Managing the city economy challenges and strategies in developing countries

Managing the City Economy In a world increasingly organized as networks of cities, this book offers the first full-length treatment of the subject of managing the city economy It explores key challenges and strategies, particularly in developing countries where developmental deficits are greatest and almost all urban growth will take place between now and 2050 International in scope, this book is unique in its focus as it connects theory with practice Through an interdisciplinary and strategic approach, this book explores the challenges and options in managing the contemporary city economy It aims to illustrate the extent to which appropriate policy interventions in the city economy could offer effective solutions to some of the most difficult social and environmental challenges facing cities The book comprises five main parts Part I sets the scene by examining contemporary processes that affect cities and explaining the challenges these processes pose for city managers Part II presents a selection of conceptual frameworks commonly used in urban economic analysis Part III examines the management of sectoral growth, covering manufacturing, exports of services, transport and logistics, and real estate Part IV addresses urban poverty, low-carbon transition and the informal economy Part V focuses on laying the foundation for long-term city development, exploring the roles of city development strategies, municipal finance, investment in people and appropriate infrastructure This book is designed for graduate courses in urban economic development, urban planning, urban policy and public administration, and for professionals who are involved in the management of city economies and/or conducting research, consultancy or policy advocacy for cities Through critical review of relevant debates and a dozen case studies, this book will equip city managers with the knowledge required to strengthen the performance of their city economy while delivering authentic and sustainable development Le-Yin Zhang is a Senior Lecturer with the Development Planning Unit at University College London, UK 7KLVSDJHLQWHQWLRQDOO\OHIWEODQN Managing the City Economy Challenges and strategies in developing countries Le-Yin Zhang First published 2015 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2015 Le-Yin Zhang The right of Le-Yin Zhang to be identified as author of this work has been asserted in accordance with the Copyright, Designs and Patent Act 1988 The right of the editor to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Zhang, Le-Yin Managing the city economy: challenges and strategies in developing countries/Le-Yin Zhang Includes bibliographical references and index Urban economics Urbanization—Developing countries Economic development—Developing countries Regional economics—Developing countries I Title HT321.Z42 2015 338.9009173′2—dc23 2014036822 ISBN: 978-0-415-66175-1 (hbk) ISBN: 978-0-415-66176-8 (pbk) ISBN: 978-0-203-07326-1 (ebk) Typeset in Sabon LT Std by Swales & Willis Ltd, Exeter, Devon, UK Contents List of figures List of tables List of boxes Acknowledgements List of acronyms and abbreviations Introduction vii viii x xi xiii xvi PART Contexts: Understanding the field Cities in a contemporary context The purpose of managing the city economy 26 The developmental challenge for city managers 41 PART Theory: Conceptualizing realities 63 The nature of the city economy 65 The rationale and scope for city-level public interventions 80 Frequently used conceptual and theoretical frameworks 98 PART Practice: Managing sectoral growth 113 Making manufacturing work 115 Promoting exports of services 130 Exploring the potential of cities as transport junctions and logistics centres 145 10 Managing urban real estate 159 vi Contents PART Practice: Managing cross-cutting issues 173 11 Tackling urban poverty 175 12 Exploiting a low-carbon transition 192 13 Dealing with the informal urban economy 206 PART Practice: Laying the foundation for long-term development 223 14 Formulating and evaluating a city development strategy 225 15 Safeguarding municipal finance 238 16 Investing in people 252 17 Developing appropriate infrastructure 264 18 Conclusion 277 Index 281 Figures 1.1 1.2 2.1 3.1 3.2 3.3 4.1 5.1 5.2 6.1 9.1 9.2 9.3 11.1 11.2 12.1 13.1 14.1 Growth of urban population in major regions Past and projected rates of urbanization Dimensions of well-being Incidences of slums and ‘$1/day’ poverty Incidence of slums and ‘$2.15/day’ poverty ‘The Planner’s Triangle’ Stylized structural change of an economy A typology of market failures Three types of governance structures Determinants of national competitive advantage Decreases in relative transport costs International seaborne trade, by cargo type Illustrative map of Durban The virtuous cycle of economic growth and poverty reduction Sustainable livelihoods framework An illustration of a typical technological transition Slow urbanization and de-industrialization in Ethiopia The process of CDS 30 44 45 53 75 83 88 107 147 149 156 182 186 197 216 230 Tables 1.1 1.2 1.3 1.4 1.5 2.1 3.1 3.2 3.3 3.4 4.1 4.2 4.3 5.1 6.1 6.2 6.3 7.1 7.2 8.1 8.2 8.3 8.4 8.5 8.6 8.7 Annual growth rate of urban population in major areas and countries World urban population distribution by urban agglomerations of different sizes Estimated urban slum population and proportion in developing countries, 1990, 2000 and 2010 Regional capital inflows in 2012 and changes (2007–2012) Increased importance of developing countries in world trade and capital flows Estimated total wealth and distribution in the world, 2000 Urban and rural ‘$1 a day’ poverty measures worldwide for 1993 and 2002 Urban poverty measures using a poverty line of $1.08/day (in 1993 PPP), 1993 and 2002 Urban poverty measures using a poverty line of $2.15/day (in 1993 PPP), 1993 and 2002 Urban externalities Growth in population (in 10,000s) of English cities according to function (1700–1850) Change