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STATE OF THE WORLD’S CITIES

2012/2013 Prosperity of Cities

EQUITY AND SOCIAL INCLUSION EN

VI RO

EN TA

L S UST

AINA BILITY

PRODUCTIVITY QU

AL IT

Y OF

L IF

INFRASTRUCTURE

PROSPERITY

STATE OF THE WORLD’S CITIES

2012/2013

Prosperity of Cities

First published 2013 by Routledge for and on behalf of the United Nations Human Settlements Programme (UN-Habitat)

Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

United Nations Human Settlements Programme (UN-Habitat) P.O. Box 30030, Nairobi, Kenya Tel: +254 20 7621 234 Fax: +254 20 7624 266/7 Website: www.unhabitat.org

DISCLAIMER

The designations employed and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning delimitation of its frontiers or boundaries, or regarding its economic system or degree of development. The analysis, conclusions and recommendations of this report do not necessarily reflect the views of the United Nations Human Settlements Programme or its Governing Council.

The Report is produced with official data provided by governments and additional information gathered by the Global Urban Observatory. Cities and countries are invited to update data relevant to them. It is important to acknowledge that data varies according to definition and sources. While UN-Habitat checks data provided to the fullest extent possible, the responsibility for the accuracy of the information lies with the original providers of the data. Information contained in this Report is provided without warranty of any kind, either express or implied, including, without limitation, warranties of merchantability, fitness for a particular purpose and non-infringement. UN-Habitat specifically does not make any warranties or representations as to the accuracy or completeness of any such data. Under no circumstances shall UN-Habitat be liable for any loss, damage, liability or expense incurred or suffered that is claimed to have resulted from the use of this Report, including, without limitation, any fault, error, omission with respect thereto. The use of this Report is at the User’s sole risk. Under no circumstances, including, but not limited to negligence, shall UN-Habitat or its affiliates be liable for any direct, indirect, incidental, special or consequential damages, even if UN-Habitat has been advised of the possibility of such damages.

HS/ (paperback) HS/ (hardback)

ISBN13: 978-0-415-83888-7

Design and layout by Bounford.com, Cambridge, UK.

Index by Margaret Binns

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data A catalog record has been requested for this book

iii

Our world today is predominantly urban. Cities can be prime driving forces of development and innovation. Yet the prosperity generated by cities has not been equitably shared, and a sizeable proportion of the urban population remains

without access to the benefits that cities produce. The 2012/2013 State of the World’s Cities Report,

“Prosperity of Cities”, introduces a notion of prosperity that looks beyond the confines of economic growth that have dominated development policy and agendas for many years. It examines how cities can generate and equitably distribute the benefits and opportunities associated with prosperity, ensuring economic well being, social cohesion, environmental sustainability and a better quality of life in general.

As the world continues to grapple with the impact of an economic crisis, which has triggered a series of

other crises, we are also witnessing valiant and creative attempts at different levels, by different actors, to seek solutions. Despite the challenges they face and, indeed, the dysfunction that prevails in many urban areas, cities have a central role to play in contributing to national and global recovery. And as the world seeks a more people-centred, sustainable approach to development, cities can lead the way with local solutions to global problems.

I commend the findings of this timely report to scholars, policy makers, development planners and all others interested in promoting prosperous towns and cities.

Ban Ki-moon Secretary-General

United Nations

Secretary-General’s Foreword

This is a time of crises. This is also a time for solutions. Indeed, the world is currently engulfed in waves of financial, economic, environmental, social and political crises. Amidst the turmoil, however, we are also witnessing valiant and creative attempts at

different levels and by different actors to seek for solutions. The State of the World’s Cities Report 2012/2013

presents, with compelling evidence, some of the underlying factors behind these crises that have strongly impacted on cities. It shows that a lopsided focus on purely financial prosperity has led to growing inequalities between rich and poor, generated serious distortions in the form and functionality of cities, also causing serious damage to the environment – not to mention the unleashing of precarious financial systems that could not be sustained in the long run.

The Report proposes a fresh approach to prosperity, one that is holistic and integrated and which is essential for the promotion of a collective well-being and fulfilment of all. This new approach does not only respond to the crises by providing safeguards against new risks, but it also helps cities to steer the world towards economically, socially, politically and environmentally prosperous urban futures. In order to measure present and future progress of cities towards the prosperity path, the Report introduces a new tool – the City Prosperity Index – together with a conceptual matrix, the Wheel of Urban Prosperity, both of which are meant to assist decision makers to design clear policy interventions.

To varying degrees of intensity, cities have been hit by different crises. However, this Report tells us that cities can also be a remedy to the regional and global crises. When supported by different tiers of government, and in the quest to generate holistic prosperity, cities can become flexible and creative platforms to address these crises in a pragmatic and efficient manner. Prosperity, in this sense, can be seen as a Pharmakon – both a cause of the problem and a remedy. As per this ancient Greek construct, when used properly, it can help decision-makers to steer cities towards well-balanced and harmonious development.

In this Report, UN-Habitat advocates for a new type of city – the city of the 21st century – that is a ‘good’, people- centred city, one that is capable of integrating the tangible and more intangible aspects of prosperity, and in the process shedding off the inefficient, unsustainable forms and functionalities of the city of the previous century. By doing this, UN-Habitat plays a pivotal role in ensuring that urban planning, legal, regulatory and institutional frameworks become an instrument of prosperity and well-being.

This is a time of solutions to the numerous challenges that confront today’s cities. If we are to take measures that will make a difference to the lives of the billions of people in the world’s cities, and to future generations, we need sound and solid knowledge and information. This Report provides some of these crucial ingredients. I am confident that it will serve as a useful tool in the necessary redefinition of the urban policy agenda at local, national and regional levels. I do believe also that it will provide valuable insights in the search for urban prosperity and related policy changes in the years ahead.

The Report is a bridge between research and policy, with inputs from more than 50 cities, individual scientists and institutions, particularly the Directorate-General for Regional Policy from the European Commission, and other partner institutions around the world that participated actively in the preparation of this study. I would like to thank them for their immense contribution. I would also like to thank the Government of Norway for its financial support.

The partnerships that have evolved during the preparation of this report are part and parcel of, as well as critically essential in, creating the building blocks of a more sustainable prosperity, one that is shared by all. UN-Habitat is determined to sustain and consolidate such partnerships as we collectively chart a better future.

Joan Clos Under-Secretary-General,

United Nations Executive Director, UN-Habitat

Foreword

As the world moves into the urban age, the dynamism and intense vitality of cities become even more prominent. A fresh future is taking shape, with urban areas around the world becoming not just the dominant form of habitat for humankind, but also the engine-rooms of human development as a whole.

This ongoing evolution can be seen as yet another assertion, albeit on a larger scale, of the time-honoured role of cities as centres of prosperity. In the 21st as in much earlier centuries, people congregate in cities to realize aspirations and dreams, fulfil needs and turn ideas into realities.

Prosperity in this broader, organic sense transcends narrow economic success to encompass a socially broad- based, balanced and resilient type of development that combines tangible and more intangible aspects. Taken in this multi-dimensional sense, urban prosperity tightens the links between individuals and society with their everyday environment, i.e., the city itself. Amidst multiple challenges facing cities today, a focus on poverty reduction and/or responses to the economic crisis is gradually shifting to a broader and more general understanding of the need to harness the transformative dynamics and potentials which, to varying degrees, characterize any city anywhere in the world.

How to rekindle momentum, optimize regenerating potential, enhance strategic position in the international business sphere, polishing both image and appeal – in other words, how to foster prosperity – has become the main thrust behind urban development. In this endeavour, every city will inevitably find itself on its own specific and unique historic course. Still, a common set of conditions can be found prevailing in all cities, which enable human beings to flourish, feel fulfilled and healthy, and where business can thrive, develop and generate more wealth. These conditions mark out the city as the privileged locus of prosperity, where advancement and progress come to materialize.

This Report focuses on the notion of prosperity and its realization in urban areas. More specifically, this Report advocates a shift in attention around the world in favour of a more robust notion of development – one that looks beyond the narrow domain of economic growth that has dominated ill-balanced policy agendas over the last decades.

The gist of this Report is the need for transformative change towards people-centred, sustainable urban development, and this is what a revised notion of prosperity can provide. This focus on prosperity comes as institutional and policy backgrounds are in a state of flux around the

world. Prosperity may appear to be a misplaced concern in the midst of multiple crises – financial, economic, environmental, social or political – that afflict the world today. It may appear as a luxury in the current economic predicament. However, what this Report shows with compelling evidence is that the current understanding of prosperity needs to be revised, and with it the policies and actions deployed by public authorities. UN-Habitat suggests a fresh approach to prosperity, one that reaches beyond the sole economic dimension to take in other vital dimensions such as quality of life, infrastructures, equity and environmental sustainability. The Report introduces a new statistical instrument, the City Prosperity Index, measuring the prosperity factors at work in an individual city, together with a general matrix, the Wheel of Urban Prosperity, which suggests areas for policy intervention.

As the privileged locus of prosperity, the city remains best placed to deal pragmatically with some of the new, post- crisis challenges. With adequate backing from higher tiers of government, the city appears as a flexible, operational, creative platform for the development of collaborative agendas and strategies for local responses to the global crisis.

Cities can offer remedies to the worldwide crises – if only we put them in better positions to respond to the challenges of our age, optimizing resources and harnessing the potentialities of the future. This is the ‘good’, people-centred city, one that is capable of integrating the tangible and more intangible aspects of prosperity – in the process shedding the inefficient, unsustainable forms and functionalities of the previous century or so – the city of the 21st century.

This Report comes at a transitional juncture in the international agenda: in the wake of the ‘Rio + 20’ conference on the environment and development, and ahead of a fresh, updated Habitat Agenda due in 2016 (Habitat III). Against this background, this UN-Habitat Report calls on countries and cities to engage with a fresher notion of prosperity in their respective agendas. Prosperity involves a degree of confidence in the foreseeable future. As the world recovers from one of its worst-ever economic crises and a variety of interrelated predicaments, we must find a new sense of balance and safeguard against risks of further turmoil. With dominant roles in economic, political and social life cities remain critical to setting our nations on a more inclusive, productive, creative and sustainable course.

Introduction

UN-HABITAT ADvISoRy AND TECHNICAL SUppoRT Elkin Velasquez, Laura Petrella, José Chong, Claudio Acioly, John Hogan, Raf Tuts, Ana Moreno, Alioune Badiane, Mariam Yunusa, Roi Chiti, Axumite Gebre-Egziabher, Kibe Muigai.

INTERNATIoNAL ADvISoRy BoARD Patricia Annez; Mark Redwood; Billy Cobbett; Lamia Kamal-Chaoui; Edgar Pieterse; Amin Y. Kamete; Smita Srinivas; Alfonso Iracheta; Yu Zhu; Dina K. Shehayeb, Inga Klevby, Maha Yahya, Javier Sanchez-Reaza.

FINANCIAL SUppoRT Government of Norway

SpECIAL TECHNICAL CoNTRIBUTIoN Directorate-General for Regional and Urban Policy (European Commission), various background documents from experts: Zoé Buyle-Bodin, Corinne Hermant-de Callataÿ, Christian Svanfeldt, Birgit Georgi, Antonio G. Calafati, Celine Rozenblat, Moritz Lennert, Gilles Van Hamme, Maciej Smêtkowski and Uwe Neumann.

ADDITIoNAL CoNTRIBUTIoNS: Thematic Background papers: Brian H. Roberts; Pengfei Ni; Robert M. Buckley and Achilles Kallergis; David Simon, Michail Fragkias, Robin Leichenko, Roberto Sánchez-Rodríguez, Karen Seto and Bill Solecki, Susan Parnell and Matthew Sharp; Ivan Turok.

City Reports for policy analysis: Latin America and the Caribbean: Francisco Perez Arellano (Guadalajara); Ana Raquel Flores (Ciudad Del Este); Vladimir Morales Gonzalez (Valparaíso);Flávio José Nery Conde Malta (Santos); Ibarra Rolando Mendoza (Panama City); Oscar Bragos (Rosario); Tito Alejandro Alegría Olazábal (Tijuana); Grethel Castellanos (Santo Domingo); Haydée Beltrán Urán (Medellín); Isabel Viana (Montevideo); Miguel Coyula (Havana); Carlos Foronda (La Paz); Alberto José Tobío (Guarenas); Luis Delgado Galimberti (Lima); Alain Philippe Yerro (Fort-De-France).

Africa: Femi Olokesusi (Accra, Ibadan and Lagos);Yeraswork Admassie (Addis Ababa); Hany M. Ayad (Alexandria); Madani Safar Zitoun (Algiers); Albino Mazembe (Beira); Aldo Lupala (Dar es Salaam); Faustin Tirwirukwa Kalabamu (Gaborone); Rosemary Awuor Hayanga (Johannesburg); Allan Cain (Luanda); Godfrey Hampwaye and Wilma Nchito (Lusaka); Alfred Omenya (Nairobi); C. Fernandez (Praia).

Asia and Arab States: Saswati G. Belliapa (Bangalore); Francisco L. Fernandez (Cebu); Yanping Liu and Yuehan Wang (Chongqing); Amelita Atillo (Davao); Pelin F. Kurtul (Gaziantep); Dung D. Dzung (Ho Chi Minh City); Satyanarayana Vejella (Hyderabad); Syed Shabih ul Hassan Zaidi. (Lahore); Lan Jin and Yanping Liu. (Shenzhen); Centre for Livable Cities (Singapore); Omar Khattab (Kuwait City); Ali Shabou, Nashwa Soboh, Kamal Jalouka, Deema Abu Thaib, (Aqaba and Amman); Sinan Shakir A. Karim (Basra); Mona Fawaz and Nisrene Baghdadi (Beirut); Ahmedou Mena (Doha); Darim. Al-Bassam and Jalal Mouris (Dubai); Dara al Yaqubi (Erbil); Falah Al- Kubaisy (Muharrak); Rana Hassan and Ismae’l Sheikh Hassan (Saida).

Input to boxes: Michael Cohen, Cilla Ng, Inga Klevby, José Chong, Zeltia Gonzales, Estefania Villalobos, Laura Petrella, Alexy Romero Garcia C., Dennis Mwaniki and Francisco Perez Arellano.

Design and page layout: Bounford.com (UK)

Front cover pictures Equity and Social Inclusion: © Meunierd/Shutterstock.com Quality of Life: © 2012 Peter Herbert/fotoLIBRA.com Infrastructure: © Paul Smith/Panos Pictures Productivity: © Atul Loke/Panos Pictures Environmental Sustainability: © Anne-Britt Svinnset/Shutterstock.com

Back cover picture © Claudio Zaccherini/Shutterstock.com

Acknowledgements CoRE TEAM Director: Oyebanji O. Oyeyinka

Coordinator: Eduardo López Moreno

Task Manager: Ben C. Arimah

Statistical Adviser: Gora Mboup

principal Authors: Eduardo López Moreno, Ben C. Arimah, Gora Mboup, Mohamed Halfani, Oyebanji O. Oyeyinka

Research: Raymond Otieno Otieno, Gianluca Crispi, Anne Amin

City prosperity Index: Gora Mboup, Wandia Riunga, John Obure

Editor: Thierry Naudin

SUppoRT TEAM Contributors: Wandia Seaforth, Obas John Ebohon, Cecilia M. Zanetta, Kaushalesh Lal, Dina K. Shehayeb,

Olumuyiwa Alaba, Sai Balakrishnan, Maria Buhigas,

Christopher Horwood

Statistics: Omondi Odhiambo, Joel Jere, Julius Majale, Wandia Riunga, John Obure, Anne Kibet, Wladimir Ray, Kaushalesh Lal

Maps: Maharufa Hossain, Jane Arimah

Administrative Support Team: Beatrice Bazanye, Anne Idukitta, Elizabeth Kahwae, Jacqueline Macha, Mary Dibo

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Contents Overview and Key Findings x

Part One: Re-thinking Urban Prosperity 2 Chapter 1.1: Conceptualizing Urban Prosperity 4

Chapter 1.2: Urban and Regional Trends 25

Urban Change in Developed Countries 26

Urban Change in Developing Countries 29

Part Two: Dimensions of City Prosperity 40 Chapter 2.1: Productivity and the Prosperity of Cities 42

Chapter 2.2: Urban Infrastructure: Bedrock of Prosperity 55

Chapter 2.3: Quality of Life and Urban Prosperity 71

Chapter 2.4: Equity and the Prosperity of Cities 83

Chapter 2.5: Environmental Sustainability and the Prosperity of Cities 93

Part Three: Policies for Prosperous Cities 106 Chapter 3.1: From Comparative Advantage to Urban Prosperity 108

Policy-Related Factors Underlying the Prosperity of Cities: Drivers and Constraints 110

Chapter 3.2: Innovating to Support the Transition to the City of the 21st Century 123

Urban Prosperity Through Planning and Design 129

Empowering Laws and Institutions for Urban Prosperity 136

Statistical Annex 146

Bibliography 174

Index 181

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FiguresBoxes

Box 1.1.1: Crises, cities and prosperity 5

Box 1.1.2: Ghost towns, vacant homes: wasted prosperity 6

Box 1.1.3: When streets amplify claims: the “Arab Spring” 7

Box 1.1.4: Cities and global crises 9

Box 1.1.5: Perceptions, feelings and opinions about prosperity 16

Box 1.1.6: Cities and human development 17

Box 1.1.7: Promising African cities 20

Box 1.1.8: Low production, highly available public goods 21

Box 1.1.9: Visualizing the 5 dimensions of the CPI 24

Box 1.2.1: Increased participation of European cities in networks 29

Box 1.2.2: Africa, urbanization and positive change 29

Box 1.2.3: Prosperity and urbanization: contrasted trends within regions 33

Box 1.2.4: Large urban configurations differ across regions 35

Box 1.2.5: Novel configurations: a typology 36

Box 2.1.1: Shenzhen: capitalizing on the gains of urban growth 52

Box 2.2.1: Ranking of urban infrastructure 58

Box 2.2.2: When cellphones provide pro-poor banking services 66

Box 2.3.1: Quality of life – the ‘spokes’ and the ‘hub’ of the Wheel of Urban Prosperity 76

Box 2.3.2: Quality of life, world-class cities and social inclusion 78

Box 2.3.3: Greenery and quality of life in Asian cities 80

Box 2.3.4: Internet, information and quality of life 81

Box 2.4.1: Income inequalities in the world’s cities: an overview 84

Box 2.4.2: Spatial divisions exacerbate inequality 86

Box 2.4.3: Making progress on the equity agenda 92

Box 3.1.1: Decentralization and the prosperity of cities 114

Box 3.2.1: Measuring innovation and creativity 124

Box 3.2.2: Streetwise versus petrol-powered prosperity 131

Box 3.2.3: Individual versus collective interests 137

Box 3.2.4: Law, institutions and the public interest 143

Figure 1.1.1: The Wheel of Urban Prosperity 12

Figure 1.1.2: Cities with very solid prosperity factors 18

Figure 1.1.3: Cities with solid prosperity factors – first category 19

Figure 1.1.4: Cities with solid prosperity factors – second category 20

Figure 1.1.5: Cities with moderate prosperity factors 21

Figure 1.1.6: Cities with weak prosperity factors 22

Figure 1.1.7: Cities with very weak prosperity factors 23

Figure 1.2.1: Population density in Europe, 2001 28

Figure 2.1.1: Urbanization and per capita GDP across countries as % of base year, 1960–2010 43

Figure 2.1.2: Trends in urbanization and national GDP per capita – for various levels of income, 1960–2010 44

Figure 2.1.3: Urbanization and GDP per capita in selected countries 45

Figure 2.1.4: Population, GDP per capita and total GDP for selected metropolitan areas (2008) 46

Figure 2.1.5: Factors hampering economic productivity as perceived by local experts 50

Figure 2.1.6: Perceptions of experts regarding the distribution of economic prosperity 52

Figure 2.2.1: Infrastructure provision is closely related to levels of urbanization 56

Figure 2.2.2: Infrastructure coverage by region 57

Figure 2.2.3: Telephone infrastructure in selected African cities 65

Figure 2.2.4: Contribution of infrastructure to the prosperity of cities 67

Figure 2.3.1: Perceptions about cities’ most important problems (three most mentioned issues) 72

Figure 2.3.2: Perception of experts regarding their city’s commitment to promoting quality of life 75

Figure 2.4.1: Urban prosperity, poverty and inequity 84

Figure 2.4.2: Factors restricting the scope of greater urban equity 88

Figure 2.4.3: Most notable policy or action the city is implementing to be more equitable 91

Figure 2.5.1: Environmental impact of growth as perceived by local experts – African cities 95

Figure 2.5.2: Environmental impact of growth as perceived by local experts – Asian cities 96

Figure 2.5.3: Environmental impact of growth as perceived by local experts – Arab cities 97

Figure 2.5.4: Environmental impact of growth as perceived by local experts – Latin American and Caribbean cities 99

Figure 3.1.1: Factors underlying urban prosperity as perceived by local experts 111

Figure 3.1.2: Impediments to the prosperity of cities as perceived by local experts 118

Tables Statistical Annex

Table 1.1.1: Defining a prosperous city 11

Table 1.1.2: Measuring progress and prosperity 15

Table 1.1.3: The UN-Habitat City Prosperity Index 18

Table 1.2.1: Prosperity performance indicators of selected large urban configurations by regions (2008) 38

Table 2.1.1: External factors determining a city’s productivity 47

Table 2.1.2: City-specific factors determining a city’s productivity 48

Table 2.2.1: Infrastructure deficiencies as perceived by local experts in surveyed cities (per cent) 60

Table 2.2.2: Characteristics of the road network in selected African cities 61

Table 2.2.3: Priority lanes for buses, cyclists and pedestrians in selected Latin American cities 64

Table 2.5.1: Environmental sustainability: extant policies, as perceived by local experts (per cent) 100

Table 2.5.2: Drivers of environmental sustainability in cities, as perceived by local experts (per cent) 103

Table 2.5.3: Cities with the capacity to implement environmental sustainability programmes, as perceived by local experts (per cent) 104

Table 3.2.1: Urban planning/design and prosperity 135

Table 1: City Prosperity Index and components 146

Table 2: Proportion of urban population living in slums and urban slum population, by country, 1990–2009 148

Table 3: Urban population, proportion of urban population living in slum area and urban slum population, by region, 1990–2012 150

Table 4: City population and city population growth rate of urban agglomerations with 750,000 inhabitants or more in 2009, by country, 1950–2025 (thousands) 152

Table 5: Urban population and urbanization by country, 1990–2030 169

A fresh future is taking shape, with urban areas around the world becoming not just the dominant form of habitat for humankind, but also the engine-rooms of human development as a whole. Initially understood as a transitional process, urbanization has become a positive force for transformation that makes countries more advanced, developed and richer, in most cases.

