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Globalization and Urban Economic ProspectsSIR PETER HALL

I-Jniversity College, London

lobalization isn't exactly new. The ancient Greekswere pretty good at it for the part of the globe theyknew, as were the Renaissance Florentine bankers

and their successors in 19th-century London. More recent-ly, as British General Motors employees in Luton, outsideLondon, and Ford workers in London's Dagenham lookedat their last pay checks, they might have reflected that glob-ahzatton created theirjobs in the 1920s and eliminated themin the 2000s. Capitalism, as Joseph Schumpeter famouslysaid in 1942, is an endless process of creative destruction.That is its genius, and its curse.

Of course, globalization has vastly extended its reach overthe last thirty years, as transnational corporations have extend-ed their grip ever more widely across the world.Technological colonization means that low-wage countriescan acquire state-of-the-art technology almost at the drop ofa hat, provided they offer the right base of hard and soft infra-structure: highways and high-speed telecommunications andcontainer ports, but also schools and universities and the ruleof law.That requirement increasingly divides the former ThirdWorld into the high achievers (much of East Asia, includingnow the coastal provinces of China, plus part of Latin

Rome, ltaly

America) and the stil1-struggling (most notably sub-SaharanAfrica).The important point, as always, is that organized tech-nology is the driver that makes poor countries and poor citiesrich. If you doubt that, look at Hong Kong and Singapore,which achieved the trick in one generation, or GuangzhouProvince in China which could do it in even less.

One important question is what this process of creativedestruction does for the cities of the developed world. Someof the answers are clear, others a lot less so. It is already quiteevident that in the last thirty years cities like London andNew York, Manchester and Pittsburgh, have lost much oftheir manufacturing base. Indeed the cities generally recog-nrzed as the global leaders,like London and NewYork, havesuffered just as grievously from this process as more archeryp-al industrial cities, since-a point often ignored-they weregreat centers of manufacturing.They have massively gained inadvanced services-banking, insurance and real estate, special-ized commercial services, design services like architecture andcivil engineering and fashion, tourist services, cultural andcreative services-thus helping to keep employment in somekind of equilibrium, but there have been massive shifts in

Woodrow WilsonInternationalGenterfor Scholars

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FEI Irll(.1US Department of Housingand Urban Development

WHAT'S INSIDEMessage from the HUD Secretary .

Message from the Wilson Center DirectorHUD's New Global lnitiativeNew HUD-funded UCGIS lnternational . . .

Research ProjectMetropolitanEconomicStrategy .......8Recent Wilson Center National Conference on . . . . .12

Metropolitan Economic Strategy, and Upcominglnternational Conference on Metropolitan0uality of Life

An Economic Vision for the CaribbeanThe Cities AllianceThe Future of the World's MegacitiesRecent Wilson Center lnternational Workshop . . .

on Urban GovernanceDecentralization, Democratization,

and Urban ManagementUrban Housing in Asia

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Message from US Housing and Urban DevelopmentSecretary Andrew Cuomo

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would argue that this period may be among"the most inter-esting and significant in human history.

As we begin the 21st century, unpiecedented, fast-pacedinnovations in commerce, communications and transporta-tion are blurring traditional national boundaries. Satellitesallow us to see and talk to one another across oceans, andthe advent of the Internet has revolutionized access to infor-mation and the ease of global commerce. lncreased cooper-ation and trade have strengthened the links that bind nationsand tie their fortunes to one another.

This changing global environment challenges us roreevaluate our relationships with-and responsibilities to-our global neighbors. Increasingly the line between domes-tic and international policy is disappearing.'We can nolonger afford to think and act parochially or provincially.

The rapid urbanization of the world's population posesspecial challenges.Twenty-five years from now, it is estimat-ed that 60 percent of the world's population will live incities. This demographic shift is already straining theresources of governments and communities around theworld as they confront issues of economic development,environmental protection, affordable shelter, infrastructuredevelopment and urban sprawl.

In recent years, the United States has undertaken aninnovative agenda to address these global concerns here athome.'We have developed a sophisticated housing financeand construction system that builds strong, safe and afford-able homes for mostAmericans.We have worked to revital-ize communities that have been left behind in the boomingnew economy, by encouraging business development andexpanding access to capital.

As an advanced and prosperous nation, the LJnited Stateshas a great deal of experience to share with other countriesaround the world. However, when millions of Americans

live with worst-case housingneeds, and communities strug-gle to create economic oppor-tuniry it is clear that we canlearn a great deal from the var-ied approaches and experi-ences of our global neighbors.

In the past four years, theUS Department of Housingand (Jrban Development has

renewed its international pres-ence. We have signed orrenewed bilateral agreementswith China. Israel. Mexico andSouth Africa. We have launched long-term disaster recoveryprojects in Honduras, the Dominican Republic and otherneighbors in CentralAmerica and the Caribbean.-We have ini-tiated joint planning efforts in cities along our common bor-der with Mexico. Our partnership with SouthAfrica has con-tributed to the passage oflandmark home mortgage disciosurelegislation that wrll expand social justice to all South Africans.

President Wilson once saido ooFriendship

is the only cement that will ever holdthe world together." Tbday, with theGIobaI Outlook, we are undertaking aninitiative to foster that friendship.

But in the coming years, there is much more work to do.The learning, understanding, and cooperation that we haveachieved with our international partners is just beginning.That is why we are pleased to partner with the Woodrow-Wilson International Center-a respected voice in interna-tional affairs-to produce this quarterly urban researchmonitor. The Global Outlook will chronicle these 'interesr-ing times'and provide a forum for thoughtful discussion.With this publication, we hope to increase awareness andunderstanding of critical global issues.

President 'Wilson once said, "Friendship is the onlycement that will ever hold the world together."Today, withthe Glohal Outlook,we are undertaking an initiative to fos-ter that friendship. Through our partnership with rheWilson Center, we hope to foster an honest dialogue aboutthe common challenges that nations face around theworld-and the shared solutions needed to bring justiceand opportuniry to people and communiries in an increas-ingly connected world. o

Secretary Andrew Cuomo in lsrael with Prime Minister Ehud Barak,after establishing the US-lsrael Bi-National Commission on Housing andCommunity Development.

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Message from Wilson Center Director Lee fI. HamiltonheWoodrow'Wilson International Center is dedicat-ed to bringing together scholars and practitioners,public policymakers and private sector leaders, to

meet the challenges of promoting greater understanding ofhuman interaction, public issues, and international relationsthroughout the world.'We connect history and the future,academia and action, and most importantiy, we do so basedon our commitment to promoting a global perspective onmeeting the future needs of people and places through poli-cies, programs, and research projects. As part of our overallactivities in scholarship and public service, we have for manyyears sponsored urban research and seminars, both throughour Comparative (Jrban Studies Project, and through ourDivision of United States Studies. It is in fulfillment of thismission that we have enthusiastically entered into a partner-ship with the US Department of Housing and (Jrban

Development to produce a new quarterly publication,Global Outlook.

This "International Urbanpublished quarterly and widelyform and electronicallythrough the worldwide web.It will review the latest andmost interesting ideas andactivities in urban researchand best practices from com-munities, cities, regions, andcountries on every continentaround the world.lt is an out-growth of an ongoing projectat the Wilson Center, coordi-nated by Public PolicyScholar Marc Weiss, on theglobal future of cities andmetropolitan regions. Dr.Weiss is serving as editor ofGlobal Outlook, and many of

the Wilson Center s senlorstaff, fellows, and public policyscholars will be working close-ly with HUD stafTand the edi-torial advisory board to devel-op this new publication. Theinaugural issue includes twoshort articles on recent WilsonCenter urban conferences andother major events on thehorizon. We are pleased toshare international informationand insights with you, and lookforward to your involvementwith the 'Wilson Center, whether you visit us here inWashington, DC, or via the internet at our website:www.wilsoncenter.org. Thank you for your interest in cre-ating and sustaining a brighter future for our increasinglyurban world. oResearch Monitor" will be

distributed both in printed

GLOBAL OUTLOOK, the lnternational Urban Research Monitar, is published quarterly by the Woodrow Wilsonlnternational Center for Scholars, One Woodrow Wilson Plaza,1300 Pennsylvania Avenue, NW, Washington, DC20004; and the US Department of Housing and Urban Development, Office of International Affairs, 451 SeventhStreet, SW, Room 8118, Washington, DC 20410.

EDITORS: Marc A. Weiss, Woodrow Wilson International Center for Scholarse}z, 69 1 -4229 {phl ; l2A2\ 691 -400 1 (fx ) ; We i ssMA @ wwi c. si. ed u

Alven H. Lam, US Department of Housing and Urban Developmentl2}2l 708-0770 ext. S827 {ph); (2021708-5S36 (fxh Alven_H._Lam @ hud,gov

Prague, Czech Republic

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both industrial and occupational composition. As a result,these cities exhibit the kind of structure Tom Wolfe carlca-tured for NewYork tn The Bonfre of theVanities: masters of thefinancial universe, juxtaposed with pockets of unemployment,poverry and social problems.

Some have argued that the process of change in the newglobal marketplace destroys low-level jobs and generates onlytop-level ones:in economic terms, the rent to brawn declinesto zero, as male muscles are replaced by forklift trucks, whilethe rent to brain constantly increases. In addition, some recentresearch on the American labor market suggests it is morecomplex than that: the real rent attaches to cognitive skills,which correlate only imperfectly with years of formal educa-tion. [n other words, a B.A. degree may give you a handsomecertificate but it doesnt necessarily give you the kinds ofknowledge and intelligence you need to hold down a top jobin banking or real estate.The resulting labor surplus hunts forjobs lower down the scale of skills and salaries, displacing highschool graduates who in turn displace school drop-outs.Contrary to what most people think, the American economyhas generated huge numbers of entry-level jobs, in such areas

as catering and tourism and oflftce support systems and healthcare; one problem is that a number of them are being per-formed by over-qualified and over-educated workers.

Something like this may be happening in European citiesas well. The big difference is that there, with the possibleexception of the UK,labor markets are more rigid and wel-fare programs more generous, resulting in higher levels ofurban unemployment.Whatever the differences, urban labormarkets display odd kinds of discontinuities: in the poorestneighborhoods, recent imrnigrants from Africa-many withcollege degrees or professional qualifications-find entry-level jobs in washing cars or cleaning oflices, while third-generation Afro-Caribbeans remain among the long-termunemployed.There are some hidden stories concerned withthe informal and underground economies, no doubt;researchers find that interviewees suddenly fall silent whenquestioned about critical aspects of their sources of income,or their neighbors'. People are getting by in such 1ow-income communities, or even moving on, despite glaringlack of evidence.as to the nature of their life support systems.

There is a question for the future.Technology never stands

still, and creative destructiori will again follow in its wake.Thebig changes this time could occur in the service industries.Already, the business school professors are telling us that theinternet is beginning to have a huge effect on "B2B"-busi-ness to business transactions-by eliminating much of thetransaction costs that have always been a bottleneck in ourhigtrly nerworked economic world. Consider one of thefastest growing sectors of the 1990s: the ubiquitous call cen-ters, that take your inquiries for airline tickets or auto insur-ance. Already, a significant minority share of all this business

has fhllen victim to direct transactions on the worldwide web,and much more is to follow: Bricish low-fare airline Easyjetdoes most of its business this way, and has just launched a

web-based low-price car rental service. Significantly, most callcenter jobs seem to have been generated not in the largeglobally oriented cities, but in the medium-sized provincialcities: not in NewYork or London, but places like Salt LakeCiry Omaha, Glasgow, and Newcastle upon Tyr.. (It's wellknown that whenever you pick up the phone in London, itseems to get answered by a Scottish voice: even the newLondon Development Agency has located its call center inScotland).These jobs, so rapidly generated in the 1990s, couldbe just as rapidly eliminated a decade later.

Clearly, other kinds of urban jobs will not soon disap-pear. The worldwide web might eliminate some kinds ofteaching jobs, from elementary schools to universities, but itwill most likely generate others in creating new education-al materials. Personal services jobs-nurses, waiters in restau-rants, gardeners, tour guides-are not going to be automat-ed very easily. Growth sectors, like health care and tourismand culture, will continue generating more and more suchjobs. In fact rt is highly likely that these will be the keydynamic urban industries of the next two decades.

