The connection between economic and spatial growth10 min read . Updated: 14 Jan 2015, 02:18 PM IST
This first article in a new series on urbanization highlights the problems and the mismatch between market forces and politics
This first article in a new series on urbanization highlights the problems and the mismatch between market forces and politics
Great cities are only built when spatial growth and economic growth are aligned with each other. In other words, only if urban physical infrastructure keeps pace with economic and social development can towns and cities really thrive. If we were to judge the state of our economy by the state of our cities, we would conclude that our cities are not “fit for purpose" and that our economic growth is stunted. By any measure, our urban centres are anarchic—congested, polluted, unsanitary, often unsafe and providing inhuman living conditions for a large part of the population.
The key problems are that our imagination of our cities remains unclear, the forces shaping cities are more mobile, and the role of urban planning and of local politics has changed, says Partha Mukhopadhyay, senior research fellow at the Delhi-based Centre for Policy Research. One of the country’s most distinguished thinkers on urban issues, he is particularly respected for his ability to articulate the economic, social and political aspects of urbanization. Mukhopadhyay was a speaker at the London School of Economics’ Urban Age conference in November and spoke to Mint on the sidelines of the event.
Economic forces shaping cities
“The city and urban planning seemed to be earlier synonymous, but that is no longer the case. When things are changing rapidly, they are changing direction, not following old paths, and we cannot build cities of the past, if nothing else, then for climate reasons. We don’t really have a place to take the city to. So consequently, planning becomes a lot more difficult, because you don’t know what you are planning towards. Planning anyway has been a static exercise, and now we don’t even have a destination in mind," says Mukhopadhyay. “Consequently, we need to be more open to different perspectives, because fundamentally, we need more experimentation happening, in the hope that some of it will succeed, because we don’t quite know what will work. That’s the first point."
The second important point is the issue of alignment, he says. “Cities were built around three kinds of activity: economic activity, social activity and politics, i.e. cities were sites of social emancipation, economic advancement and political participation.
“Over time, what’s happening is, as a result of globalization, economic stuff has become footloose and fancy-free. Today, any investor can choose to build a port in Abbot Point, Mundra, Dhamra or in Brazil. Therefore the kind of control that politics had over capital, that balance has gone out of whack. City managers are not the referee. Politics is not the medium that negotiates between society and economy.
“In many places, politics is basically and essentially being blackmailed by the economy. Companies can demand: do this or we will leave. The threat to exit is used by capital essentially to suppress the voice of other stakeholders. The question is: how do you restore back this balance in the system? The goods and services tax (GST) for example, is one such political effort, trying to even the level playing field across the country. When there are different instruments that different countries and states can use within a certain system, politics is trying to level out the landscape to make it spatially more neutral," he notes.
There are other forces to control capital, however, he adds. While “run-of-the-mill manufacturing is much more footloose, high-end capital has somewhat less power, and is more dependent on the presence of certain type of people being physically in the neighbourhood". For example, it is important for certain types of money to be in New York, Mumbai, Shanghai and Delhi, “because people who can do things with that money don’t want to live anywhere else."
A relatively small group of elites, who have certain special qualities—intellectual or creative—for examples, can define certain cities. The institutions that create these people—very often educational institutions—are often the types of education that cities try and focus on, Mukhopadhyay says.
“Because if these things are there and the rest of the environment of the city is nice, then these people will stay on in the city and per force business has to come here because talent is here. As a result of that, there is a lot of other spillover. It’s not just the talented people who come over. Certain complexity comes up in the city, as sociologist Saskia Sassen pointed out. A lot of these people are more amenable to the idea that we need something more equitable, and the politics becomes more equitable. So when we begin to imagine the city, we don’t imagine the city as a physical structure as most of us know it. It’s more of social structure," he emphasizes.
Local politics and urban development
The question then arises as to the role of local politicians as actors shaping the physical structure of cities. In a city like Mumbai, local politics, real estate development and urban policy are inevitably intertwined. But Mukhopadhyay points out: “If they’re really local politicians, they won’t think of structures. Really local guys have a stake in the city. Who are the guys who are only thinking of structures? The guys who look at only the structure are the ones who get their cut from building the structure; they don’t care whether the structure is put to any use or not. ‘I want to build slum housing, I’ll do it. I want to build flyover, let’s do it. Metro rail, let’s do it’. Who cares if anyone uses?"
This phenomenon is not restricted to Mumbai. Under the Jawaharlal Nehru National Urban Renewal Mission, hundreds of thousands of houses have been built that are vacant, Mukhopadhyay says. “In Delhi, about 20,000 apartments are vacant because can’t find people to move in there. People are not moving in for two reasons. First, because, they are built in places where they don’t have services that enable people to use it productively—there is no infrastructure of water, power, transport, etc. And second, in terms of governance, the city of Delhi has no idea which 20,000 it will take to put there. Nobody wants to voluntarily go there.
