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IIEP Co-Hosts 4th Urbanization & Poverty Reduction Research Conference

This is the first in a four-part series of blog posts recapping the 2017 Urbanization and Poverty Reduction Research Conference and the presentations of its speakers.

Kampala, Uganda’s sprawling urban capital, is the 13th fastest-growing city in the world, with a population boom that reaches 4.03 percent annually and an economy that is largely informal. With a substantial influx of rural workers entering the capital and 60 percent of the population living in informal housing, settlement is taking place faster than most crucial infrastructure can develop. Kampala is also the single greatest opportunity for Uganda’s growth, with two-thirds of the city yet to be built and possibilities for economic development reliant on new, sustainable infrastructure, stronger institutions, and human capital flowing from rural areas into formal sectors of the economy.

While Kampala’s situation is dire, it reflects growing trends in regions like Southeast Asia and Sub-Saharan Africa, which also face key questions: What national policies strengthen and weaken cities? How should developing countries re-think their land use policies? How can sanitation infrastructure have an impact on economic development? These questions and more were addressed at the Fourth Urbanization and Poverty Reduction Conference.

Hosted by the Institute for International Economic Policy alongside the World Bank and the International Growth Center Cities Program, the conference brought together a number of distinguished speakers and addressed pressing questions regarding the developing world’s cities. IIEP and our co-sponsors aimed to present and discuss challenges of sustainable urban development within developing countries. To answer broad questions about national policies, infrastructure, and their impacts on city development, this event consisted of three sessions: Land, Transportation, and Public Services. Michael Toman, the World Bank’s Lead Economist on Climate Change, and Ede Ijjasz-Vasquez delivered the day’s opening remarks, speaking on the immense challenges that rapid urbanization creates in reducing poverty and supporting inclusive growth for the cities around the world experiencing extraordinary population booms.

At the same time, Ijjasz-Vasquez explained, national and local governments are becoming increasingly aware of the coordinated policy efforts required to confront the challenge. Cities in Africa and South Asia are “waking up to the reality of urbanization,” often finding, as in the case of Sri Lanka, that they must reshape their policies based on new data. For example, World Bank analyses have found that Latin America is not as urbanized as we previously thought. Conversely, Sri Lanka shapes their policies with the understanding that they are a rural country, they are actually over 45% urbanized.

The conference’s morning panel consisted of  Edward Gleaser, Professor of Economics at Harvard and the IGC, Jennifer Musisi, Executive Director of Kampala Capital City Authority, and Paul Romer, Chief Economist and Vice-President of the World Bank.

One challenge to tackling urbanization from a perspective of economic and sustainable growth is the politicization and disagreements that come with major policy changes. As Edward Glaeser explained, the design of a city “is always political.” One key debate – whether to retrofit cities or build them new – cannot be considered without a discussion of the institutions that impact such decisions. “The downsides that come with congestion, like traffic, crime, and disease, can be mitigated by good government,” said Glaeser.

Musisi and Romer both spoke about the demand for land space and the need to develop in a spatially conscious manner, reconceptualizing the connections between people and resources. Romer recommended centralizing government decision-making in this area, as well as locating authority at local levels in order to create these connections and efficiently expand the productive capacity of urban areas.

Later, in his keynote address: Cities, Growth, and Planning, World Bank Chief Economist and Senior Vice President Paul Romer presented approaches to multifaceted issues such as the sustainable development of the world’s cities. Romer’s research, such as Urbanization as Opportunity, has an emphasis on government policies which facilitate organized urban expansion as an opportunity for social and economic progress.

With the urban population in developing countries reaching over 2.5 billion, the accommodation of the urban population and the declining urban density can be accomplished through a “Kaizen” approach. “Kaizen,” a Japanese word for continuous improvement, describes to Romer’s suggestion of  incrementally learning about a system dealing with a large number of people to improve it to achieve agile development. Mr. Romer then dispelled a number of traditional economic myths, suggesting a new, creative approach to the economic issues that the urbanization of the developing world creates.

Economists need to be more open to implementing design when creating cities, not solely responding to the market. Additionally, cost-benefit is not as useful of a dichotomy as many believe, and is too simple for the complex solutions needed in urbanization. Finally, Mr. Romer asserted that charity is not a good revenue model, as it is not scalable to all places. It may seem like a good solution to receive large donations from INGOs and governments, yet it would be impossible to profit off of this model in the long-term, or expect to use it in every city across the world.

 

About

The Institute for International Economic Policy (IIEP), which is located within the Elliott School of International Affairs, serves as a catalyst for high quality, multi-disciplinary, and non-partisan research on policy issues surrounding economic globalization. The Institute research program helps develop effective policy options and academic analysis in a time of growing controversies about international economic integration in many countries around the world. The institute's work also encompasses policy responses for those who face continued poverty and financial crises despite worldwide economic growth. Affiliated faculty have appointments in the departments of economics, history, and political science as well as the law and business schools.

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