This means that cities should promote themselves aboveall as centers of excellence in higher education, in advancedhealth care, in specialized business and professional serviceswhich can be exported to other places, in culture and intourism. What that implies is cities should be most con-cerned about their quality of life.As places like Glasgow andBilbao have shown, formerly grimy, metal-bashing blue col-lar meccas can convert themselves into European cities ofculture and tourism. As Birmingham in England demon-strates, a city can move from car-manufacturing to conven-tioneering.And as its rival Manchester is busy proving, a cirythat promotes and develops its airport-now emerging as

one of Europe's busiest-can compete as a magnet foradvanced services. The possibilities are endless. But the raceis constant, for the Schumpeterian principle will rule as longas capitalism survives-a great deal longer, it appears, thanSchumpeter himself gloomily suggested sixry years ago. .

Sir Peter HalI is a Professor in the Bartlett School ofPlanning, University College, Lonilon. He is author ofCities in Civilization anil many other books.

Bratislava, Slovakia

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HUD's New Global Initiative in Policy Development andResearch: The Office of International Affairs

SUSAN M. WACHTENUS Departrnent of Housing and Llrban Developrnent

ore than 1.5 billion people will be added to urbanpopulations across the globe during the next 25years, when 60 percent of all the world's peopie

will be living in or near major cities. Not only are the peo-p1e and economies of rich and poor nations becomingincreasingly urbanized, the cities of the world are becomingincreasingly globalized. With the establishment of cross-national entities like the European lJnion, and the devolu-tion of national power to cities and their surrounding metroareas, these city-states have become loci of political powerand decision-making. Cities now function as focal points ininternational labor and financial markets, are subject tointernational regulations, and produce environmentalimpacts that are viewed not only as regional issues, but as

issues that cross national borders.Capital and labor are attracted to cities that perform well,

and, with devolution, the qualify of ciry governments is

increasingly important for cities' own citizenry, as well. Forcitizens to hold government accountable for outcomes, it is

first necessary to establish reliable measures of performance.With the establishment of urban performance indicators,local and national governments can monitor urban trends.

This burden falls with special weight on the Department ofHousing and lJrban Development (HUD), the agencyresponsible for urban and housing policy in the United States.

To respond to calls for leadership from internationil. organiza-tions and partner countries, and to help the department betteranticipate and meet the needs of people in America's urbancommunities, under the leadership of HUD SecretaryAndrewCuomo, HLID has established an Office of InternationalAffairs within its Office of Policy Development and Research.Through its international work, HLJD studies best practicesabroad, adapting those practices to domestic policy formula-tion, and helps foreign governments and non-governmentalorgarnzations adapt successful American development modelsto their own needs. Through this inaugural issue of GlobalOutlook, and future issues, we will be passing on the lessons weare learning through international exchange.

In order to gauge the success of cities in increasinglydecentrahzed countries, moreover, and to set realistic devel-opment targets, we have a role to play in developing thebenchmarks which citizens can use to hold their govern-ments accountabie for improving communiry outcomes. Insubsequent issues of Global Outlook, HUD will publish a

series of housing and urban indicators, such as the incidenceof poverry housing affordabiliry transportation services andenvironmental quality.

The global urban challenges before us span issues ofrapid growth, affordable housing, environmental concerns,and employment opportuniry. In all of these, good gover-

nance and community planning are vital. In much of thedeveloping world, urbanization has magnified challengestraditionally faced by congested cities. Governments every-where are pressed to keep up with increased demand forinfrastructure and services, for example, maintaining potablewater supplies. According to a recent study by the U.S.National Intelligence Council more than 3 billion people-almost half the world's population-will live in "water-stressed" regions tn 2015.

Rapid urbanization also will keep the adequate supply ofaffordable housing at the top of municipal and national agen-das for decades to come.The experience of the United States

and other nations has demonstrated that a key to meeting thechallenges of rapid urbanization is expanding opportunitiesfor affordable homeownership. F{omeownership empbwerscitizens to solve the problems of their community by givingthem a financial stake in improving and maintaining theirenvironment, and by giving them access to capital throughreal estate markets and supporting housing finance systems.

Laid-off factory workers in eastern Beiiing, China, have built sheltem nextto their own homes, for renting to migrant workers.

Recognizing three major international needs-increasinghomeownership, promoting community-based planning,and providing accurate performance data to monitor out-comes-Ht]D has structured and staffed its Ofhce ofInternational Affairs Office based on a matrix of threespheres of policy concern: housing finance, communitydevelopment, and the use of information technology fordata-sharing. HUD s international program also has a coun-try specific focus, currently, in five geographic areas-Central America and the Caribbean, Mexico, China, SouthAfrica, and Israel-where there is both great need and muchto be contributed from our partner countries. In each ofthese countries, information is exchanged through academ-

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ic research and also through the practical, hands-on knowl-edge gained from HUDt collaboration with national gov-ernments as well as local communities.

HOUSING FINANCEHUD is working with officials in the Dominican Republic,Israel, and China, on housing finance pilot prqects that tai-lor U.S. models to each nation's challenges. For exampie, inChina, which is in the midst of the world's largest housingreform effort, HUD is working with the ministries ofConstruction and Finance to design a pilot project whichwill result in the issuance of mortgage-backed securities.Thisresearch project will assist in China's efforts to build primaryand secondary mortgage markets enabling hundreds of mil-lions of low-income urban renters to become homeowners.

The experience of the United States andother nations has demonstrated that akey to meeting the challenges of rapidurbanization is expand.ing opportunitiesfor affordable homeownership.

URBAN AND COMMUNITY DEVELOPMENTCommunity development and community empowermentare key to the U.S. approach to addressing housing andurban development needs. An important component ofHUD's international program is sharing HUD's successfulprograms in community development. In Central America,for example, where countries are recovering from the dev-

Hurricane Mitch devastated communities throughout Honduras, leaving almost two millionadults and children homeless.

New housing construction in Chiapas, Mexico

astation of Hurricanes Mitch and Georges, HIJD's Office ofInternational Affairs has committed time and resources toimproving municipal planning through effective disastermanagement, improved data utilization, and the develop-ment of integrated communiry development plans. HUD isinvolved in community development initiatives in countriesthroughout Central America, the Caribbean, in Mexico andin South Africa.

USING INFORMATION TECHNOLOGY FORDATA.SHARINGTo promote the use of the new information technologies incommunity planning, HUD is establishing a relationshipwith the lJniversity Consortium for GeographicInformation Science. This project will pair American uni-

versities with universities in devel-oping countries to create an inter-national network for urban policyresearch based on GlS-linked indi-cators. The consortium will estab-lish an extensive database with a

wide variery of key variables andindicators, similar to HUD's State

of the Cities project for US urbanareas. By late 2001, urban indicatordata-sets and GIS training materi-als from this project will be avail-able on the internet, as well as pre-liminary outcomes from the devel-oping countries. The goal of thisnew database is to enable govern-ments throughout the world tobetter address urban problems.

HUD's UCGIS work will rein-force existing work being under-taken by the United NationsCenter on Human Settlement(UNCHS). The Global UrbanIndicators project is an ongoingeffort by the UNCHS to create

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standardized international data on urban areas.As part of thisagenda, the UN General Assembly will evaluate progress onthe "Habitat Agenda" from the Global Conference onCities, or Habitat II, which was held in Istanbul rn 1996.HUD's Of1ice of International Affairs will take the lead inpreparing for the follow-up conference, Istanbul *5, whichis being held inJune 2001.

HUDt Otfice of InternationalAffairs office is collaborat-ing with the-WoodrowWilson International Center to makethis international urban indicator data available throush tne

Global Outlook.These data arrd, more generally, the analyses

they wili allorv, will improve understanding of urban andhousing issues and wili inform scholars and practitionersabout urban development trends throughout the world.o

Dr" Susan Wachter ls Assistnrct Stcretary af PoliryDeuelopment and Research at the US Department o_l

/J.otrsittg and Urban Deueloltntent in Washington, DC. Shtis on leaue as n ProJ-essar af Real Estate and Finance a.tTheWharton School aJ' the University qf" Pemrcyluania.

New HUD-funded ResearchUrban Quality of Life

The US Department of Housing and UrbanDevelopment's Office of Policy Development andResearch recently granted $240,000 to the UniversityConsortium for Geographic lnformation Science (UCGIS)

for a major project on "Global Urban Quality: An Analysisof Urban Indicators Using Geographic lnformationScience (GlS). The UCGIS is a non-profit organization ofuniversities and other research institutions dedicated toadvancing international understanding of geographicprocesses and spatial relationships through improvedtheory, methods, technology and data. UCGIS membersinclude leading colleges and universities, research organ-izations, professional societies, and private affiliates thatare devoted to fostering multidisciplinary geoscienceresearch and education and promoting the use of geo-graphic information science and geographic analysis.

UCGIS and HUD will be conducting two symposia to fos-ter cooperative efforts between consoftium members andother interested agencies and institutions. The first sympo-sium will be held in Washington DC on February 2-3,2Q01.This symposium will: 1) demonstrate the capacity of UCGISmember universities to analyze global urban quality; and, 2)

investigate the availability of data in developing countries tobe studied utilizing the various analytical models. The sym-posium will consist of invited presentations from UCGISmember universities describing work currently being doneon urban indicators and on related geographic informationscience activities within developing countries. Additionalparticipants are welcome at the symposia.

As part of the overall HUD-funded project, five UCGISmember universities will be paired with institutions inemerging nations to carry out internet-based training andanalyses using urban indicators. These five internationalresearch teams will develop and disseminate new state-of-the-art GIS and urban indicators databases that can beused over the internet by local government policymakers,researchers, and national and global agencies involvedwith urban issues. By providing internet access to themaps and data, detailed information about cities, com-munities, and metropolitaniregions will become muchmore widely available.

Project on Global Geographic Indicators of

SUSAN MCDONALD JAMPOLERUniversity Consortium for Geographic Inforrnation Science (UCGIS)

The long-term goals of this research project for HUDand UCGIS are to:. Gain knowledge, for cities in developing countries

around the world, of indicators that can be used tomonitor change and assist in creating and evaluatingpolicies and programs designed to improve the quali-ty of urban life.

r Establish a quantitative baseline of data that can beused in the future to evaluate the effectiveness of newpolicies and programs designed to generate prosperi-ty for communities facing economic difficulties, toexpa nd afforda ble homeownersh i p opportu n ities, andto reduce poverty and homelessness.

r Increase expertise in evaluating urban indicators usingspatial analytical techniques and geographie informa-tion systems, and help transfer such enhanced knowl-edge from UCGIS universities to participating organi-zations within the emerging nations. This vital infor-mation exchange will primarily be through web-basedtraining programs.

r Build a local capacity within developing countries forcollecting and utilizing policy-related urban indicators.

r Establish relationships between the UCGIS memberuniversities and their collaborators from emergingnations in order to increase the capacity within devel-oping countries to continue urban indicator analysison a long-term basis.

The five above-stated goals will require ongoing, long-term research and action. A second UCGIS/HUD sympo-sium will be held August 10-11,2001 to evaluate the suc-cess of this research program on global urban indicators.Invited participants will evaluate the effectiveness oftraining activities, provide recommendations for extend-ing the program over the long-term, and identifyresources and funding to expand the project during thesecond and third years. For more information contactUCGIS Executive Director Susan McDonald Jampoler byphone at (703) 779-798A, by fax at (703) 771-1635, or byemail at execdir@ucgis.org.

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Metropolitan Economic Strategy: How Urban RegionsInnovate and Prosper in the Global Marketplace

POINT ONEAmerica's future prosperity depenils on the Tnoiluctiuityand competitiueness of its metroytolitan regions, the keycenterc of innouation and business actiuity, wherc ouer90 percent of the nation's job growth is currently takingplace, and where nearly 90 percent of the nation's GrossDomestic Proiluct is nou being generateil.

The nature and volume of investment, production,and trade in and through America's metropolitanregions is one of the basic structural building blocks ofour country's macroeconomic growth and global com-petitiveness, and thus is at least as important as fiscal andmonetary policy, international trade, education, andother economic issues regularly considered and debat-ed by the executive,legislative, and judicial branches ofthe federal government, including the Board ofGovernors of the Federal Reserve System.

Metropolitan Economic Strategy is vital fornational econornic policy in the new globalrnarketplace, both in the USA and in countriesthroughout the world.

POINT TWOCommunities, both cities anil suburbs, can only thriue as partof a larger metropolitan economic ilynamic, with the entireregion hecoming a center of ailuanceil innouation anil techno-logical excellence in the proiluction anil ilistribution of uari-ous goods and seruices.

The competitive advantage of a metropolitan regioncomes from successfully mixing highly skilled and high-value specialization together with economic and socialdiversiry and by strategically investing in, improving, andsustainably utilizing the region's fundamental assers-irsphysical, financial, and human capital.