Today, as many centuries ago, human beings regroup together in order better to exchange, learn, produce, enjoy and protect each other. Moving to a city or staying in a city is in itself an objective desire to have a better life. The fostering of prosperity has been one of the main reasons that explain the existence of cities. They are the places where humankind realizes ambitions, aspirations and dreams, fulfil yearning needs, and turn ideas into realities.

Urban prosperity takes different forms and characterizations. Each individual city, depending on its own stage of socioeconomic development, history and culture, can be seen as giving its own unique interpretation of prosperity, including in the way it is shared among the population. Still, it is possible to find a common set of conditions that enable urban residents to flourish, feel happy and healthy, and in which business can thrive, institutions develop, and physical spaces become more integrated and diverse.

In this sense, the city is the home of prosperity. It is the place where human beings find satisfaction of basic needs and essential public and private goods, where commodities can be found in sufficiency and their utility enjoyed. Cities are where material and immaterial aspects of life are realized, providing contentment and happiness and increasing the prospects of individual and collective well- being. However, when prosperity is absent or confined to some groups, when it is only enjoyed in some parts of the city, when it is used to pursue vested interests, or when it is a justification for financial gains for the few in detriment of the majority, the city becomes the arena where the right for a shared prosperity is fought for.

RE-THINkINg URBAN pRoSpERITy The Pursuit of Prosperity in a Time of Crisis Never before had humankind faced cascading crises of all types as have affected it since 2008, from financial to economic to environmental to social to political. Soaring unemployment, food shortages and attendant price rises, strains on financial institutions, insecurity and political

instability, among other crises, might well on their own call into question the relevance and even the viability of a Report on prosperity. This proliferation of risks might even challenge the conventional notion of ‘Cities as the Home of Prosperity’, i.e. where, by definition, ‘successful, flourishing, or thriving conditions’ prevail.

As people in the latter part of 2011 gathered in Cairo’s Tahrir Square or Madrid’s Puerta del Sol, in front of London’s St Paul’s cathedral or in New York’s Zuccotti Park, they were not only demanding more equality and inclusion; they were also expressing solidarity with fellow citizens that are part of the ‘99 per cent’ (the vast majority) as opposed to the ‘one per cent’ (the tiny proportion of people with vastly disproportionate shares of wealth and power). From a symbolic point of view, these actions came as attempts to build bridges over social, political and cultural differences; more practically, though, and as earlier in Tunisia, these movements highlighted the inherent risks of ill-balanced growth or development policies, and their failure to safeguard prosperity for all.

As a result of lopsided development notions and policies, instead of being places of opportunities and prosperity, cities all-too-often have become places of deprivation, inequality and exclusion. In too many parts of the developing world, unequal access to opportunities and resources has pushed many people into favelas, bidonvilles, Katchi Abadis or campamentos (as slums are known). In Europe as in other parts of the developed world, new forms of social exclusion, marginalization and poverty are emerging, such as infrastructure-poor suburbs, immigrant poverty, young people at risk, and the vulnerable elderly.

Throughout history, cities as seats of power have served as arenas for protests and the recent social movements are no exception. Demographic concentrations in dense urban spaces allow critical masses of protestors to congregate and air new ideas, highlighting cities’ role as sounding boards for positive social change.

Cities: Remedy to the Global Crises If anything, the recent crises have demonstrated that cities around the world are, to varying degrees of intensity, exposed at least as much to the destructive as to the more beneficial effects of international markets, including social and political repercussions. In this sense, these crises did more than highlight the transformative role of cities; they also showed that they are in a better position, at

Overview and Key Findings

least notionally, to address regional and global crises. For that purpose, there is a need to confer a more vigorous role to cities with a strong support from various tiers of government. Cities need to be put in better positions to respond to the challenges of our age, optimizing resources and harnessing the potentialities of the future.

With this reinvigorated support, cities can act as remedies to the global crises in a number of ways: ■■ Acting as flexible and creative platforms that can

develop responses in a pragmatic and efficient manner; ■■ Boosting production in the real sector of the economy

at local level, with attendant employment and income generation;

■■ Acting as the fora where linkages, trust, respect and inclusive responses are built;

■■ Preparing local actions that can be structured and included in national agendas for more efficient, flexible results and more beneficial effects;

■■ Negotiating with local stakeholders and forging new partnerships and social pacts which, in turn, can strengthen national governments;

■■ Aligning central and local government expenditures at city level in order to maximize benefits and impacts;

■■ Devising a number of safeguards against a variety of evolving socioeconomic risks, prioritizing investment in social security nets and local/regional infrastructure, with a view to securing longer-term growth;

■■ Deploying safeguards against the risks international markets may bring to bear on local socioeconomic conditions, and adopting redistributive policies in close collaboration with central governments.

Re-Thinking Urban Prosperity A poverty-stricken plumber in Hyderabad (India), a factory worker in Bogotá (Colombia), a middle manager in Madrid (Spain), a businessman in Fortaleza (Brazil), a car mechanic in Nairobi (Kenya) − all five will have aspirations to prosperous lives. However, prosperity means different things to different people around the world. Whatever the individual perception, regardless of culture and civilization, prosperity refers to a sense of general and individual socioeconomic security for the immediate and foreseeable future, which comes with the fulfilment of other, non- material needs and aspirations.

Yet, the prevailing view continues to confine prosperity to the realm of economics; a limiting view that shuts out other dimensions that are integral to human well-being and necessary for individual and collective fulfilment.

If anything, the 2008 financial crisis has amplified the need to include other, non-economic dimensions in the understanding and measurement of prosperity.

This edition of the State of the World’s Cities report calls on countries and cities to engage with a fresher notion of prosperity in their respective agendas – one that transcends the narrow confines of an accumulation-driven model that benefits only a few to the detriment of the majority. It proposes a new notion that looks beyond the narrow domain of economic growth that has dominated ill- balanced policy agendas over the last decades. Prosperity in this broader, organic sense encompasses a socially broad- based, balanced and resilient type of development that combines tangible and more intangible aspects. This fresh notion is more holistic and integrated, including other vital dimensions such as quality of life, adequate infrastructures, equity and environmental sustainability.

The gist of this Report is the need for transformative action in favour of the people-centred, sustainable urban development which a revised notion of prosperity can provide. This focus on prosperity comes as institutional and policy backgrounds are in a state of flux around the world. It is expected that this new approach to prosperity will put cities and countries in a better position not just to respond to the effects of the crisis and provide safeguards against new risks, but also to steer the world towards economically, socially, politically and environmentally urban futures.

However, for this notion of prosperity to be implemented at city level, there is a need to reconsider the existing model of urban development, introducing major changes in the form and function of the city – an approach that re-shapes urban space through appropriate planning and design, creating a city at a human scale where diversity, connectivity, and physical integration are all inter-woven, and prosperity is shared. This new urban space requires a different type of city.

Promoting the City of the 21st Century In this Report, UN-Habitat advocates for a new type of city – the city of the 21st century – that is a ‘good’, people-centred city, one that is capable of integrating the tangible and more intangible aspects of prosperity, in the process shedding the inefficient, unsustainable forms and functionalities of the city of the previous century. UN- Habitat plays a pivotal role in ensuring that urban planning, legal, regulatory and institutional frameworks become an instrument of prosperity and well-being.

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The city of the 21st century transcends the form and functionality of previous models, balancing lower energy costs with a smaller ecological footprint, more compact form, and greater heterogeneity and functionality. This city safeguards against new risks and creates conditions for a higher provision of public goods, together with more creative spaces for imagination and social interaction.

The city of the 21st century is one that: ■■ Reduces disaster risks and vulnerabilities for all,

including the poor, and builds resilience to any adverse forces of nature;

■■ Stimulates local job creation, promotes social diversity, maintains a sustainable environment and recognizes the importance of public spaces;

■■ Creates harmony between the five dimensions of prosperity and enhances the prospects for a better future;

■■ Comes with a change of pace, profile and urban functions and provides the social, political and economic conditions of prosperity.

Conceptualizing Prosperity Prosperity implies success, wealth, thriving conditions, and well-being as well as confidence and opportunity. In general terms, a prosperous city offers a profusion of public goods and develops policies and actions for sustainable use, and allows equitable access to ‘commons’. In this Report, UN- Habitat conceptualizes urban prosperity as follows: ■■ First, a prosperous city contributes to economic growth

through productivity, generating the income and employment that afford adequate living standards for the whole population;

■■ Second, a prosperous city deploys the infrastructure, physical assets and amenities – adequate water, sanitation, power supply, road network, information and communications technology, etc. – required to sustain both the population and the economy;

■■ Third, prosperous cities provide the social services – education, health, recreation, safety and security, etc. – required for improved living standards, enabling the population to maximize individual potential and lead fulfilling lives;

■■ Fourth, a city is only prosperous to the extent that poverty and inequalities are minimal. No city can claim to be prosperous when large segments of the population live in abject poverty and deprivation. This involves reducing the incidence of slums and new forms of poverty;

■■ Fifth, the creation and (re)distribution of the benefits of prosperity do not destroy or degrade the environment; instead, the city’s natural assets are preserved for the sake of sustainable urbanization.

In order to measure present and future progress of cities along the prosperity path, the Report introduces a new tool – the City Prosperity Index – together with a conceptual matrix, the Wheel of Urban Prosperity; both of which are meant to assist decision-makers with the design of effective policy interventions.

The ‘Wheel of Urban Prosperity’ Prosperity, as defined by UN-Habitat, is a social construct that materializes in the realm of human actions. It builds deliberately and conscientiously on the objective conditions prevailing in a city at any time, wherever located and however large or small. This is a broader, wide-ranging notion that has to do with well-balanced, harmonious development in an environment of fairness and justice.

UN-Habitat’s notion of prosperity takes in all urban functions as subsumed under five main categories: productivity, infrastructure, quality of life, equity and environmental sustainability. Since shared, balanced development is a crucial feature of prosperity, none of the dimensions must prevail over the others and all must be kept roughly ‘equal’ – for the sake of a smooth ‘ride’ on the path of prosperity. In practice, of course, it is a rare city where the five dimensions will be found equal at any point in time, and this is where policy interventions will be called for, as suggested graphically by the conceptual matrix of the Wheel of Urban Prosperity.

UN-Habitat’s ‘wheel of prosperity’ symbolizes the well- balanced development of the five dimensions of prosperity, the current condition of which is measured through the City Prosperity Index (CPI).

The ‘outer rim’ of the wheel absorbs the cumulative forces transmitted through the ‘spokes’ – the five dimensions of prosperity. It provides some level of direction and symbolically contributes to guide the city towards a more prosperous path.

The spokes are the five dimensions of prosperity. In most cases, they interact and influence each other through various, quasi-automatic linkages along the periphery or ‘outer rim’. For example, as a city develops infrastructure, it will also enhance prospects for economic expansion and enhance quality of life. Likewise, when a city pursues pro-poor policies and equitable development, this will also

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enhance the chances of higher productivity and improved environmental protection. Interactions and inter-influences between the ‘spokes’ can also occur at the centre of the wheel, where they are more policy-determined.

The hub at the centre of the wheel brings together the urban power functions (e.g., public authorities, laws, regulations and institutions, urban planning, civil society, trade associations, special agencies, etc.) associated with the five ‘spokes’. In this role, the ‘hub’ represents human agency in all its embodiments. It holds the five ‘spokes’ together and endeavours to maintain their balance and symmetry, with four interrelated roles: (i) ensuring the prevalence of public over any other kind of interest; (ii) controlling the direction, pace and momentum of the ‘wheel’; (iii) ensuring balanced development of the five ‘spokes’ and associated synergies; and (iv) in a two-way relationship, absorbing and amortising any ‘shocks’ transmitted by the ‘spokes’.

This Report suggests that it is for the city of the 21st century to pursue shared, integrated prosperity, keeping the ‘wheel’ well balanced with mutually reinforcing spokes through a dynamic hub. UN-Habitat introduces a new statistical instrument, the City Prosperity Index, to measure the prosperity factors at work in individual cities, which pinpoints areas for policy intervention.

The City Prosperity Index Cities can take different paths to prosperity. Still, UN- Habitat has developed an index that measures the current status of cities vis-à-vis the five dimensions of prosperity, as conceptualized by UN-Habitat. This index also measures government actions and policies in the pursuit of prosperity, and the outcomes of these policies. The index provides an indication of how solid or weak are the prosperity factors available to any individual city.

However, UN-Habitat’s ‘City Prosperity Index’ (CPI) does not only provide indices and measurements; it also enables decision-makers to identify opportunities and potential areas of action along the path of prosperity.

The CPI includes various indices and indicators for each dimension of prosperity, with specific indices computed into one single metric that measures advancement along the road of prosperity. This information is relevant to decision- makers and important for prosperity-oriented public policy-making.

The CPI is composed of the five dimensions (the ‘spokes’ in the ‘wheel’) of urban prosperity. For the calculation of specific indices, the CPI includes various components partially covered in other measures such as the Green City Index, the Ecological City Index and the Livable City Index, which are further disaggregated into various variables and sub-indices. The CPI also relies on the Human Development Index (HDI), which goes into the computation of the ‘City Human Development Index’ (CHDI). The CPI has been designed in such a way that additional information and data can be incorporated when calculating the index. This degree of adaptability makes it possible to bring the more important city-specific variables and space-related indicators into the index.

The UN-Habitat City Prosperity Index is unique in the world for two reasons: (i) it focuses on individual cities, as opposed to countries, and (ii) it is concerned with prosperity as measured across five dimensions, of which the local economy is only one, as opposed to the sole business environment. The resulting CPI values can be regrouped in six distinct brackets that range from cities with ‘very solid’ prosperity factors to those where those factors are found to be ‘very weak’.

In broad terms, the classification by CPI values results in regional brackets with various cities in the developed world featuring solid prosperity factors (CPI: 0.900 or higher), with a majority of African cities with very weak readings constituting the last two groups (CPI: 0.600 or below). In between, a large number of Asian and Latin American cities make up the third and fourth groups (with CPI values of 0.700–0.799 and 0.600–0.699, respectively).

The classification of cities according to the six different CPI groups shows the following characteristics:

group (by prosperity factors) Characteristics Cities

Cities with very solid prosperity factors (0.900 and above)

■ Strong integration of the 5 dimensions of prosperity. ■ High production of goods and services, strong economic

fundamentals, high productivity. ■ Urban power functions (good governance, urban planning, laws,

regulations and institutional frameworks) work fairly well, creating safe and secure environments.

Vienna, Warsaw, Milan, Barcelona, Copenhagen, Zurich, Amsterdam, Auckland, Melbourne, Tokyo, Paris, Oslo, Dublin, Helsinki, Stockholm, London, Toronto, New York.

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THE pRoSpERITy oF CITIES The Five Dimensions of Prosperity This edition of the State of the World’s Cities report presents a fresh perspective on prosperity based on five dimensions – productivity, infrastructures, quality of life, equity and environmental sustainability. In the pursuit of prosperity urban authorities must understand the various interlinkages and interdependencies between these five dimensions. Well-targeted interventions in one of the dimensions of prosperity will have multiplier effects in the other dimensions. Urban power functions ensure shared, balanced development, which is a defining feature of prosperity. Taken individually, the most important features of each of these dimensions are outlined below.

Productivity and the Prosperity of Cities ■■ Urban areas contribute disproportionally to national

productivity. However, the structural productivity of cities will at least in part rest upon an efficient supply of serviced land and reliable infrastructure, including transport, power, water and sanitation as well as information/communication technologies. Cities at earlier stages of development must look to enhance

transport connectivity, including to markets, providing the population with access to adequate healthcare and basic education.

■■ Concentrations of populations, infrastructure, economic, social and cultural activities can lead to substantial benefits and efficiency due to agglomeration and scale economies. Agglomeration economies give cities a competitive advantage and benefit densely populated urban areas.

■■ The sound operation of any city (traffic and emergency management, transportation, waste collection/disposal and other services) has a crucial role to play in support of social and economic activities.

■■ Cities where exchange of ideas and innovation are encouraged will be better able to tap into the growth dynamics that fuel the creation of social and intellectual capital, thereby contributing to prosperity. However, it is worthy of note that top performing cities derive their strengths not just from their status as global economic powerhouses, or from sophisticated infrastructure and innovation mechanisms, but also from their ability to enhance quality of life.

group (by prosperity factors) Characteristics Cities

Cities with solid prosperity factors – first category (0.800–0.899):

■ The dimensions of prosperity are connected, generating a self- reinforcing, cumulative momentum.

■ Relatively strong institutions, responsive legal and regulatory frameworks.

■ Large availability of public goods.

Ankara, Mexico City, Guadalajara, Bucharest, Shanghai, Almaty, São Paulo, Moscow, Seoul, Prague, Athens, Budapest, Lisbon.

Cities with solid prosperity factors – second category ( 0.700–0.799):

■ Show ‘less coordinated’, ill-balanced development in the ‘spokes’. ■ Institutions, legal and regulatory frameworks and urban

management practices are undergoing consolidation.

Casablanca, Cairo, Manila, Johannesburg, Jakarta, Cape Town, Beijing, Yerevan, Kyiv, Bangkok, Amman.

Cities with moderate prosperity factors ( 0.600–0.699):

■ Wider discrepancies among the 5 dimensions of prosperity. ■ Institutional and structural failings. ■ Less balanced development. ■ Neat divide between rich and poor.