in cropping labour productivity in China, 1978–1987 Peasants’ sales (retail and wholesale) to non-agricultural population in China, 1980–1987 Typology of possible economic roles of the state Potential frameworks for analysis An illustration of the principle of comparative advantage Stages of competitive advantage and its sources Pattern of World Trade, 2012: Exports Manufactured exports by developed and developing countries Composition of commercial service exports (%) Value, growth and composition of ‘other commercial services’ (%) for 1998, 2006 and 2012 Share of developing countries in global exports Gross district income composition in Bangalore Economic growth in Bangalore Bangalore’s export performance Population growth in Bangalore urban agglomeration area 10 14 15 38 43 43 43 46 67 71 71 90 100 103 108 117 119 134 134 135 140 140 141 141 Tables ix 10.1 10.2 11.1 11.2 11.3 11.4 11.5 12.1 13.1 13.2 13.3 15.1 15.2 15.3 17.1 Who owns the city of London? Changes in key baseline indicator in the Docklands UDA Regional trends of poverty reduction Unemployment and working poor throughout the world Productivity and wage growth in Bangladesh Growth, inequality and poverty reduction in Brazil, China and India Categorization of poverty reduction approaches Growth of selected renewable energy companies in Baoding and Europe Changes to the size of informal employment in selected countries between 2002 and 2012 surveys Different schools of thought regarding the informal economy Manufacturing size distribution in Ethiopia (2007/08) Comparative fiscal role of local government in different regions Distribution of municipal expenditure in selected developing countries Distribution of municipal revenues in selected developing countries Uneven distribution of unreliable infrastructure among world regions 165 169 178 180 181 183 184 202 208 211 218 240 242 243 264 276 Practice: Laying the foundation for long-term development United Nations (2013) The millennium development goals report 2013 New York: United Nations Unruh, G (2000) Understanding carbon lock-in Energy Policy, 28(12), 817–30 Unruh, G and Carrillo-Hermosilla, J (2006) Globalizing carbon lock-in Energy Policy, 34(10), 1185–97 Wolf, C., Wang, X and Warner, E (2013) China’s foreign aid and government-sponsored investment activities: Scale, content, destinations, and implications Washington, DC: Rand Corporation World Bank (1994) World development report 1994 Washington, DC: World Bank World Bank (2009) World development report 2009: Reshaping economic geography Washington, DC: World Bank World Bank Group (WBG) (2011) Transformation through infrastructure Issues and concept note, infrastructure strategy update Washington, DC: World Bank Group Zhang, L.-Y (2003) Economic development in Shanghai and the role of the state Urban Studies, 40(8), 1549–72 18 Conclusion This book has been designed to offer a practice-oriented perspective on the management of the contemporary city economy, especially in the developing world It is very much aimed at present and future city managers, that is, those who have or will have some responsibility for looking after the economic performance of their city Following a brief Introduction, I approached this task in five steps (or five parts) Part I outlined the broad economic, ethical and developmental contexts for city management Chapter highlighted the tough economic environment under the current capitalist world economy (including globalization), or more specifically the ‘new international division of labour’ In this perspective, developing economies face two choices: either confining themselves to the smallness of the domestic market, or engaging in international interactions through foreign investment and trade It is a choice between stagnation and prosperity In the latter case, they face the challenge of liberating themselves from the position of a periphery or semiperiphery by undertaking conscious and continuous industrial upgrading across different global value chains The success of doing so depends on the specific assets that city managers can help develop (Chapter 3) An interesting dynamic that city managers should explore is that some cities may be able to outperform their national economies in this regard In the ethical domain (Chapter 2), there is a rising tide towards authentic and sustainable development The difference between the two forms of development is a subtle one, as authentic development encompasses sustainability, as well as social justice (or equity) and efficiency However, the key difference lies in the fact that authentic development is ultimately defined in individual terms, as ‘human ascent’, whereas sustainability is about inter-generational justice in relation to nature If the ethical tide is rising fast, the reality of development is improving rather slowly and suffers from many deficits (Chapter 3) A key question here is the role of cities and their managers in addressing these deficits The evidence points to dynamic linkages between rural and urban poverty, and between poverty and slums Cities act as transformers: they absorb the ‘extremely poor’ from the countryside, though at different speeds, and turn them into the ‘income poor’ (and the non-poor) On the other hand, the incidences of urban poverty and slums are highly correlated The implication is that poverty-busting economic growth in urban centres can have a profound impact on addressing some of the most serious development deficits in our era This background analysis then set the stage for Part II, where I focused on comprehending the city economy and the extent to which public intervention could make a difference to the economic performance of the city In Chapter 4, the internal and external dynamics of the city economy were examined over the 278 Conclusion processes of industrialization and de-industrialization The overall lesson was that a city can essentially take one of three economic roles: 1) as a local service centre; 2) as an industrial