Metropolitan Econornic Strategy is vital for urbanpolicy.

POINT THREEBy emphasizing the interwouen economic ilestinies thatbriilge across families anil communities within metropolitanregions, people begin to see themselues as "citizens of a met-ropolitan economry"-Ttlayers on the economic "home teum"competing with other metropolitan economic teams all ouerthe worlil.

The real "rrty" of today and tomorrow is the metropolis.Metropolitan regions are the most economically organiccomponents of urban geography and demography affectingpeople's daily lives at the local level, and the main access

MARC A. WEISS'Woodrow Vilson International Center for Scholars

points for individuals trying to thrive in the global econo-my.Yet the greatest barrier to regional coordination, coop-eration, and collaboration is the lack of a common metro-politan consciousness and citizenship.Therefore, promoting"teamwork" is essential for individual and collective success,by encouraging households and families to begin reachingbeyond local political boundaries in pursuit of their com-mon interests and goals of increasing prosperity and enhanc-ing qualiry of life.

Metropolitan Econornic Strategy is vital forregional identity.

POINT FOT-IRMetropolitan Economic Strategy is not the same as rcgionaleconomic growth.

Every metropolitan region experiences economicgrowth or decline, regardless of whether or not there arecomprehensive plans or coordinated initiatives.Metropolitan regions function as fully integrated economiesin terms of the production and distribution of goods andservices, and they will function as such with or without a

coherent economic strategy. A critical determinant of theirsuccess is the decision-making process of private sectorexecutives, investors, entrepreneurs, and consultants makingfacility location commitments in the global marketplace,especially regarding the synergy and attractiveness of metro-politan regions as centers of innovation that can providebusinesses with a competitive advantage.

(Jnfortunately, regional economic growth often occursin an uncoordinated and haphazard fashion, and conse-

Beiiing, Ghina

quently may be missing opportunities to produce greaterinvestment, higher incomes, and more equitable distributionof the benefits of prosperiry among people and places. Mostregions do not have any viable mechanisms for promotingmetropolitan economic development, in terms of eitherdeveloping a common vision, formulating a collective strat-egy, or jointly cooperating to implement such plans. Most ofthe contemporary debate centers on the impacts of region-al economic growth, including whether growth is too fast ortoo slow, the problem of disparities and inequities, alongwith harmful effects on the environment. This discourse is

primarily about analyzing trends and reforming policies.Metropolitan Economic Strategy, on the other

hand, is a proactive organizing principle thatdepends on regional tearnwork and citizenship. It isexplicitly designed to bring together the public and privatesectors across the entire region to formulate and carry out a

coordinated set of targeted investments in people and places,consciously designed to enable businesses to thrive, jobs toexpand, and quality of life to improve. Each of the majorconstituencies-business, government, and communiuyleadership, must closeiy collaborate for the metropolis tothrive economically, socially, physically, and politically. In justthe same way that communities, cities, counties, and states

use economic development plans to guide their actions, so

also must the communities that constitute the metropolitanregion farsightedly engage in such comprehensive planningand united action if they are to compete effectively and winin the global economy.

POINT FIVEFormulating anil implementing an effectiue MetropolitanEconomic Strategy requires focusing on two key elements:

1) Investing in the fundarnental assets and activitiesthat will help fuel productivity and innovation.

Among these are:

. transportation and infrastructure

. education and workforce deuelopmento research and technology. uenture capital and other forms of business fnancing. seruices and amenities. economic deuelopment incentiues. trade promotion and market expansion. business and employment attraction and retention. entrepreneuri al culture an d bus ine s s -fri en dly ins titutio ns. regional coordination and ciuic leadership. taxation and regulatory policyc enuironmental preseruation and restoration. community and family deuelopmentt amenities and quality of life

2) Promoting modern and dynatnic industry net-works that accelerate the pace of innovation andgrowth. These broad-based groups of interconnected firmsand organizations, also called clhsters, are best able to fullycapttahze on the mix of specialization and diversiry in the

region's firms and assets, and to foster a climate of techno-logical innovation in design and production of goods andservices that can compete globally and generate substantialgrowth in jobs and incomes.

POINT SIXMetropolitan Economic Strategy must he home-grown aniltailor-maile in oiler to succeeil.

The fundamental assets and the key dynamic industrynetworks will vary from region to region. Polymer scienceand engineering is a winner for Akron and northeast Ohio,but not necessarily for Austin,Texas, where computer hard-ware and software are the leading edge, or Atlanta, Georgia,where telecommunications and transportation are thefastest-growing economic engines.

At the US Department of Housing and [JrbanDevelopment in 1.996, we identified 18 key industry net-works nationwide that in different combinations play majorroles as export-based economic generators in 114 metro-politan regions across the country, with wide variations fromone region to the next:

. Business and Professional Seruices

. Health Seruices

Gesky Krumlov, Gzech Republic

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Cape Town, South Africa

. Entertainment and Tburisme Financial Seruices. Housing and Construction. Medical Products. Tiansportation and Tiade Seruices. Industrial Supplies. Printing and Publkhingo Electronics and Communications. Tiansportation Equipment. Materials Supplies. Aerospace and Defense. Agriculture and Food Processingo Natural Resources. lndustrial MachinerytConsumer Goods. Apparel and Tbxtiles

In the 1998 Strategic Economic Developmenr Plan for'Washington, DC, we identified six key industry networksfor the city and the metropolitan region:

o Busines s / Profes sional / Financial / As s o ciation Seruices. Hospitality /Entertainment/Tourism / Specialty Retail. Uniuersities / E ducational / Res earch Institutions. Biomedical Research /Health Seruices. Media/Publications. InJo r m ati o n Tb chnol ogy / Tbl e co mmuni cati o ns

In the 1999 Baltimore Economic Growth Strategy, weidentified four key industry nefworks for the city and themetropolitan region:

o Business, Professional, Financial, Non-Profit, andInformation Seruices and Products

. Biomedical Research, Medical Products, and Health Seruices

. Hospitality, Entertainment,Tourism, and Specialty Retail

. Tiansportation and Tiade Seruices and Equipment

. 1". '.:, ,..,,

..-.l'ir;il;ir;,;:ilr ,,, :.:..,, , rr, ' :,,...:

One size definitely does not fit all.Each rnetropolitan region must find theright mix and rnost irnportant assetsthat work best for generating innova-tion and prosperity.

POINT SEVENComprehensiue anil effectiue MetropolitanE cono mi c Strategy neces s arily inu olu es centralcities, by maximizing the urban contributionto regional prosperity, anil by spreailing thehenefits of metropolitan wealth creation toincrease incomes anil quality of hfe for thepeople who liue anil work in anil near cities.

Industry ner\,vorks operate across regionsand always include significant business oper-ations located in cities.The smooth function-ing of metropolitan economies, with theirhighly interrelated business activities involv-

ing thousands of private firms and public sector organLza-tions, requires healthy central cities to serve as focal pointsfor regional identity in the global marketplace, and toengage in many key aspects of the production and distribu-tion of goods and services. Cities remain a major source ofcreativify and innovation, and they will continue to play a

vital role in ensuring that regional businesses andjob oppor-tunities can compete in international markets.

The six key roles for central cities in the rnetro-politan econorny are:

. centers of innouation and aduanced seruices

. centers of cultwre, sports, entertainment, conuentions, andtourism

. centers of education, research, and health care

. centers of transportation and trade

. market centers

. workforce cenlers

The best way for cities and olderinner-ring suburbs to succeed is byworking collaboratively with theirregional neighbors, orga,nizingcoordinated public-private partnershipsto develop and carry out a MetropolitanEconomic Strategy

POINT EIGHTMetropolitan Economic Strategy is the best way for cities aniltheir resiilents to I,rosper in the new global marketplace.In todayb global economic context, cities simply cannot sur-vive in isolation from their regional surroundings. Urbaneconomies increasingly extend far beyond the traditional cityboundaries. Central cities, even the largest and fastest-grow-ing ones, are physically constrained by artificial boundaries

11 -

that divide them from the rest of their natural economlcgrowth area, and they can only revive or continue to thriveby directly linking their future direction to the overall pros-perity and competitiveness of the surrounding metropolis.The best way for cities and older inner-ring suburbs to suc-ceed is by working collaboratively with their regional neigh-bors, organizing coordinated public-private partnerships todevelop and carry out a Metropolitan Economic Strategythat includes three major elements:

1) Build on the city's strengths in the context of met-ropolitan econornic growth.Growing the city's key industry networks also inherentlyinvolves strengthening the region's economic vitaliry. Citiesboth currently possess and can create major assets to increasetheir competitiveness. By doing so they expand the overallmetropolitan economic pie, even as they work to capture a

larger share of that pie for city-oriented business activitresthat utilize to best advantage the existing transportation andcommunications infrastructure, accessibility of the centrallocation, the urban-oriented lifestyle attractions, the diversi-ty and depth of experts and specialists, and the qualicy ofmajor knowledge-based institutions.

2) Reinvest and repopulate downtown and neighbor-hoods.This must be based on marketing the city's potential appealto businesses and residents from throughout the region andaround the world, with coordinated public and privateinvestments, and concentrated efforts to create or bring backcommerce and jobs, high quality stores and services, safe

streets and good schools, better housing and attractiveamenities.

3) Connect urban residents to regional jobs.Such initiatives necessarily include targeted training, place-ment, transportation, child care, and other incentives andservices that eliminate barriers to the smooth functioning ofthe metropolitan job market and help fil1 suburban jobshortages by expanding employment opportunities for thelow-skilled,low-income population living in and near cen-tral cities.

POINT NINEPreseruing anil enhancing a gooil physical enuironment anilquality of hfe is essential to the long-term success of aMetropolitan Economic Strategy.

No region can compete globally and sustain itself as acenter of innovation without atffacting and retaining talent-ed people.These highly skilled professionals are increasinglylifesryle-oriented and will only live and work in places thatoffer a very high quality of life. Today's environmentalismand related movements for smart growth, sustainable devel-opment, and new urbanism are more than just compatible

with economic growth. Environmental protection andrestoration are fundamentally necessary for generating pros-perity in the new global economy. Preserving and enhanc-

ing the physical and natural environment of cities and met-ropolitan regions includes cleaning up and redevelopingbrownfield sites; renovating historic structures; improvingclean air and water; maintaining the beauty of natural land-scapes, the accessibiliry of pathways and open space, and theavailability of agricuitural land; curbing sprawl and trafficcongestion, reinvesting in older urban and suburban centers;expanding transit and other pedestrian and transportationalternatives; and generally strengthening communiry plan-ning and design of cities and suburbs.

POINT TENFiniling the right mechanisms for gouernance is uitical to thesuccess of Metropolitan Economic Strategy.

Each region must make its own way, navigating the com-piicated challenges of bridging across many levels of separatejurisdictions and governing units, including communities,cities, counties, special districts, public authorities, states, andeven nations. This challenge is made even more complexbecause the role of the private sector is absolutely critical.Forming the right kind of partnerships, establishing the

Budapest, Hungary

-12right rype of leadership, creating the right form of cooper-ative governance structures-these and many other issues

must be resolved for Metropolitan Economic Strategy tomake a visible and long-term difference. There is not onebest solution, and again, one answer certainly does not covereverv situation. o

Dv. MavcA.Weiss is a Puhlic Policy Scholar at theWoodrowWilson International C enter for Scholars in Wa shington, D C.He is author of The Rise of the Comrnunity Builders,and Tlr.e Econornic Resurgence of Washington, DC,and coauthor of Ch'arter of the New fJrbanisrn, andRealEstate Developrnent Principles and Process.

Recent Wilson Center National Conference on Metropolitan EconomicStrategy, and Upcoming International Conference on MetropolitanQuality of Life

KENT H. HUGHESVoodrow Vilson International Center for Scholars

Kevin Hanna, President, Atlanta Development Authority;Alice Rivlin, Chairman, District of Columbia Control Board,and former Director, White House Office of Managementand Budget; Gene Sperling, Director, White HouseNational Economic Council; Susan Wachter, AssistantSecretary, US Department of Housing and UrbanDevelopment; Marc Weiss, Public Policy Scholar,Woodrow Wilson International Center; and AnthonyWilliams, Mayor, City of Washington, DC.

The conference participants spent many hours each dayin breakout discussion groups developing recommenda-tions for new policies, programs. and research efforts. Theresults of this conference will be summarized in a 32-pageconference report to be published and widely disseminat-ed by the Wilson Center. The Metropolitan EconomicStrategy conference received financial support from the USFederal Conference Fund, and the Fannie Mae Foundation.

