learning from history. I was around when the World Bank provided a loan and technical advice to the Government of Singapore in the 1960s that led to the establishment of the city’s public transit system. This included the first congestion charge in the world – something that London and other cities have only begun to introduce in more recent times. What Singapore has done over the past 40 years to build a truly livable and productive city, we are only just starting to see happen in other major population centers around the world. I will speak more about Singapore’s achievements later. I have also been around long enough to witness a dramatic change in my own institution’s thinking about urbanization. The “old thinking” was that urbanization was a bad thing – that it led to people living in miserable conditions in slums with few opportunities to find work, educate their children or escape poverty. Public policy was regarded as biased towards cities which in turn, increased the attraction of rural people to urban areas. In those days, cities were viewed as incapable of providing the services and the jobs the rural migrants were looking for. We – and I believe the development community generally – were genuinely interested in finding ways to encourage people to stay in rural areas where they could continue their traditional subsistence lifestyles rather than migrate to cities and possibly face the destruction of social networks and have to deal with crime, violence and squalor. It is East Asia where we have seen this old thinking about cities and urbanization either turned on its head or completely bypassed. East Asia has embraced urbanization because it creates engines of growth in the form of cities that, if planned and managed well, then offer people opportunities to build productive lives. Nowhere is this thinking more evident than in China. It was Deng Xiao Ping who recognized around 20 years ago that people needed to be able to seek wealth and build productive ways of living. Cities were recognized as “growth poles” – each one sending a wave of economic growth to its hinterland. Between 1980 – when reforms began –
and 2000, 268 million Chinese people migrated from rural to urban areas and that movement of people to cities continues to this day. Extreme poverty rates among rural populations dropped dramatically from 37 percent in the mid-1970s to 5 percent in 2001. Urbanization became the basic pillar of China’s economic growth and by 2020, we expect that 60 percent of Chinese people will be living in urban areas. Amazingly, China has been able to absorb more than 370 million people into its cities without the proliferation of urban slums. How has it done this? The experts who work on this at the Bank tell me there are a number of factors behind this achievement. But key among them is good national policies that give Chinese municipalities the authority to introduce and implement regulations governing land use, the transport system and the urban environment. Strong decentralized urban planning and utility management at the city level have also played a strong part in the success. China also recognized early on that urban development is not possible on the cheap and that building ahead of demand makes a lot of sense. For example, through the 1980s, Shanghai spent 5-8 percent of its GDP on urban infrastructure to redevelop the city. Beijing and Tianjin now spend more than 10 percent of their GDP on roads, water and sewerage services, housing construction and transport. China’s phenomenal ability to mobilize financial resources for urban development through domestic credit and foreign direct investment is what keeps the funds for cities coming. Add all of this together and you start to see why China’s cities have coped more effectively with rapid urbanization than cities in other middle and lower-middle-income countries. We have seen a similar story here in Singapore. At independence in 1965, 70 percent of Singapore’s householders lived in overcrowded conditions and a third of the population squatted on the city’s fringes. Unemployment rates averaged 14 percent and half the people were illiterate. Just over 40 years later, the slums are gone and the city has grown into one of the most productive, creative and functional in Asia. Again, the secret lies in a combination of innovative and forward-looking policies, investments in education and infrastructure, and a concerted bid to attract foreign capital and talent. It’s another example of Asia’s forward looking attitude to urbanization. Embracing it rather than fearing it. And taking it a step further, Singapore wants to share what it has learned with others. The World Bank and the Government of Singapore are currently discussing setting up a regional hub for training urban practitioners – this would draw on and share Singapore’s phenomenal knowledge and experience. This link between well planned, successful cities and prosperity is not limited to Asia. More and more we are also seeing middle income countries like Brazil and Mexico turning cities into growth-inducing hubs that attract human capital and innovation.
It’s this new thinking about cities and urbanization that is a key focus of the World Bank’s forthcoming World Development Report which also provides some calming findings for a debate that is sometimes prone to hysteria. For example: - It finds that the likely growth of cities has often been exaggerated. The populations of Shanghai, Sao Paulo and London in the year 2000 were about two thirds of what had been predicted in 1974. - It shows that the current pace of urbanization in developing countries, other than China, is not unprecedented, mirroring quite closely the experience of today’s high income countries at a similar stage of development. - It also finds that the growth rate of urban populations in developing countries is actually on the decline, having reached its peak in the 1970s although that’s not to dismiss the increasing challenge that current rates of growth bring.