powerhouse; or 3) as a transnational hub for the production and marketing of advanced services The scope for public intervention (Chapter 5) is probably greatest in the second case (i.e during the stage of industrialization) Here the approach of industrial policy appears to have much to offer Two of its most important ingredients are the identification of ‘strategically important sectors’, defined as those with income-elastic demand and high productivity growth potential, and focused efforts to support their growth through either ‘hard’ or ‘soft’ brands of industrial policy Chapter represented a unique contribution of this book Based on practices of policy making and scientific insights from several disciplines, it introduced frameworks as heuristics and explained some of the most widely used analytical frameworks in the field of urban economic development and management The purpose was to sharpen the reader’s sensitivity towards implicit and explicit ways of framing policy diagnosis and prognosis The emphasis here was on developing the ability to detect and apply frameworks, and being critical towards the use of frameworks by others and oneself If Chapters through were aimed at preparing the lens, the rest of the book (Chapters through 17) offered an opportunity to use that lens for ‘learning by observing’ But this learning experience was broken down into three sections, presented respectively in Part III, Part IV and Part V Part III (Chapters to 10) looked at experiences of managing sectoral growth in manufacturing, exports of services, transport and logistics, and real estate Chapter (on manufacturing) showed that there are really ‘high’ and ‘low’ roads of industrializing, respectively represented by Foxconn and Huawei The ‘high’ road is characterized by full-scale engagement with an international division of labour, technical capability developed first through serving a fast-growing domestic market and then serving a wide customer base, and the ability to reap high rewards for the workforce and the home economy The ‘low’ road also involves active engagement with the global market, but treats labour as a cheaper alternative to automated robots, which will eventually replace the workers There can be no question that the latter road is a dead-end To take the ‘high’ road, however, means, at a minimum, a workforce educated to degree level Chapter considered a growth model that has emerged only in the past decade This is the model of service exports-led economic growth, pioneered by some Indian cities The evidence leaves little doubt as to how effective it can be, although the scope for upscaling is in doubt Like in manufacturing, the key bottleneck is human capital – once again, a well-educated workforce is required In addition, this workforce needs to be proficient in English, the international language of the business world The exciting experience of developing Africa’s first Aerotropolis was the focus of Chapter The case of Dube TradePort illustrates the intimate relation between three urban economic activities: industrial production, transport and logistics development and the opportunity to reshape the urban physical fabric It shows that a combination of vision, strategic location and institutional capacity and commitment can produce real transformation on a large scale One of the most interesting effects of globalization is the development of a global market for real estate As shown by Shanghai, Bangalore and London (Chapter 10), it enables those cities in the right places to develop or re-develop themselves by drawing on external resources, ranging from the financial to the human and the social The real Conclusion 279 questions here are whether the distribution of the costs and benefits is socially just and whether the scale and speed are environmentally sustainable Part IV was about three cross-cutting issues The purpose was to draw new insights by linking existing works with the city economy Building on the insight in Chapter that urban areas are the real transformer and terminator of poverty, Chapter 11 drew out two other insights The first one was that economic growth matters more in lowincome economies than in middle-income ones The second was that there remains much scope for manufacture exports-led growth to take place in developing economies and to reduce poverty, especially in some of the lowest-income economies Following on the identification of green growth in Chapter as a tool for meeting both economic and environmental goals, Chapter 12 looked at low-carbon transition in cities The cases of Baoding, China, and London, England, show that there is much scope for exploiting this transition to develop new industry and strengthen a city’s brand, although cities have so far only made half-hearted efforts to lead the transition Perhaps the political economy of climate change is too powerful to make the escape from ‘carbon lock-in’ a steady ride The persistence of the urban informal economy has troubled development stakeholders since the 1970s While much attention is focused on its large size in developing cities, the case of urban Ethiopia (Chapter 13) shows two under-explored dynamics On the one hand, it shows that the informal sector can shrink when the urban formal sector is anaemic, when the agricultural sector benefits from growth and when rural land policies discourage migration On the other hand, it also shows that this outcome is by no means ideal as the opportunities of industrialization and urbanization are missed The final section (Part V) of this book was concerned with long-term development issues It was about planning, financing and investing in the future Chapter 14 examined the recent history of city development strategies as a planning tool, adapted to the globally oriented and uncertainty-stricken world that contemporary cities belong to This examination revealed the ‘collective puzzlement’ that characterizes urban management in many parts of the world and the substantial efforts that are being