"We had a full agenda and tackled some very toughissues, such as worKorce development, smart growth, andurban reinvestment," said Marc Weiss. "lt is so importantthat we focused on this fundamental challenge. becauseAmerica's and the world's future prosperity-the success andvitality of our nation's families and communities-dependson creating a state-of-the-art metropolitan policy agenda."

The Wilson Center will be holding a follow-up interna-tional conference-Metropolitan Quality of Life: HowCommunities, Cities, Counties, Regions, and StatesSustain and Improve Transportation and Infrastructure,Housing and Seruices, Land-Use and Environment, andUrban Amenities-to be held on September 12-15,2001 inWashington, DC. This conference is also being coordinat-ed by Marc Weiss.

For additional information on the conference and toreceive copies of the conference overview materials andsummary report, please contact Marc Weiss by phone at(2021 691-4229, by fax at (2021 691-4001, or by email atweissma @wwic.si.edu. .

Kent H. Hughes is a Pubtic Policy Schotar at the WoodrowWilson lnternational Center for Scholars in Washington,DC. He is currently writing a book on Americab gtobateco no m ic com petitiveness.

More than 100 senior practitioners and distinguishedexperts from across the nation gathered at the WoodrowWilson International Center on September 20th throughSeptember 23rd. They focused on creating new policiesand partnerships that enable America's metropolitanregions to implement coordinated public and privateinvestment strategies designed to enhance technologicalinnovation, productivity, and competitiveness.

"The conference- Metropolitan Economic Strategy:How Communities, Cities, Counties, and Regions lnnovateand Prosper in the New Global Marketplace-facilitated in-depth discussion among national policymakers to gener-ate fresh and creative approaches for expanding prosperi-ty and improving quality of life in metropolitan regions,"said Marc Weiss, Public Policy Scholar at the WilsonCenter and conference coordi nator.

The main conference themes are drawn from a bookentitled Teamwork, that Marc Weiss is co-authoring withHenry Cisneros, former Secretary US Department ofHousing and Urban Development. "Our book," statedHenry Cisneros, "is exploring and promoting the best waysthat public, private, civic, and community leaders can worktogether to ensure that cities and suburbs will thrive in thefast-changing international economy of the 21st century."

Featured speakers included Philip Angelides, Treasurer,State of California; Earl Blumenauer, Member, USCongress, from the City of Portland (Oregon), and Co-Chairman, Livable Communities Task Force; HenryCisneros, Chairman, American CityVista, former SecretaryUS Department of Housing and Urban Development, andformer Mayor, City of San Antonio (Texas); Brent Coles,Mayot City of Boise (ldaho), and President, US Conferenceof Mayors; Lee Cooke, Chairman, Habitek International,and former Mayor, City of Austin (Texas); Richard Erickson.President, Regional Business Council of Northeast Ohio.and former President, Akron Regional DevelopmentBoard; Parris Glendening, Governor, State of Maryland,and President, National Governors' Association; StephenGoldsmith, Domestic Policy Adviser, Bush-Cheney 2000,and former Mayor, City of lndianapolis (lndiana); JavierGonzales, Commissioner, Santa Fe County (New Mexico),and President-elect, National Association of Counties; LeeHamilton, Director, Woodrow Wilson lnternational Center;

----s-An Economic Vision for the Caribbean

t first glance, the Caribbean appears to be a collec-tion of poor island nations, many of which ranknear the bottom of the list of nations bv everv sta-

tistical measure of economic capaciry including population,national and per capita income, rates of investment, andindustrial growth. In addition, these nations face the imme-diate challenge of responding to the demise of the Lom6Convention, a trade agreement between the EuropeanlJnion and their former colonies which provided protectedmarkets for their banana exports. A third of the Caribbeaneconomy is tied to international banana exports, but theseislands are not economically eflicient producers of bananas

in global terms, so they will not be able to hold on to theirmarket share without the special trade protections providedby the Lom6 Convention. It is tempting and justifiable todecry the'WTO interventions that led to the demise of theseprotections, but it is also arguable that any effort to contin-ue them will delay the type of economic diversification inthe Caribbean that is necessary for its independent survivalin the face of global competition. I would like to suggestinstead, that visionary and effective interventions are neces-sary to create an entirely new and better future for theCaribbean economy and to enable it to diversify, grow fromwithin, and establish itself as a competitive player in theglobal economy.

The interests of the United States are inextricably tied tothe Caribbean. On the one hand, more than $35 billion ingoods and services flow annually between the US and theCaribbean islands, so that growth of the Caribbean econo-my will expand American business and employment oppor-tunities. On the other hand, with over one-third of theCarribean workforce employed in banana production, fail-ure to initiate positive economic alternativesto the declining banana trade will generate aneconomic disaster of such proportions thatcrime rates could skyrocket, massive numbersof new immigrants may flood Florida's east

coast, and the doors to the Carribean corri-dor for drug smugglers could be thrown wideopen.

During the past several decades the UnitedStates has made a number of efforts tostrengthen the Caribbean economy. TheCaribbean Basin Economic Recovery Act,enacted in 1.983, instituted the CaribbeanBasin Initiative (CBI). Untii the NorthAmerican Free Trade Agreement (NAFTA)was ratified tn 1994, most Caribbean nationsenjoyed significant US trade preferencesthrough their participation in the CBI. Afterthe implementation of NAFTA, the earliertrade advantages of CBI for these Carribean

CONGRESSMAN CHAKA FATTAHUS House of Representatives

countries were severely eroded. The phased implementationof NAFTA is further deepening the trade disadvantage ofCBI countries, and without adjustments, the trade gap willcontinue to widen untilJanuary of 2008 when NAFTA willbe fully implemented.

The Caribbean Basin Tiade Partnership Act (CBTPA),passed recently by the Congress and signed by PresidentClinton in May of 2000, provides for the trade adjustmentsnecessary to accomplish so-called "NAFTA pariry" for theCaribbean. This legislation provides eligible Caribbeanisland nations trade status equivalent to the NAFTA signa-tories (US, Mexico, and Canada).The CBTPA is a tempo-rary affanqement that anticipates the negotiation of freetrade agreements between the individual Caribbean nationsand the United States by 2005. In any case, its provisionsexpire in 2008.

It is important to realize that all of these measures followthe format, and operate within the context established by theLIS generalized system of preferences with its commodityspecific tariffs and quotas.Thus they are driven by the strate-gic imperatives of the IJS economy, not by the developmentneeds ofthe Caribbean islands.In addition, these trade agree-ments are tied to traditional elements of the old Caribbeaneconomic production system, and therefore help perpetuateneocolonial dependency. It is doubtful that such trade poli-cies alone can serve as tools for diversified business develop-ment and substantial economic transformation .The questionbecomes what policies can be followed and what actions canbe taken that will enable the Caribbean nations to diversifyand transform their economies in a manner that will allowthem to function effectively and independendy, so that theycan grow compete, and prosper in the global economy.

Puerlo Rico

- 14

Viewed as a whole, the island nations constituting theCaribbean Basin already have all of the infrastructure neces-sary to support a dynamic, modern economy-airports, sea-ports, electrical generation capacity, fresh water distributionsystems, paved road nefworks, and telecommunications trans-mission systems.'With a total popuiation of 26 million, and a

combined Gross Domestic Product of $35 billion, if theCaribbean islands were all one country they would currentlyrank 40th from the top among 226 nations worldwide. TheCaribbean Basin has a generally well-educated and industri-ous workforce, supported by literally dozens of colleges anduniversities. Among the various islands there is now a globaleconomic presence in a variety of industries, including tex-tiles, metal manufacturing, chemicals, agriculture, food pro-cessing, and tourism,and a financial infrastructure with at leastone major international bank in every Caribbean nation.Fina\ there are a number of cities and higtrly urbanized areas

that can serve as centers ofinnovation and advanced servicesfor the entire Caribbean Basin. Although it is most desirableto view these vital economic assets in Caribbean-wide terms,they are tn fact under the control of the many individualcountries, most of whose populations and markets are toosmall to make very efficient use of them. Currently, individ-ua1 Caribbean nations are competing in the global market-place alone, and doing so through trade channels and businessrelationships that were institutionalized long ago during theircolonial periods. How much more powerful would eachCaribbean country be if it functioned through these samechannels, and many others that they might estabiish, as part ofa unified region with an integrated vision, consolidatedresources, and coordinated investment and export strategies?

Importantly, there are a number of long-standing institu-tions that have as their goal the enhancement of economiccooperation among these island nations. One such institutionis the Organrzation ofEastern Caribbean States (OECS).TheOECS has established a strong central bank, The EasternCaribbean Central Bank, providing for a common currency,the Eastern Caribbean dollar. This currency is used byAntigua & Barbuda, Dominica, Grenada, St. Kitts and Nevis,St. Lucia, St.Vincent & Grenadines, Anguill a, and Montserrat.According to Newsweek, these Caribbean nations together in1999 offered the second most successful fixed-rate currencyin the Northern Hemisphere. The Caribbean Communiryand Common Market (CARICOM) is another importantmultinationil. treatty organization with its own region-wideelected parliament. CARICOM's goal is to evolve into anEEC-rype international entity with a corrrrnon currency,freedom of movement among sovereign states, and unrestrict-ed free trade. However, at the present time CARICOMinvolvement is voluntary among the various countries, andthus its decisions do not carry the force of law.An additionalregional entify is the Association of Caribbean States, a par'-Caribbean organization which serves primarily as a regionalcommunications and identity vehicle.

With such significant interest in regional cooperation, andfavorable region-wide assets that can stimulate and supporteconomic development, why has progress toward diversifica-

..,:,,.:.,.,,:,f11,.r,,t . ,',, , :

tion and strengthening of the Caribbean economy been so

slow? Some would argue, that the fractured nature ofCaribbean's island geography is a problem. But there areindustries, notably tourism, telecommunications, informationprocessing, and financial services, for which this geography isnot a liability, and in some instances is considered a majorasset. Others argue that the cultural diversity of the regioncreated by its fragmented colonial heritage is a serious prob-lem. But the diversity of the United States is a defining ele-ment of our national character, and that diversicy does notseem to have stifled our economic growth. Still others sug-gest that insufficient investment capital limits the growthpotential of the Caribbean. The truth is that the potentialinvestment capital currently available in global markets ismore than enough for developing the Caribbean economy,and abundant capital will flow to any locarion or invesrmentopportunity that it expects to generate an adequate return.Therefore, the task facing those who would promote eco-nomic growth in the Caribbean is to create the global per-ception that investment in the Caribbean islands will gener-ate highly competitive returns without undue risk.

I do not mean to suggest that the geography, the cultur-al heritage, or even the infrastructure of the Caribbean donot present substantial challenges. However, it is clearly pos-sible to design and implement a successful Caribbean eco-nomic development strategy based on existing assets, andtaking fully into account these special challenges. What is

presently hampering Caribbean economic growth is thatthe individual countries cannot escape the grip of formercolonial trade connections, external sources of privatefinance, and dependent relationships with internationalfinancial organrzattons that together diminish their freedomof movement to build critical mass and internal momentum.They still remain trapped within the gravitational pull ofthese traditional subordinate relationships. Although leadersin each country are aware of the possibilities for Caribbean-wide economic cooperation, and some may even wish toparticipate in regional initiatives, the status quo of depend-ent international relationships stil1 represents basic econom-ic survival, and these isolated island nations simply do nothave the financial resources individually to build the newcapacity needed to escape the stranglehold of the past andcreate a more dynamic and self-sufficient future.

There are three steps the world communify can take,working in close cooperation with the Caribbean Basinnations, that could catapult them beyond the threat of theeconomic collapse they are currently facing and move themrapidly into the brighter future that their many valuablephysical and human assets make possible. The first is to pro-vide 100% international debt relief.To strip the Caribbeanof its trade protections and other rights and privileges ofcolonial status, while leaving them saddled wirh the remnantfinancial obligations thereof would be unconscionable andunjust. Further, the institutional, human, and financialresources that such a drarnatic international action wouldfree up would help create the room and opportunity tobuild a modern and dynamic Caribbean economy.

15-

The second step is the construction of a public/privatepartnership to mobilize and manage huge new infrastructureinvestments.Today the Caribbean infrastructure is in relative-ly decent shape. But if our objective is to launch theCaribbean region into the high-energy world of global com-petition, then the infrastructure must be upgraded to totalexcellence: create greater electrical capaciqr, extend utilitycoverage, improve transmission lines, repair and strengthenroads, eliminate unpaved airport runways, dredge harbors toimprove shipping access, modernize port facilities, upgradewater distribution and sewage treatment. Such an aggressive

investment program would both create many new jobs forworkers left unemployed by the collapse of the market forCaribbean bananas, and at the same time create the piatformto generate high value-added economic growth.