New Delhi, Yaoundé, Guatemala City, Ulaanbaatar, Phnom Penh, Nairobi, Mumbai, Chisinau, Tegucigalpa.

Cities with weak prosperity factors (0.500–0.599):

■ Production of goods and services is still too low. ■ Historic structural problems, chronic inequality of opportunities and

widespread poverty. ■ Inadequate capital investment in public goods. ■ Lack of pro-poor social programmes.

Lusaka, Dar es Salaam, Harare, Dakar, Addis Ababa, La Paz, Accra, Lagos, Kampala, Dhaka, Kathmandu, Abidjan.

Cities with very weak prosperity factors (below 0.500):

■ Dysfunctional systems, institutional failings. ■ Sluggish economic growth, widespread poverty and destitution. ■ Post- or ongoing conflict countries.

Monrovia, Conakry, Antananarivo, Bamako, Niamey.

Urban Infrastructure: Bedrock of Prosperity ■■ Prioritizing infrastructure must feature in any long-term

economic and social development and environmental protection strategy. Prosperous cities are those that have vastly improved the range and quality of their infrastructure.

■■ As they meet infrastructure requirements, cities signal that provision of public goods is high on the local political agenda. However, infrastructure needs proper maintenance if the initial investment is to pay off and the benefits are to endure over time.

■■ Consistent and targeted investments in transport and communication infrastructure are a major factor behind urban prosperity. It is in the best interests of cities to develop sustainable public transport, which will have positive repercussions on all dimensions of prosperity.

Quality of Life and Urban Prosperity ■■ Cities that are committed to quality of life are almost

always also committed to enhanced productivity and equity, emphasizing the strong relation between these dimensions.

■■ Cities that give priority to the notion of public space, providing green areas, parks and recreation facilities, demonstrate a commitment to improved quality of life. Such cities are also likely in the process to enhance community cohesion and civic identity.

■■ Access to public spaces does not only improve quality of life, it is a first step to civic empowerment, paving the way for a broader, deeper institutional and political space.

■■ Effective public safety is a fundamental ‘common good’ that enhances quality of life for all, and is a major foundation for urban prosperity.

Equity and the Prosperity of Cities ■■ Inequalities are becoming steeper. Paradoxically, this has

occurred as wealth rose enormously around the world. However, equity has a significant impact on economic performance, since the greater the degree of equity, the greater the chances of a fuller, more efficient use of available resources, including skills and creative talent.

■■ Prosperity thrives on equity, which involves a lowering of barriers on individual/collective potential, expansion of opportunities, and strengthening of human agency and civic engagement. When equity is embedded in urban development strategies, efficiency is enhanced, asset utilization becomes optimal, productivity improves, and social cohesion is strengthened.

■■ More equitable cities have greater chances to be more prosperous, too; but prosperity does not happen all by itself, or as a logical consequence of economic growth. Promoting equity is a dual endeavour: (i) providing the conditions that enable every individual and social group to realize their full potential and harness the collective benefits and opportunities that cities offer; (ii) removing any systemic barriers that discriminate against any individual or social group.

■■ When prosperity remains an elusive proposition for a majority of the population, the prospects of social unrest or full-blown conflicts increase, since the majority’s claims are nothing but demands for effective human dignity.

■■ There is no substitute for government leadership to address issues of equity, with civil society playing advocacy, support and complementary roles.

Environmental Sustainability and the Prosperity of Cities ■■ Environmentally sustainable cities are likely to be more

productive, competitive, innovative and prosperous. These cities are able to draw a healthy balance between economic growth and the environment, in the process facilitating integrated development and resilience.

■■ Urbanization and economic growth are inevitable; if matched with appropriate and effective policies and governance, the environmental consequences are manageable.

■■ Cities must build those financial and other institutions required to achieve environmental sustainability, otherwise economic growth will fall short of ensuring shared prosperity.

■■ Environmentally sustainable cities are more compact, energy-efficient, clean and less polluted, more accessible, and offer better transport choices.

■■ Investments in renewable energies could generate more employment and income for urban households. Waste management and recycling can be a huge source of employment in developing countries.

poLICIES FoR pRoSpERoUS CITIES Factors Promoting Prosperity UN-Habitat opinion surveys and policy analysis have identified a number of factors that can create a favourable environment for cities to prosper. These factors are mediated by the local context, and as such, their effects may vary across cities and regions. A clear understanding

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and appreciation of these factors is important in reorienting the policies, supporting structures and mechanisms that can affect the prosperity of cities. These eight factors are the following: effective urban planning and management; decentralization polices and appropriate institutions; a system that creates equal opportunities for all; participation of civil society; elected local officials; a favourable business environment; access to basic amenities; and public transport and mobility.

Effective urban planning and management: This has been perceived by local experts surveyed by UN- Habitat as the most important factor behind a favourable environment for urban prosperity. The five dimensions of prosperity will give any city a grip on an otherwise largely uncontrolled urbanization process. Against a background of rapid urbanization, urban planning is a necessity not a luxury, as demonstrated, in the many cities where it has been lacking, by the proliferation of slum and squatter settlements, spiralling poverty, inadequate infrastructure and deteriorating environmental conditions – all of which are inconsistent with prosperity. Evidence shows that when planned and well managed, with distributive mechanisms in place, urbanization can reduce poverty. Urban planning and appropriately developed institutions and regulations also have major roles to play, improving equity through the capture and redistribution of rising land values. Moreover, effective urban planning can encourage more compact, efficient and sustainable development, with the benefits of economies of scale and agglomeration.

Decentralization and appropriate institutions: Decentralization policies emerge as the second important factor enhancing urban prosperity. Local experts see it as the most important factor in Latin America and the Caribbean. The perceived effect of decentralization in Arab States appears to lag behind other regions. The highly centralized governance structure in this region undermines the efficiency of municipal authorities, obstructs political participation and erodes the relationships between the citizenry and public authorities. In Africa, the degree of decentralization varies significantly across countries: it is high in South Africa and Uganda, but only moderate in Kenya, Ghana, Nigeria, Rwanda and Namibia. Many Asian countries have made remarkable progress with decentralization, such as Indonesia and the Philippines. The one lesson from this diversity of experiences and circumstances is that for decentralization to be effective and strengthen urban authorities’ commitment to prosperity, it must be matched by fiscal devolution. It is also clear

that decentralization works well when backed by strong commitment and support from central government.

A system that creates equal opportunities: A system that guarantees equal opportunities for all is the third important factor underlying the prosperity of cities. The more egalitarian a city, the more prosperous it is to become. The importance of such a system is most pronounced in Arab States compared with other regions, perhaps due to the fact that this sub-region is one of the most egalitarian in terms of income distribution in the developing world (Gini coefficient of 0.36). For a city to be truly prosperous, it must deploy systems that will ensure equal opportunities for all, especially the more vulnerable – the poor, women, children, the elderly, youth and the disabled. On the contrary, highly unequal cities are a ticking time bomb waiting to explode. A system that creates equal opportunities for all can use redistributive policies that give priority to low-income groups and areas (e.g., Venezuela‘s massive investment in healthcare and education, with the provision of over 8,000 clinics in the barrios or universal pension schemes in Botswana, Lesotho, Mauritius and Namibia). Another alternative will be conditional cash transfers (e.g., Brazil’s Bolsa Família scheme, which benefits 11.1 million families, and has contributed to reducing poverty and inequality).

Civil society participation: Policies that promote the participation of civil society are perceived by local experts as the fourth most important factor behind enhanced urban prosperity. Participation of civil society has the potential to empower communities, build social capital, lead to better design of urban projects, and allow for citizens’ concerns to be incorporated into development strategies. The perceived importance of participation of civil society varies across regions. It is seen by local experts as the second most important factor in Latin America and the Caribbean, while in Arab States it ranks only fifth. Asia provides a classic example of a participatory planning process with the People’s Campaign for Decentralized Planning in the State of Kerala (India), which was launched in 1996. Lessons from various countries suggest that successful civil society participation is dependent upon certain preconditions such as: (i) a political system that encourages active citizenship and is committed to equity and remedial action; (ii) a legal basis for participation; (iii) available resources in terms of skilled and committed professionals, as well as well- resourced and empowered local governments; and (iv) informed and organized communities and stakeholders.

A favourable business environment: Cities with favourable business environments and entrepreneurial

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cultures are more likely to be prosperous than others. A business-conducive environment is needed for a vibrant private sector, attracting and retaining investment (including foreign direct), creating jobs and improving productivity – all of which are important for the promotion of growth and for expanded opportunities for the poor. In Asia, a favourable business environment is perceived as the most important factor promoting prosperity, as demonstrated by Singapore. Other Asian countries that rank high with respect to the ease of doing business include Hong Kong, Korea, Thailand, Malaysia and Japan. In Africa, countries such as Mauritius, South Africa, Rwanda, Tunisia and Botswana also have a good record enabling business environment. In recent years, Rwanda has undertaken reforms to streamline business procedures, create a favourable legal framework, reduce bureaucracy, and improve service delivery in order to promote both domestic and foreign investment..

Impediments to the Prosperity of Cities Based on the UN-Habitat local expert survey, the seven main impediments to urban prosperity are the following: poor governance and weak institutions; corruption; lack of appropriate infrastructure; high incidence of slums and poverty; high costs of doing business; low levels of human capital; and high crime rates. The hard-won prosperity gains made by cities can be jeopardized or eroded by these impediments.

Poor governance and weak institutions: The impact of poor governance and weak institutions on urban prosperity appears to be more pronounced in Africa and Arab States, where over 40 per cent of experts cite this factor as the single most important impediment. Indeed, in these cities, as in many others in developing countries, the institutions required for urban prosperity, if they exist, are weakly developed. Institutional inadequacies take the form of weak (if not altogether lacking) legal and institutional frameworks, disregard for the rule of law, poor enforcement of property rights, excessive bureaucracy, and proliferation of corrupt practices, among others. All these are incompatible with urban prosperity.

Corruption: Corruption is considered by local experts as the second most important hindrance to enhanced urban prosperity. The negative effects vary across cities and regions. While corruption on a grand scale has (as might be expected) the most devastating impact, corruption in any form undermines confidence in the fairness of government, the rule of law and economic stability. In Arab

States, corruption is the joint first factor along with poor governance and weak institutions; in Asia it is perceived as the second most serious impediment; and in Latin America and the Caribbean, it is rated as the third most important. Corruption can be detrimental in a variety of ways: acting as a deterrent to foreign direct investment; undermining the ability of city authorities to provide fair municipal services; distorting infrastructure spending in various ways that are not beneficial for the urban poor; and causing poor delivery of urban services.

Inadequate infrastructure: Inadequate infrastructure is a major impediment to the prosperity of cities. The impacts of deficient infrastructure appear to be more pronounced in Asian and African cities and less so in Arab States. Cities with deficient infrastructure can be adversely affected on many fronts. For instance, inadequate water and sanitation facilities will lead to deterioration of the urban environment, increasing the disease burden on the urban poor. Deficient infrastructure can raise the costs of doing business in urban areas and reduce firm productivity by as much as 40 per cent. Besides denting trade and competitiveness, inadequate infrastructure often leads to congested roads and poor transport facilities, which all act as serious hindrances to any city’s prosperity.

High incidence of slums and poverty: Cities with high incidence of slums are an indication of lopsided prosperity. Slum dwellers are often stigmatized on account of their location and are often discriminated against in terms of access to public and social services, as well as employment. Large concentrations of slums impose enormous burdens on urban authorities that often lack the political will and resources to provide even the most basic services, with implications for the prosperity of cities. Rather than being proactive in their approach to urban development, cities with large concentrations of slums are likely to adopt a reactionary and fragmentary approach to urban development, which tends to be expensive in the long run.

Poorly developed human capital: Low levels of human capital and skilled labour can hinder urban prosperity. Education is essential not just for nurturing but also for attracting talents, and bolstering innovation. Availability of highly-skilled human capital in turn attracts and generates innovative and knowledge-based industries. Attracting and cultivating talents has become common practice for cities in the pursuit of prosperity. From New York to Boston, London to Vienna, Dubai to Singapore, or Bangalore to Shenzhen, many cities can illustrate this phenomenon. The cities’ large proportions of high-skilled workers, nurtured

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through their vocational education system, have been crucial for city prosperity.

High crime rates: Crime emerges as another major impediment to the prosperity of cities. No city can claim to be truly prosperous if it is crime-ridden and the population lives in a perpetual state of insecurity. Crime is a major deterrent to domestic and foreign investment and can cause capital flight. In Africa, more than 29 per cent of business people report that crime was a significant investment constraint. In South Africa, a survey of major cities showed that around 25 per cent of respondents were reluctant to allow their children to walk to school, while 30 per cent stopped using public transportation. In large Latin American cities, high numbers of murders deter people from working evenings and at night. In Jamaica, crime has a pernicious effect on national tourism and is often cited as a major reason for the country’s weak economy.

All these factors have implications for local economies, quality of life and the attractiveness of public spaces, on top of lost opportunities for socioeconomic advancement that are so crucial for the prosperity of cities.

Policies Promoting Prosperity UN-Habitat policy analysis identifies three major types of action to promote urban prosperity: 1. Innovations to support the transition to the City of the

21st Century. 2. Urban planning and design for prosperity. 3. Empowering laws and institutions for urban prosperity.

Various other policies and actions are certainly needed, the specific nature of which will vary from one city to the next. In this endeavour, and given the holistic nature of prosperity, effective coordination of municipal authorities with local and central government has a pivotal role to play.

Innovations to support the transition to the City of the 21st Century: Creativity and innovation involve a variety of areas that range from technology to institutions, organizations and modes of operation to information and knowledge, finance and human development. Although increasingly viewed from the sole economic perspective, innovations can flourish in many areas such as developing and managing urban life, renewal of social institutions, improved urban policies, development of knowledge networks, etc.

Creativity and innovation are largely influenced by six main types of factors: (i) locational advantages (i.e., economies of agglomeration and ‘positive externalities’

at regional scale); (ii) knowledge networks; (iii) cultural factors; (iv) the economic environment; (v) organizational factors; and (vi) State/government interventions (i.e., policies, incentives, institutions). The cities and countries best placed for economic growth and prosperity are those that invest in building knowledge and innovation institutions and related systems with strong support from both public authorities and the private sector.

Innovation is a creative capital that is brought to bear on various dimensions of development and prosperity, in the process unleashing undeveloped potential and making fuller use of local resources and assets. The culture of creativity must be embedded in the way cities operate. Therefore, it is not just for government or business, but also for communities and the public at large, to mobilize their own powers of imagination. In practice, all of this requires well-adapted physical environments, which in turn have to do with urban economies and better urban planning. From a more institutional point of view, support to knowledge exchange and networking is another way of stimulating creative capital, along with favourable conditions for research and development. As for the productive sector, creative stimulation can also derive from economies of agglomeration and an entrepreneur-friendly environment.

Urban planning and design for prosperity: In the midst of ongoing demographic, socioeconomic or environmental cross-currents, cities must reassert control over their destinies with reinvigorated urban planning and design, for the sake of shared prosperity and harmonious development.

If urban planning is to be in a better position to address the shortcomings of the Global Standard Urbanization Model of the 20th century, both theory and practice must come under serious review to ‘rescue’ the discipline from its role as a mere technical tool, restoring it to its rightful position in the public sphere. However, efficient urban planning requires a reinvigorated notion that can really contribute to the pursuit of shared prosperity, and for that purpose four conditions must be met: (i) restoration of public confidence; (ii) repositioning of urban planning in decision-making; (iii) deployment of

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the fullness of its functions across the five dimensions of shared prosperity; and (iv) support for these functions with adequate financing.

As a decision-making tool, urban planning must better defend the ‘public’ against the menace of ever-expanding ‘private’ interests and its consequences: shrinking public spaces and reduced provision of public goods, which in turn affect more collective, intangible dimensions, such as quality of life, social interaction, cultural identity and social values. Interdependencies and interactions among the five ‘spokes’ in the ‘wheel of urban prosperity’ (productivity, infrastructure, quality of life, equity and environmental sustainability) can be deliberately enhanced (as opposed to being allowed to occur all by themselves) through the strategies and interventions that are part and parcel of urban planning. More specifically, it is in the power of a well-planned decision or well-calibrated choice in one dimension of prosperity − for example, the design of a street supporting multimodal transport as part of the infrastructure development of the city − not just to make that particular part of the urban space more accessible or pedestrian-friendly, but in the process also to improve productivity (shops, street-trading, etc.), quality of life and social inclusion.

UN-Habitat calls for a fresh, different type of urban planning and design – one that has the power to transform urban landscapes and expand existing enclaves of prosperity across the entire city. UN-Habitat proposes a reinvigorated notion of urban planning, one that comes with a new value system that relies on effective institutions, well-adapted laws and regulations, sustainable urban solutions and active civic involvement in public affairs. This type of planning signals a paradigm shift towards a new urban pattern − the city of the 21st century: a city that can better respond to the challenges of our age, optimizing resources to harness the potentialities of the future; a people-centred city, one that is capable of transcending the inefficient, unsustainable GS20C model, in the process integrating and nurturing the five dimensions of urban prosperity as defined in this Report. UN-Habitat’s reinvigorated notion of urban planning involves sustainable use of, and equitable access to, the ‘commons’ through appropriate policies and schemes. It also gives any city tighter public control over the use of land, and contributes to the change in form and function of cities based on sustainable development principles. Acting from the ‘hub’ of the ‘wheel for prosperity’, urban planning can identify strategies and plan for optimal production of public goods,

in the process contributing to social capital, enhancing sense of place, safety and security, integrating social groups (e.g., youth), and increasing the economic value of the areas where these goods are provided.

Prosperous cities must plan and implement a variety of technical solutions to improve functionality and achieve sustainable urban forms. Although solutions can vary according to local conditions, UN-Habitat has identified a number of key interventions in various areas, including: increase population density to sustainable levels; encourage social diversity and mixed land-use; devise multimodal mobility strategies; plan infill development and guided expansion; and promote livable public spaces and vibrant streets.

Empowering laws and institutions for urban prosperity: The success of some of the cities as highlighted in this Report is based on specific combinations of laws, regulations, institutions and processes. In almost all cases, advances along the five dimensions of prosperity are either accelerated or impeded by existing bodies of laws and regulations, the strength of enforcement, as well as by the configuration, capacity and flexibility of the institutions responsible for steering urban development.

In recent years, there has been a resurgence of policy reviews and scholarly studies striving to address the normative and organizational underpinnings of urban change. As part of this change, it is clear that legal and institutional systems are part of the hub that drives the ‘wheel of urban prosperity’, supplying the laws and regulations that support and shape the five ‘spokes’, adjusting them over time as conditions, needs and fresh risks may require. In this process, business, academia, civil society – non-governmental and grassroots organizations, trade unions and professional associations, political parties, etc. − all need to contribute to the design and enforcement of these laws and regulations, including strong institutions, to make sure that the city moves along the path of prosperity. Laws that are adapted to the requirements and expectations of the city of the 21st century and the associated institutional set determine the very genesis of the modern city.

Laws, regulations and institutions as factors of restraint, opportunity and action, act as the levers that can optimize the social function of property and balance it out with private rights and assets. They can revitalize ‘Rights to the Commons’ and expand the public realm. As cities work on the five dimensions of prosperity, there also occurs a progressive expansion in the size of the commons. More

amenities are brought into collective use and more access is provided, enabling larger numbers of urban residents to use and enjoy shared spaces, services and facilities. Rules and regulations constitute a key instrument in urban management and development. They generally steer and circumscribe planning and construction. Indeed, statutes, ordinances and regulations are the bases for the guidelines and standards regulating spatial layouts and construction designs. The same applies to institutional relationships, functional allocations and authority designation, besides resource distribution. The legal framework in turn enables civic organizations and community activities. Equally significant is the overall manner in which legal-regulatory and institutional frameworks delineate the public and private spheres and guide the interaction between and within them in the everyday workings of the city. The capacity for a city to maintain extensive and quality shared

spaces and facilities provides a good indication of its degree of prosperity.