made for securing the long-term prosperity of cities The results are mixed, but there should be no doubt that the effort is worthwhile Chapter 15 turned to the worrying state of municipal finance It formed a sharp contrast with the scholarly prediction of a future world where a new order of city-states will replace or rival the current order of nation-states The truth is that while cities are the pillars of national economies, municipal governments are heavily dependent on fiscal transfers from their national governments Although some cities have been able to obtain a better fiscal deal with their national governments, there is no doubt that, for cities to realize their true potential for contributing to economic and social development both within and outside their boundaries, a better fiscal deal has to be made One of the more insightful perspectives that have emerged in the past decade is the ‘total wealth’ approach In an unashamedly economic perspective, it conceptualizes the challenge of achieving sustainability and well-being as a matter of managing well the portfolio of assets that an economy or society has Moreover, it shows that the single, absolutely most important asset is human beings and their relationship with each other as reflected in formal and informal institutions (see Chapter 5) Coupled with the new growth theory, this makes investing in people (Chapter 16) a matter of utmost import However, both reasoning and the experience of Medellín suggest that implementing a ‘total wealth’ approach requires a much more strategic approach towards 280 Conclusion economic and social policies at the city level In essence, municipal policies need to be carefully balanced between meeting the basic needs of the poor and the innovative needs of entrepreneurs Labour and capital need to work together more cooperatively Education and skills development is again a key Chapter 17 looked at infrastructure development that is appropriate for a sustainable future Coupled with the related issues raised in Chapter 10 (e.g declining population density), it showed through the case of Qingdao, China, that the ‘hard’ modern infrastructure that has been built has a significant ‘carbon lock-in’ effect and so a great deal of effort will be required to reshape it So after all these twists and turns, what have we learnt from the exploratory journey we have taken through the pages in this book? The central question posed in the Introduction was: ‘How and to what extent can city managers help achieve significant progress towards authentic and sustainable development in their city (and possibly beyond) by managing the city economy more effectively?’ The numerous case studies should leave us in no doubt that there is significant scope and many options for city managers to so However, their success will depend at least partially on the extent to which they identify with the goal of authentic and sustainable development, and are prepared to find solutions for any problems that lie in their way It will also depend on how focused they are in tackling the three key questions in terms of the good life, the just society and the right relation to nature More specifically, city managers need to look out for their growth sectors, to help consolidate mature industries that are capable of providing a large number of relatively well-paying ‘decent’ jobs, and to adopt a long-term, responsible stance towards planning, people and infrastructure development Above all else, the most important thing is probably this: they have a sense of duty towards their city and its people and a willingness to learn and to act upon past lessons, some of which this book has tried to spell out Index absolute poverty 176–7 Abu-Lughod, J.L 73–4 adaptation 19, 269–70 adding new work to older work 76–7 Addis Ababa, Ethiopia 212–19 administrative status 3–4 Aerotropolis model 150–1, 154–6 Africa: Dube TradePort 148, 154–6, 163, 278; sub-Saharan 177–9; urbanization 5–6 agency 98–9 Agenda 21 21–2 agglomeration economies/dis-economies 68–9 agricultural development-led industrialization (ADLI) 213 agriculture 65–6, 67, 187; growth in Ethiopia 216–17; rural-urban linkages 70–2 air transport 137, 147–51, 152 airports 148–51 Allen, J 73 allocation branch 244 allocative efficiency 32 amenity needs 29, 254 Amsden, A.H 90–1, 93–4 Angel, S 164 Apple iPods and iPhones 49, 121–2 appraisal 231 appropriate infrastructure 265; see also infrastructure Aristotle 31 Arrighi, G 12–13, 49, 120 asset base, infrastructure as 265 Asset Vulnerability Framework 184 authentic development 27–9, 35, 277; urban drivers for 55–8 backward linkages 116, 268–9 Bahl, R.W 238, 239–40 Bailey, R 198–9 Bairoch, P 8, 65, 66, 67 balance of payments 117 Ban Ki-moon 252 Bangalore: real estate 164–6; services exports 138–9, 140, 141–2, 143 Bangladesh 181, 187, 188 Baoding, China 201–2 Barr, N 32, 33 basic needs 27, 29, 176, 254 Bateman, M 260, 261 Berg, J 182 Bevir, M 87, 249 Blackstone 165 Blueprint for a Green Economy 34, 35 Bogotá, Colombia 188–9, 248 Bonacich, E 146–7 bottom-up poverty reduction 183–4 Braudel, F 73 Brazil 184–5 Brown Agenda 53 Browning, H.C 131 Brundtland Report 34–5 bubbles 161, 163 Buchanan, J 87 business surcharges 248 C40 Cities Climate Leadership Group 194–5 Cali, Colombia 230 Camagni, R 51, 55–6 Campbell, S 52–3, 54 capability 27–8, 254 capital inflows 14 capitalism 34; evolution of the capitalist world economy 10–17 carbon dioxide emissions 20, 273; see also low-carbon transition carbon lock-in 196, 270 Carrillo-Hermosilla, J 270 Castells, M 18, 19 282 Index catalytic state 17, 92–3 central flow theory 73 central place theory 70, 72–3 Centros de Desarrollo Empresarial Zonal (CEDEZO) 260, 261 certified emission reduction units (CERs) 247 Chang, H.