The report uses empirical evidence to show that spatial inequality within cities and between regions may increase in the early phases of development but declines with strong economic growth. England is a good example. In the 1830s, wages were 75 percent higher in England's towns and cities compared to its rural areas. Today, average real disposable income is roughly equal in cities, towns and villages. When we look at the difference between lagging and leading regions, we see a similar pattern. Cambodia and Bangladesh (with GDP per capita of less than $300) have gaps in consumption between their leading and lagging areas of 89 percent and 73 percent respectively. But in Colombia and Thailand (with GDP per capita of approximately $2,000), the equivalent gaps are about 50 percent. For Canada (with a per capita GDP of $20,000), the gap is less than 25 percent. In effect, cities draw people and firms to areas of higher productivity. Urbanization is closely related to the way nations have shifted from agrarian to industrial economies and later to post-industrial economies. One of the messages of the WDR is that policy makers must recognize the spatial transformations that lie behind these sectoral shifts to enable places to prosper and specialize. No country has grown to high income without vibrant cities. But to be inclusive and efficient, policy makers must see themselves as managers of a portfolio of cities that are specializing and performing different functions according to their size and economic structure.
Personally, I am excited about the World Development Report’s findings as I believe it’s high time we had the discussion with some fresh evidence of the importance of cities as drivers of economic growth. Indeed, the report’s findings will be reflected in the World Bank’s new Urban Sector Strategy which will help us improve our support to cities and governments dealing with the challenges of rapid urbanization. The strategy will place greater emphasis on partnerships, capacity building and knowledge sharing and it will focus, among other things, on infrastructure that supports growth and connects people. Of course, we will not lose sight of the important work of finding ways to improve the welfare of people living in slums and squatter settlements through better neighborhood infrastructure, clearer land tenure systems, and improved building quality standards. Our strategy will also take into account the impact cities are having on the environment given the demand they place on countries to provide more energy, water, infrastructure and urban services generally. Climate change is a central consideration for governments and planners with cities generating an estimated 70 percent of carbon emissions and with many urban centers located in vulnerable coastal regions. But climate change concerns should encourage us to rethink the shape of our cities, not mislead us into trying to slow down the pace of urbanization. Cities and their leaders are now armed with the knowledge and the desire of their constituents to strive for cleaner sources of energy, more effective urban transport systems that reduce dependence on private cars and more energy efficient buildings. As we’ve heard throughout this Summit, cities all over the world are starting to push harder for green building standards and higher density development rather than encouraging more urban sprawl. At the same time as higher energy prices are helping to increase the density of cities, innovative mayors with foresight are also pushing this agenda with uncommon vigor as we have seen through associations of mayors in the United States, the UK and many other countries. It’s in helping to face and address challenges like climate change and urban sprawl that the World Bank can bring particular expertise. We have been working with national Governments and city authorities across the world for more than three decades. By sharing knowledge and experience and offering financial support, we have helped cities to invest in new infrastructure, deliver services, improve financing mechanisms and build forward-looking strategies. Mayors and city councils have found the Bank to be an important partner to help them test new ideas and debate issues from climate change to upgrading slums and developing industrial zones. We understand that cities play a key role in promoting growth and reducing poverty but key to their success is how they are managed. A successful city is one with a vision, a good idea of its problems and needs, a good ear for what its citizens want and need and a good eye for what other cities are doing. Successful city management requires knowledge, creativity, vision, transparency and accountability and smart cities see what’s ahead and plan accordingly by investing in housing, transport and amenities to attract the best and brightest to live there. Through our knowledge arm, the World Bank Institute, we have reached out to city authorities and other partners across the world through a sophisticated video network called the Global Development Learning Network. In this way we have exchanged ideas on policy and operational issues, needs analyses, quality assurance and evaluation, business administration, pricing policies and funding acquisition with countries like Australia, Cambodia, China, Indonesia, Japan, Mongolia, the Philippines, Singapore, Thailand and Vietnam. In East Asia, we are working with the Global Development Learning Network on a program called “Connecting Cities to Global Knowledge and Resources.” This facilitates city-to-city knowledge sharing on strategic issues among local governments, especially on City Development Strategies among participating cities in Asia. Another new initiative in the making is a multi-year initiative on Cities and Climate Change (called the Sustainable City Program) which is being designed with the support of numerous international donors and through our Eco2 Cities program, we are promoting a new business model for environmentally and economically sustainable urban development that provides technical assistance to countries for policy and regulatory reforms, strategic infrastructure investments, and financial incentives. CONCLUSION
Ladies and gentlemen, humankind has come to an important moment in its history. Never before have more people lived in cities and towns and this is a trend that is going to accelerate during this century. In the same way that Singapore has developed, cities will become nuclei of economic production – some will be geared towards their domestic markets while others will target the world market. Technological advances and increasing access to information will enable cities to evolve more efficient means of boosting growth and afford their citizens greater freedom to interact with each other. But as cities grow, more attention will need to be paid to their environmental impact. Planning and managing cities will become a key focus of national policy as countries become increasingly conscious of the global impact of their urban populations. These are exciting and challenging times and I look forward to our institution sharing some of the new thinking that summits like these are highlighting and in playing a key role in providing up to the minute knowledge and advice. Thank you.
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