The third major step is to organize a university-led eco-nomic development consortium. This consortium wouldinclude the academic, corporate, civic, and political leader-ship of the Caribbean islands. It would invite the participa-tion of interested American and other international univer-sities and private sector executives and entrepreneurs, and itwould engage in a broadly based participatory strategicplanning process designed to create and promote a newpopular, exciting, and realistic vision of the Caribbean'sfuture. This process would address strategic industries, edu-cation and workforce training. research and technologydevelopment, capital availabiliry business formation andgrowth, community and environmental issues, and otherimportant assets from the perspective of the entire

Caribbean Basin, toward the goal of harnessing and focus-ing all available resources-public and private, local andinternational-in pursuit of the widely shared vision thatemerges from the strategic planning process..

In the new global economy every nation is a "developingcountry."Technology has a way of leveling the playrng field ofopportunity and reducing the gap in development potentialbetween high and low income nations. The accessibility andrapid dissemination ofinformation and innovation means thatthrough strategically guided leadership, economic success can

be created virtually anywhere. The shaping opportunity ofdeveloping countries derives from the character of the neweconomy: knowledge and information-based, technology andcommunications-intensive, and globally oriented. The ubiq-uitous and globally penetrating worldwide web empowersnewcomers and start-ups, so niche players have a real chanceto create and control brand new product markets which can

grow and spawn entirely new industries. There are literallythousands of products on the market today that did not existjust one or rwo decades ago.These new products have creat-ed wealth sufiicient to finance development of the entireCaribbean. if not the entire so-called Third World. The termof art that has evolved to describe the combination of cir-cumstances likely to give rise to such outcomes is "the inno-vative milieu." New places, by properly configuring theirassets, can become centers of innovation and invention, andcan both take advantage of and produce new technologicaland organizational breakthroughs that will give them a com-petitive edge. My last proposal is designed to gather the lead-ership and creativity that can reinvent the Caribbean as a

magnet to attract talented people, and a greenhouse for grow-ing economic innovation.

In conclusion, the Caribbean has an abundance of valuableassets with which to compete successfully in the global mar-ketplace, but the many small and independent island countriesmust work together as an econo-i."lly unified region in orderto utilize their combined assets effectively and to their bestadvantage. The highly developed nations of the world, led bythe United States, can assist the Caribbean in establishing itsnew international identity by releasing the financial constraintsimposed on these individual nations through 100 percent debtrelief. Investing in the full development of the Caribbean'smany physical and human assets is in the best interests of theglobal economy, and it will help overcome the looming hard-ship and deprivation that will follow the elimination of oldcolonial trade protections. Development opportunities are notso much a matter of rich and poor as they are of vision andleadership. My hope is that the global community joins handswith the Caribbean and rises to the occasion. o

Congressman Chaka Fattah is a Member of the US House ofRepresentatiues in Washington, DC, representing the SeconilCongressional District of Pennsyluania, which incluiles partof the City of Philadelphia and some of its western suburbs.He serued as Co-Chairman of the Liuable CommunitiesTaskForce, anil Co-Chairman of the Weh-Baseil EilucationCommission, in the 106th Congress.Dominican Republic

The Cities Alliance: A New Global Challenge toUrban Poverty

MARK Ti:I#,}T*?

ffordable, community-based solutions exist to pro-vide the urban poor with access to basic services.'Why then do 40 to 50 percent of ciry residents in

many developing country cities-including the vast major-ity of the urban poor-live in slums and squatter settlementswithout access to clean water, sanitation, health care, roads,and schools?

Slums and squatter settlements are the resuit of failuresin governance and public policy in coping with rapidurbanization. Given this terrible legacy of failed policiesand faced with the doubling of the urban population ofdeveloping countries over the next 25 years, how can wepossibly hope to respond to this challenge? How can weensure that the next generation of urban poor will benefitfrom the enormous opportunities for human developmentthat urban life offers?

First, we must take up the challenge of urban poverryreduction as a global public policy issue. Strategies toimprove the urban poort access to ciry services must bedeveioped beyond the boundaries of sector strategies andwithin the broader frameworks of both city developmentstrategies and national poverry reduction strategies.

Second, we must caprtaltze on the trends of decentraliza-tion and democratization by working more directly with localauthorities to help them respond to the issues facing theurban poor. Many locai authorities now have the responsibil-ity and authority they need to take decisions at the local level.Moreover, democratization has strengthened their accounta-biliry and since the urban poor are voting in ever increasingnumbers, their demands for basic urban services are now fre-quently showing up as political priorities for local leaders.

Third. to achieve the above we need to invest in a col-lective effort to harness the power of existing networks oflocal authorities, private sector institutions, and develop-ment agencies. Investing together in a focused effort tobroaden the benefits of local solutions through global learn-ing will create a coherent effort necessary to dramaticallyscale-up the impacts of urban development investments.

The Cities Alliance is building a coalition of cities andtheir development partners to meet these challenges. It willdraw upon the vast experience of community-based urbanupgrading programs, while addressing the public policy, reg-ulatory and institutional issues that have in the past con-strained replication and scaling-up. Its strategy is to address

inequities in the provision ofbasic infrastructure and serv-ices within the framework ofbroad-based cify develop-ment strategies. This strategyhas been inspired by coura-geous mayors in cities of allsizes and in all regions whoare demonstrating the politi-cai will to invest in thisopportunity.

The World Bank and theUnited Nations Centre forFIuman Settlements (Habitat)together launched The CitiesAlliance in May of 1999, togenerate a new internationalpublic-private partnershipcommitted to makingunprecedented improvementsin the living conditions of theurban poor.The Alliance aimsto achieve this goal by mobi-hzing commitment andresources for citywide andnationwide upgrading pro-grams which are conceived bylocal stakeholders within the

Nicaragua

17-

broader framer,vork of strategic urban economic development.Working together with cities and their national and interna-tional associations on new tools and knowledge sharing, pub-lic and private sector partners in the Alliance rvi11 marshal theirexperience and knowledge to support both the formulationand implernentation of city development strategies.

The Cities Alliance Consultative Group r,vill serve as a

global public policy forum to share the lessons learned andagree on policy orientations and standards of practice in areas

related to the Alliances' goals. The Cities Alliance rvill drawupon the existing capacity of its partners for implementation.The objective is to catalyze partners' actions in ways that gobeyond their individual actions and to help create a newcoherence of effort in urban development cooperation.

'Whether new urban residents over the next 20 years willlive as disenfranchised citizens in conditions of misery anddegradation, or in conditions of dignity and well-being, willdepend to a great extent on decisions that we collectivelymake norv. In a globalizing world, it is clear\ in our self-interest to join forces to meet this challenge. r

Meyk Hildebyand is Manager of 1"he Cities Allianrc at'fheWorld Bank in Whshington, I)C.

The Cities Alliance Fact Sheet

WHAT IS THE CITIES ALLIANCE?

. A global coalition of cities and their development part-ners committed to pro-poor policies and prosperouscities without slums.

r Launched in 1999 by the World Bank and the UnitedNations Centre for Human Settlements (Habitat), withtwo areas of focus:

- Linking the process by which local stakeholdersdefine their vision for their city, analyze its eco-nomic prospects, and establish a city developmentstrategy and priorities for action;

- Making unprecedented improvements in the livingconditions of the urban poor by supporting city-wide participatory urban upgrading programs ancnationwide scales of action-with targets set inCities Witltout Slums initiative.

WHY FOCUS ON THE URBAN POOR?

. Over the next two decades g0% of population growthin developing countries will be urban.

I Already close to 30% of the developing world's urbanpopulation lives below poverty lines.

o Pro-poor policies are needed to cope with this explo-sive growth of urban poverty and growing inequalitybecause they threaten the social cohesion and politicaistability needed for social development and economicgrowth.

o Demand is high-the urban poor are influencinginvestment priorities since they are voting in increas-ing numbers, and decentralization has put pressure onlocal governments to be more accountable.

IMPACT TARGETS

t Cities Without Slums action plan-improve lives of100 million slum dwellers by 2020.

r Holistic city development strategies-define roles ofall stakeholders in implementation.

r Citywide and nationwide scales of action*focus onscaling-up and sustainabil ity.

o Build political will-demonstrate that slums are notinevitable.

r Partnerships-expand the level of resources reachingthe urban poor by improving coherence and by moredirectly linking grant funded technical cooperation toinvestment follow-up.

BUY.IN TO.DATE

r Integral to World Bank's urban sector strategy*Bank'sinitial investment $3million.

o Integral to United Nations global campaigns on securetenure and good urban governance-initial commit-ment by Habitat $1.5 million.

o The world's major international associations of citiessit on governing board as equal partners.

o Ten governments-including all of the G-7-have com-mitted initial $15 million.

o President Nelson Mandela committed to serve active-ly as "patron" of Cities Without Slums initiative; actionplan strongly endorsed by Secretary-General of UnitedNations and incorporated in United NationsMillennium Declaration adopted by 150 Heads of Statein September 2000.

o Regional development banks, United NationsDevelopment Programme, United Nations Children'sFund (UNICEF), lnternational Labor Organization,European Union, and several other multilateral andbilateral agencies are considering joining partnership.

FUNDING GAPS

r Gap of $19 million for the Cities Alliance 3-year busi-ness plan.

I Gap of additional $75 million tor Cities Without Slumsfirst 5-year plan.

The Future of the World's Megacities

ccording to the United Nations PopulationDivision, the world passed the historical six billionmark in October 1999. One of the most striking

features of world population growth is the rising predomi-nance of the developing world. During the past 50 years,near\ 90 per cent of all population growth at world leveloccurred in the developing regions.'Within less than 50 years,by 2045-2050, ali population growth is expected to be con-centrated in the developing regions, since the developedregions (which include Europe, Japan, Northern America,and Australia/New Zealand) will most likely experience a

net reduction of their overall populations. Despite theHIV/AIDS pandemic, Africa is expected to be the fastestgrowing region, probably doubling in size over the next halfcentury-from 751. million to between 1.5 and 2.1 billionpersons by 2050. The population of Asia is expected toincrease from 3.6 billion persons at present to somewherewithin the range of 4.3 to 6.3 billion by 2050. LatinAmericaand the Caribbean is likely to increase from 505 million tosomewhere befiveen 654 and 994 million by 2050.

The second striking feature is related to urban growth.Although the growth of world urban population has beenslower than what was projected 20 years ago, its scale hasbeen unprecedented. Over the past 30 years, world urbanpopulation more than doubled, increasing by 1.5 billioninhabitants. In the next 30 years, virtually all of the world'spopulation growth will be in urban areas. During that peri-od the urban population is expected to increase by 2 billionpersons, the same number that will be added to the wholepopulation of the world. Most of thisgrowth will take place in the urban areas

of the developing world, whose growthwill likely increase from 1.9 billion in2000 to 3.9 billion rn 2030.The urbanareas of the developed regions areexpected to increase very slowly, from900 million in 2000 to 1 billion in2030.

As in the case of total population,there will be a significant redistributionof world urban population between thedeveloped and the developing regions.Between 1950 and 1975, 32 millionnew urban dwellers were added annual-ly worldwide-about two-thirds in thedeveloping countries. During 1975-2000, 52 miilion new urban dwellerswere added each year-87 percent indeveloping countries. By 2000-20 1 5, 65million will be added annually-93 per-cent in developing countries.

.:..,':'.1..r,i ,i,..l,-.,l' l.,-, ,. I l

ELLEN BRENNAN.GALVINThe United Nations

Looking at the regional breakdown, Africa has the low-est level of urbanization and the fastest urban growth.Currently, 38 percent of Africans are urban dwellers; by2030,the percentage will be 55 percent.The problem facingmuch ofAfrica is that very rapid rates of urban growth makeit exceedingly difhcult to provide services. The urbangrowth rate for Africa as a whole currently is around 4 per-cent. East Africa is growing at more than 5 percent perannum, with individual countries growing at considerablyhigher rates. Projections show that Africa's urban growthrate will stay around 3.5 percent through 2010 and abovethree percent until 2015-2020.

Latin America and the Caribbean is the most urbanizedregion in the developing world, with three quarters of itsinhabitants living in urban areas-roughly the same per-centage as in the United States. Between 2000 and 2030,213 miilion people will be added to the urban population ofthis region, bringing the percentage of people living inurban areas to 83 percent. Asia has a 1eve1 of urbanizationvery similar to that of Africa-currently 37 percent. Asia as

a whole, however, will have to absorb huge populationincrements-a total of I.3 billion new urban inhabitants by2030. South Asia faces particularly daunting prospects, wirhIndia having to absorb as many as 345 million new urbaninhabitants between 2000 and 2030,Pakistan 99 million, andBangladesh more than 50 million.