-J 89 Charles, M.B 150 cheerleader, government as 92 Chen, M.A 209 China 192, 271; economic reforms 232; infrastructure development 273–4; LCT 201–2; manufacturing 121–3; poverty 177, 181–2, 185; real estate 167–8; rural-urban linkages 70–1; SEZs 124; Shanghai see Shanghai China Watch 273–4 Chongqing, China 122 Christaller, W 72 cities 3–25; advantages and potential 45–6; climate change 19–21; conditions of developing cities 9–10; decentralization 21–2; democratization 21, 22; evolution of the capitalist world economy 10–17; ICT revolution and the informational city 17–19; impact of globalization on 50–2; urbanization and 3–10 Cities Alliance 226–7 city development strategy (CDS) 225–37, 279; evaluating 231–2; formulating 229–31; perspectives on 227–9; practices and lessons 232–5; significance as a new city management tool 225–7 city economy 65–79, 277–8; cities as industrial powerhouses or service centres 74–7; economic rationale of the city 68–9; external dynamics 69–74; historical context 65–8 city forum 226 city growth, urbanization vs 5–6, city managers: required qualities 57–8; tasks for 56–7 city-regions 50–1 Clean Development Mechanism (CDM) 247 climate change 19–21, 118, 153; and the green economy 199–200; infrastructure as a tool for addressing 267, 269–70; LCT see low-carbon transition collaborative governance 228 collectivism 34 Collier, P 253 Colombia 188–9, 190, 230, 248, 260–1, 266 combinational poverty reduction approaches 185–7 commercial real estate 161–2, 166, 167 commodity chains, global 12–13, 47–9 commodity-export role 48 comparative advantage 103–4 competition, inter-city 51–2 competitive advantage 104–7; stages of 106–7, 108 component-supplier role 48 computer and information services (CIS) 133–5; IT services exports 136, 137–42 concentration points 70 conceptual frameworks 99; see also frameworks construction lags 160 construction sector 115, 137, 162 consumption, efficiency in 32 containerization 148, 168 containment paradigm 164 cooperation, inter-city 51–2 cooperatives 215 Copenhagen Summit 193 core 12–13 cost advantage 123 costs, transport 145–7 creative destruction 107–10 cross-cutting issues 58 Cultura E programme 261 custodian interventions 91–2 Daewoo Corporation 188 Davis, K 5, 6–8 Deane, P 80 debt financing 245–6 Decent Work Agenda 257–8 Decent Work Pact 258 decentralization 21–2, 194; fiscal 239–41, 244–6 de-industrialization 68, 75, 76, 77, 168; Ethiopia 216, 217; premature 120 Delhi-Mumbai Industrial Corridor (DMIC) 124–5 demand: conditions 106, 107; intervention focusing on 94 demiurge interventions 91–2 democratization 21, 22 Denis, C 14 dependency theory 10 Detroit 238 development: authentic see authentic development; economic see economic Index 283 development; effects of manufacturing expansion 117–18; effects of serviceexports-led growth 135–6; goals of 27–9, 31; guiding principles 31–5; human see human development; relations between ends and means of 31; sustainable see sustainable development development agencies 212 development conflict 53 development deficits 41, 42–5 development economics 81 developmental challenge 41–62, 277; advantages and potential of cities 45–6; city/nation-state relationship 58; global contexts 46–52; MDGs 42–5, 61–2; sustainable development triangle 52–5; urban drivers for authentic/sustainable development 55–8 developmental state 90–2 distribution 36–7; non-worsening income distribution 37, 38 distribution branch 244 distributive services 131 Docklands, London 168, 169 Doemeland, D 268–9 Dower, N 28, 31 Drangel, J 12–13 Dreze, J 28 dualist school 209, 211, 212 Dube cargo terminal 155, 156 Dube City 155 Dube TradePort (DTP) 148, 154–6, 163, 278 Duranton, G 68–9 Durban International Airport (DIA) 154–5 Earth Summit 1992 34 East Asia 48, 49, 118; ‘Miracle’ economies 184 economic centre of gravity 16–17 economic development 255–6; infrastructure and 265–6, 268–9; measuring 37–9; role of 36–7; role of the state 80–1 economic growth 37; Ethiopia 212–13; fiscal decentralization and 246; infrastructure and 265–6; links between inequality, poverty reduction and 182–3; promotion by municipal governments 246 economic imagination 57 economic integration 266–7 economic opportunities 28, 187 economic perspectives on people 254–5 economic policies 184–5 economies of scale 116; external 68–9 education 137 efficiency 31–2, 117, 135, 151, 163, 272 embedded autonomy 91 employment: Indian IT/ITeS sector 139–40; informal 206–7 empowerment 187 Empresas Públicas de Medellín (EPM) 248, 260, 261 Engel’s law 75–6 enhancement needs 29, 254 Enste, D.H 207–8 entrepreneurial city 110–11, 193, 247 entrepreneurs 107–10, 254–5; government as entrepreneur 92 entrepôt trade 137 environmental advocacy networks 193–4 Environmental Kuznets Curve (EKC) 55, 56 environmental regulation 92 environmental sustainability 55–6 equilibrium theory 82–4 equity 32–4, 117–18, 136, 151, 163 Ernst, C 182 essential needs 27, 29, 176, 254 Ethiopia 212–19, 252–3; government policy towards the informal sector 214–16 European Charter of Local Self-Government 21 Evans, P 91–2, 93–4 exclusion 210, 211, 212 exit 210 expenditure ratio 240 expenditures, municipal 240, 241, 242 experience industries 131 export-platform role 48 export processing zones 124 exports: manufactured 15, 119; services 132, 133–43 external dynamics 69–74 external economies: market failures 82–4; pecuniary and technological 84; of scale 68–9 externalities 45–6 extreme poverty 176 facilitator, government as 92 factor conditions 106, 107 factor-driven competitive advantage 106–7, 108 factories 67 financial crisis of 2008 37 284 Index finance: financing infrastructure investment 270–1; financing LCT 195; municipal see municipal finance financial and business services 137 firm strategy, structure and rivalry 106, 107 first-generation fiscal federalism 241–5 fiscal decentralization 239–41, 244–6 fiscal federalism 241–6 flexible specialization 209–10, 211 foreign direct investment (FDI) 15, 46–52, 117 foreign trade see trade formalization programme 214–16 forward linkages 116, 268–9 Foucault, M 92 four-factor model of competitive advantage 106, 107 Foxconn 121–2, 187, 257 frameworks 98–112, 278; frequently-used frameworks 100–11; role and nature of 98–100 Fransen, J 209, 214 free rider problem 