The Century Of Cities

Via the Sustainable Cities Collective, an interesting look at some of the opportunities and challenges facing the world’s metropolises in the 21st century:

This is going to be a century of cities. Already 50% of world’s population is urban and this rate is increasing by 10% per year, meaning that by 2035, 70% of world’s population will be urban. The number of mega-cities, that is, cities with over 10 million people, is also increasing annually. By 2025, out of the top 600 cities in the world in economic terms, more than one hundred will be in China. They represent the majority of the world’s gross domestic product (GDP). In terms of the pace of urbanization, if we combine China and India, the numbers become even more staggering. In the coming years, a population the size of the United States is moving into cities in China, and half of India’s population will live in cities of more than one million people. The two largest countries in the world demographically are becoming collections of cities.

The rapid pace of global urbanization brings enormous challenges to cities. How are they going to re-invent and transform themselves? In particular, how are they going to build the capacity to absorb a larger population, to integrate new technologies, and to become more economically and culturally dynamic?

The world as city clusters

There are cities like Dubai, Shanghai and Singapore that are becoming magnets for investment, and magnets for hard-working people from around the globe. But as notable as they are for growing in a vertical dimension, there is also the horizontal dimension. A satellite view shows that cities are not just dots on the map, rather they are patches that are expanding. In other words, the world is effectively becoming city clusters or city corridors.


Think of the world as these city clusters that increasingly bond together as condensed infrastructure corridors. There are many of them around the world. “Abu-Dubai” is one of them. Back in the 1970s or 80s, Abu-Dhabi and Dubai were about 100 miles apart, separated by deserts. Today, if you travel between them you will see they are increasingly connected by built up urban corridors, and hence people now call it “Abu-Dubai”. India has a couple of these as well – the Greater Delhi area, and Mumbai-Pune, two very important financial and technological centres connected by an expressway. And there is of course the original megalopolis, the Tokyo-Nagoya- Osaka corridor, which has over 80 million people.

If we zoom in on China, there are three major mega-city clusters: the Bohai Sea ring around Beijing; the Yangtze Delta around Shanghai; and the Pearl River Delta. The population of just those three is larger than the total of the top ten non-Chinese cities in the world today.

When one thinks of the Pearl River Delta region, we tend to think of Hong Kong, historically a place that embodies the model of “one country, two systems”. But if you travel there today, you can see that terminology no longer works. You can start in Hong Kong, and very easily take the metro into Shenzhen, which is more state-run. So, you go from an open and liberal Hong Kong towards a more state-directed Shenzhen, up to the heavily industrialized Dongguan area, towards Guangzhou, the regional capital, which has really transformed itself from an industrial centre to a financial centre. Then over to the other side, to the more industrialized areas, the Shantou and Zhuhai special development areas, and down to the open, free-wheeling gambling haven of Macau. These belong to totally different political geographies, and yet mayors and local authorities have been collaborating to build the transportation that works, and the customs agreements that allow people and goods and trade to move so much more freely around the region. So, it’s no longer “one country, two systems”. It is becoming just one mega-region. And, in fact, in terms of its economy, per capital income of the Pearl River Delta is larger than of Shanghai, and its combined GDP would make this mega-city a member of the G20 group of countries. And this is just one part of China.


Cities are not just based on their sovereignty, but also on their capacity to make their own decisions and set their own policies. Around the world, we can see that a diplomatic powerhouse doesn’t have to be a capital city of a country. New York City, Dubai, Istanbul, Mumbai and Frankfurt, for example, are drivers of commercial diplomacy and environmental diplomacy in their respective countries.

And this is nothing new. In the history of diplomacy, from ancient Mesopotamia to the Renaissance in Italy, it has always been cities that are actually the driver of exchange and of communication across societies. Now this is happening on a whole different scale. There are more mayors serving as the heads of states today than ever in history, and that number is growing over time. We see from Mexico to Nigeria to Turkey to Indonesia, mayors are increasingly becoming leading candidates for nation-states or already are. They can demonstrate a municipal track-record and the ability to govern that they can take to a larger scale, and those accomplishments make them well-suited to be national and international leaders.

What does it take to be a leader of a global city today? There are certain challenges they have to be prepared for, and one of them is the ability to manage diverse and multi-ethnic societies. Today, cities like Dubai, Singapore and Toronto are really as much foreign as they are national. They are melting pots because they give new meaning to the term “cultural capital”. Their leaders don’t have the luxury of treating immigration as a temporary condition. It’s a permanent reality. Their mayors cannot offer citizenship to foreigners but they have to find a way to make everyone feel like a stakeholder and be a stakeholder in that society.

Around the world, we see some countries are tearing themselves apart over ethnic, religious and sectarian differences, but successful cities cannot afford to do that, nor can they afford to be so stratified that the city feels like two, three or four cities at the same time, with walls dividing people based on their background or their income. This kind of inequality has consequences. We cannot separate the images of Occupy Wall Street, the London riots, Gezi Park in Istanbul and Tahrir Square in Cairo, the images that are defining our news today, from thinking about the context of young populations that are unable to access the promise of urban life.

New urban strategies

We are rapidly urbanizing our planet. We are building an urban civilization that is predominantly coastal. Most of the major cities in the world today, and most of the new cities that we are building today, are on the coast. This means the rising sea levels are going to affect at least four to five million people in the United States and upwards of 200 million people in Asia. For the first time, the Intergovernmental Panel on Climate Change is talking about the need for relocation, about relocation strategies for populations in the event of the kinds of major natural disasters that we are seeing with increasing frequency in Asia, in the Middle East and Latin America. This is going to require not just trillion of dollars of new investment, but entirely new urban concepts and strategies.