A central characteristic of current world urbanizationtrends is that megacities-cities with populations of tenmillion or more-are becoming larger and more numer-

Managua, Nicaragua

19-

ous, accounting for an increasing proportion of urbandwellers. Currently, there are 19 cities in the world withover ten million inhabitants, 15 in deveioping countries. By2015, there will be 23 cities with over ten million inhabi-tants-19 in developing countries (13 in Asia, four in LatinAmerica, two in Africa) (Table 1).These megacities, whichcurrently shelter 263 ntlhon inhabitants, are projected togain more than 100 million inhabitants by 2015, increasingto 375 million inhabitants. Bombay is expected to becomethe second largest megaciry rn 201.5, followed by Lagos,Dhaka and Slo Paulo.

The eme;:gence of megacities is a modern phenomenon,occurring over the last half century.In 1950, only NewYorkhad a population of ten miliion or more. In addition to theincrease in their number, megacities are becoming consider-

ably larger.The minimum population size for a ciry to makethe list of the world's 15 largest urban agglomerations was

3.6 million in 1950. By 1990, a population of 9 million was

required as the threshold. By 2015, Buenos Aires, with 14.1

million, is expected to be 15th on the 1ist.

Whereas the average annual rate of population growthwas one percent or less for megacities in the developed worldduring 1970-1990, megacities in developing countries haveexhibited significantly higher rates of population growth, as

well as a larger range of rates, than those in developed coun-tries. Some megacities are continuing to grow very rapidly.Dhaka, for example, grew by 6.9 percent per annum during1,975-2000, while Lagos grew by 5.6 percent annually.

Contrary to the alarmist predictions, however, about"exploding cities," the growth of most of the world's megac-

ities has been slowing down, in someinstances quite dramatically. MexicoCiry is a case in point.Whereas pro-jections prepared by the UnitedNations and theWorld Bank duringthe 1970s forecasted a population forMexico City in the range of 27-30million by the year 2000, MexicoCity's population is currently 18.1

miliion-projected to reach I9.2million in 2015. One explanationfor the decline in megacity growthrates appears to be a deceleration inrates of national population growth.Indeed, a simple regression indicatesthat the national population growthrate explains nearly half (47 percent)of the variation in megacity growthrates in developing countries. Ofcourse, the fact that India's threemegacities grew at rates of between2 and nearly 4 percent per annumduring 1975-2000 indicates thatother forces must surely be involved.Still, the relationship betweenmegaciry and national populationgrowth rates is quite remarkable,given that megacities generally com-prise only a very small proportion oftheir national populations.

It is diflicult to generalize aboutthe factors behind the siowdown inthe growth of many of the world'smegacities, as numerous complexfactors are involved. Again, MexicoCiry provides an example. In addi-tion to voluntary emigration afterthe 1985 earthquake, factors makingMexico Ciry less attractive haveincluded rising housing prices, theincreasing cost of living, and qualiryof life considerations. lndeed, one

Table 1-Recent and Projected Growth of the World'sMegacities, 1975-2015

POPULATION(mittionsl GROWTHRATE{percentase}

Megacity

l. Tokyo

2. Mexico City

3. Bombay

4. Sao Paulo

5. New York

6. Los Angeles

7. Shanghai

8. Lagos

9. Calcutta

10. Buenos Aires

11. Dhaka

12. Karachi

13. Delhi

14. 0saka

15, Beijing

16. Jakarta

17. Metro Manila

18. Rio de Janeiro

19. Cairo

tg75

19.8

11.2

6.9

10.0

15.9

8.9

11.4

3.3

7.9

9.1

2.2

4.0

4.4

9.8

8.5

4.8

5.0

7.9

6.1

20m

26.4

18.r

r8.1

17.8

16.6

13.1

12.9

13.4

12.9

12.6

12.3

11.8

11.7

11.0

10.8

1 1.0

10.9

r0.6

10.6

2015

26.4

19.2

26.1

20.4

17.4

14.1

14.6

23.2

17.3

14.1

21.1

19.2

16.8

I 1.0

12.3

17.3

14.8

1 1.9

13.8

tg75-2000 2uxl-2915

1.2

1.9

3.9

2.3

0.2

1.5

0.5

5.6

2.0

1.3

6.9

4.3

3.9

0.4

0.9

3.3

3.1

1.2

2.2

0.0

0.4

2.4

0.9

0.3

0.5

0.8

3.7

1.9

0.7

3.6

3.2

2.4

0.0

0.9

3.0

2.1

0.8

1.7

Source: United Nations Population Division, World Urbanization Prospects: The 1999

Revision.

-20third of a sample of Mexico Ciry residents intervierved in a

migration survey conducted in 1987 indicated that theyexpected to move away from the city in the future; morethan 75 percent of the residents sampled referred to prob-lems related to metropolitan life, such as delinquency, stress,

and air pollution. Of even greater importance is the fact thatmore dynamic grorvth has occurred elservhere. Indeed, therapid economic gror,vth of Mexico's border states-r,vhichaccounted for 62 percent of national job grorvth from 1985to 1990-is a major explanation for Mexico Ciry's relativedecline.

REGIONAL OVERVIEWThere is a great diversiry of experience arnong the worldtmegacities. Broad differences in patterns of megacity growthpersist among the major geographical regions. In LatrnAmerica, the rate of population growth of most major citiesin the region peaked during the 1960s, when fertility levelswere still relatively high and governments in the region werepursuing policies of import-substituting industrializationthat drerv large numbers of migrants to the cities.

In recent years, a dramatic and unanticipated slowdown rnthe growth of megacities in the Latin American region sur-

Global T?ends 2OL5: A Dialogue about the Future withNongovernment ExpertsThefollowing text is an excerpt (pp. 16-17)from a publication with the slme nAme, published December 18,2000 by the

US National Intelligence Council and the LJS Central Intelligence Agency

Movement of PeopleTwo major trends in the movement of people will charac-terize the next 15 years*urbanization and cross-bordermigration-each of which poses both opportunities andchallenges.

Growth in Mega-CitiesThe ratio of urban to rural dwellers is steadily increasing.By 2015 more than half of the world's population will beurban. The number of people living in mega-cities-thosecontaining more than 10 million inhabitants-will doubleto more than 400 million.

Urbanization will provide many countries the opportu-nity to tap the information revolution and other techno-logical advances.

The explosive growth of cities in developing countrieswill test the capacity of governments to stimulate theinvestment required to generate jobs and to provide theservices, infrastructure, and social supports necessary tosustain livable and stable environments.

Regional Fcpulation: 1950-2015Divergent demographic trends, the globalization of labormarkets, and political instability and conflict will fuel adramatic increase in the global movement of peoplethrough 2015. Legal and illegal migrants now account formore than 15 percent of the population in more than 50countries. These numbers will grow substantially and willincrease social and political tension and perhaps alternational identities even as they contribute to demograph-ic and economic dvnamism.

States will face increasing difficulty in managingmigration pressures and flows, which will number sever-al million people annually. Over the next 15 years,migrants will seek to move:r To North America primarily from Latin America and

East and South Asiar To Europe primarily from North Africa and the Middle

East, South Asia, and the post-Communist states ofEastern Europe and Eurasia.

r From the least to the most developed countries ofAsia, Latin America, the Middle East, and Sub-SaharanAfrica.

Regional Population by Age Group: 2000 and 2015For high-income receiving countries, migration willrelieve labor shortages and otherwise ensure continuingeconomic vitality. EU countries and Japan will need largenumbers of new workers because of aging populationsand low birthrates. lmmigration will complicate politicaland social integration: some political parties will continueto mobilize popular sentiment against migrants, protest-ing the strain on social services and the difficulties inassimilation. European countries and Japan will face dif-ficult dilemmas in seeking to reconcile protection ofnational borders and cultural identity with the need toaddress growing demographic and labor market imbal-ances.

For low-income receiving countries, mass migrationresulting from civil conflict, natural disasters, or econom-ic crises will strain local infrastructures, upset ethnic bal-ances, and spark ethnic conflict. lllegal migration willbecome a more contentious issue between and amonggovernments.

For low-income sending countries, mass migrationwill relieve pressures from unemployed and underem-ployed workers and generate significant remittances.Migrants will function as ethnic lobbies on behalf of send-ing-country interests, sometimes supporting armed con-flicts in their home countries, as in the cases of theAlbanian, Kurdish, Tamil, Armenian, Eritrean, andEthiopian diasporas. At the same time, emigrationincreasingly will deprive low-income sending countries oftheir educated elites. An estimated 1.5 million skilledexpatriates from developing countries already areemployed in high-income countries. This brain drain fromlow-income to high-income countries is likely to intensifyover the next 15 years.

zr-

Johannesburg, South Africa

prised even local observers.'Whereas a process of intra-met-ropolitan employment dispersal has been taking place for a

number of years in such cities as Buenos Aires, Sio Paulo, andMexico Ciry the scale has increased greatly. Manufacturingplants have been moving much greater distances and oftenbeyond metropolitan boundaries (within a 200km radiusfrom the central core of Slo Paulo, for example). In addition,profound changes have taken place over the past decade inBuenos Aires, Mexico Ciry Rio de Janeiro, Slo Paulo, andother large Latin American cities as a result of economicrecession and structural adjustment programs.

Despite its relatively low level of urbarnzation (37 percent),Asia accounts for near\ half (48 percent) of world urban pop-ulation. Amounting to 1..4 billion persons, this number is 50per cent higher than the current urban population of thedeveloped world. As noted, a majority of the world's megaci-ties are located in Asia. Many megacities in Asia have experi-enced dramatic economic growth in recent years. Seoul, witha Gross Domestic Product (GDP) of $93 billion in 1990-the12th highest in the world-is rapidly moving away from"developing" country status. Until theAsian economic crisis in1998, Bangkok andJakarta had booming economies. In theSoutheast Asian countries as a whole, urbantzation has beenpenetrating deep into the countryside, resulting in extendedand dispersed mega-urban regions encompassing hinterlandsas far as 100 km from the central core.

In recent years, China's megacities have been growing atvery rapid rates, although this growth is partly due to reclas-sification. Of course, the meaning of "urban" in China is

now far different from the generally accepted meaning ofthat term. The use of official urban and migration statisticsto measure levels of and changes rn urbanization can be seri-ously misleading. Moreover, the experience of China'smegacities has been fairly unique.IJrban migration over thepast several decades has been closely related to politicalswings, economic changes, and related policy shifts.

The largest cities of the Indian subcontinent (e.g.

Bangalore, Bombay, Calcutta, Delhi, Hyderabad, and Madrasin India; Karachi and Lahore in Pakistan; and Dhaka inBangladesh) have followed a different pattern. Many megac-ities on the subcontinent have fairly stagnant economies, yetthey will have to absorb huge population increments overthe next several decades. Bombay, where at least half thepopuiation does not have access to adequate shelter, is pro-jected to have a population of more than 26 million in201,5. Karachi, a city experiencing continuing politicalunrest, is projected to have a population of more than 19

million inhabitants. Dhaka, one of the poorest cities in theworld where the average annual income for slum dwellerscurrently is around US $150, is projected to have a popula-tion of more rhan 21. million in 2015.

Fueled by continuing out-migration from impoverishedrural areas and by very high natural increase, despite years ofsustained recession, cities in Africa are growing very rapidly.At nearly rwice the world average, this growth puts incred-ible pressure on already strained economies.'Whereas muchof the academic literature stresses the strong link betweeneconomic development and urbanization, the relationship

between the two is much weaker in Africa than elsewherein the developing world. Many countries in the regionexperienced negative or very slow rates of Gross NationalProduct (GNP) growth in the last two decades.Yet almost allcountries in the region exhibited high urban growth rates,

including those with negative GNP growth. The twomegacities in sub-Saharan Africa, Lagos and Kinshasa, areamong the worldb poorest yet most rapidly growing megac-ities and are expected to continue to grow at a similar paceover the next two decades.

PATTERNS OF INTRAMETROPOLITANPOPULATION GRO\VTHJust as there are wideiy divergent patterns of economicdevelopment and urban growth among the major geo-graphical regions, there are striking demographic differen-tials within megacities.Aggregate rates of population growthfor the megacities may be quite misleading. Megacities are

spatially very extensive, with sizes ranging from the tradi-tional core city of 100-200 sq. km to regions of2,000-10,000 sq. km and more.

