MODULE : I :
CITIES AS ENGINES OF GROWTH
SREELAKSHMI CJ [Link] [Link]
cities as engines of growth
1. Pre- industrial society:
When production was predominantly
agricultural in preindustrial society, it
occurred outside the cities.
2. Industrial Revolution:
This pattern got reversed as the industrial revolution
progressed—manufacturing production emerged
as the major activity occurring in inner city areas.
3. Post industrial Revolution:
In the post-industrial era, this pattern again changed, with production base
largely moving to the metropolitan periphery and beyond (Brotchie et al. 1985).
This pattern of change tends to expand the city limits and adds
substantially to the contribution made by cities to the total
production (also see Norman et al. 2006; Levinson and Chen 2007; Rastogi 2010).
Pattern of development in cities
Some of the main factors that have led to growth of cities are:
(i) Surplus Resources
(ii) Industrialization and Commercialization
(iii) Development of Transport and Communication
(iv) Economic Pull of the City
(v) Educational and Recreational Facilities.
Factors influencing Growth of Cities around the World:
• India’s cities will have to play a critical role for the country to become a global economic
powerhouse
• India is one of the fastest growing economies in the world. Number of inhabitants
in Indian cities
500
• aspiring to become a 460 million
Urban Population
– US$5 trillion economy by 2026 and 400
300
– US$40 trillion by 2047, when India marks
100 years since its independence. 200
• Urbanization playing a critical to this.
109 million
100
0
1970 2018
year
India to become Global economic power
• The number of city inhabitants in Indian cities is estimated to have increased almost fourfold
– 1970 and 2018, from 109 million to 460 million.
1000 • Being second-
900 876 largest urban
50 % of total
Urban population (in millions)
800 community in the
population world, the country
700
is expected to add
600
another 416
500 460
million people to
400
its cities by 2050
300 and have an urban
200 share of
109
100 population of 50
0 percent.
1970 2018 2050
Year
India to become Global economic power
Cities are the loci of economic growth & innovation
• Cities are the loci of economic growth and innovation, where productive
firms, better-paying jobs, and key institutions are located
• By enabling firms and workers to interact closely, cities generate increases in productivity through
several channels, collectively known as agglomeration economies.
• A key implication of the theory is that firms in larger and/or denser cities should be more productive,
pay workers higher nominal wages and salaries, and engage more in innovative activities.
• Consistent with this, the data strongly suggests that agglomeration economies are very much present in India.
1. Land area & GDP : Cities in India occupy just 3.0% of the nation’s land, but their contribution to
gross domestic product (GDP) is a massive 60.0% . Analysis of estimated district GDP
reveals that each percentage point increase in a district’s urban population share is associated with
a 2.7% increase in district GDP.
2. R&D : Firms in India’s larger cities contribute more to the GDP than their counterparts in smaller
cities.
1. introduce product and process innovations
2. conduct research and development more often than their counterparts in smaller cities.
(econometric analysis suggests that firms in a city twice as large as another are more likely to
engage by 17.5% in product innovation, 9.9% in process innovation, and 21.2% in research and
development)
Agglomeration economies in India.
3. Analysis of India’s Periodic Labour Force Survey, 2018–2019 shows that even after controlling for age,
gender, educational attainment, worker type (i.e., regular versus casual), and industry and occupation of
employment, full-time wage and salaried workers in cities with 1.5 million or more residents in
2011 had, on average, 16% higher monthly earnings than their counterparts in
smaller cities
and about 36% higher than counterparts in rural areas.
4. Manufacturing and modern services, i.e., sectors that are critical enablers of economic dynamism, account
for a larger share of employment in larger cities, i.e.,48% as compared with 38% for smaller
cities and 18% for rural areas.
5. Larger cities tend to have a higher share of regular workers among the category of wage
and salaried workers in larger cities as compared with smaller ones (91.2% versus 78.8%).
Agglomeration economies in India.
• Realizing the promise of India’s cities in meeting its development goals will require a holistic approach for all
Indian cities, large or small, working together as a system.
• As India transitions from being a largely rural to an urban society & so the focus needs to be on
harnessing the economic potential of all cities, large and small.
1. need to nurture megacities and their hinterlands as centres of economic growth
2. facilitate tier 2 and 3 cities to take on the mantle in the future.
• This requires that cities be managed appropriately. Indeed, there are many examples of cities globally that are
not contributing significantly to economic dynamism, even as they have gotten larger and/or denser. In India,
the following make it difficult to realize the benefits of agglomeration to their fullest:
India from rural to urban
• In this context, NITI Aayog and Asian Development Bank have undertaken a project, Strengthening
the States/UTs for broad based urban development
• An overarching objective of the project is to develop principles and frameworks for growth enabling
urban governance and coordinated spatial and economic planning and involves:
1. sensitizing state governments on the importance of developing appropriate policy frameworks at
the state and city level;
2. identifying key bottlenecks that constrain Indian cities from fully realizing their potential as
engines of growth;
3. developing implementable solutions to these bottlenecks, including workable structures of urban
governance and mechanisms for coordinating spatial and economic planning; and
4. informing policy makers about the types of investments and activities that states and cities
should prioritize from a growth and jobs perspective.
Strengthening the States/UTs for broad based urban development
Objective
Four module approach
Module 1: Shortlisting of cities
• Twelve cities from seven states
were selected as case studies to
analyse their growth bottlenecks
and identify frameworks for
growth-enabling urban
governance and planning
• A top-down three-tier approach
(state, district, and city) was used to
arrive at the shortlist of 12 cities. In
the first step, five states were
identified based on indicators of
urban population growth potential,
economic output, business
environment, sustainability, and
infrastructure.
Module 1: Shortlisting of cities
• Module 2: City profiles and
stakeholder consultations
• Profiles of each of the 12
cities were developed
around five key pillars A
brief profile was developed
for each of the short-listed
cities, discussing their
economic potential (such as
key growth and investment
sectors, Gross State Domestic
Product (GSDP) composition,
and employment activities),
the trajectory of spatial
growth of economic activity,
and the reasons that are
enabling and/or restricting
their economic growth.
Module 2: City profiles and stakeholder consultations
• More than 130 stakeholders from the
government and the private sector were
identified for evaluating the key
issues constraining the cities from
fully realizing their economic
potential.
• Discussions with regional, metropolitan,
state, and central governments were held
to understand the broader economic–
spatial relations, urban and peri-urban
dynamics, and the granular set of factors
driving economic growth in the
states and cities examined.
Module 2: City profiles and stakeholder consultations
• Module 3: Assessment of bottlenecks constraining the potential of cities
• Five broad bottlenecks were identified as major impediments to urban and industrial growth of cities,
These issues have been categorized under five broad bottlenecks:
1. lack of common economic vision and planning across different institutions;
2. challenges related to land supply and regulations;
3. unintegrated planning of urban and industrial infrastructure;
4. capacity constraints and inadequate institutional framework; and
5. policy and regulatory constraints.
Module 3: Assessment of bottlenecks constraining the potential of cities
• Five broad bottlenecks were identified as major impediments to urban and industrial growth of cities,
Module 3: Assessment of bottlenecks constraining the potential of cities
Module 3: Assessment of bottlenecks constraining the potential of cities
• Five broad bottlenecks were identified as major impediments to urban and industrial growth of cities,
Module 3: Assessment of bottlenecks constraining the potential of cities
• Implementation agenda and action plans for each city have been proposed across five solution themes
• Five themes have been identified across which solutions to the bottlenecks can be categorized.
Module 4: Roadmap for a growth enabling framework
Thank you…