A quick scan across the world reveals that in the places where growth and innovation have been most successful, a hybrid public-private, domestic-foreign nexus lies behind the ‘miracle’. These aren’t states; they’re ‘parastates’- or, in one common parlance, ‘special economic zones’ (SEZs). Across Africa, the Middle East and Asia, hundreds of such zones have sprung up in recent decades. In 1980, Shenzhen became China’s first; now they blanket China, which has become the world’s second largest economy.

The Arab world has more than 300 of them, though more than half are concentrated in one city, Dubai. These SEZs offer clues as to how unrelenting urbanization and sustainable production can co-exist but, when planning for future cities that work, we need to be aware of the challenges and benefits presented by SEZs.


Cities are designed to generate productive economic activities, but they also need to be designed in a way that is sustainable. For example, when it comes to economic sustainability, we have learnt that the economic zones that were designed for a single industry can be very vulnerable to changes in global supply chains. These ‘demand shocks’ have been devastating for some southern Chinese cities that were built on one industry and also for places like Detroit in the United States. So, building in some amount of diversification is important for economic sustainability.

Illustration: Chappatte

When it comes to the environmental sustainability, again it is the choice of the parastatal entities. Government officials and investors can work together to ensure environmental sustainability. Or there can be projects that are very unsustainable and very exploitative. We have many decades of experience in both regards, particularly in the unsustainable dimension. For example, there is Guangzhou in China. If we look at the periphery of Guangzhou, and the new special economic administrative technology park that has been developed there, we find a lot of the periphery of Guangzhou has been built on prime agricultural land that was used especially for soybean cultivation. Now, people realize that they don’t want to give up so much arable land in the context of China’s rising food demand, so they have halted some development and decided to relocate it to other areas. That is an example of realizing that these SEZs should be more environmentally sustainable.

And, of course, one should add the issue of human sustainability. The garment factories collapsing in Bangladesh was an example of not having sustainable workplace practices from a human rights and labour rights point of view. However, we are starting to see that things are now improving in Bangladesh, in Viet Nam, and in some other countries due to domestic pressure, supply-chain pressure, and the scrutiny that comes when companies suffer reputational damages.

Build inclusive cities

New economic cities, such as Songdo in the Republic of Korea have been built ‘from scratch’ and don’t have poor people living there. But in the established mega-cities, like Lagos, Nairobi, Mumbai, Karachi, Jakarta, Manila and Rio de Janeiro, we find teeming slums. While these are often called ‘shadow economies’, they are in fact self-organizing ecosystems with their own geographic patterns, political hierarchies, economic models and social structures. Mike Davis and Robert Neuwirth are two of the greatest travellers and journalists who have observed life in the world’s cities. They have written extensively about the so-called shadow economy but there is not a complete overlap between slums and shadow economies. For example, consider the recycling of plastics, aluminum and cardboard that takes place in the slums of Mumbai. People are taking legitimate assets – these wastes are assets – they are recycling and they are paid for doing it, so the term ‘shadow economy’ is unfortunate. It has multiple meanings and can mean an unregulated economy or a ‘black’ market or an untaxed economy. But the Mumbai recyclers are taxed and regulated. Therefore ‘grey market’ is a more appropriate term, and is one that cannot be considered as negative. A huge percentage of the world’s population survives precisely in the grey market. It represents the means of survival for several billion people.

These slums are self-organizing ecosystems. To use again the example of recycling in mega- cities like Mumbai, this is an activity that would not otherwise take place. It is filling in for a market failure, and it is filling it as a very spontaneous activity that has developed these supply-chains that were not created or regulated by the State. In that sense, it is a self- organizing activity. It is a means to meet supply and demand that has occurred by virtue of entrepreneurial instincts.

Governments and industry

I strongly believe that governments should devote most of their attention to the issue of inequality between the slums and the glamorous side of a city. The fact that they don’t devote as much attention as they should is precisely why it is important to continue to allow self-starting entrepreneurial activities to take place and to support them wherever possible. We see examples of it happening: Rio de Janeiro and Medellín are places where there have been government efforts to extend transportation and public services like sanitation and so forth into the slums. The new President of Indonesia, Joko Widodo, who was previously the mayor of Surakarta, is famous for having emphasized the importance of business firms engaging in community activities in that city. He is an example of the mayors who, with growing frequency, are becoming heads of state because they have a good track-record of focusing on the poorest part of the population.

And it is not only the government, but also the corporations which have an important role to play. I believe the private sector has and will have a dominant role in today’s cities and in the cities of the future. Most of the people living in the mega-cities are not public sector workers. The public sector’s responsibility is bringing in more public services and delivering better housing and transportation, and hopefully proving some kinds of cash transfer programmes to help micro-economic activities. However most of the delivery of these kinds of services is essentially done by the private sector. The most important thing is the division of labour and shared responsibility – what I call “hybrid governance” or multi-stakeholder collaboration. In this context, industry still plays an essential role in building sustainable and inclusive cities. It is true that some places in the world are post- industrial, but most countries in the world are not. While we should probably learn to prepare for a world that is not driven by human-centric industrial production, industry will still matter a lot – even if robots are doing the work. At least for now, most of the jobs created in the world are not going to be automated. For example, building construction is still done by humans.

Education, hospitality, construction, health care – none of these activities, which are the largest employers in the world economy, are being hurt by automation technology. This is where governments should spend their money. These are very essential factors in cities. They are in dire need all over the world, and they all need industry to support their functions. The technological revolution is on the way, but we should focus on the areas that are still very necessary and that are still creating a lot of jobs. These jobs are closely related to industry.

This entry was posted on Friday, December 11th, 2015 at 8:08 am and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

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