Population growth in large cities usually does notincrease the population density of high-density areas, butpromotes densification ofless developed areas and expansionat the urban fringe. In particular, population densities in thecentral core frequently decline as households are displacedby the expansion of other activities. This finding is veryrobust in both industrial and developing countries and has

been observed in cities as diverse as Bangkok, Bogotl,Mexico Ciry Shanghai, and Tokyo. Whereas the traditionalurban cores of many megacities are experiencing very slowor negative population growth, areas on the periphery fyp-ically are experiencing rapid growth. For example, the ciryof Slo Paulo grew by one percent per annum during1,980-1991,. The central core as well as the interior andintermediate rings lost population (at rates of -1.3, -0.9 and-0.4 percent per annum, respectively). The exterior ringgrew by only 0.4 percent per annum

"vhile the periphery

expanded by 3 percent.In many megacities, periurban areas have grown or are

continuing to grow at staggering rates, making it impossibleto provide services. In Slo Paulo, for example, the growth ofthe peripheral ring was nearly 13 percent per annum during1960-1,970, declining to 7.4 percent during 1970-1980 andto 3.8 percent during 1980-1987. It is not uncommon forperipheral areas of megacities to be growing by rates of10-20 percent per annum. Flowever, because of the rapidi-ty of growth in these newly developing areas, sometimes as

a result of sudden land invasions, the magnitude of thisgrowth is unrecorded.

Such rapid population growth in periurban areas has

serious implications for infrastructure provision and landmarkets.A major reason why local administrations in manydeveloping country cities have not coped successfully withurban population growth is that they simply do not knowwhat is going on in their local land markets. Most megac-ities lack sufficient, acctJrate, and current data on patterns

Beiiing, China

of land conversion, infrastructure deployment, and landsubdivision patterns. Frequently, urban maps are 20 to 30years old and lack any description of entire sections ofcities, and particularly of the burgeoning periurban areas.

Clearly. the rypical ten-year census interval is a problcnr inthe analysis of megacities, as the metropolitan populationmight easily grow by more than two million within a five-year period.

THE COMPONENTS OF MEGACITY GROWTHEven if all in-migration to the megacities were somehow tocease, cities would have to absorb huge population incre-ments as a result of natural increase. This point is often lostin the popular literature. In many megacities, naturalincrease is and will continue to be the most important fac-tor explaining population growth.At world level, net migra-tion from rural to urban areas accounts for less than half ofthe population growth of cities.Around 60 percent of urbangrowth is due to the excess of urban fertiliry over urbanmortaliry.

A study of the components of urban growth prepared bythe United Nations Population Division found that, where-

2g:

-as internal migration and reclassification was the source of64 percent of urban growth in developing Asia during the1980s (around 50 percent if China is excluded), it account-ed for only 25 percent of urban growth in Africa and 34percent in Latin America. These findings have importantimplications for policymakers and planners. In regions char-actertzed by economic stagnation, where rates of rural out-migration have declined over the past decade, such as Africaand Latin America, the contribution of natural increase has

been strengthened. Consequently, if the growth of urbanareas is to be significantly reduced, more emphasis needs tobe given to the reduction of Grtiliry.

Interestingly, for all of the theorizing about the linkagesbefween urbanization and fertiliry decline over the past sev-eral decades, detailed work in this area has been quitesketchy. Using Demographic and Health Survey (DHS) datacollected between 1987 and 1.993 in 14 Afncan countries,recent research on fertiliry behavior in African cities has

found that high levels of female in-migration have reducedtotal fertility rates in African cities by about one birth perwoman. This influence of migration on fertiliry appears

consistent throughout sub-Saharan Africa, suggesting thatmigration to cities may be promoting national fertiliry tran-sitions in Africa. This situation is all the more ironic sincemost African governments currently are quite serious aboutreducing aggregate rates of population growth.Yet they are

quite insistent on curbing the growth of metropolitan areas,

mainly by retaining population in the countryside.In a sense, the richness of this research highlights how lit-

tle has been known up to now about the complex factorsinvolved in recent urban fertility behavior in developingcountries. Factors such as the volume and permanence ofmigration, the eflects of age structure, spousal separation,exposure to modern ideas, and the changing opportunirycosts of childbearing remain understudied. Despite thewidespread acknowledgment 20 yearc ago that family plan-ning was one of the most cost effective means of reducingurban growth, virtually no work has been done on familyplanning use and needs among the urban poor. Indeed, froma policy perspective, the limited knowledge of the linkagesbetween rural-urban migration and, in particular, contra-ceptive behavior has hampered the efforts of policymakersand program workers to design and implement effectivefamily planning programs which might have a significantimpact on reducing urban growth.

ATTEMPTS TO CONTROL MEGACITY GRO\VTH.While a considerable knowledge gap remains regarding the

complexity and future implications of demographic changein the world's megacities, there is a generally accepted bodyof ideas in the policy arena for controling megacify growth.For example, the anti-urban bias finally appears to have dis-sipated. It is now widely acknowledged that cities are, ingeneral, productive places that make more than a propor-tionate contribution to economic growth. ln retrospect, it is

perhaps astonishing that the anti-urban bias of planners,some scholars, and government ofhcials has continued for so

long despite apparent grounds for discrediting it. For years,planners made futile attempts to "contain" urban growth onthe assumption that rural to urban migration could be

stopped or slowed down and that people could be relocatedfrom the existing urban areas. These views no longer are

accepted widely, except perhaps in Africa.Early attempts to "contain" megacity growth ranged from

the "closed city" policies ofJakarta (1970) and Manila (1960r,which were notorious failures, to China's household registra-tion system. It was long assumed that direct controls on resi-dential mobility had litde chance of success, except perhaps ina collectivist sociery such as China;even this turned out not tobe the case. Despite decades of restrictions, China's "floatingpopulation" in its largest cities now numbers in the millions.

A number of developing countries have devoted consid-erable efforts to devising strategies to reduce metropolitangrowth, primarily by fostering the growth of secondarycities and promoting regional development. Mexico is a

prime example. Since the early 1970s, Mexico has had oneelaborate plan after another-typically a new one in eachsix-year presidential term of office. It is generally acknowl-edged, however, that these plans have had minimal irnpacton influencing Mexico's patterns of spatial distribution.

How the world's megacities are managedin coming decades will shape patterns ofnational economic growth, the settle-ment of vast populations and the socialand political stability of many develop-ing countries. The stakes are high.

The great paradox is that profound changes haveoccurred in patterns of spatial distribution in Mexico and inother developing countries, yet regional policy is consideredto have contributed very little to it.Indeed, deconcentrationhas occurred in practice when regional planning has been atits weakest, with few governments in heavily indebteddeveloping countries having any funds to invest in infra-structure in the poorer regions, or to offer incentives forindustrialists to relocate to the periphery.

It is now widely acknowledged that it is counterproduc-tive to talk about how to "control" the growth of megaci-ties, whether through coercive measures or by channelinggrowth to secondary cities. Moreover, despite the rhetoricthat still abounds, megacity size per se is not a critical poli-cy variable. Since the 1980s, there has been a remarkableshift of research attention from the demography of cities tothe polity of cities, with particular focus on issues of urbanmanagement and, in the 1990s, urban governance. Withrespect to management, a virtual consensus has emergedamong urban scholars that the costs and benefits of cities arenot merely a product of population size (hence growth), butare primarily a consequence of the commitment and capa-

- 24.

bilities of municipal governments toimplement policies that improve pop-ulation welfare. The assumption thatgood management overcomes popu-lation constraints of cities wouldappear tenable based on recent histo-ry. Many cities of the world, forinstance those of recent origin in sub-Saharan Afrtca, are too big relative totheir managerial capacities. Yet someof these "oversized" cities are ouitesmall, e.g.. in the range of 100,000 to200,000 inhabitants. Similarly, manymegacities-Tokyo is cited mostoften-are seemingly well-managedand, therefore, not too larqe.

CONCLUSIONIn calling attention to rhe growth ofmegacities, the US CentralIntelligence Agency's Global Tiends2015 , noted that "the explosivegrowth of cities in developing countries will test the capac-ity of governments to stimulate the investment required togenerate jobs and to produce the services, infrastructure, andsocial supports necessary to sustain livable and stable envi-ronments." In coming decades, large cities will be at theforefront of globalization and will be the principal nodesgenerating and mediating the flow of capital, people, trade,greenhouse gases, poilutants, diseases, and information. Ifboth urbantzation and decentraltzation continue in thedecades ahead, cities will caffy a heavy charge of responsi-bility for political stabiliry openness, economic progress, andthe qualiry of life in many narions. Megacities rhat canbecome and remain more competitive in international tradeand investment are likely to grow in the future, whereasthose that cannot are likely to stagnate or decline.

The necessity for megacities to be internationally com-petitive in order to sustain their economic vitaliry in the21st century may well create new and wide economicchasms if governments in cities with lagging internal com-petitiveness do not improve urban conditions. Megacitiesthat continue to grow in terms of population, but lag behindin international competitiveness and economic develop-ment, may become less able to support large influxes of pop-ulation or alleviate urban poverty.

It is important to emphasize that the population of theworld's megacities will continue to grow over the next sev-

eral decades, whether or not they become more interna-tionally competitive-indeed regardless of whether theireconomies grow at all. Economically lagging metropoliranareas in developing countries continue to attract migrantsbecause the "push factors" of rural poverry make even sub-sistence living in poor cities a more attractive alternative.Among the megacities with the highest rates of populationgrowth are poor cities with sluggish economies such as

Cairo, Calcutta, Dhaka, Kinshasa and Lagos.How the world's megacities are managed in coming

decades will shape patterns of national economic growth,the settlement of vast populations and the social and polit-ical stabiliry of many developing countries. The stakes arehigh. -Without

extraordinary efforts ro develop urbaneconomies, especialiy in such a critical area as infrastruc-ture, a segregated world economy may emerge where thosemegacities that have the necessary prerequisites for integra-tion prosper, while others fall farther and farther behind.[Jnless such trends are reversed, the urban landscape inmany developing countries will be bleak, chaotic andimpoverished. o

Dr. Ellen Brennan-Galuin is Chief of the Poptulation PolicySection of the Uniteil Nations Population Diuision in NewYork City.

San Juan, Puerto Rico

25-

Recent Wilson Center International Workshop onUrban Governance in Major World Cities

BLAIR A. RUBLE, JOSEPH S. TULCHIN, AND ANDREW D. SELEE'Woodrow'Wilson International Center for Scholars

heWorkshop on (Jrban Governance in MajorWorldCities, sponsored by the -Woodrow WilsonInternational Center's Comparative lJrban Studies

Project and the US Agency for International Development,brought dozens of leading experts from cities around theworld to meet on December 7-8, 2000, at the WilsonCenter in Washington, DC. Speakers addressed emerginggovernance issues in ten large metropolitan areas: Bombay,Manila, Tokyo, Abidjan, Johannesburg, Sao Paolo, Santiago,Moscow, and Kiev, and discussed common themes emergingin state-sociery relations in these cities.

In his introductionWilson Center Fellow Richard Strendubbed the workshop's central theme as "The IrresistibleForce Meets Godzilla." Based on his humorous metaphor,"the irresistible force" is the emergence of large, complexmetropolitan areas affected by globalization, migration, andthe diffusion of economic and political power. "Godzilla" is

the growth of citizen mobilization which is placing increas-ing social demands on these cities. The meeting pointberween these two dynamics is the challenge of urban gov-ernance:how to address complex problems while remainingresponsive to citizen concerns.

The emergence of mega-cities, and the concomitantproblems of urban governance on a very large scale, is a rel-ativeiy new phenomenon. The social energies unleashed inthese mega-cities can be described as a "Fourth -W'ave."

However, while Samuel Huntington's "Third'Wave" focuseson regime change at the top leve1s of national governments,the "Fourth 'Wave" is driven by grassroots expressions ofpolitical enthusiasm and involvement in large urban regions.Increased social mobilization directed at urban issues maylend a high degree of legitimacy to iocal governmentswhich can respond favorably to these demands, but italso creates problems for metropolitan leaders who are

accustomed to non-participatory planning approaches.Tensions naturally emerge between the need for

government coordination of large metropolitanregions and the importance of democratic participa-tion in smaller units within these same regions. Insome cities in the developing world, this is furthercompounded by the prevalence of informal networksthat have emerged to supply needs that are not met byiocal governments. In many cities new strategies forparticipatory governance have been initiated toinvolve citizens in urban management.These initiativeshave provided encouraging, though highly unevenexperiences. However, the way to approach participa-tory governance differs from ciry to ciry and there is

no single strategy to build effective participation. Insome cases, municipal institutions in developing coun-

tries, which have been patterned after those of the UnitedStates ofAmerica or of European nations, may not be fullyharmonized with local traditions and practices and thusshould be reexamined and potentially restructured.