The review of regulatory frameworks is of particular importance for those cities in the developing world that have long operated with externally derived standards and codes, who must also tend to effective implementation and enforcement capacities. This calls not only for major institutional restructuring, but also for a revision of zoning and building codes to support urban reforms, not to mention squatter regulation and slum upgrading. In addition, cities today must provide accommodative measures, allowing for progressive construction, smaller plot sizes and multiple variants of land tenure with higher densities. Similarly, utility standards must be adjusted, and new development financing channels devised, in the face of inequity and exclusion.

Re-thinking Urban Prosperity

Part One

Conceptualizing Urban Prosperity

THE CITy IS THE HoME oF pRoSpERITy Cities are where human beings find satisfaction of basic needs and essential public goods. Where various products can be found in sufficiency and their utility enjoyed. Cities

are also where ambitions, aspirations and other intangible aspects of life are realized, providing contentment and happiness and increasing the prospects of individual and collective well-being.

However, when prosperity is absent or restricted to some groups, when it is only enjoyed in some parts of the city,

when it is used to pursue specific interests, or when it is a justification for financial gains for the few to the detriment of the majority, the city becomes the locus where the right to shared prosperity is claimed and fought for.

pRoSpERITy: A MISpLACED CoNCERN IN THE MIDST oF CRISES? Never before has humankind as a whole faced cascading crises of all types as have affected it since 2008, from financial to economic to environmental to social to political. Soaring unemployment, food shortages and attendant price rises, strains on financial institutions, insecurity and political instability, among other crises, might well on their own call

into question the relevance and even the viability of a report focused on prosperity. This proliferation of risks might even challenge the conventional notion of ‘Cities as the Home of Prosperity’, i.e. where, by definition, ‘successful, flourishing, or thriving conditions’ prevail.

Ill-balanced development notions and policies have meant that, instead of being the locus of opportunity and prosperity, cities all-too-often have become places of deprivation, inequality and exclusion. In too many parts of the developing world, unequal access to opportunities and resources has pushed vast numbers of people into favelas, bidonvilles, katchi abadis or campamentos, as slums are known. In Europe, new forms of social exclusion, marginalization and poverty are emerging, such as infrastructure-poor, immigrant poverty, young people at risk, and more vulnerable elderly.1

As people in the latter part of 2011 gathered in Cairo’s Tahrir Square or Madrid’s Puerta del Sol, in front of London’s St Paul’s cathedral or in New York’s Zuccotti Park, they were not only demanding more equality and inclusion; they were also expressing solidarity with fellow citizens that belong with the ‘99 per cent’ (the vast majority) as opposed to the ‘one per cent’ (those with vastly disproportionate shares of wealth and decision- making capacity). These movements highlighted the inherent risks of ill-balanced growth or development policies, and their failure to safeguard prosperity for all. Throughout history, cities as seats of power have served as stages for

Chapter 1.1

POLICy It is in every city’s interest to adopt organically integrated types of development and prosperity that transcend the narrow confines of an accumulation-driven model that benefits only a few to the detriment of the majority.

A focus on prosperity as conventionally understood seems, at best, an unnecessary luxury in a time of crisis. At worst prosperity can be seen as a harbinger of yet another single-minded pursuit of purely economic prosperity that might bring the global economy to the brink again.

Conceptualizing Urban Prosperity

Crises, cities and prosperity

The financial crisis: Borrowing, borrowing, borrowing Prominent scholars such as Joseph Stiglitz ascribe the 2008 financial crisis to rising income inequalities in countries around the world. In the face of stagnating real earnings, those households in the lower- and middle-income brackets were forced into more and more borrowing in order to maintain or improve living standards. With financiers experimenting with risky schemes at the other end of the credit chain, this situation led to a spate of defaults and, ultimately, the financial crash of 2008. The double irony of this crisis is that it originated in the efforts of a supposedly sophisticated financial system to give low-income categories a much-desired access to housing finance – and a foothold in prosperity.

The democratic crisis: ‘We are the 99 per cent!’ The recent crisis is more than just an economic one. More fundamentally, it has exposed a number of risks to social justice, fairness, participation and, ultimately, democracy. Systematic decision-making in favour of those better-off is, in itself, a form of democratic deficit, and one that has led to popular movements like New York’s Occupy Wall Street. The movement ‘calls for a society organized around the needs, desires, dreams, of the 99 per cent, not the one per cent’ The other major uprisings of 2011 – the Arab Spring in North Africa and the Middle East, and Spain’s own Indignados – were also motivated by similar demands for better and deeper democracy as essential for overall prosperity. These protests highlighted the fact that

economic growth was a necessary condition for prosperity, though insufficient on its own: social and political inclusion is vital for prosperity.

The environmental crisis: The convergence of climate change and urbanization The current pattern of urbanization both in developed and developing countries converges on one and the same model: low density-based suburbanization. Land speculation is associated with indiscriminate conversion of rural land to urban uses in the peripheries; this phenomenon combines with a growing reliance on individual motor vehicles and new-fangled middle- class lifestyles to expand urban areas way beyond formal city boundaries. A variety of economic agents can typically be found behind this trend, including real estate developers, home- and road-builders, national and international chain stores, among others, more often than not with support from banks and finance houses. Wasteful expansion of cities in endless peripheries is a major factor behind climate change. Beyond the physical threats from climate change, some cities stand to face an array of additional risks related to the provision of basic services and public goods (water supply, physical infrastructure, transport, energy, etc.), affecting industrial production, local economies, assets and livelihoods. Climate change may have ripple effects across many sectors of urban life, affecting the potential for prosperity of the more vulnerable populations: women, youth, children and ethnic minorities.2

Box 1.1.1

May 1 2012 saw protests in many cities around the globe. In New York City, labour union members marched in support of the Occupy Wall Street activists campaigning against the chaos in the financial sector.

State of the World’s Cities 2012/2013

ghost towns, vacant homes: wasted prosperity

Box 1.1.2

What sowed the seeds of the 2008 world financial crisis was an unusual combination of sustained economic growth and low interest rates. The resulting sense of prosperity and optimism might have been legitimate (some respected economists saw a ‘new golden age’ opening up), but in the USA and elsewhere the financial sector needed higher interest rates to maintain or boost profits. Home loans to low-income (‘sub-prime’) households provided an opportunity for higher yields, and the US guarantee mechanism made securities based on sub-prime home loans an attractive proposition for US and foreign investors – good returns and no apparent risk, especially when enhanced by sophisticated derivative instruments. The whole structure unravelled when low-income borrowers defaulted en masse on their badly structured home loans: interest payments stopped on both loans and bonds, which became largely worthless, the financial sector was destabilized around the world, a credit crunch began and a global recession with it.

This happened at a time when, in both developed and emerging countries, the numbers of built houses and mortgage loans had reached historic levels, in the process expanding peri-urban areas far beyond previous limits. As a result, the bursting of the property ‘bubble’ reverberated around the world, from San Francisco to Mexico to Dublin to Madrid to Cairo and to Shanghai.

In 2007, Spain and Ireland built many more houses than any other European country.3 In Spain alone, it is estimated that some seven million units were built between 2001 and 2010, while the population grew 5.2 million during the same period,while over that same period, house prices more than doubled.4 In Mexico, the housing sector grew 12 per cent in 2004, more than four times the country’s overall growth rate that same year.5 In Egypt, since the 1980s, many urban developments have sprung up on desert land. In the Greater Cairo area, for instance, eight cities in particular have become the focus of massive investment, speculative interest, territorial expansion and grandiose urban planning.6

Evidence shows that in nations like Angola, Egypt, Mexico or China, what had originally been planned as new housing opportunities for the medium- to low-income segments (including rural migrants in China) turned out as quality developments which high prices and dependence on new roads and motor vehicles made inaccessible to the initial targets. In these cases, the failure lay both in poor urban planning and the misidentification of the target population. Uncontrolled, quick-profit oriented property market growth has left behind sprawling, badly planned peri-urban developments where millions of housing units have remained vacant once the property bubble burst. In North America, repossessed houses represent masses of capital and ruined dreams, lying out there unused and useless, abandoned, wasted.

In Europe as a whole, Spain stands out with the highest number of vacant houses – with contrasted figures that refer to three up to six million units. In Ireland the celebrated ‘Celtic Tiger’ has left behind

more than 2,800 ‘ghost estates’ – urban developments where an important proportion of the houses are vacant or unfinished, according to a 2010 government survey.7 In the United States, about 11 per cent were unoccupied in 2011.8 The situation is not any different in Latin America. In Mexico, five million houses were vacant in 2010, or 14 per cent of the housing stock.9 In Brazil, 6.1 million houses were vacant in 2010.10 In China and Egypt, the situation is even more alarming with many developments or ‘ghost towns’ unoccupied or partially occupied.

Although data is scant, evidence shows that, in addition to vacant houses, China is no stranger to the ‘ghost town’ phenomenon either. For example, Kangbashi, a satellite town of Ordos, Inner Mongolia, was planned for one million but had a much smaller population in 2010;11 with many of the houses remaining empty despite 90 per cent of them having been purchased.12 And it would seem there are many other developments sub-occupied in China. For example, Chenggong, a newly developed area in the southern city of Kunming (Tianjin), remains poorly occupied five to 10 years after completion.13 In urban Egypt, the proportion of vacant urban housing units is reported to be in excess of 20 to 30 per cent of the housing stock.14

Oversupply is a major factor behind housing vacancies. Property and land speculation results in unaffordable prices. Uncontrolled or permissive urban and regional planning (often linked to corruption) is another factor. Cultural factors can also come into play. In countries as diverse as Spain, Ireland and China, housing purchases for investment, together with a tradition of small-scale letting,15 encourage owners to maintain vacant properties regardless of actual demand.

Around Cairo (as in countries like Mexico), lack of infrastructure, public services and social amenities in new suburban areas is another factor behind high vacancy rates, along with high commuting costs. Based on research by Mexico’s National Housing Fund Institute for Workers (INFONAVIT),16 it would appear that more than one third of vacancies in the country is related to lack of basic services, and another third to excessive commuting times to/from work, school etc., as also happens in China’s own new towns. In Mexico, insecurity and inadequate housing designs are other factors, which also testify to poor overall planning. Easy credit has turned into a crunch and the fake prosperity associated with the property/housing ‘bubble’ leaves a legacy of evictions and indebtedness, instead of comfort and valuable capital, with a once thriving construction sector and millions of workers left to stall. Millions of housing units stand vacant while thousands of households are evicted from their homes because they default on mortgage payments. Lending institutions sit on vast stocks of vacant new homes with limited market value, while evicted or low-income households are consigned to inadequate, insecure housing conditions. In Spain, the number of evictions has tripled since 2007. In Ireland, vacant houses could be used to reduce the deficit of housing for those in need.

Conceptualizing Urban Prosperity

protests and the recent social movements are no exception. Demographic concentrations in dense urban spaces allow critical masses of protestors to congregate and air new ideas, highlighting cities’ role as sounding boards for positive social change. This points to another of the promises of a prosperous city – not just a more productive socioeconomic use of space and the built environment, but also one that safeguards the city’s role as a public forum where plans and policies can be discussed and challenged for the sake of a more prosperous society.

CITIES: REMEDy To THE gLoBAL CRISES If anything, the recent crises have demonstrated that cities around the world are, to varying degrees of intensity, exposed at least as much to the destructive as to the more beneficial effects of international markets, including social and political repercussions. In this sense, these crises did more than expose systemic market failures: they also highlighted major imbalances at the core of economic policy-making.19

When responding to such crises, national macroeconomic policies definitely have a major role to play through countercyclical public expenditure, strengthening

bank supervision and financial regulations, introducing progressive income taxation, and reinforcing worldwide financial governance mechanisms, among other solutions.

However, responses to global crises must also allow for a vigorous role for cities. So far, cities have been perceived as the ‘engines’ of national economies and there is no reason to depart from that view. Indeed, city authorities find themselves, at least notionally, in a position to boost production in the real sector of the economy at local level, with attendant employment and income generation. If urban responses to economic crises are to be effective on a local scale with positive regional or national repercussions (‘multiplier effects’), then efficient, multi-way institutional, policy and budget linkages are required between all relevant tiers of government. In this respect, proper alignment of central and local government expenditures at city level can facilitate transfers and their effective use by city authorities.

Far from undermining the role of cities as ‘engines’ of national economic development, the recent worldwide crisis has highlighted the evolving nature of the risks against which urban spaces must safeguard themselves, and their populations, and the same goes with the effects of climate change. Municipal authorities must also be aware

When streets amplify claims: the ‘Arab Spring’

When Mohamed Bouazisi, a 26-year-old street vendor in Sidi Bouzid (Tunisia), doused himself in petrol and scratched a match, little did he know that his tragic act would set ablaze a number of cities along the southern and eastern Mediterranean shores, in the process toppling some well-established governments. The unfortunate young man also shed the cruellest possible light on the punishing lack of socioeconomic opportunities many youths his age are so familiar with in that part of the world: a graduate who took to street vending in a bid to survive, Bouazisi had been arrested for lack of a permit and his goods destroyed.

This lack of perspectives highlights the ill-balanced type of ‘prosperity’ which this Report is looking to redress. Among other positive features, Tunisia is known both for having eradicated slums and for its young, well-educated workforce, but so far economic opportunities have been inequitably shared, to the sole benefit of a number of vested interests.17 This is for lack of the political and other institutions that ensure inclusion, equal distribution of wealth among various groups, and respect for cultural diversity.

Bouazisi was one in the more than 100 million 15- to 29-year- old cohort who contribute up to 30 per cent to the Middle East and North African population.18 This so-called ‘youth bulge’ in the region’s demographic profile reflects the lag between rapidly

declining mortality and a slower decrease in fertility rates. With the scarcity of (especially quality) jobs, average unemployment in the region – 25 per cent – is nearly double the worldwide rate of 13 per cent. As usual, averages conceal significantly higher numbers: in Algeria and the Palestinian Territories, unemployment is the plight of 40 per cent of the active population. In Algiers, Tunis, Cairo or Tripoli, more than 50 per cent of the unemployed are first-time job seekers – the highest of any region of the world. This reflects a significant mismatch between education (especially secondary) and labour markets.

In these capitals as in secondary cities and towns from January 2011 onwards, the street became the natural forum as the chain of protests spread across the region. Being spaces for flows and movement, streets and squares emerged as the privileged locus where people can do more than express grievances: they can forge identities and enlarge solidarities (including across borders). In this somewhat chaotic, spontaneous process, people come to recognize their mutual interests, shared feelings and aspirations. Cities leave their spatial imprints on the nature of social struggles, where politics evolves from a ‘micro-’ to a ‘macro-dimensional’ nature, transcending wealth, power and privilege. As Bouazisi might have hoped, what has come to be known as the ‘Arab Spring’ showed how cities can act as catalysts for cooperation and sharing.

Box 1.1.3

State of the World’s Cities 2012/2013

POLICy Cities can devise a number of safeguards against a variety of socioeconomic risks. Municipal authorities can prioritize expenditures on social security nets, local/ regional infrastructure and other types of development, with a view to securing longer-term growth while stimulating consumption and/or employment in the short term.

POLICy Cities can also deploy safeguards against the risks international markets may bring to bear on local socioeconomic conditions, deploying redistributive policies in close collaboration with central government in order to reduce income gaps and other local structural problems.

Cities are a remedy to the global crises. They provide ready, flexible and creative platforms that can mitigate the effects of regional and global crises in a pragmatic, balanced and efficient way. Cities can act as the fora where the linkages, trust, respect and inclusiveness that are part of any remedy to the crisis can be built. Acting locally in different areas and spaces, urban responses to the crisis can be structured and included in national agendas for more efficiency, with better chances of flexible responses and more beneficial effects. Although not immune to the divisive partisanship and ideologies that can paralyze decision-making, cities find themselves in more privileged positions than national governments to negotiate and agree on responses with local stakeholders. They can forge new partnerships and local social pacts which, in turn, can strengthen national governments in the face of global challenges.

China: busy traffic on one of Beijing’s boulevards. Wide avenues such as this bring a sense of space to city centres but increasing wealth has led to a massive growth in private car use, with attendant congestion and increase in greenhouse gas emissions.

Conceptualizing Urban Prosperity

that safeguards against newly emerging risks can take all sorts of forms, including incentives (e.g., higher wages for low-income workers), benefits (healthcare or retirement income schemes) and trust (e.g., avoiding corruption, or fair dealings with organized civil society). These safeguards can complement those of a more tangible nature, such as urban rehabilitation and transport- or climate-related infrastructure, which preserve the mutual benefits of productivity and socioeconomic well-being for businesses and residents alike.

RE-THINkINg URBAN pRoSpERITy A poverty-stricken plumber in Hyderabad (India), a factory worker in Bogotá (Colombia), a middle manager in Madrid (Spain), a businessman in Fortaleza (Brazil), a car mechanic in Nairobi (Kenya) − all five will have

aspirations to prosperous lives. However, prosperity means different things to different people around the world. Whatever the individual perception, regardless of culture and civilization, prosperity refers to a sense of general and individual socioeconomic security for the immediate and foreseeable future, which comes with the fulfilment of other, non-material needs and aspirations.

Yet, the prevailing view continues to confine prosperity to the realm of economics, a restrictive view that shuts out other dimensions which are integral to human well- being and necessary for

Cities and global crises

The mismanagement of urban economies and finance as epitomized by the 2008 housing finance crisis in the USA has reverberated around the world. The subsequent economic crunch has, among other consequences, caused a fall in migrant worker remittances, and fiscal retrenchment has forced cuts in public spending on infrastructure, health and education in many countries.

Urban areas around the world have distinctly felt the pinch, what with rising numbers of redundancies and declining demand for goods and services of all kinds. From automakers in Detroit to urban shopkeepers in Buenos Aires or Nairobi, to factory workers in Shanghai to farmers in Brazil or Burkina Faso, millions have found themselves caught short.

In contrast, the highly urbanized economies of Argentina, Brazil, Chile, Colombia and Mexico have generally responded better to the global slowdown than the United States or Europe, as they activated their urban economies through focused spending and credit, together with stronger ‘safety nets’ for more vulnerable households.

Latin America highlights the problem with conventional economic stimulus through additional government spending: these blanket policies pay no attention to the specific locations where economic problems are occurring, or where consumption requires stimulus for a quick reactivation of maximal multiplier effects. Outside Latin America, no government spending has specifically targeted cities, thereby ignoring the spatial configurations of national and local economies and, more particularly, the way agglomeration economies might be energized by additional public expenditure.

Over time, economic growth is closely associated with the urban share of the population, and in all countries in the world

nowadays more than half of GDP emanates from urban areas. As economies, too, become more urban, the relationship strengthens between the efficiencies and productivity of agglomeration economies, on the one hand, and location on the other hand. The essence of the process of value creation is to bring factors of production together in time and space. When associated with higher densities and proximity, industrial agglomeration reduces production costs and stimulates consumption by an ever more affluent urban labour force. Research in Brazil has found that productivity increased roughly one per cent for every 10 per cent increase in the number of workers employed in an industry or a city. This means that if the number of workers in a city rose from 1,000 to 10,000, productivity would increase by a hefty factor of 90.20 Lessons from decades of practice and programme assistance should be reflected, rather than patently ignored, in governments’ fiscal stimulus policies. The single major lesson of development assistance is that not only do local conditions matter, but they also win at the end of the day. Far from supply/ demand charts, the space in which economic behaviour actually occurs is none other than shops, markets, factories, where production, commerce, and consumption occur, and in households where purchase decisions are made.

The central issue for policy and strategy is how best to support cities’ efforts to stimulate and sustain the economic multipliers needed to generate employment and incomes. In this respect, infrastructure is a necessary though not a sufficient condition, and that is why local economic development strategies must cut across sectors. Once incentives and other conditions for productivity are in place, the distribution and sale of goods and services are the next steps.

Box 1.1.4

UN-Habitat presents a fresh perspective on prosperity based on five dimensions – productivity, infrastructures, quality of life, equity and environmental sustainability.

State of the World’s Cities 2012/2013

individual and collective fulfilment. If anything, the 2008 financial crisis has amplified the need to include other, non- economic dimensions in the understanding and measurement of prosperity.