268 freedom 27–8 freight transport 147–8, 152 Friedmann, J 50, 100–1 Fröbel, F 11, 47 Frye, T 90 functioning 27–8 Garden City model 166–7 Geels, F.W 194 gender disparity 141 generative sectors 269 Gentilini, U 176 geographical imagination 57 Gereffi, G 48–9 Gerschenkron, A 85 Gershuny, J 132 Ghani, E xvii Giddens, A xx, 15 Gilbert, A 189 Gini coefficient 16, 253 global cities 100–2 global city-regions 50–1 global commodity chains 12–13, 47–9 global production networks 47–9 global supply chains 145, 146–7 global value chains (GVCs) 47–9, 145, 146–7 Global Value Chains Initiative 48–9 globalization 13–15, 118–19, 195, 225–6; of carbon lock-in 270; effects on cities 17, 50–2; effects on developing countries 15–16; effects on nation-states 17 goals of development 27–9, 31 Goffman, E 98 good governance 89, 188–9 Gou, T 121 Goulet, D 26, 27, 29, 31 governability 88 governance: CDS as collaborative 228; emerging trends of 88–9; failures 87–9; global value chains 48–9; good 89, 188–9 government-business relations 90 government failure 86–7, 268 grabbing-hand model 90 Green Agenda 53 green economy 199–200 green industry 200 greenhouse gas emissions 20, 273; see also low-carbon transition gross domestic product (GDP) 36, 76, 116 gross national product (GNP) 28 growth: city 5–6, 7; economic see economic growth growth elasticity 183 Gruber, J 268 Guidelines on Decentralization and the Strengthening of Local Authorities 21 Hall, P 99, 228 Hanseatic League 50 hard energy path 269–70 Harris, C.D 45, 70 Harris, N 226 Hart, K 207 Harvey, D 33, 34, 57, 110–11 Haughton, J 177 Hausmann, R 227 health care 137 Heckscher-Ohlin theorem 104 Heclo, H 228 Held, D 13 helping-hand model 90; see also developmental state Hepworth, M 18–19 heterarchy 88 Hill, P 131 Hill Dwellers (Dongria Kondh) 53–4 Hirschman, A.O 84–5 Hirst, P 13–14 Hopkins, T 47 Household Responsibility System 70 Howard, E 166–7 Index 285 Huawei 122–3 hub-and-spoke system 149 human development 27, 252–63, 279–80; challenges 256–7; contexts 252–3; importance of investing in people 254–6; strategies and practice 257–61; supporting 56 human resource constraint 142 Humphrey, J 48 Huntington, S 21, 255–6 husbandry interventions 92 ICT revolution 17–19 ‘iGoli 2010’ 230, 234 Iimi, A 246 income elasticity of demand 75 income poverty 176 India 271; 74th Constitution Amendment Act 1992 249; Bangalore see Bangalore; IT/ITeS industry 137–42; manufacturing 123–5; municipal finance 248–9; National Manufacturing Policy 124–5; Orissa Hill Dwellers 53–4 inducement mechanisms 85 industrial policy 93–4, 213, 278; CDS as 227–8; decarbonization 198–9 Industrial Revolution 66–7 industrialization xvii, 8, 66–8, 166, 255; ADLI 213; and agricultural development 70–2; cities as industrial powerhouses 74–7; developmental state 90–1; effects 76–7 industry clusters 106 industry-level analysis xix inequality 253; global 16; India 141–2; infrastructure as a tool for reducing 266–7; links between economic growth, poverty reduction and 182–3 informal employment 206–7 informal sector 206–7 informal urban economy 206–21, 279; challenges 212; defining 206–7; extent 207–9; perspectives on 209–12; strategies and policy options 212–19 information technology (IT) service exports 136, 137–42 informational city 17–19 infrastructure 264–76, 280; economic role of 265–7; perspectives on developing 267–70; potential and key challenges 270–2; practices 272–4; service exports and 135; unreliability 264 innovation 107–10; manufacturing and 116; theory of innovations 197–8 innovation-driven competitive advantage 106–7, 108 institutional learning 110 instrumental freedoms 28 intangible capital 38–9 integrated development 149–51 inter-city relations 51–2, 72–4 Intergovernmental Panel on Climate Change (IPCC) 19, 192 intergovernmental transfers 245–6 intermodalism 148 International Civil Aviation Organization (ICAO) 152 International Covenant on Economic, Social and Cultural Rights 254 International Labour Office (ILO) 206, 208, 212; Decent Work Agenda 257–8 International Monetary Fund (IMF) 14, 15, 253 International Standard Industrial Classification (ISIC) 115, 127–9 internationalization 13–15; of real estate 164–6 interventionist approach xvii investment: financing infrastructure investment 270–1; in the future 58; need for in the transport sector 153 investment-driven competitive advantage 106–7, 108 invisible-hand model 90; see also neo-liberal state IT-enabled services (ITeS) 137–42 Jacobs, J 76–7, 115, 179 Jessop, B 87–8, 89 job creation 187, 217 jobs-centred approach 257, 258–9 Joburg 2030 234 Johannesburg 229, 230, 234–5 Kaldor, N 116 Karnataka, India 139 Kasarda, J.D 150 Kaya Identity 20, 192 Kemp, R 110, 197 Kerala, India 249 Khandker, S 177 Kilkenny, M 68 King Shaka International Airport (KSIA) 154, 155–6 286 Index King’s Cross re-development, London 169–70 Korea 188 Korzeniewicz, M 48 Kousky, C 193, 195 Kraay, A 182 Krugman, P 51 Kuhn, T.S 99 Kuznets, S 37, 38, 132 Kuznets Curve 38 Kyoto Protocol 195, 247 laboratory federalism 244–5 labour: export of 137; reallocation 259 land see real estate landscape 198 late industrializers 90–1 Lebret, L.