Participants in the workshop stressed the need to findlocal government mechanisms that generate civic participa-tion and create public accountabiliry to citizens and com-munities.While they acknowledged that the combination ofparticipation and accountability may not always lead tomore efficient ciqr management and effective economicperformance, it will at least make the highly challenginggovernance of complex, dynamic, and problematic mega-cities a shared enterprise between citizens and the state, andprovide greater opportunities for people and places that are

traditionally rnarginahzed to have their voices heard andtheir concerns addressed. o

Dr. Blair A. Ruble is Director of the Kennan Institute forAiluanced Russian Stuilies at the Woodrow WilsonInternational Centerfor Scholars inWashington, DC. He iscoeilitor o/Preparing for the Urban Futureo anil authorof the forthcoming Second Metropolis: PragrnaticPluralisrn in Gilded Age Chicago, Silver Age Moscow,and Meiji Osaka.

Dr.Joseph S.Tulchin is Directot, of the LatinAmerican Programat the Wooilrow Wilson International Center for Scholars inWashington, DC. He is coeilitor ofPreparing for the UrbanFuture: Global Pressures and Local Forces.

Andrew D. Selee is a Program Associate in the LatinAmerican Program at the Woodrow Wilson InternationalCenter for Scholars in Washington, DC.

Mexico

+,,,rr-'.1,,.,,,r, ii-,.'i

-26

Decent t alization, Democ r atization,The Case of St. Petersburg

All cities, especially the largest ones, have to manage hugeproblems at the beginning of the 21st century: economic,ecological, and social. These problems become even morecomplicated if the city also is searching for the right bal-ance between effectiveness and democracy while simulta-neously making major reforms both in the economy-moving from planned and centralized to market-drivenand decentral ized - and in politics - goi ng from totalita ria n

regime to democracy-as is the case in the city of St.Petersburg and the entire Russian Federation.

The city of St. Petersburg is the second biggest city inthe Russian Federation, with Moscow being by far thelargest. lts current population is over 4.7 million, downfrom nearly 5 million people a decade ago. As anautonomous part of a federative state, St, Petersburg hasgoverning authority and political status similar to a stategovernment in the USA.

The process of democratization began in 1989, whenthe citizens voted for their first democratically elected citycouncil. ln 1991, shortly after Anatoly Sobchak becamethe city's first elected mayor, and once the infamousCommunist coup called the "August putsch" was defeat-ed by Boris Yeltsin, St. Petersburg Mayor Sobchak gaveback to the city its old name instead of the Soviet"Leningrad." The further development of the politicalprocess led Russia to attempt to create a system of localself-government for cities and other local municipalitiesas a third level of public administration, beneath the fed-eral government and the various states that comprisedthe federation. ln this situation two major problems con-nected with the largest agglomerations were addressed:

1) How many levels of administration do the cities ofMoscow and St. Petersburg need as both "states" and" municipalities?"

2) What kind of responsibilities should be set for eachlevel of city government as determined in questionone above?

The first problem was solved very simply: the 1993Constitution of the Russian Federation forbids the con-nection of both tasks-that of state government and localgovernment-in the same authority. Moscow simplyignored the Constitution and the subsequent 1995 federal"Local Government Act" by connecting both governmen-tal functions in the same authorities: the "City Duma"(combined state parliament and city council), and the cityadministration.

St. Petersburg created different kinds of governancestructures than Moscow, deliberately designed to be

and Urban Management:

REVEKKA VOULFOVICHNorth-Vest Acaderny for Public Administration,

St. Peiersburg, Russian Federation

much more decentralized in terms of authority, responsi-bility, and local accountability. The authorities of the all-city level only perform the functions of "state govern-ment". The "state government" also oversees the secondlevel: 23 district administrations covering the entire city.

The new third level was created during 1997-98 to ful-fill the functions of local self- government. There are 11 1

municipalities inside the large city of St Petersburg: someof them are formerly independent smaller cities andtowns, but others are simply urban neighborhoods or dis-tricts, created artificially at different times without specif-ic historical, cultural or other distinction.

What are the main challenges and opportunities of thisrelatively new and complicated multi-level managementstructure? On the one hand, the city administration hastoo many functions to fulfill them effectively, especiallyones connected with collecting and articulating the wish-es and needs of citizens, and is responsible for too largeof a geographic area and demographic base to administerit properly. On the other hand, the district level is nearerto the citizens, but has no legitimacy as a local govern-ment; it only implements the decisions of the city-level.And the municipalities are too small and too weak, lack-ing the necessary fiscal resources to accomplish key tasksas the main element of the city's democracy. At this grass-roots level of urban governance, it is possible only tospeak about problems, without the means to actuallysolve them.

CONCLUSIONOne can envision creating different systems and struc-tures of administration in large cities and urban regions,but all of them need clearly definable characteristics,which the governance system of St. Petersburg is cur-rently lacking: 1. Rational distribution of power, resourcesand functions between the levels of government; 2.

Citizens' belief that they can truly and effectively workwith the local government to generate economic prosper-ity and improve quality of life in the city. Such a beliefdoes not yet exist in St. Petersburg, as evidenced by therecent municipal election results in March, 20Q0: in mostmunicipal districts the citizens voted against all of the can-didates and for none of them! t

Dr. Revekka Voutfovitch is an Assaciate Professor at theNorth-West Academy for Public Administration in St.Petershurg, Russian Federation, and a Regional ExchangeScholar at the Kennan lnstitute for Advanced RussianStudies, Woodrow Wilson lnternational Center forSch ol ars, Washi n gto n, DC.

n,-

Urban Housing aln

TrIE HOUSING CHALLENGESince the first worldwide conference on housing problems indeveloping countries (Habitat I) was held in Vancouver in1976, housing has continued to be an important research con-cern in the urban literature on developing countries.Approximately one-half of all urban dwellers in general are

living in housing that may be qualified as sub-standard, eitherin (authorised) slums or in (unauthorised) squatter setdements.Asia is generally considered the worst region in terms of hous-ing with national studies giving urban slum population figuresof 54% for Indonesia,4TYo for Bangladesh and 36% for lndia.

Most Asian countries reportedly invest no more than 3Yo

of their Gross National Product in housing compared with4Yo rn developed countries. Most are plagued by the absence

of unified housing agencies and the prevailing problem ofcompetition for scarce financial resources stemming frommulti-agency delivery of affordable housing for low-incomepeople. Against this backdrop, Hong Kong and Singapore bycontrast have made significant progress in meeting the hous-ing needs of their population. Both cities are widely knownfor their successful housing and urban development transfor-mation in recent decades. Their experience in this achieve-ment offers lessons for improving the housing conditions ofthe urban poor and has been widely analysed and document-ed.The focus here is almost exclusively on Singapore housingthough the research challenge is of wider application.

Singapore's post-independence national housing produc-tion has responded in a timely fashion to the needs of thegrowing urban population. After 39 years of uninterruptedeffort and seven S-year building programmes, Singapore has

completed more than 800,000 public housing units and asso-

ciated inhastructure. Everyone is housed with a separate unitfor every household. There are poor families in the publichousing estates but there is no observable homelessness.

According to a recent report in the local newspaper, TheStraits Times, while the poor elsewhere are homeless, thepoorest 20Yo of households in Singapore are well housed, and75% of them are home owners.The scenario in Singapore isthat the majoriry (86%) of the country's 4 million populationare living in public housing, of which 90%o are owner-occu-pied on 99-year leases. No other industrialised country inAsia or elsewhere, has combined so much public provisionwith so much private and individual ownership.

Although initially built as low-cost housing for low-income families, progressive improvements have been madeto housing space and qualiry over the years to the extent thattoday's public housing has become synonymous with com-fortable, middle-class housing for most Singaporeans. Publichousing in Singapore is more than providing shelter. It is

also about enhancing social integration and nationai devel-opment. Affordable housing is available to all and targeted

Asia: A Perspective from Singapore

Nati on ar u't':*ErT Ti*J# Isubsidies are available to help households that cannot affordminimum housing. Housing sector policy is integrated intonational economi.c and social planning. The housing sectorcontributes towards the broad social and economic objec-tives of alleviating poverry controlling inflation, generatingemployment and income growth, enabling social and spatialmobiliry and improving the quality of life.The achievementhas attracted the attention of policymakers and researchersalike. The attraction is encapsulated by Y.M. Yeung, whoobserved that "from the viewpoint of urban development,Hong Kong and Singapore are fascinating case studiesbecause their urban policies have been painstakinglydesigned and successfully implemented. Many urban plan-ners and policymakers from developing countries visit thecity-states and come away with the conviction that theyhave seen the future and it works."

Research has a crucial role to play in this process, it relates

directly to public policy questions at every level. It is withsuch an understanding of the significance of housing researchthat I and two of my colleagues have compiled an annotatedbibliography on housing in Singapore and identified possiblefuture lines of inquiry.A few of these are of particular signif-icance to the policy sphere.To take one example: a corrunonstarting premise characterizing much of the Singapore hous-ing policy analyses is the success of its public housing. Butwhatever the past successes of housing policy and howeverfunctionai it has been to the country's economic and nation-al growth, it cannot be assumed that the policy will be equal-ly successful or functional as the country moves to a differ-ent stage of economic development. [n other words, housingdelivery systems can be evaluated-as good or bad-only inthe specific social, political and economic context pertainingin a particular country at a particular time. In a worldincreasingly obsessed with the notion of best practices andtransferability of lessons, it is imperative that each countryseek to gain a better understanding of the way the housingsector actually works and to know which instruments workand which do not in their own particular context.

At present, as Singapore policymakers take strategic deci-sions about how the country is to most appropriatelyrespond to the new order of globalization and informationtechnology development, it will become important for themto also re-examine-and perhaps change-their socialdevelopment strategies.When faced with the challenges oftransferring the Singapore economy into a knowledge-based economy, questions arise as to the future role of thehousing sector: what the housing market can do to adjustitself to the new economic development scenarios. It bringsto focus policy issues necessary to facilitate this role. Thequestion of who, precisely, should pay for housing provision,and how, remains one of the important issues.

Given the strong links between housing policy reformsand concerns to reduce poverty and to reverse the deterio-ration of the urban environment, the focus of research onurban housing, its role and working in the new global order,is increasingly urgent. The results have direct bearing onhousing sector performance.It is the poor who are most dis-advantaged by poorly functioning housing markets.As point-ed out by theWorld Bank, policies that consrrain market effi-ciency and responsiveness of the housing delivery systemcould result in reduced investment, housing which is lessaffordable and of lower quality, and a less desirable neighbor-hood environment. The housing sector must thus be seenand managed as an important sector of the urban economy.The economy is a major loser when the housing sector fails.

Recognition of the demographic and cultural dimensionof the housing challenge is no less important. Demographicfactors including residents' preferences, attitudes, and circum-stances are key considerations in housing supply and demand.Changing population profile and the oncoming trend of agingpopulation will over time aft-ect the housing sector outcomes.In addition to physical design and infrastrucure supply impli-cations, there are also the macroeconomic conditions thataffect household incomes. Making appropriate housing provi-sion for the changing population profile thus requires a betterunderstanding ofhow the residents use and relate to the spacesand buildings.It raises questions regarding the formulation andthe power of various groups in the population on the formu-lation and distribution of housing provision. By elucidating theprovider-consumer dichotomy, research can enable the carefulallocation of scarce financial and land resources.

Another related area that I see offering a considerableresearch challenge is high-rise, or "skyscraper" multifamilyhousing. In Singapore, the national land stock of 647 squarekilometers and the needs of a growing population have ledto the deliberate choice of building high-rise, high-densicyhousing which is a general departure from the traditionalcultural norm of living.As cities adopt the high-rise optionto meet growing population needs, it would inevitably sug-gest a wider extension of research into high-rise housing.In

Beiiing, China

addition to research on the technical aspects of load, wind,ventilation, maintenance service and green design, there isalso the equally important stakeholder analysis of user needsand perception. This is a relatively understudied field inSingapore and elsewhere. .

Dn Belinila Yuen ds an Associate Professor of UrbanPlanning in the Department of Real Estate, School ofDesign anil Enuircnment, National (Jniuersity of Singapore.She is coauthor o/ Singapore Flousing; Urban Qualityof Life; anil Sustainable Cities in the 21st Century.

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