This Report introduces a new gauge for the degree of prosperity in the cities of the world. As developed

by UN-Habitat, the City Prosperity Index combines the five dimensions of prosperity as understood in this Report and as subsumed in measurable indicators. The index pinpoints individual cities’ strengths and weaknesses, in the process suggesting where policy action can address imbalances.

Re-thinking prosperity in those terms requires a shift away from the current dominant perspective, which is outdated and unsustainable on many grounds with its combination of cheap fossil fuel, heavy dependence on the motor car, highly segmented urban forms, socially and economically segregated spaces, endless urban peripheries that consume land, resources and in many cases natural protected areas – and all largely steered by private, not public interest.

Prosperity involves a forward-looking perspective, a widely shared basic aspiration. It is also a process, one which, through adequate actions, safeguards and practices, together with support from appropriate institutions, has the potential to improve individual and collective well-being. Looking beyond the economic or financial dimension, prosperity in this sense includes other vital dimensions such as quality of life, adequate infrastructures, equity and environmental sustainability. Prosperity is about raising living standards; extending the outreach and quality of the public sphere; and providing ease and convenience in life and work routines. It is about a sense of balance and sharing across social spheres or lifestyles and, more personally, a sense of shared security, efficiency, comfort and aesthetics.

Those living in prosperous cities enjoy the benefits of standard public goods such as educational opportunities, health services, mobility, a safe environment and good quality physical capital, including adequate public spaces.21 Similarly, prosperous cities safeguard residents against socioeconomic marginalization, contributing to a sense of belonging and ‘social cohesion’. Moreover, prosperous cities come with positive side-effects in the form of non- market goods which, with well-devised safeguards from public authorities, can be made accessible to everyone. For example, European cities can differ greatly in terms of per capita consumption of private goods, but then not so much in terms of per capita consumption of non-market goods; this goes to show that prosperity, indeed, is not only about money. For instance, a resident of Frankfurt- am-Main, Germany, may enjoy a much higher income and consumption of private goods than fellow countrymen in Freiburg or Jena; still, each in their respective city will likely have access to the same amounts of non-market goods (e.g., pleasant urban landscapes, thanks to adequate planning/ preservation policies). It is not uncommon for cities with lower incomes to provide higher amounts of non-market goods.22 Prosperity is strongly linked to the production of public goods.

CoNCEpTUALIzINg pRoSpERITy: THE UN-HABITAT AppRoACH Prosperity implies success, wealth, thriving conditions, and well-being as well as opportunity. In any urban setting, a key question will arise: What are the essential conditions and elements that are required for a city to thrive, or for an urban area to be described as prosperous, or for the well-being of the population? Put differently, what are the manifestations or outcomes of a prosperous city? In general

POLICy A fresh approach to prosperity is needed, not just to respond to the effects of the crisis and safeguard against new risks, but also to steer the world towards economically, socially, politically and environmentally prosperous urban futures.

POLICy Shared urban prosperity puts people first, values the tangible and intangible aspects of development, promotes inclusive economic growth, protects human rights, ensures enabling equitable development, cares for the natural environment, reduces disaster risks and vulnerabilities for the poor and builds resilience to adverse forces of nature. This new city – the city of the 21st century – creates harmony between the five dimensions of prosperity and enhances the prospects of a better future.

POLICy The ‘good’, people-centred city of the 21st century stimulates local job creation, promotes social diversity, maintains a sustainable environment and recognizes the importance of public spaces. It is a city that is all encompassing and accessible to everyone.

POLICy The city of the 21st century transcends the form and functionality set in previous centuries, balancing lower energy costs with a smaller ecological footprint, a more compact form, greater heterogeneity and functionality, safeguards against new risks, a higher provision of public goods, and a more ‘human scale’, together with more creative spaces for imagination and social interaction.

Conceptualizing Urban Prosperity

terms, a prosperous city offers a profusion of public goods and develops policies and actions for a sustainable use of, and equitable access to, ‘commons’.23 More specifically, several elements which come to mind guide what constitutes the UN-Habitat conceptualization of urban prosperity.

First, a prosperous city contributes to economic growth through productivity, generating the income and employment that afford adequate living standards for the whole population. Second, a prosperous city deploys the infrastructure, physical assets and amenities – adequate water, sanitation, power supply, road network, information and communications technology, etc. – required to sustain both the population and the economy. Third, prosperous cities provide the social services – education, health, recreation, safety and security, etc. – required for improved living standards, enabling the population to maximize individual potential and lead fulfilling lives. Fourth, a city is only prosperous to the extent that poverty and inequalities are minimal. No city can claim to be prosperous when large segments of the population live in abject poverty and deprivation. This involves reducing the incidence of slums and new forms of poverty. Prosperous cities are equitable and socially inclusive. The benefits and opportunities that come with a prosperous city are equitably (re) distributed. A prosperous city ensures gender equality, protects the rights of minority and vulnerable groups, and ensures civic participation by all in the social, political and cultural spheres.

Fifth, the creation and (re)distribution of the benefits of prosperity do not destroy or degrade the environment;

instead, the city’s natural assets are preserved for the sake of sustainable urbanization.

THE ‘WHEEL oF URBAN pRoSpERITy’ Prosperity, as defined by UN-Habitat, is a social construct that materializes in the realm of human actions. It builds deliberately and conscientiously on the objective conditions prevailing in a city at any time, wherever located and however large or small. It is a broader, wide-ranging notion that has to do with well-balanced, harmonious development in an environment of fairness and justice.

As described above, prosperity takes in all urban functions as subsumed in five main categories. Since shared, balanced development is a crucial feature of prosperity, none of the dimensions must prevail over the others and all must be kept roughly ‘equal’ – for the sake of a smooth ‘ride’ on the path of prosperity. In practice, of course, it is a rare city where the five dimensions will be found equal at any point in time, and this is where policy interventions will be called for, as suggested graphically by the profile of a city’s specific ‘prosperity index’. For instance, infrastructure may be well advanced but inaccessible to large portions of the population, therefore compromising the notion of equity. In other, frequent situations, a city may be economically efficient, enhancing job opportunities, but neglecting the natural environment.

Since socioeconomic conditions keep changing on a local and a broader scale, they will have an effect on one or more of the five dimensions of prosperity, and it will be for policy interventions to restore the balance. In

Defining a prosperous city

A prosperous city is one that provides

productivity Contributes to economic growth and development, generates income, provides decent jobs and equal opportunities for all through effective economic policies and reforms.

Infrastructure development Provides adequate infrastructure – water, sanitation, roads, information and communication technology – in order to improve living standards and enhance productivity, mobility and connectivity.

Quality of life Enhances the use of public spaces for the sake of community cohesion and civic identity, and guarantees individual and material safety and security.

Equity and social inclusion Ensures equitable (re)distribution of the benefits of prosperity, reduces poverty and the incidence of slums, protects the rights of minority and vulnerable groups, enhances gender equality, and ensures civic participation in the social, political and cultural spheres.

Environmental sustainability Values the protection of the urban environment and natural assets while ensuring growth, pursues energy efficiency, reduces pressure on surrounding land and natural resources, reduces environmental losses through creative, environment-enhancing solutions.

Table 1.1.1

State of the World’s Cities 2012/2013

this endeavour, city authorities will find that the various interlinkages and interdependencies between the five dimensions can also be of a positive nature. For instance, provision of water and sanitation in informal settlements will improve both equity and quality of life, and even the environment. This points to the ‘natural’ or ‘spontaneous’ interdependencies between the five dimensions along the outer rim of the wheel. These can also be strengthened with a multiplier effect through deliberate, well-targeted interventions through the ‘hub’ of the wheel, i.e., the combined power functions at work in any city. For instance, building a school and a covered market next to a poor area is likely to have multiplier effects across the five dimensions of shared prosperity.

This goes to show that far from some new ‘model’ or ‘utopia’ or branding/marketing technique, UN-Habitat’s ‘wheel of prosperity’ symbolizes the well-balanced development of the five dimensions, the current condition of which is graphically represented in the Wheel of Urban Prosperity (see below). The ‘outer rim’ absorbs the cumulative forces transmitted through the ‘spokes’ – the five dimensions of prosperity. At the centre is the ‘hub’ – the local urban power functions, with four interrelated roles: (i) ensuring the prevalence of public over any other kind of interest; (ii) controlling the direction, pace and momentum of the ‘wheel’; (iii) ensuring the balanced development of the five ‘spokes’ and associated synergies; and (iv) in a two-way relationship, absorbing and amortising any ‘shocks’

The Wheel of Urban prosperity

URBAN PROSPERITY

UR BA

N PR

OS PE

RI TY

URB AN

PR OS

PE RIT

Y URBAN PROSPERITY

URBAN PROSPERITY

Government institutions

Laws and urban planning

policy interactions

Productivity

Infras tructu

re Environmental sustainability

Eq ui

ty an

d so

cia l in

clu sio

n Quality of life

spoke interactions

sp ok

e in

te ra

ct io

sp ok

e in ter

act ion

sspoke interactions

spoke interactions

Source: UN-Habitat, 2012.

Figure 1.1.1

Conceptualizing Urban Prosperity

transmitted by the ‘spokes’. The ‘hub’ brings together the power functions (e.g., laws, regulations and institutions, urban planning, civil society, trade associations, dedicated agencies, etc.) associated with the five ‘spokes’. In this role, the ‘hub’ represents human agency in all its embodiments. It holds the five ‘spokes’ together and endeavours to maintain their balance and symmetry over time.

MEASURINg pRoSpERITy: ATTEMpTS, FAILURES AND pRogRESS Prosperity remains one of humankind’s most enduring pursuits across time and space. But it is only in the past few decades that decision-makers, academics, practitioners and populations have started to measure this important dimension of human development. This has been a journey of learning, trial and error. The adage ‘what gets measured, gets done’ has injected a sense of urgency in the pursuit not just of prosperity per se, but also of an operational definition complete with specific indicators.

More than 70 years ago in 1937, the Nobel-winning metric of gross domestic product (GDP) was purported to be the ‘mother of all statistics’, capturing the notion of prosperity through any country’s total production of goods and services. Although GDP spread rapidly and was widely accepted for decades, it is becoming more and more apparent that this aggregate is too narrow to provide the accurate measure of a society’s overall well-being today. In

1972, the king of Bhutan declared he was interested in measuring ‘Gross National Happiness’ (GNH). In 1990, US economist Mahbub ul-Haq convinced future Nobel laureate Amartya Sen to create ‘an index as vulgar as GDP but more relevant to our own lives’.24 In 2006, China developed its own ‘Green GDP Index’, which seriously challenged the validity of the standard aggregate, once environmental aspects were factored in.25 In 2009, Joseph Stiglitz called for an end to ‘GDP fetishism’ and, one year later, the British government announced that it would, for the first time, survey happiness in addition to purely economic measures.26

POLICy The city of the 21st century seeks to achieve integrated prosperity, making the ‘wheel’ well balanced with mutually reinforcing spokes in a dynamic hub.

The ‘hub’ is made up of the local urban power functions. These encompass the public sector (municipal and other institutions/ agencies, as well as laws and regulations) and the non-public sector (civil society, private business etc.). They combine in a variety of ways according to local needs and conditions, with the synergies between them resulting in innovative institutional or policy practice that contributes to shared prosperity.

Fetching water in Debre Zeit city, Ethiopia. Quality of life and prosperity require an urban growth with commensurate infrastructure and basic services.

State of the World’s Cities 2012/2013

Prosperity is a more complex notion, one that cannot be captured through straightforward indices that measure how much money people earn or how many cars they own. A ‘prosperous’ life includes other non-material, non-tangible dimensions, like having a voice in shaping the future of one’s city, having meaningful relationships, belonging to supportive communities, and having the resources and capabilities to transform your dreams into concrete realities.

The ideas, aspirations and challenges of this early 21st century are different from those of the Great Depression era that was at the origin of the GDP measure. Ecological and environmental concerns have become central priorities for the way we shape our contemporary and future societies. Protection of human rights, advancement of democratic values − including women’s empowerment − and respect of fundamental principles such as dignity and tolerance – all of these are part of a more inclusive and prosperous future. Equity is essential to higher prosperity and sustained urban development. Currently, GDP does not reflect any of these critical conditions.

The search for alternative measures of prosperity is an unprecedented and cutting-edge scientific

endeavour. Studies have shown that even though income is an important determinant of subjective well-being, wealthier countries are no happier than poorer ones. ‘Life satisfaction has remained more or less unchanged in most advanced economies over several decades in spite of significant economic growth’.27 While income per capita has tripled in the USA since 1950, the percentage of people describing themselves as ‘happy’ has barely increased at all, and has even declined since the mid-1970s. ‘In Japan, there has been little change in life-satisfaction over several decades. In the UK the percentage reporting themselves ‘very happy’ declined from 53 per cent in 1957 to 36 per cent today, even though real incomes have more than doubled’.28 The so-called ‘happiness paradox’ has been empirically demonstrated by economist Richard Easterlin in a study of 19 developed and developing countries.29 Many other studies have since corroborated what is now known as the ‘Easterlin paradox’, leading some countries and institutions to search for alternative indicators to measure societal progress.

Recent efforts have attempted to include these other dimensions of prosperity for a more accurate representation

of societal progress. Table 1.1.2 presents a summary of these methods and approaches.

The notion of prosperity is still largely viewed as belonging in the realm of economics. However, it is also acknowledged that prosperity goes beyond material well- being and economic growth. Trying to integrate other tangible and less tangible human dimensions of development such as well-being and quality of life has been an ongoing story for more than 40 years, with efforts to create new matrices and approaches that add nuance to standard GDP.

Simple pleasures, such as a stroll along the streets of Kathmandu, Nepal, indicate real, everyday prosperity.

Conceptualizing Urban Prosperity

Measuring progress and prosperity

Human Development Index (HDI) United Nations Development Programme 1990

HDI combines indicators of life expectancy, educational attainment and income into a composite human development index. It is a single statistic that serves as a frame of reference for both social and economic development, ranking countries by level of “human development”.

Genuine Progress Indicator (GPI) Think-tank Redefining progress 1994

GPI was developed as an alternative system to GDP measurement. It is used as a more inclusive type of economics based on ‘True Cost’ economics, looking how increased production of goods and services has actually resulted in the improvement of welfare or well-being.

Measuring Sustainable Development UNECE, oECD, EURoSTAT 2005

This particular measure is structured around the concept of capital, as measured under four main dimensions – economic, natural, human and social – that all pertain to sustainability. The idea is to make this concept operational for public policies.

Prosperity Index Regional Research Institute, USA 2006

This index measures regional economic prosperity and tracks performance at city level, assessing competitiveness and identifying opportunities to improve business. Although based on economic prosperity, the index includes three main components: business, people and location.

Commission on the measurement of economic performance and social progress, France 2008

This Commission proposed to shift emphasis from measuring economic production to measuring people’s well-being, against a background of sustainability. The Commission concluded that well- being is better assessed on the basis of income and consumption rather than production.

Legatum Prosperity Index Legatum Institute, Uk 2008

The index purports to measure national prosperity based on wealth and well-being, using a composite indicator. It ranks 110 countries based on eight ‘pillars of prosperity’: economic conditions, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom, and social capital.

Redefining Prosperity UN Sustainable Development Commission 2009

Prosperity is redefined based on three aspects: a) fulfilment of material needs; b) the social and psychological dimensions that contribute to an enhanced sense of identity, meaning, belonging and hope; c) individual capability to flourish in more prosperous environments.

National Well-Being Accounts Index New Economics Foundation, Uk 2009

The index measures social progress based on subjective well-being. It combines two types of data: personal (emotional well-being, satisfying life, vitality, resilience, self-esteem) and social well-being (supportive relationships, trust and belonging).

Global City Index (GCI) Foreign policy Magazine, kearney & Chicago Council on global Affairs 2010

The GCI measures the international standing of cities along five dimensions: business activity, human capital, information exchange, cultural experience and political engagement. The index results in competitiveness rankings of cities in terms of business opportunities and economic innovation.

Sustainable Development Index Department for Environment, Food and Rural Affairs, Uk 2010

This index combines four sets of data: sustainable consumption and production, climate change and energy, protecting natural resources and enhancing the environment, and creating sustainable communities. The index is a composite of a total 68 indicators.

Various sources, compiled by UN-Habitat, 2012.

Table 1.1.2

State of the World’s Cities 2012/2013

THE UN-HABITAT ‘CITy pRoSpERITy INDEx’ Cities can take different paths to prosperity. UN-Habitat views development as a non-linear, non-sequential and complex process and recognizes that development paths are differentiated and unique.34 Still, actions and policies implemented by governments to enhance prosperity and the outcomes of these policies can be measured to provide an indication of how solid or weak are the prosperity factors available to any individual urban area.

UN-Habitat’s ‘City Prosperity Index’ (CPI) does not only provide indices and measurements; it also enables decision- makers to identify opportunities and potential areas of action along the path of prosperity. The CPI includes various indices and indicators that are relevant to urban areas and important for prosperity-oriented public policy-making.

Being based on the UN-Habitat concept of prosperity, the CPI includes the five dimensions (the ‘spokes’ in the ‘wheel’) of urban prosperity. The CPI includes various dimensions

perceptions, feelings and opinions about prosperity

Most cities nowadays depend on objective variables to guide policy-making. These variables are based on ‘hard’ statistics and ‘cardinal’ basic indicators, including inflation rates, gross domestic product (GDP) and foreign (direct or indirect) investment. Yet, for the sake of better-balanced policies, more and more cities are recognizing the need to include subjective variables for better policy-making, based on residents’ perceptions, feelings and experiences − which are referred to as ‘ordinal’ measures. Perception surveys are particularly important in the current aftermath of a crisis that has eroded the trust of a vast majority of citizens in a broad range of institutions including business, the media and government.

Perception and customer satisfaction surveys can provide important signals, views and opinions of what citizens want or expect from political leaders − and they can do so almost in ‘real time’. At a time when cities and governments find themselves under immense financial constraints, and important decisions must be made with limited information, the potential benefits of perception surveys have never looked higher. Using a variety of metrics, many cities have commissioned such surveys on major issues and used them to establish policy priorities. For instance, the City of Cape Town, South Africa, has commissioned an annual, independent customer satisfaction survey to gauge the perceptions of residents and businesses with regard to municipal service delivery. The survey is conducted through both face-to- face interviews and telephone conversations.30 Such perception surveys provide an easy, proactive and cost-effective way of securing feedback from residents and business.31

When governments use these perceptions as a ‘diagnostic’ to identify, and respond to, areas of concern, they can reclaim legitimacy among the population. In a related development, a UN-Habitat perception survey of local experts (2011) recently revealed that a majority perceived that municipal authorities in 50 representative cities considered equity and environmental sustainability as the least important dimensions of prosperity, by comparison with productivity, quality of life and infrastructure. These findings suggest that city authorities must pay more attention to the equity dimension of prosperity in response to residents’ concerns.

Perception surveys can alert public authorities not only to what citizens need and value, but also to what citizens want from different tiers of government – local, district/provincial or national. Since prosperity takes multiple dimensions, some tiers of government may find themselves in better positions than others when it comes to effective delivery. Regarding quality of life – in this Report, one of the five dimensions of prosperity – the experts surveyed by UN-Habitat survey agreed that, of all the different tiers of government, local authorities should be expected to implement adequate policies in areas like affordable public transport, well-planned public spaces, sports and recreational facilities, security and safety, and local socioeconomic development.32 Indeed, those experts consider that local authorities are generally best placed to provide for safe, inclusive and environmentally sound neighbourhoods for improved overall quality of life.

Objective statistics and subjective perceptions may tell different stories, but together they represent an important metric of prosperity. For example, cities with steep income inequality (i.e., statistically, with Gini coefficients of 0.5 or higher) do not only reflect institutional and structural failures in income distribution, but their risks of social unrest are also higher. These risks can be further exacerbated by social and spatial perceptions of inequality, which can be heightened by belief systems and cultural norms. Unmet demands for a more balanced distribution of the benefits of prosperity can lead to popular frustration, and even to unrest. Conversely, a low degree of human development will bring a population to adapt their expectations to what they believe is possible in their circumstances.33 Given these caveats, governments must combine subjective perceptions with objective variables to develop a more accurate understanding of the best ways of advancing urban prosperity. Taken together, ‘soft’ indicators (including perception surveys) and statistical measures (‘hard’ indicators) enable policy- and decision-makers better to understand both the (social and economic) state their cities are in, and the state (of mind) the populations are in.