-J 27, 29 legalist school 209, 211 leverage 160, 161 liberal state 92 liberalism 33–4 libertarianism 33 Lin, J.Y 93–4, 268–9 linkages 116, 268–9; transnational economic linkages 46–52 Linn, J.F 238, 239–40 Little, I 86 Livingstone, K 194–5 local development state (LDS) 260–1 localization economies 69 logistics 145–58, 278; development potential of logistics centres 151; market prospects 152–3; policy and strategic issues 153–6; sector characteristics 147–8; significance 145–7 London 230; Crossrail I 248; LCT 193, 194–5; real estate 162, 164, 165, 168–70 London Docklands Development Corporation (LDDC) 169 Long Beach, New York 168 long-distance services 94, 131; IT service exports 136, 137–42 long-term development 31 low-carbon transition (LCT) 192–205, 279; challenges and opportunities of 199–200; drivers of 200; perspectives on 196–9; practices of 201–2; Qingdao 273–4; roles of cities in 194–5; significance and global context 193–4 Lovins, A 269–70 low pay 179, 180–2 Lucas, R.E 36 Lujiazui Central Finance District 233 luxury needs 29, 254 Maastricht Treaty 245 making room paradigm 164 managed openness 92–3 Mandela, N 252 manufacturing 115–29, 278; challenges and strategies of managing 119–25; characteristics of 15–17; developmental effects of expansion in 117–18; Ethiopia 217, 218; exports 15, 119; ISIC 115, 127–9; labour-intensive and poverty reduction 187, 188; opportunities for manufacturing-led development 118–19; services embodied in manufactured exports 135 market failures 81, 82–6, 160, 268; CDS as response to 227–8; early response to 84–6; typology 82–4 market positioning 154 market-preserving fiscal federalism 246 market prospects: real estate 164–6; transport and logistics 152–3 market pull 200 market structure 152 market volatility 160–1 Marshall, A 68 Marx, K 10 Marxism 34 material index 146 maximin choice 33 McKinsey Global Institute (MGI) 119 Medellín, Colombia 248, 260–1 Medellín MetroCable 260, 266 mega-cities 8, 18 Meier, G.M 37, 82, 83 merchants 66 metropolitan area metropolitan region micro and small enterprises (MSEs) 214–16, 217, 218 midwifery interventions 91–2 migration 256–7; rural-urban 6, Milanovic, B 16, 256 Miles, I 132 Millennium Development Goals (MDGs) 42–5, 61–2, 175, 252, 264 Miller, D 33 mining 115 mitigation 19–20, 269–70 mobility 256–7 Index 287 modernity xx monitoring 231 Motkuri, V 138 Mpanda Airport, Tanzania 153 Muhkerjee, A 124 Multifibre Arrangement (MFA) 188, 190 multi-level perspective (MLP) 197, 198 multinational corporations (MNCs) 47 Mumford, L 66, 166, 267 municipal expenditures 240, 241, 242 municipal finance 238–51, 279; challenges and strategies in managing 247–8; perspectives on 241–6; poor state of 238–41, 242, 243; practice 248–9 municipal revenues 240, 241, 243 Musgrave, R.A 241–4 Narayana, M.R 139 NASSCOM 138, 139, 142 national government revenues 248 nation-states: effects of globalization 17; stratification of 11–13; see also state national investment and manufacturing zones (NIMZs) 124 national poverty lines 176 natural capital 38–9 needs 27, 254, 272; theory of 29–31 negative externalities 45–6 neoclassical criticism 81, 86–7 neo-liberal state 92 networks: of cities 72–4; global production 47–9; world city network 73, 101, 102–3 new growth theory 255 new historical materialism 269 new international division of labour (NIDL) 11–13, 46–7, 255, 277 newly industrialising countries (NICs) 48 niches 198 non-worsening income distribution 37, 38 Nordhaus, W.D 103 Oates, W 241–5 Obama, B 252 OECD oil: crisis 10; price 153 Olson, M 86–7 original position 33 Orissa Hill Dwellers 53–4 O’Sullivan, A xvii Palma, J.G 253 paradigms 99 Parkway Holdings 137 passenger transport 148, 152 peak oil 153 Pearce, D 34, 35 pecuniary external economies 84 people see human development per-capita income 140 Perez, C 110 periphery 12–13 Perry, G 210 personal services 131 Petrella, R 50 Pezzey, J 35 Planner’s Triangle 52–5 policy-making 228–9 political economy of LCT 198–9 political instability 255–6 population growth, urban 5, 6, population size/density 3–4 Porter, M 92, 104–7 ports 148–51 positive externalities 45–6 poverty 175–91, 279; factors of 179–82; global trends of 177–9; identifying and measuring 175–7; India 141–2 poverty gap 177 poverty gap index 177 poverty lines 176 poverty reduction 37, 42–4, 182–9; approaches and means 182–7; categorization of approaches 183–7; global trends of 177–9; infrastructure and 266–7; tackling urban poverty 187–9 pragmatic worldview xix Prebisch, R 86 Prebisch-Singer thesis 85 premature de-industrialization 120 Preston, F 198–9 principles of development 31–5 privatization 213 procedural paths 54 produced capital 38–9 producer services 131 product cycle theory 11–12, 106 product mix, efficiency in 32 production networks, global 47–9 productive efficiency 32 productivity 180–2; dispersion 259 professional and engineering services 137 property conflict 53 property cycles 161 public good, infrastructure as 268 288 Index public interventions 80–97, 278; at city level focusing on demand 94; governance failures 87–9; government failure 86–7; at industry level 93–4; market failures 81, 82–6; role of the state in economic development 80–1; at state level 89–93 public utilities 115 Pudong, Shanghai 167–8; New Area 232–3 Puga, D 68–9 purchasing power parity (PPP) 176 PwC and SCMI study 153 Qingdao, China 273–4 Quah, D 16 Ravallion, M 182–3 Rawls, J 33–4 ready-made garments (RMGs) 188 real estate 159–72, 278–9; characteristics of the sector 159–61; development potential of the sector 163–4; economic role 161–3; key challenges 166–7; market prospects 164–6; practice 167–70 regulation: absence of 210; government as regulator 92; transport sector 153–4 related and supporting industries 106, 107 relative poverty 176 Ren Zhengfei 123 renewable energy 192–3, 201–2; see also low-carbon transition rent-seeking 87 residential property 161–2; affordable 166–7 resource conflict 53–4 resource endowment 272 revenue ratio 240 revenues: municipal 240, 241, 243; national government 248 rights-based approach 254 Rip, A 110, 197 road transport 147–8 Rodrik, D 227 Rosenstein-Rodan, P.N 255 Rotmans, J 196–7 rural poverty 42–3 rural-urban linkages 70–2 rural-urban migration 6, Rydin, Y 54–5 Samuelson, P.A 103 sanitation 42, 44 Sassen, S 17, 101–2 Schneider, F 207–8 Schneider, S.H 193, 195 Schumpeter, J.A 107–10, 254–5 Scitovsky, T 82–4 Scott, A.J 50–1 sea transport 147, 148–51 second-generation fiscal federalism 245–6 sectoral growth 58 security 187 semi-periphery 12–13 Sen, A 27–8, 34 services 130–44, 278; characteristics of 130–2; cities as service centres 74–7; composition and growth of service exports 133–4; defining 130–1; developmental effects of service-exports-led growth 135–6; government as service provider 92; IT service exports 136–42; modes of trade in 132; potential of exports of 133–5; and poverty reduction 187; socio-economic roles of 132, 