Growing African cities: Tony Venables Dept of Economics, University - - PowerPoint PPT Presentation

growing african cities
SMART_READER_LITE
LIVE PREVIEW

Growing African cities: Tony Venables Dept of Economics, University - - PowerPoint PPT Presentation

Growing African cities: Tony Venables Dept of Economics, University of Oxford & International Growth Centre What are the characteristics of successful cities? How are African cities performing? What will it take? Africa 1/3


slide-1
SLIDE 1

Growing African cities:

Tony Venables Dept of Economics, University of Oxford & International Growth Centre

  • What are the characteristics of successful cities?
  • How are African cities performing?
  • What will it take?
  • Africa 1/3 of way through its urbanisation
  • 500 mn Africans will enter cities in the next 30 years
  • 350k per week
  • Africa must build twice as much urban capacity in next 30 years as in last 100.
slide-2
SLIDE 2
  • Successful cities have high productivity
  • Developed countries: doubling city size raises productivity 5%
  • Cities are where new things happen
  • Centres of innovation
  • ‘Incubators’ for new firms
  • What are the mechanisms? Scale and specialisation
  • Thick labour markets
  • Matching
  • Specialisation – and incentives for workers to get skills
  • Thick product markets
  • Scale and competition
  • Access to intermediate goods – forward and backward linkages
  • Knowledge spillovers
  • Scale economies in provision of utilities, public services

Urban potential I

slide-3
SLIDE 3
  • Mechanisms work through ‘connectivity’
  • Worker<-> firm: Consumer <-> firm: firm <-> firm
  • Connectivity requires:
  • Transport infrastructure:
  • Public investment
  • Density:
  • Private investment: residential and commercial
  • Density is an outcome of efficient land-use:
  • Market outcome with centre to edge rent gradients and
  • Textbook ‘monocentric city’.
  • ‘Crowding’ vs building tall

Urban potential II

slide-4
SLIDE 4

Successful cities: employment density

4

slide-5
SLIDE 5

Successful cities: residential density

5

slide-6
SLIDE 6

Urban form: residential density

6

slide-7
SLIDE 7

7

Brasilia Johannesburg Moscow

Urban form: residential density with non-market outcomes

slide-8
SLIDE 8
  • Cities are high cost.....
  • Commuting, land values, capital costs of infrastructure

..... but offset by productivity advantage

  • if they achieve efficient land-use, connectivity, productivity
  • Cities can be self-financing
  • Much of surplus created by cities is capitalised in land values
  • Land values are a tax base:
  • Ethically fair
  • Non-distortionary
  • Relatively easy to collect
  • Sufficient to fund infrastructure (Henry George theorems)

Urban potential III

slide-9
SLIDE 9
  • Early urbanisation
  • Urbanisation levels are high for per capita income levels
  • Challenge for affordability of decent housing
  • Excessive primacy:
  • High share of urban population in largest city
  • Typically not the ‘urban hierarchy’ seen elsewhere
  • Low levels of investment
  • Private:

Informality – bifurcated residential housing stock, sprawl  low density & inefficient land use.

(comparable figures – less dense than European cities)

  • Public:

Poor transport infrastructure Poor public service provision  poor connectivity

  • Employment: informality and failure to attract formal sector firms

African cities: stylised facts

slide-10
SLIDE 10
  • Attracting firms & creating jobs:
  • Inefficiencies in land-use and lack of connectivity  high cost  low real wages but

high nominal wages

  • Failure to attract footloose manufacturing
  • ‘Urbanisation without industrialisation’
  • Sunk capital and expectations:
  • Expect slow city growth  expect low rents  build low  lack of density  slow city

growth

  • Expensive to retro-fit
  • Public finance:
  • Weak tax system and/or low land values  hard to finance infrastructure  lack of

connectivity ….etc

In combination, these create real danger of low-level trap. Cumulative causation and multiple equilibria

slide-11
SLIDE 11

Policy responses Raising investment – residential/ infrastructure/ commercial

  • Residential
  • Property rights
  • Appropriate regulatory standards
  • Mortgage markets
  • Infrastructure
  • To create connectivity and to coordinate expectations
  • Utilities and other public services
  • Public finance
  • Commercial
  • Efficient land-use/ infrastructure  lower cost business environment

Quantitatively – enormous challenge Across many areas of government – city, finance, law, regulation, industry, transport