Box 1.1.5

Conceptualizing Urban Prosperity

partially covered in other indices such as the Green City Index,35 the Ecological City Index, and the Livable City Index. Each is further disaggregated into various variables and sub-indices. UN-Habitat has adopted an incremental approach to the development of this index. Two of the dimensions – productivity and quality of life – correspond to components of the Human Development Index (HDI), and have been used to compute the ‘City Human Development Index’ (CHDI). The three other dimensions – infrastructure, environmental sustainability and equity – are made of various key indicators as indicated in Table 1.1.3. Although more refinement is still needed in terms of what indicators are included in the index and the respective weightings thereof, those that have been selected offer the possibility of disaggregating the different dimensions of prosperity, in the process identifying policy intervention areas..36

Although in many cases the prosperity of a city will go hand in hand with that of the country, significant variations in CPI measures can be found in cities in the same country, and this goes to show that national

aggregates do not necessarily reflect what happens in different regions or cities. Most existing prosperity indices provide estimations for countries only (see Table 1.1.2). By comparison, the UN-Habitat City Prosperity Index is unique in the world for two reasons: (i) it focuses on individual cities, as opposed to countries, and (ii) it is concerned with prosperity as measured across five dimensions, of which the local economy is only one, as opposed to the sole business environment. The resulting CPI values can be regrouped in six distinct brackets that range from cities with ‘very solid’ prosperity factors to those where those factors are found to be ‘very weak’.37

Cities and human development

Cities with high HDI values appear both as engines of positive change and as beneficiaries of prosperity. In the developing world, some urban areas are becoming so prosperous that they have closed the gap with, or even surpassed, the HDI of cities in developed nations. For example, Seoul, South Korea, features a HDI as high as 0.911, higher than that of many European cities, particularly the southern and eastern regions where HDI readings, though high, come under 0.900 in cities such as Lisbon, Athens or Warsaw.

Box 1.1.6

UN-Habitat analysis shows that some cities in the developing world are becoming more prosperous (with higher HDI values), reflecting very significant progress on health and education, and at times even in the absence of sustained economic growth.

City and National HDI values

City HDICountry HDI 2010HDI Index

Kin sh

as a

Nia me

Mo nro

via Da

ka r

Ac cra

Mu mb

Ne w

De lhi

Ca iro

Me xic

o C ity

Wa rsa

To ron

to Se

ou l

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

Source: UN-Habitat, Global Urban Observatory, 2012.

The Human Development Index (HDI) is typically higher in cities compared with relevant national averages. Indeed, cities are in general richer than the rest of any country. However, differences between city and country HDI measures are much steeper in nations with lower national HDI measures.

State of the World’s Cities 2012/2013

In broad terms, the classification of cities by CPI values results in regional brackets, with various cities in the developed world featuring solid prosperity factors (CPI: 0.900 or higher), with a majority of African cities with very weak readings constituting the last two groups (CPI: 0.600 or below). In between, a large number of Asian and Latin American cities make up the third and fourth groups (with CPI values of 0.700– 0.799 and 0.600–0.699, respectively).

Cities with very solid prosperity factors (0.900 and above): In the world’s most prosperous cities the five ‘spokes’ are well developed overall, with very little variations among them. Urban power functions such as good governance, urban planning, laws, regulations and institutional frameworks ensure that no

particular dimension of prosperity gains prevalence to the detriment of the others. Cities with very solid prosperity factors feature high volumes of goods and services as well

The UN-Habitat City prosperity Index

Dimensions Definitions/variables

productivity The productivity index is measured through the city product, which is composed of the variables capital investment, formal/informal employment, inflation, trade, savings, export/import and household income/ consumption. The city product represents the total output of goods and services (value added) produced by a city’s population during a specific year (details of the methodology can be found in the CPI technical report).

Quality of life The quality of life index is a combination of four sub-indices: education, health, safety/security, social capital and public space. The sub-index education includes literacy, primary, secondary and tertiary enrolment. The sub- index health includes life expectancy, under-five mortality rates, HIV/AIDS, morbidity and nutrition variables.

Infrastructure development

The infrastructure development index combines two sub-indices: one for infrastructure, and another for housing. The infrastructure sub-index includes: connection to services (piped water, sewerage, electricity and ICT), waste management, knowledge infrastructure, health infrastructure, transport and road infrastructure. The housing sub-index includes building materials and living space.

Environmental sustainability

The environmental sustainability index is made of four sub-indices: air quality (PM10), CO2 emissions, energy and indoor pollution.

Equity and social inclusion

The equity and social inclusion index combines statistical measures of inequality of income/consumption (Gini coefficient) and social and gender inequality of access to services and infrastructure.

Table 1.1.3

Cities with very solid prosperity factors

Productivity Index

Quality of Life Index

Infrastructure Development Index

Environmental Sustainability IndexCPI Index (with four dimensions)

Equity IndexCPI Index (with �ve dimensions)

Wa rsa

w Mi

lan

Ba rce

lon a

Br us

se ls

Co pe

nh ag

en Zu

ric h

Am ste

rda m

Au ck

lan d

Me lbo

urn e

To ky

o Pa

ris Os lo

Du bli

He lsi

nk i

Sto ck

ho lm

Lo nd

To ron

Ne w

Yo rk

Vie nn

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Source: UN-Habitat, Global Urban Observatory, 2012.

Figure 1.1.2

Conceptualizing Urban Prosperity

as strong economic fundamentals and high productivity. Their populations live longer and are well educated. Infrastructures are available and the environment is well managed. These cities are well governed and ensure safe, secure environments. It is clear that the five ‘spokes’ of urban prosperity are kept together in balance and at a right pace by a ‘hub’ that has the collective interest as its core.

All the cities in this group feature very high Gross National Incomes (GNI) per capita (from US$ 25,478 for New Zealand to US$ 58,810 for Norway) and they produce a substantial share of the country’s GDP (e.g., Brussels – admittedly an exception – contributes as much as 46 per cent of Belgium’s GDP). The economic power of some of these cities is comparable to that of many national economies. Estimated GDP equivalents in Tokyo and New York are similar to those of Canada or Spain, while London’s GDP is higher than that of Sweden or Switzerland.

When the equity index is included in the CPI, the findings show that urban equity and prosperity are closely linked: not unsurprisingly, cities that do well on the first four dimensions of prosperity (with very solid prosperity factors) seem to be more equitable. In most cities of this group, inequality is relatively low, as reflected in low Gini coefficients (typically below 0.4, the exception being New York where inequality is significantly steeper (0.5)). When the equity dimension is taken into consideration, the CPI remains high for all cities (i.e., above 0.800), but only half remain with ‘very solid’ prosperity factors (i.e., CPI above 0.900).

Cities with solid prosperity factors – first category (CPI: 0.800– 0.899): Cities in this bracket feature high CPI values. The five ‘spokes’ of prosperity are connected, generating a self-reinforcing, cumulative momentum along the path of prosperity. The minute variations between the ‘spokes’ is evidence of the efficiency of the ’hub’, i.e., relatively strong institutions,

responsive legal and regulatory frameworks and large availability of public goods. Cities in Southern and Eastern Europe such as Lisbon, Athens, Warsaw, Budapest, Prague, Bucharest and Moscow feature in this bracket, along with others in Latin America and Asia: São Paulo, Mexico City, Almaty (Kazakhstan), Shanghai, Seoul and Ankara.

Cities with solid prosperity factors belong to countries with different stages of economic development and different HDIs, with Kazakhstan featuring the highest (0.884) and China, Turkey and Brazil the lowest (0.663, 0.679 and 0.699, respectively).

However, it is important to note that high inequalities in Moscow, Mexico City and São Paulo interfere with their performance in terms of prosperity. When the equity index is included in the CPI, both cities score below 0.800. This suggests that, although prosperity factors remain on the whole solid, they are somewhat weaker. While inequality is

POLICy Despite their high production of goods and services, European cities are experiencing many crises –financial, employment and housing, among others – and it is expected that their respective CPI values will reflect this in the near future.

Cities with solid prosperity factors – first category

Productivity Index

Quality of Life Index

Infrastructure Development Index

Environmental Sustainability IndexCPI Index (with four dimensions)

Equity IndexCPI Index (with �ve dimensions)

An ka

Me xic

o C ity

Bu ch

are st

Sh an

gh ai

Alm aty

Sã o P

au lo

Mo sc

ow Se

ou l

Pr ag

At he

Bu da

pe st

Lis bo

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Source: UN-Habitat, Global Urban Observatory, 2012.

Figure 1.1.3

State of the World’s Cities 2012/2013

historically entrenched in most Latin American cities, it is a recent phenomenon in Russia, in the extended aftermath of economic liberalization.

Cities with solid prosperity factors – second category (CPI: 0.700–0.799): This group is heterogeneous, with some cities showing a ‘less coordinated’, ill- balanced development in the ‘spokes’. This comes as the result of institutions, legal and regulatory

frameworks and urban management practices that are in the course of consolidation, and this is why they cannot hold together all the elements of the ‘wheel’ to operate with stability. Heterogeneity is also related to the stage of development of the relevant countries. Measured by HDI readings, significant variations occur between countries like Jordan (0.884) and Indonesia (0.600), for instance. Interestingly, the capital cities of these two countries do not feature such extreme variations in their respective HDIs (0.810 for Amman and 0.755 for Jakarta).

However, it is important to note that inequality is inconsistent with prosperity

as understood in this Report. When the equity index is included in the CPI, Cape Town and Johannesburg (which both feature very high Gini coefficients) drop from the bracket of cities with ‘solid’ prosperity factors and join the ‘weak’ or even ‘very weak’ group, with CPI values of 0.590 and 0.479 respectively.

Cities with solid prosperity factors – second category

Productivity Index

Quality of Life Index

Infrastructure Development Index

Environmental Sustainability IndexCPI Index (with four dimensions)

Equity IndexCPI Index (with �ve dimensions)

Ca sa

bla nc

a Ca

iro

Ma nil

Jo ha

nn es

bu rg

Ja ka

rta

Ca pe

To wn

Be ijin

Ye rev

an Hà

No i

Ky ïv

Ba ng

ko k

Am ma

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Source: UN-Habitat, Global Urban Observatory, 2012.

Figure 1.1.4

POLICy Cities in emerging economies such as Brazil or China combine high economic growth and strong infrastructure, and are expected to move faster along the path of prosperity – but then, for the sake of balanced development, they must tackle inequalities and environmental degradation. They also must look to improve quality of life through more ample provision of public goods.

Most of the cities in this group are located in Asia: Amman, Bangkok, Hanoi, Yerevan, Beijing, Jakarta and Manila. Four African cities also feature solid prosperity factors: Cape Town, Johannesburg, Cairo and Casablanca. Kyiv in Ukraine is the only city in Eastern Europe.

promising African cities

Among the 20 African cities included in UN-Habitat’s CPI sample, Cape Town, Johannesburg, Cairo and Casablanca are the only ones featuring solid prosperity factors. Cairo’s current political turmoil highlights the need for a more integrated pathway and more balanced growth with some dimensions (quality of life and infrastructure) progressing much faster than others (equity and social inclusion). Morocco, on the contrary, has embraced political change with a new constitution that enhances civil liberties and expands the notion of prosperity, which stand to benefit Casablanca and other cities. South African cities have experienced significant economic growth, but in the past two decades life expectancy has declined substantially, affecting quality of life.

Box 1.1.7

Conceptualizing Urban Prosperity

Cities with moderate prosperity factors (CPI: 0.600–0.699): The difference between ‘solid’ and ‘moderate’ prosperity factors lies in wider discrepancies among the values of the various components. This points to institutional and structural failures, as the ‘hub’ fails to keep the ‘spokes’ at a relatively same ‘length’. Cities with less balanced development feature contrasted patterns, with a neat divide between rich and poor.

In Nairobi, prosperity is compromised by steep inequality (Gini coefficient: 0.59), causing its CPI value to drop from ‘moderate’ to ‘weak’ (0.673 to 0.593).

Cities with weak prosperity factors (CPI: 0.500– 0.599): In most cities with weak or very weak prosperity factors, much remains to be done in terms of quality of life, infrastructure and the environment in most of the cities in this bracket. Production of goods and services is still too low, a reflection of underdevelopment. Historic structural problems, chronic inequality of opportunities, widespread poverty, inadequate capital investment in public goods, and

lack of pro-poor social programmes are critical factors behind such low degrees of prosperity.

The city product of African cities in this bracket is low, as are the ratings for quality of life and infrastructure. Most of these cities perform better on the environment indicator (low emissions of fine particles (PM10)). Recent progress in Ghana in the economic and political

spheres looks certain to improve the CPI value for Accra, which at the moment is low (0.533) due to poor economic performance (0.347). Addis Ababa features relatively low in all CPI components, and this relative uniformity reflects a fair balance among the ‘spokes’ (0.52 on average). The city continues to make progress, thanks to higher investment in infrastructure and construction, manufacturing and tertiary activities. This in turn paves the way for job creation, and it is for central government

Most of the cities in this bracket – Tegucigalpa, Nairobi, Phnom Penh, Ulaanbaatar, Guatemala City, Yaoundé, Mumbai and New Delhi – feature low HDIs (below 0.62). While in most cities a moderate CPI value is associated with a low city product, in the case of the two Indian cities the low CPIs mostly reflect poor environmental conditions.

Cities with moderate prosperity factors

Productivity Index

Quality of Life Index

Infrastructure Development Index

Environmental Sustainability IndexCPI Index (with four dimensions)

Equity IndexCPI Index (with �ve dimensions)

Ne w

De lhi

Ya ou

nd é

Gu ate

ma la

Cit y

Ula an

ba ata

Ph no

m Pe

Na iro

Mu mb

Ch isi

na u

Te gu

cig alp

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Source: UN-Habitat, Global Urban Observatory, 2012.

Figure 1.1.5

Low production, highly available public goods

Chisinau, the capital of Moldova, features a very low city product (0.34) that is almost half those of Mumbai (0.645) or New Delhi (0.596). Still, this combines with very high readings for quality of life (0.85), infrastructure (0.895) and clean environment (0.894), similar to those for much richer cities like Auckland, Brussels, London or New York. With a very modest economic base, the city has been able to deliver sufficient public goods to reach a moderate degree of prosperity. This goes to show that various dimensions of urban prosperity can be deployed even when economic growth remains relatively weak.

Box 1.1.8

State of the World’s Cities 2012/2013

to ensure that this economic model, which involves several dimensions of prosperity, retains both momentum and good synchronization.

Various cities/countries in this group have recently been marred by conflicts, political instability or economic crisis. The city product of Harare (0.246), not long ago a very vibrant economic centre, is almost as low as that of post-conflict cities like Monrovia (0.048), Antananarivo (0.171) or Conakry (0.133). In 2002, Zimbabwe recorded the lowest slum prevalence of the region, and one of the lowest of all the developing world (four per cent); poor governance, political instability and massive housing evictions in 2005 have raised that percentage to 17 per cent, mainly due to overcrowding; and yet, Harare features high infrastructure development (0.899), similar to that of emerging economy cities like Ankara, Manila, Mexico City or Mumbai. Quality of life in Harare is also very low, reflecting a dramatic reduction in life expectancy (to 1970s levels). Similar declines are also observed in the Democratic Republic of Congo, Lesotho, Swaziland or Zambia.

It is important to note that inequality further weakens the CPI values for Lagos, Harare and Lusaka. When the equity index is included in the CPI, all three cities move from ‘weak’ to ‘very weak’ prosperity factors (below 0.500).

Cities with very weak prosperity factors (CPI below 0.500): Cities in this bracket feature contrasted patterns among the sub-indices in the CPI. For some, the dispersion of index values across the ‘spokes’ reflects institutional and

Cities with weak prosperity factors

Productivity Index

Quality of Life Index

Infrastructure Development Index

Environmental Sustainability IndexCPI Index (with four dimensions)

Equity IndexCPI Index (with �ve dimensions)

Lu sa

Da r e

s S ala

am Ha

rar e

Da ka

Ad dis

Ab ab

La Pa

z Ac

cra La

go s

Ka mp

ala Dh

ak a

Ka thm

an du

Ab idj

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Source: UN-Habitat, Global Urban Observatory, 2012.

Figure 1.1.6

The bulk of this bracket can be found in Africa: Abidjan, Accra, Addis Ababa, Dakar, Dar es Salaam, Harare, Kampala, Lagos and Lusaka. Also included are Dhaka, Kathmandu and La Paz.

Recycling is a vital service in modern cities.

Conceptualizing Urban Prosperity

structural problems. For others, the five dimensions of prosperity do converge, if at very low values, a hallmark of dysfunctional systems, institutional failures, sluggish economic growth as well as widespread poverty and destitution.

There are only five cities with very weak prosperity factors (CPI below 0.500) in UN-Habitat’s worldwide sample. The common feature of cities with very weak prosperity factors is that they have recently experienced various conflicts of varying degrees of intensity. In Bamako, Antananarivo, Monrovia, Niamey and Conakry, production, quality of life and infrastructure indicators are all very low.

POLICy More prosperous cities demonstrate the effective functioning of the hub in terms of urban power functions such as governance, urban planning, laws, regulations, and institutions.

El Alto, Bolivia: a large and poorly serviced part of greater La Paz, where the population is 80% indigenous.

Cities with very weak prosperity factors

Productivity Index

Quality of Life Index

Infrastructure Development Index

Environmental Sustainability Index

CPI Index (with four dimensions)

Equity Index

CPI Index (with �ve dimensions)

Mo nro

via

Co na

kry

An tan

an ari

Ba ma

Nia me

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

Source: UN-Habitat, Global Urban Observatory, 2012.

Figure 1.1.7

State of the World’s Cities 2012/2013

Endnotes

1 López Moreno, 2010.

2 UN-Habitat, 2011a.

3 Kitchin et al, 2010.

4 Banco De España, 2012.

5 Vassalli and Sánchez, 2009.

6 UN-Habitat, 2011c.

7 British Broadcasting Corporation, 2010.

8 U.S. Department of Commerce, 2011.

9 BBVA, 2011; INFONAVIT, 2011a.

10 Instituto Brasileiro de Geografia e Estadistica, 2010.

11 Yu, 2011.

12 Quartly, 2010.

13 Barboza, 2010.

14 UN-Habitat, 2011c.

15 Inurrieta Beruete, 2007.

16 INFONAVIT, 2011b.

17 The phenomenon had been highlighted nearly a decade earlier by the United Nations Development Programme (UNDP, 2002).

18 Assaad and Roudi-Fahimi, 2007.

19 United Nations, 2010a.

20 Spence et al, 2008.

21 Calafati, 2011.

22 Ibid.

23 Historically, water, biodiversity, knowledge and some other shared resources, including roads, sidewalks, highways and other public infrastructure, have been considered as ‘commons’. ‘Commons’ are also intangible aspects such as clean environmental conditions, identity, cultural and symbolic spaces. More recently, from an institutional governance perspective, ‘commons’ are institutional arrangements such as ‘spaces’ for negotiation and participation, cultural norms and legal and statutory provisions.

24 Dickinson, 2011.

25 The outcome of China’s ‘green GDP’ index was that if air pollution, water shortages, desertification, and depletion of fish stocks and wildlife were factored into its GDP calculation, the 2004 GDP would have been 511 billion yuan (US$ 66 billion), or three per cent lower (SEPA and NBS, 2006).