139–41; typology of 131 Shanghai, China 201, 248, 271; CDS 229, 230, 232–4; Pudong 167–8, 232–3 Shapiro, H 81 shared vision 229–31 Shenzhen, China 121–3 Shleifer, A 90 short-term development 31 Singlemann, J 131 skill upgrading 122 Sklair, L 15 slums 9, 10, 42, 44–5, 141–2 small and medium enterprises (SMEs) 261, 266 Smith, A.J 92 social justice 32–4, 56, 259 social learning 228–9 social mobilization 255–6 social movements 98 social policies 184–5 social services 131 socialism 34 sociological imagination 57 socio-technical regimes 198 Soete, L 110 soft budget constraint 245–6 soft energy path 269–70 Sovacool, B 270 Sowers, E.P 269 space of flows 18 space of places 18 special economic zones (SEZs) 124 specialization 103–4, 106 Index 289 specification-contracting role 48 stabilization branch 244 stages-of-competitiveness model 106–7, 108 stakeholders 226 standardization 11 state: city-state relations 58; economic roles of 90; intervention at state level 89–93; role in economic development 80–1; role and the informal urban economy 210–12; role and LCT 200; role in technological transition 196–7; typology of 90–3 Stolper-Samuelson theorem 104, 118 Storper, M 18 stratification of nation-states 11–13 strong sustainability 54–5 structural change 74–6 structural transformation 37 structuralist school 209, 211 Sturgeon, T 48 sub-Saharan Africa (SSA) 177–9 subsidiarity principle 245 subsistence needs 27, 29, 176, 254 substantive paths 54–5 suicides 121, 122 Sumner, A 176 sustainability 34–5, 118, 136, 151, 163–4 sustainable development xx, 35, 277; Agenda 21 21–2; city managers as champions of 56–7; urban drivers for 55–8 sustainable development triangle 52–5 Sustainable Livelihoods Framework (SLF) 185, 186, 266 sustained economic growth 37 Swaminathan, M 209–10 Tanzania 153 Tata Nano 123 taxation 245; municipal revenue 241, 243; real estate as tax base 161, 162, 163 Taylor, L 81 Taylor, P 58, 72, 73, 102–3 technical education 142 technical progress 257 technological external economies 84 technological innovation 116 technological innovation system (TIS) theory 197–8 technological transition 196–7; see also low-carbon transition technology push 200 terms of trade 16, 85–6 theoretical frameworks 99; see also frameworks Thompson, G 13–14 Thünen, J.H von 145–6 Tianjin, China 201 Tiebout Model 245 top-down poverty reduction 183–4 total wealth approach 38–9, 255, 265, 279–80 tourism 136 trade 46–52; frameworks 103–7; manufacturing 15, 117, 119; service exports 132, 133–43; terms of 16, 85–6; world system 73–4 transformational infrastructure 267 transition: low-carbon see low-carbon transition; theory of 196–7 transnational corporations (TNCs) 193; world city and global city hypotheses 100–2 transnational economic linkages 46–52 transnational practices 13–15 transport 145–58, 261, 278; costs 145–7; development potential of transport junctions 151; market prospects 152–3; policy and strategic issues 153–6; sector characteristics 147–8; significance 145–7; technological developments in sea trade and air transport 148–51 transport foci 70 Turok, I 167 Ullman, E.L 45, 70 uncertainty 153, 160 UNCTAD 137 UNE 261 unemployment 179–80, 217 United Cities and Local Governments (UCLG) survey 239, 240 United Kingdom 160; Climate Change Act 2008 192; LCT 193; London see London United Nations (UN) 264; International Bill of Rights 254; System of National Accounts 130 United Nations Development Programme (UNDP) 226; Human Development Report 27, 38 United Nations Framework Convention on Climate Change (UNFCCC) 19–20; Conference of Parties (COP) meetings 193, 195 United States of America (USA) 192 290 Index unitization 148, 168 Universal Declaration of Human Rights 254 Unruh, G 196, 270 urban economic management 26–40, 277; guiding principles of development 31–5; instrumental role of 35–9; meaning and goals of authentic development 27–9; theory of needs 29–31 urban development plans 260–1 urban entrepreneurialism 110–11, 193, 247 urban hierarchy 72 urban planners 193 urban regeneration 77; real estate-led 167–70 urbanization 3–10; agricultural development, industrialization and 70–2; vs city growth 5–6, 7; determinants of 6–9; Ethiopia 216, 217; rates of 5–6, urbanization economies 69 utilitarianism 33 value chains, global 47–9, 145, 146–7 value conflicts 31 Van Dijk, M.P 209, 214 Vedanta 54 Vernon, R 11–12 visioning 229–31 volatility 160–1 voluntarist school 209, 211, 212 vulnerability 175 Wade, R 93 wages 121; low 179, 180–2 Wallerstein, I 12, 21, 47, 255 Washington Consensus 49 weak sustainability 54–5 wealth-driven competitive advantage 106–7, 108 wealth store 161, 163 Weber, A 146 Weber, M 66 Weingast, B.R 246 Weiss, L 92–3 well-being 28–9, 118, 136, 164; dimensions of 29, 30 White, S.C 29, 30 Wilson, J 146–7 Wolff, G 100 women job creation teams (WJCTs) 214–15 working poor 179, 180 World Bank 138, 226, 253; human development 257, 258–9; informal sector 208, 215–16; infrastructure 265–6, 266–7, 271, 272; poverty 175, 176, 184, 187; total wealth approach 38, 255; transport 145, 146 world cities 100–2 world city network 73, 101, 102–3 world city-ness 102–3 world economy: Braudel’s world-economy 73; capitalist 10–17 world system: Abu-Lughod 73–4; Wallerstein’s world-systems theory 12–13 World Trade Organization (WTO) 133 World War II 80–1 Yangtze Basin 233 Yip, P 122 youth unemployment 180 Zhang, L.-Y 120 Zhengzhou, China 122 Zhuhai Sanzao Airport 150–1 Zou Ji 273 ... Congress Cataloging in Publication Data Zhang, Le-Yin Managing the city economy: challenges and strategies in developing countries/ Le-Yin Zhang Includes bibliographical references and index Urban... highlights the importance of the administrative status of the settlement in defining cities However, the city defined here is only the political city, not the economic city The economic city (or the city. .. and instruments can be used to help the process of meeting social and environmental challenges In this sense, the role of the state in the city economy, in terms of its policies, strategies and