26 Dickinson, 2011.

27 Jackson, 2009.

28 Ibid.

29 Easterlin, 1973; 1974.

30 City of Cape Town, 2011.

31 Quantisoft, 2012.

32 Ibid.

33 Sen, 1979.

34 Oyelaran-Oyeyinka and Sampath, 2010.

35 Between 2009 and 2012, Siemens sponsored a series of publications on Green City from which the performance, with respect to urban environmental sustainability, of cities in different parts of the world can be assessed. An Ecological City Index was also developed in assessing the sustainability of the environment (S. Joss, D. Tomozeiu and R. Cowley, 2012: Eco-city indicators – governance challenges). In the quality of life aspect, the Livable City Index was also developed. The Economist Intelligence’s Unit publishes annually a Global Liveability Report. Mercer also releases annually the Quality of Living Survey, comparing 221 cities based on 39 criteria (Mercier, 2011: Quality of living survey). Since 2007, the lifestyle magazine Monocle has published an annual list of livable cities.

36 Further compounding the problem of data dearth is the fact that most of the existing information was not collected in a uniform way to allow for comparisons of cities across countries and regions.

37 This classification has used data from multiple sources for the various components of the UN-Habitat Urban Prosperity Index, and this calls for a word of caution when interpreting some of these variations.

visualizing the 5 dimensions of the CpI

Equity index Quality of life index

Productivity index

Infrastructure indexEnvironmental index

Vienna

Mexico City

Johannesburg

0 0.5

1.0

Equity index Quality of life index

Productivity index

Infrastructure indexEnvironmental index

0 0.5

1.0 Vienna

Cairo

Nairobi

The two pentagons represent the five ‘spokes’ of prosperity as measured in five cities and the extent to which they are imbalanced/balanced in relation to each other. The radar-shaped graphs suggest where policy interventions are required. For instance, Nairobi (in the right-hand graph) performs well in terms of the environment and infrastructure, but less so on equity, productivity and quality of life. In Cairo, the situation is the

reverse, as the environment appears to be the weaker point in an otherwise well-balanced pattern of prosperity – although at an overall lower level compared with Vienna. Similar interpretations can be derived from the pentagon to the left, which compares the relative performances of Mexico City and Johannesburg, again against Vienna’s.

Box 1.1.9

Urban and Regional Trends

MoRE THAN HALF oF THE WoRLD popULATIoN IS NoW URBAN It is really remarkable that only one century ago, two out of 10 people in the world were living in urban areas. In the least developed countries, this proportion was as low as five per cent, as the overwhelming majority was living in rural areas. The world has been rapidly urbanizing since then and, in some countries and regions, at an unprecedented pace. It was only two years ago that humankind took a landmark step when, for the first time in history, urban outnumbered rural populations. This milestone marked the advent of a new ‘urban millennium’ and, by the middle of this century, it is expected that out of every 10 people on the planet, seven will be living in urban areas.

Interestingly, only 60 years ago or so (1950), the number of people living in urban centres was slightly higher in developed (54 per cent, or 442 million) as compared with developing countries. Today, of every 10 urban residents in the world more than seven are found in developing countries, which are also hosts to an overwhelming (82 per cent) proportion of humankind. Moreover, it is estimated that, between 2010 and 2015, some 200,000 people on average will be added to the world’s urban population every day. Worth noting is that 91 per cent of this daily increase (or 183,000) is expected to take place in developing countries.

In the last quarter of 2011, the world population reached the seven billion mark. This historic event took place 12 years after the six billion mark. It took 123 years to double from one to two billion but ‘only’ 33 years to cross the three-billion threshold.1 Although demographic growth is slowing down

across the world as a whole, it remains that the ever-shorter time it has taken to add one extra billion signals a major shift in both the pace and scale of global demographics.

It is almost certain that at some point in late 2011, the seven-billionth human was born in a developing country. This is where virtually all (93 per cent) of the world’s population growth is happening today. Moreover, all future population growth is expected to take place in urban areas, and again nearly all of it in Africa, Asia and Latin America. Therefore, it is highly probable that the seven-billionth human was born in a city in any of these three regions.

These numbers highlight the extent to which the world population has increasingly come to live in urban areas. For all the clarity of these trends and the benefits that come with urbanization, too many governments still maintain ambivalent if not hostile attitudes to this process. In 2009, slightly over two-thirds (67 per cent) of countries in the world reported that they had implemented policies to reduce or even reverse migrant flows from rural areas to cities. Of an average 10 African governments, slightly over eight were found trying to stem rural migration.2 However, contrary to common perception, migration from rural to urban areas is no longer the dominant determinant of urban population growth in developing countries. Today, natural increase accounts for some 60 per cent of that growth, and the transformation of rural settlements into urban places, a process known as ‘reclassification’, accounts for another 20 per cent or so.

Understanding current and prospective trends in urban demographic growth is fundamental if appropriate policies and strategies are to be designed and deployed to maximize the benefits of urbanization. This includes taking advantage of opportunities, devising better regional and urban policies, and planning for the future. In this chapter, every major region of the world is shown to feature unique development patterns that are analysed against the background of current trends and projections.

Chapter 1.2

State of the World’s Cities 2012/2013

Urban Change in Developed Countries

URBAN popULATIoN gRoWTH IS NExT To STAgNANT In the more advanced nations, urban population growth is next to stagnant (0.67 per cent on an annual average basis since 2010), which represents an additional six million or so every year. In Europe, the annual increase is only two million. By comparison, the aggregate annual population increase in six major developing-country cities – New Delhi and Mumbai (India), Dhaka (Bangladesh), Lagos (Nigeria), Kinshasa (Democratic Republic of Congo) and Karachi (Pakistan) – is higher than Europe’s entire

population. Population in North American cities was the least slow of all those in the developed world between 2005 and 2010, particularly in the United States (one per cent on average).

The growth, decline and prosperity

of cities: There is no clear association between the demographic growth or decline of cities and their degrees of prosperity. Although population numbers have declined in a number of cities in Western Europe, Canada and New Zealand, this did not affect living standards, which in some cases even improved. On the other hand, and as might be expected, population declines in a number of cities in Eastern Europe and the United States of America are strongly associated with economic decay. The loss of economic momentum in Cleveland, Detroit and Buffalo (homes to the USA’s

declining automobile, steel and heavy industries, respectively) and the deterioration of inner city conditions (deserted residential areas and crumbling infrastructure) have all gone hand in hand with population declines.

Population decline in the city proper can very often go hand in hand with rapid growth in peripheral areas, a phenomenon known as the ‘doughnut effect’. For example, in Saskatoon, one of Canada’s most dynamic and affluent economic hubs, migration and natural increase caused a 15 per cent population increase in peripheral municipalities between 1996 and 2001.3 Likewise in the United States of America, there has been a continuous decline (minus 8.3 per cent between 2000 and 2010) in the population of affluent St. Louis, while neighbouring cities such as St. Charles and Jefferson increased their populations by 26.6 per cent and 10.8 per cent, respectively, during the same period.4

Growing cities are located in growing regions: Cities and the surrounding regions are typically interdependent economically and tend to share similar socioeconomic and demographic trends. In most North American cities, growing cities correspond to the most dynamic regions and those experiencing population losses are located in less dynamic regions. Canada is a case in point. Research found that between 1981 and 2001, two-thirds of smaller cities and towns with declining populations were located within declining regions, and 77 per cent of cities on a positive demographic trend were to be found in growing regions.5 In contrast, in Western Europe the prosperity of entire regions is largely dependent on a primate conurbation and the concentration of services and manufacturing that comes with it. A study on the sustainability of 285 European regions conducted by the Berlin Institute in 2007/8, just prior to the financial crises, showed that cities like Reykjavík, Stockholm, Oslo, Zurich and Geneva were doing well, as did the regions where they are located. With their relatively unchanged, well-educated and well-nigh fully employed populations, these cities base their economic momentum on a combination of factors: they act as administrative and/or financial/economic as well as cultural capital cities, with high value- added activities (including communications, business services, high technologies, research, etc.),6 and this momentum spills over across the (often largely urbanized) surrounding

In the past 20 years, the proportion of European cities with declining populations is similar to those whose population growth rates are over one per cent.

Cities must create capacities that will enable them to understand and anticipate trends as well as develop appropriate strategies to harness the growth and offset the decline of some areas or regions.

POLICy Regional and national urban planning through central government in collaboration with lower levels of governance and other key stakeholders plays a critical role in creating a system of cities and in determining the prosperity and growth of cities.

Urban and Regional Trends

China, Ruili, Yunnan Province. Dai minority threshing rice harvest in fields which are gradually being swallowed by this booming border city.

State of the World’s Cities 2012/2013

regions through manufacturing and ancillary (logistics, etc.) activities.

Cities in the north will continue to attract migrants: European urban areas, in particular, will continue to feature low fertility rates and rapidly aging populations. These demographic trends are unmistakable and point to overall demographic decline.

Between 2005 and 2010, net international migration counterbalanced the excess of deaths over births in 11 developed countries, while contributing twice as much to population growth in another nine countries.7 With the

ongoing economic crisis, the aggregate flow of immigrants to developed countries has slowed down from an annual 2.3 per cent average rate in 2000–05 to 1.7 per cent in 2005–10. Rising unemployment in some of the host cities/countries may cause governments to impose restrictions on increased immigration.9

In Italy, the dynamic, affluent northern industrial cities of Brescia and Reggio Emilia saw the share of immigrants in their populations increase from five and six per cent respectively in 2002 to 19.3 and 17.2 per cent in 2010.10 Ireland’s economic boom caused Dublin’s foreign-born population to soar by over 300 per cent between 1991 and 2008.11

With the ongoing economic crisis, the aggregate flow of immigrants to developed countries has slowed down from an annual 2.3 per cent average rate in 2000–05 to 1.7 per cent in 2005–10.12 Despite these current trends, it looks like enduring demographic and economic asymmetries between the North and South will continue to fuel international migration, as developed nations require foreign workers to address labour shortages and counter the effects of population aging on welfare systems.

population density in Europe, 2001

Source: ORNL LandScan – cartography DG REGIO, European Commission.

Figure 1.2.1

POLICy It would be in the best interests of European countries/cities to review immigration policies with a view to maximizing the benefits and reducing the more negative aspects of the phenomenon, with inclusionary social and political mechanisms to bring prosperity to all.

In the European Union countries, it is projected that deaths would outnumber births from 2015 onwards, putting an end to population growth through natural increase. Positive net migration will be the only demographic growth factor until 2035.8

Urban and Regional Trends

Urban Change in Developing Countries

DIvERgENT URBAN gRoWTH pATTERNS In the past decade, the urban population in the developing world grew an average 1.2 million people per week, or slightly less than one full year’s demographic growth in Europe’s urban areas. Asia dominated the picture, adding 0.88 million new urban dwellers every week. Africa was the second largest contributor with an additional 0.23 million per week, dwarfing Latin America and the Caribbean’s 0.15 million weekly increment.

Africa: The urban population is set to outstrip Europe’s: In what promises to be one of the more remarkable forthcoming developments in the overall pattern of urbanization in Africa, the region’s population

is poised to outgrow both Europe’s and Latin America’s, which was the first region to become predominantly urban in the developing world. In 2025, the aggregate urban populations of Africa, Europe, Latin America and the Caribbean are expected to reach 642 million, 566 million and 560 million, respectively.

Increased participation of European cities in networks

Large European cities in terms of both population and economic production, such as London and Paris, are characterized by their involvement in business networks across the continent and beyond. Other cities with higher GDP per capita, such as Amsterdam, Zurich, Brussels, Frankfurt, Dublin, Copenhagen and Stockholm, are also involved in important networks on account of their high concentrations of national and sub-regional banking, financial and business services. In contrast, those cities with high shares of manufacturing are associated with lower participation in international networks. Various Southern and Eastern European cities, including Athens, Rome, Madrid, Barcelona and Milan,

appear to be relatively weak in terms of international networks despite their economic size. Some German cities also belong in this category, notably Berlin.

It must also be remembered that the primary sector (mining and agriculture) can also connect urban areas in developed countries to world markets through company headquarters, commodity exchanges and specialist services based in cities located next to production areas. This is the case with countries like Australia (mining) and Canada (mining and intensive cereal production).

Source: Moritz Lennert (2011), Cities in Networks, prepared for UN-Habitat

Africa, urbanization and positive change

It is only one century ago or so that the urban population in Africa was less than eight per cent of the total. Since then, many things have changed, some in a positive way.

Over the entire span of the 20th century, life expectancy increased from 24 to 52 years.13 Education has become more widespread, with literacy rates in Sub-Saharan Africa rising from 23 per cent in 1970 to 65 per cent in 2010.14 Gross domestic product per capita increased from 585 (1990) international dollars in 1913 to 1,368 in 1998.15 By the end of the 20th century, Africa’s population was 35 per cent urban.

Box 1.2.1

Box 1.2.2

In the developing world, the pace of urban population growth rate has slowed down from just under three per cent in the year 2000 to 2.4 per cent in 2010, which is still three and a half times higher than the annual average population growth rate in developed countries.

Africa: the ongoing urban economic momentum in Africa is a result of a number of the typical factors of prosperity at work in other regions of the world, such as economies of agglomeration, location advantages, and diversification of the economic base, albeit all in nascent form.

Urbanization in Africa features a conspicuous degree of primacy, i.e., the concentration of significant proportions of the national urban population in one or a very small number of cities. Basic infrastructure and communication networks have undergone tangible improvements in many cities. Public transport still features as a major issue on the urban development agenda, while inequality and poverty remain at the heart of Africa’s problems.

State of the World’s Cities 2012/2013

In an apparent paradox, by that same year, 2025, Africa will still be the least urbanized region in the world (45 per cent of the population).

Asia: Moving into the ‘Urban Century’ Half of the world’s urban population now lives in Asia. This region has accounted for about 65 per cent of the demographic expansion of all urban areas across the world since the beginning of the 21st century. Undoubtedly, this is the ‘Asian Urban Century’.16 Large population concentrations in mega-cities are to remain a prominent feature in urban Asia (today, seven out of the 10 most populous cities of the world are in this region). In the recent past, Delhi and Shanghai have joined the league of ‘meta-cities’, those massive conurbations

of more than 20 million people. It is expected that by 2020, another three Asian cities – Beijing, Dhaka and Mumbai – will have reached the 20 million mark.

Asia’s urban population growth rate remains sustained if somewhat slower at an annual estimated rate of 2.4 per cent (compared to 2.7 per cent between 2005 and 2010), second only to Africa’s. On current trends, this slowdown should continue (to an average of 1.7 per cent in the early 2020s and below one per cent by 2050).17

No developing region has invested more than Asia in advanced knowledge infrastructure for economic development. A combination of public and private sector capital expenditure has provided the modern infrastructure required for industrial

expansion, research and development, innovation and entrepreneurship, which in turn have enhanced the economic potential and competitiveness of so many cities in Asia. These, as a result, are rapidly shifting away from labour-intensive to high-technology industries and to the service-oriented sector. For instance, Cebu City in the Philippines is prospering on the back of business process outsourcing, where the number of jobs soared from 40,000 to 70,000 from 2009 to 2010.18 Nowadays in Lahore, the capital of the Punjab Province of Pakistan, as many as 42 per cent of the workforce are employed in finance, banking, real estate and social services. In India, Bangalore, the capital of Karnataka State, is behind 32 per cent of the country’s software exports and provides 25 per cent of jobs in the national information technology sector.19

This is only some factual evidence highlighting the main lesson from Asia, namely, that infrastructure development focused on improved productivity (and quality of life) has gone hand in hand with economic growth and urbanization, particularly over the last two decades. According to the UN-Habitat State of Asian Cities Report, the region contributed a solid 30 per cent of the world’s economic output in 2008.20 More specifically, the report noted that cities accounted for 80 per cent of Asia’s gross domestic product, while only hosting slightly over 40 per cent of the region’s total population. Increases in GDP per capita (as measured in constant year-2000 US dollars) has been spectacular in East Asia and the Pacific, with a 120 per cent surge between the year 2000 and 2010. By comparison, over that same period GDP per capita in Sub-Saharan Africa grew by 25 per cent, and only 22 per cent in Latin America and the Caribbean.21

Latin America and the Caribbean: Inter-city migration predominates: This is the most urbanized region in the world (80 per cent of the total population, compared with Europe’s 73 per cent).The urban transition in this region was achieved in the early 1960s, or about 16 years before Western Asia (the second sub-region in the developing world to become predominantly urban), and 30 and 45 years respectively before Southern and North Africa (or, on current trends, some 70 years before the whole of Africa).

Still, and as in Africa and Asia, some of the foundations for improved prosperity have been emerging across Latin America and the Caribbean over the past few years. Most prominent among these are transport infrastructure and telecommunications, together with the provision of basic services and housing improvements. In some countries, better physical connectivity, enhanced communication

Asia: This region is also confronted by the same urban paradox as Africa. Despite high concentrations of population in large cities, the continent ranks among the least-urbanized regions in the world (45 per cent urban). The tipping point for ‘urban Asia’ is expected to happen earlier though (around 2020s).

POLICy African cities must connect to regional and global business networks, enhance quality of life, improve basic infrastructure and communication networks, address public transport deficiencies and environmental conditions, and respond to inequality and poverty issues, if they are to turn into real engines of national growth and prosperity.

POLICy Cities must give more attention to rising inequalities and the worrying trend of environmental degradation.

Urban and Regional Trends

La Paz, Bolivia, sprawls ever higher up the mountain side. The metropolitan area, formed by the neighbouring cities of La Paz, El Alto and Viacha, is the most populous area of Bolivia.

State of the World’s Cities 2012/2013

technologies at urban and regional levels, and improved quality of life, particularly in secondary cities, have contributed to reduce urban primacy. Today and as a result, small- and medium-size cities in the region are not only growing faster, but are also becoming destinations of choice for people who were living in larger agglomerations.

In many Latin American cities, economies have diversified through de-industrialization and the expansion of tertiary activities, particularly in the trade and service sectors, causing informal employment to soar, but the phenomenon has not yet been properly quantified.

CoNvERgENT URBAN gRoWTH pATTERNS Cities are expanding in a discontinuous, scattered and low-density form that is not sustainable: A defining feature of cities in

the developing world is an outward expansion far beyond formal administrative boundaries, largely propelled by the use of the automobile and land speculation. A large number of cities – whether in Angola, Egypt, Brazil,

China, or almost any other country – feature very land- consuming suburban sprawling patterns which often extend to even farther peripheries. A study on 120 cities shows that urban land cover has, on average, grown more than twice as much as the urban population. Similar urban trends can be observed in other parts of the world. For instance, in Mexico, the urban physical expansion of all urban areas over the past 30 years was estimated to be at around 7.4 per cent on an annual average basis, outstripping population growth by a multiple of nearly four.22 In India, built-up areas grew faster than the population in nearly all of the largest cities, especially during the 2000–11 period in Greater Mumbai, Bangalore, Pune, Jaipur, and Kolkata. India’s larger cities –particularly Bangalore, Hyderabad, and Surat – are sprawling at an accelerated pace, with the attendant decrease in densities outside their administrative boundaries.23 Similar urban trends can be observed in other parts of the world. In Algeria, for instance, much of the urban expansion has taken the form of uncontrolled sprawl around Algiers, with many of the more affluent, car-owning residents migrating to the periphery. Between 1987 and 2008, the land area of the city increased by almost four per cent per year, compared with only 1.5 per cent for the population.24 In the Saudi capital Jeddah, private developers in 2009 requested an allocation of over 20,000 hectares of land outside city boundaries, but municipal authorities were able to prove that only 17,000 hectares would be needed to accommodate requirements over the next 29 years, half of which could be located on vacant land within the city’s existing boundaries.25

Cities are becoming endless expanses, with high degrees of fragmentation of the urban fabric that result in vast interstitial open spaces. At the periphery, residential neighbourhoods are characterized by low-density developments which, along with under-used spaces and fragmented built-up areas in the intermediate city- rings, are contributing to dramatic reductions in residential densities. In the developing world, it was

Latin America and the Caribbean will be nearly 87 per cent urban in 2050, by which time the annual average pace of growth in the urban population is expected to slow down to 0.3 per cent. Some cities already see their populations shrinking. Latin America and the Caribbean stands out as the only region where migration between urban areas is a significant determinant of urban population growth, accounting for nearly 50 per cent and due to several factors, chief among them the pursuit of prosperity.

POLICy Latin American cities must become more productive and generate local jobs, and improve transport infrastructure and living conditions, short of which they will face prospects of population decline due to higher mobility from city to city. They must reduce entrenched inequalities while improving quality of life and environmental protection. More prosperous cities must articulate better their strategic advantages with national economic policies and enhance their creative capital to increase prosperity prospects.

POLICy Even though the region is more urbanized than Europe, GDP per capita (PPP) was nearly three times lower than the European Union’s in 2010. The main reasons include chronic inequalities and mass poverty, insufficient infrastructure, poor public services, inadequate connectivity, poor governance and fragile institutions.

Most urban plans and regulatory regimes in the developing world have been incapable of preventing the conversion of rural land to urban use in city peripheries. As a result, the reclassification of settlements from ‘rural’ to ‘urban’ has become the second most significant determinant of urban population growth and expansion in the developing world today.

Urban and Regional Trends

observed that the average built-up area densities declined in 75 out of the 88 sampled cities, or 6 out of 7, between 1990 and 2000. Densities shrank from an average 174 persons per hectare (p/ha) in 1990 to 135 p/ha in the year 2000. The most significant decrease took place in the sampled Asian cities, where the densities shrank from 217 p/ha in 1990 to 160 p/ha in the year 2000, or a 26 per cent decrease.26 In the recent past, significant decreases in built-up densities in cities especially outside administrative boundaries have also been reported. Among many examples, cities such as Bangalore, Hyderabad and Surat (in India) reduced by more than half the built-up densities outside administrative boundaries between 2000 and 2010.27

POLICy Cities must accommodate demographic and spatial expansion, with a concomitant development of well- devised urban structures that would reduce transport and service delivery costs, optimize land use and support the deployment and/ or protection of open spaces.

POLICy Better connectivity, mobility and accessibility and well-planned integration of land-use, density and transport have the potential to reduce energy consumption drastically, making cities more sustainable.

prosperity and urbanization: contrasted trends within regions

Box 1.2.3

Africa: proportion urban and urban growth rate, 2010

per cent

Low-income (30 countries)

Lower middle-income (14 countries)

Upper middle-income (9 countries)

4.0%

2.3%

3.0%

Percentage urban Urban growth rate

Source: UN-Habitat, 2012.

Urbanization is far from being homogenous within single large regions of the world. Even though regional averages are important to understand urban trends, conditions and projections and for the sake of comparison, they conceal large disparities across countries in the same region.

Levels of urbanization and rates of growth differ significantly when compared with the economic development of countries within the same region. In general, low-income economies are growing at least twice as fast as high-income economies, but their typical level of urbanization is less than half that of the more developed countries.

Intra-regional differences can be significant, though. For instance, Africa’s urban population growth rate was on average 3.3 per cent in 2010, but variations among low- and high-income African economies were very significant: 30 countries that were ranked as ‘poor’ saw their urban populations grow at a very brisk pace (about four per cent) while nine countries in the ‘upper middle-income’ category grew at a more moderate rate of about two per cent from 2005 to 2010. It is well known that populations in less advanced countries grow much faster on average than those more advanced; but what this data shows is that, within the same region, some countries see their urban populations expand twice as fast as that of other countries, and the stage of development is a determinant factor behind this difference. While countries with the poorest economies will take around 18 years to double their urban populations, countries with the most advanced economies of the region will take more than double, considering that their urban growth rates are diminishing faster.

This goes to show that the level to which a national population is urbanized reflects the degree of economic development. Understanding which cities are experiencing a demographic boom and which others are undergoing dramatic decreases in population is critical when it comes to designing urban policies that are apt to maximize gains, redress regional imbalances and (re)allocate capital expenditure for the sake of higher levels of prosperity and more sustainable urban and regional development.

State of the World’s Cities 2012/2013

NovEL URBAN/REgIoNAL CoNFIgURATIoNS AND pRoSpERITy Cities large or small have increasingly come to merge together to form new spatial configurations that typically take three principal forms: mega-regions, urban corridors and city-regions. Each on its own spatial scale, these three forms seem to act as nodes where global and regional flows of people, capital, goods and information combine and commingle, resulting in faster growth, both demographic

and economic, than that of the countries where they are located. These new configurations are more and more spatially connected and functionally bound by their economic and environmental links,

at times even socially and politically. They play an increasing role in the creation and distribution of prosperity far beyond their own specific geographic areas.

Large cities such as Bangalore, Mexico City or Cairo are found morphing into new spatial configurations in which they amalgamate other cities and towns of various sizes within their economic orbit. In other cases, two or more large cities, such as Mumbai and Delhi in India, São Paulo- Rio de Janeiro in Brazil, or Ibadan-Lagos-Accra in Africa, form transport corridors for the purposes of industrial development, business services or trade. Still in other cases, government creates planned ‘supra-agglomerations’ as part of a regional/national development strategy. This is the case in China, where the Guangdong Provincial Government recently announced the development of the Pearl River Delta mega-region, which would include nine large cities28 with an aggregate surface area of 40,000 km2, or 26 times that of Greater London.29

A critical mass of people, ideas, infrastructure and resources acts as a magnet for development, attracting migrants, private firms, investors and developers. All of this enhances the prospects for more employment opportunities, wealth creation, innovation and knowledge, which are all major factors of prosperity.

POLICy The challenge here is for local authorities and regional governments to design the development of cities in parallel with the development of regions, rather than treating both as isolated spaces, a process which involves innovative coordination mechanisms for urban/regional management and governance.

POLICy Considering the ‘natural’ or ‘spontaneous’ growth of these large urban configurations, cities and regions in the developing world must introduce regional planning strategies to mitigate any adverse side-effects and harness the opportunities and potentials that are concentrated in those large agglomerations.

Mexico City, a metropolis of over 20 million people.

Urban and Regional Trends

Large urban configurations, as grouped in networks of cities, amplify the benefits of economies of agglomeration, increasing efficiencies and enhancing connectivity. They also generate economies of scale that are

beneficial in terms of labour markets, as well as transport and communication infrastructure, which in turn increase local consumer demand.

Large urban configurations differ across regions

Europe: Urban planning has had much more influence here than in any other region of the world. Located along major transport routes, novel urban configurations are specialized industrial and business centres, but with less dense populations than counterparts in developing regions. Many capital cities have moved from the ‘regional’ to the ‘supra’ cluster format.

Example: The so-called ‘Blue Banana’, a discontinuous corridor linking many West European cities from London to Milan. The area combines the highest concentrations of population and economic (especially banking/financial and manufacturing) centres in the whole continent.

North America: The main features here are massive investment in freeway systems and planned urban development with a dispersed pattern of urban settlement and specialized functions. Most cities in these configurations have populations of over one million, and the typical morphology is polycentric in terms of both urban form and economic structure. They rank among the largest in the world for aggregate surface area, about 18.9 million urban acres.

Example: The North-East mega-region including Boston, New York, Philadelphia, Baltimore and Washington D.C., which hosts 17 per cent (or about 52 million) of the US population and generates 21 per cent of the nation’s GDP.

Asia: In newly industrialized countries, large agglomerations are more dispersed and less well planned. Densities are typically much higher – over 15,000/km2 – but in city regions can be as twice as high, particularly in inner city areas. Large urban configurations are becoming more specialized, including industrial cluster development (high technology and traditional manufacturing) and services (health, education and transport).

Example: China’s Hong Kong-Shenzhen-Guangzhou agglomeration is home to 120 million.

Africa: There are relatively few large urban configurations in Africa. They tend to be linear along corridors or coastal trading routes (e.g., the Abidjan-Accra-Lagos corridor) and major arterial roads between adjacent provincial cities (Johannesburg-Pretoria and Lagos-Ibadan). Typically they are not planned. Services are poor, as are transport infrastructure and logistics. Employment is driven primarily by trading, natural resources and low-level

services. The typical pattern combines high population density in inner cities and low densities in outer areas.

Examples: Cairo-Giza, the largest urban agglomeration in Northern Africa, home to 17.8 million.

The Cairo-Alexandria corridor is the largest mega-urban region (stretching over 225km), with export-oriented agriculture accounting for 40 per cent of the surface area.

The Ibadan-Lagos-Accra corridor spans over 600 km across four countries (including Benin and Togo) and is host to some 30 million.

Arab States: There are very few large urban configurations in Arab States. In the Near East, the evolution is from mono- to polycentric or diffuse urban corridor formats, especially in Iraq, Iran, Saudi Arabia and Turkey. In the Maghreb, large urban configurations develop along rivers, coastal areas and trade routes. Trans-border cities are expanding along highways and modern transportation networks, and as in Africa they tend to be linear along urban corridors.

Examples: Tangier is emerging as a new Extended Metropolitan Region around what has become North Africa’s largest container port.

The Kenitra-El Jadida corridor includes the cities of Casablanca and Rabat, Morocco’s business and administrative capitals respectively, which are home to a combined 7.5 million people and generate half the country’s GDP.

The Abu Dhabi-Sharjah free trade zone also includes Dubai and Ajman, with over 200 factories, more than 3.5 million residents and the largest container port in the region.

Latin America: Despite the fact that the region has the highest proportion of urban population in the world and except for a number of city-regions, large urban configurations are rather few. They are changing from a mono-centric pattern of development to polycentric and urban corridor forms. Those cities constrained by physical geography spread along main transportation lines and adjacent rural areas. Large cities are growing in a diffuse, low- density pattern with peripheral industrial development and housing.

The mega-region that stretches from São Paulo to Rio de Janeiro is home to 43 million people.

Sources: Brian H. Roberts (2011); UN-Habitat State of the Arab Cities Report (2012); Regional Plan Association and America 2050 (2012).

Box 1.2.4

State of the World’s Cities 2012/2013

ENHANCINg pRoSpERITy IN LARgE URBAN CoNFIgURATIoNS: THE 5 DIMENSIoNS Large urban configurations concentrate many of the resources and opportunities that give substance to the five dimensions of prosperity: enhanced productivity, infrastructural development, quality of life, equity and social inclusion, and environmental sustainability.

Enhanced productivity: Planning large urban configurations as a ‘portfolio’ of functional and complementary areas of specialization can lead to more diversified economies, capitalizing on the comparative advantages of each city within the large agglomeration and developing a strong regional vision for the whole large

configuration. For instance, in the Pearl River Delta mega-region in China, each of the cities capitalizes on its comparative strengths, and contributes to the overall prosperity of the large configuration.

Infrastructural development: Transport infrastructure improves connectivity and spatially integrates the networks

of cities that make up the urban/regional configuration. The large economically prosperous cities of Shanghai, Guangzhou and Beijing have invested in infrastructure to connect peripheral towns and enhance the large urban configuration. Beijing has extended 304 km of roads to link all ‘administrative villages’ to the city (2005). Shanghai has built 750 km of highways to integrate the rural hinterland (2007). Guangzhou has completed extensive networks of roads, electricity and water distribution to all neighbouring rural settlements with more than 100 residents (2007).30

Equity and social inclusion: The market- driven logic of scale economies can interfere with equitable distribution, such as unregulated land markets, spatial segregation, extreme income inequalities and uneven development. Speculative real estate development in many of these large urban configurations effectively excludes not only the poor, but even the middle class, from formal land markets, creating an

Novel configurations: a typology

Mega-regions surpass mega- and meta-cities by population and economic output, combining large markets, skilled labour and innovation, and amalgamating several cities within the orbit of the overall region.

Example: Japan’s Tokyo-Nagoya-Osaka-Kyoto-Kobe region, with a population close to 60 million.

Urban corridors: a number of urban centres of various sizes are connected along transportation routes in linear development axes that are often linked to a number of megacities, encompassing hinterlands. New developments in some fringe areas experience the fastest growth rates and the most rapid urban transformation.

Example: in Malaysia, the Kuala Lumpur-Klang corridor along the Klang Valley.

City-regions take on a larger scale than large cities, expanding beyond formal administrative boundaries to engulf smaller ones as well as semi-urban and rural hinterlands, and even merging with other intermediate cities, creating large conurbations that eventually form city-regions.

Examples: São Paulo, Brazil; Cape Town, South Africa; Bangkok, Thailand.

Box 1.2.5

POLICy It is in a city’s best interest to establish linkages with other neighbouring urban areas for the sake of complementary functions. This will help to develop a strong collective regional identity, in the process achieving greater economic momentum than if they remain in isolation.

POLICy Investments in transport infrastructure and related reforms, including finance and regulations, deliver major economic benefits, contributing to poverty alleviation and improving quality of life.

POLICy Cities and regional governments should encourage social and institutional innovations that can reduce socio- spatial inequalities; this can include tax revenue transfers among urban authorities within the large urban configuration, or revenue-sharing, or equalization grants.

POLICy More effective local and regional institutions, new linkages and alliances across the three tiers of government, together with a comprehensive vision with clear plans favouring inclusiveness, are all crucial for equitable development and prosperity.

Urban and Regional Trends

uneven patchwork of privilege and underprivilege across large urban areas.

Quality of life: When city leaders cooperate, rather than compete, in a number of areas (crime, poverty, social inequalities, transport systems, infrastructure), a more effective type of regional governance emerges that has direct

implications on quality of life both inside and outside the large urban configuration.

Environmental sustainability: Environmental challenges transcend political/ administrative boundaries. Yet, local authorities may find themselves with little power or resources to

counter the damaging effects of growth on the environment, particularly in the face of the negative externalities generated by neighbouring cities.

POLICy Increasing evidence shows that interventions to promote quality of life have clear positive effects on the other dimensions of prosperity. Unsurprisingly, progress on the other dimensions of prosperity is found to enhance quality of life.

POLICy Looking beyond their own local interests and cooperating with the other jurisdictions involved, local authorities can improve competitive advantage while also preserving the environment.

POLICy Working together, cities in a large urban configuration are in better positions effectively to protect, manage, and plan for physical environment that span multiple jurisdictions.

POLICy The economic surpluses that large urban agglomerations derive from productivity gains can be channelled towards the protection of natural resources in the region, with the costs of maintaining these indivisible public goods equitably shared among the population.

India, Tirupur, Tamil Nadu. Workers at a textile factory in Tirupur. There are some 7,000 garment factories in the city, providing employment to close to one million people.

State of the World’s Cities 2012/2013

LARgE URBAN CoNFIgURATIoNS FACE SpECIFIC RISkS Large urban configurations come with a number of well- identified, specific risks: poor urban/regional planning, lack of coordination and deficient coping strategies in the face of social and fiscal disparities. Although these

affect the whole population, the bulk of the risks fall disproportionately on the poor.

In most cases, large urban configurations in developing countries are not planned. Economic forces and spontaneous growth tend to sharpen spatial and social disparities, which are further compounded by

prosperity performance indicators of selected large urban configurations by regions (2008)

City Country population (millions) Typology

Metro Area km2 ppkm2

Met gDp $Bn gDp/Capita

gDp/C City to National Ratio

gDp $m/km2 Economic Drivers

ASIA

Tokyo Japan 35.83 Urban Corridor 8,677 4,100 $1,479 $41,278 1.2 $170 Services /Manufacturing/Government/Transport

Seoul South Korea 9.78 Mega City 959 10,200 $291 $29,755 1.2 $303 Manufacturing

Guangzhou China 10.18 Urban Corridor 1,968 6,700 $143 $14,044 2.6 $73 Manufacturing

Hong Kong China 7.28 Trans-Border 280 25,200 $320 $43,956 1 $1,143 Advanced Services/Transport

Singapore Singapore 4.49 Trans-Border 463 9,700 $215 $47,884 1 $464 Advanced Services/Transport

Metro Manila Philippines 13.5 Mega City 1,425 14,600 $149 $11,035 3.3 $105 Advanced Services

Mumbai India 19.35 Mega City 1082 17,880 $209 $10,801 4 $193 Advanced Services/Manufacturing

Istanbul Turkey 12.6 Mega City 1,269 10,400 $182 $14,444 1.5 $143 Advanced Services/Manufacturing

Tel Aviv Israel 3.33 Urban Corridor 1516 5,900 $122 $36,684 1.3 $80 Advanced Services/Manufacturing

oCEANIA

Sydney Australia 4.36 Urban Corridor 1,788 2,438 $213 $48,853 1.3 $119 Advanced Services/Transport

Melbourne Australia 3.64 Urban Corridor 2,152 1,600 $172 $47,318 1.3 $80 Advanced Services

AMERICAS

New York City USA 19.18 Mega City 11,264 1,800 $1,406 $73,306 1.6 $125 Advanced Services/Transport

Los Angeles USA 12.59 Urban Corridor 5,812 2,500 $792 $62,907 1.4 $136 Advanced Services/Transport

Mexico City Mexico 21.16 Urban Corridor 2,525 7,400 $390 $18,428 1.5 $154 Advanced Services/Gov/Manufacturing

São Paulo Brazil 19.89 Urban Corridor 3,756 5,400 $388 $19,507 2 $103 Advanced Services/Manufacturing/Transport

Rio de Janeiro Brazil 11.89 Urban Corridor 2,123 5,600 $201 $16,905 1.7 $95 Advanced Services/Gov/Manufacturing/Transport

AFRICA

Cairo Egypt 15.55 Urban Corridor 1,709 10,100 $145 $9,327 1.7 $85 Advanced Services/Gov/Manufacturing

Algiers Algeria 2.8 Mega City 453 7,800 $45 $16,071 2 $99 Advanced Services/Gov/Manufacturing

Casablanca Morocco 3.28 Sub National 1378 2,383 $33 $10,049 2.6 $24 Manufacturing

Johannesburg South Africa 10.27 Mega City 2,525 3,000 $164 $15,972 1.5 $65 Advanced Services/Manufacturing

Cape Town South Africa 7.28 Mega City 2455 2,965 $103 $14,148 1.3 $42 Advanced Services/Manufacturing

Lagos Nigeria 10.58 Urban Corridor 997 9,500 $35 $3,309 1.5 $35 Advanced Services/Manufacturing

Sources of data: GDP data from (Price Waterhouse Coopers, 2010), area data (Hove, 2010) adjusted on a density estimate and Google Earth urban area estimates.

Table 1.2.1

Urban and Regional Trends

inefficient use of land and other resources. Close links with world financial markets and the impacts of global and regional economic crises shape ‘uneven geographies of development’.

Faced with the challenges and costs of addressing sustainability problems, many large urban agglomerations

may choose to ignore quality of life and environmental issues, in the belief that these can be caught up with later. Large urban configurations that take this path run the risk of finding it increasingly difficult to attract investment, labour and skills. Economic growth may happen, but the risks of future disinvestments by firms and exit of some social groups could compromise future prosperity.

Endnotes

1 United Nations, 1999.

2 United Nations, 2010b.

3 Statistics Canada, 2001.

4 U.S. Census Bureau (n.d.) U.S. Census Bureau: State and County QuickFacts http:// quickfacts.census.gov/qfd/index.html

5 Statistics Canada, 2005.

6 Pierre Bourdieu views “the capital [city] as the locus where all forms of capital [resources] are concentrated” in Bourdieu P., Sur l’Etat – Cours au Collège de France 1989-1992, p. 162, Paris, 2012. For an in-depth analysis, see Bourdieu. Les effets de lieu (locus effects) in Bourdieu P. (ed.), La Misère du monde, pp. 159-167, Paris, 1993.

7 United Nations, 2010b.

8 Eurostat, 2008.

9 United Nations, 2010b.

10 ISMU Foundation – Projects and Studies on Multiethnicity, 2010.

11 City of Dublin, 2009.

12 United Nations, 2010b.

13 Maddison, 2001.

14 UNDP, 2010.

15 Maddison, 2001.

16 Mohan, 2006.

17 United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision, CD-ROM Edition.

18 Fernandez, F.L., 2011.

19 Zaidi, 2011.

20 UN-Habitat and ESCAP, 2010.

21 World Bank Data: World Development Indicators & Global Development Finance, Online database last updated July 9 2012, http://data.worldbank.org

22 ONU-HABITAT and SEDESOL, 2011.

23 IIHS, 2011.

24 Safar Zitoun and Tabti-Talamali, 2009.

25 Jeddah Municipality, 2009.

26 Shlomo et al, 2010.

27 IIHS, 2011.

28 The nine cities are the following: Guangzhou, Shenzhen, Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing.

29 Roberts, 2011.

30 World Bank, 2009a.