“One is to provide that entire infrastructure, which is not possible. The Chinese make money by polluting—and make money in cleaning that up. There are ways of making rents by making things that are socially useful also, e.g. providing transport, it’s not as if all rents are completely socially useless. So it is only when you start imagining cities as social institutions, that is when the local stuff starts becoming very important. The differences in opinions between local people are an organic way of going ahead.
“Some cities make wrong choices and drive capital or people away. You need that experimentation to happen, it is part and parcel of growth. Some cities make wrong choices and fall by the wayside."
Relationship between market forces and policy
Cities are shaped by market forces and government policy, and the relationship between both is complex, states Mukhopadhyay. “They are multiplicative functions, not additive functions. If the policy stuff is zero and the market is 100, the market forces are not going to work," he points out, adding that “a lot of the stuff that’s happening in Gurgaon today would’ve happened in Delhi, but the way you worked on land in Delhi, DDA (Delhi Development Authority) just didn’t believe that there would be these kinds of entities that would need their own land and physical structures.
“That’s what led to Gurgaon being what it is today. Haryana had Ansals, DLF and others. They had land to offer, and there were market forces of ITs (information technology firms) and BPOs (business process outsourcing units). That marriage is what created the phenomena. You could’ve created a better phenomena out of this. You could’ve made (London’s) Canary Wharf, but Gurgaon will take its shape and move forward. The cities that function well are ones where both these things are aligned, with some urban planning in it. Fundamentally, if politics get aligned to capital, that’s the growth machine story."
Rent-seeking, land-use law and urban growth
No discussion on urban development in India is complete without a discussion on rent-seeking behaviour among politicians. Mukhopadhyay offers a pragmatic approach, saying: “All societies have rents, the question is what portion of it is taken as rent, is that sustainable? And what is the rent used for? If you take 5% of everything and as a result of that rent, if that is invested in the productiveness of what you are doing, that is East Asia, Malaysia, South Korea. Politics is essentially about how the rents are coming out of the whole process, how they are distributed. That is the mediation. Left to itself, capital will want all of it. The standard economic story is that there is growth, you pay taxes and the taxes go back to social stuff, but there is more to that because you are shaping rules, structures, deciding land-use.
“If I simply change one aspect of Indian law—the right to change land use—rents would drop all across the cities. Because the only reason certain places are valuable is because they have certain different land use from the plot next door. That rule as to what decides the change of land use is a rule that is essentially the way it is structured, is something that all these forces are acting on. In Mumbai, the NTC Mill lands were sold in bulk; it would have had a very different outcome than the current piecemeal stuff. It is about creating an ecosystem where the people don’t mind if the guy makes 5% if a variety of things are happening like industry, water, schools are running well, sanitation, hospitals running well, people get jobs," he says.
Detroit and local politics
Detroit is a great example to highlight the mobility of capital and the role of local politics, says Mukhopadhyay. “The Detroit metropolitan region is a thriving place. Not too bad at all. As a region, it’s not bankrupt, but as a city, it is completely bankrupt. The entire base has moved out of Detroit. Wherever money comes from, it’s outside the boundary line. Wherever the money has to be spent is inside the boundary line. It is an extreme form of mobile capital. That is the kind of regional stuff that could happen.
“Local politics need to ensure that all these things happen. You need structures that connect across each of them, and allow negotiations. Somebody who says: this is important stuff. Some places which solved that problem will do better. Places who don’t solve the problem will not work," he points out.
Mukhopadhyay cites the example of Delhi. “Delhi gets water from Haryana from an unlined canal, so there is a lot of seepage. But since the canals are not properly lined, there is seepage, due to which Delhi gets less water. If 100 litres is pumped, Delhi would get 80 litres only, but if the Delhi government gives money to line the canals, Delhi will get more water. So Delhi government lines the canal. Now, Haryana says: ‘I used to give you 80 earlier, I will continue to give the same and keep the 20.’ Each city takes things from various places. If the politicians are able to negotiate and can do the mediation, the issues are resolved and the place will prosper. If they fail to do the mediation, the place will go down.
“There is nothing wrong in the fundamental viability of the place, but there needs to be some coordination for movement to take place. The bigger problem is the fact that we don’t know as to which direction to move in, that remains. We still are left with a meta-problem—that we don’t know where to go, because we don’t know in which way economic activity or social activity will be organized in the world 50 years later because there are climate issues, manufacturing issues, 3D printing.
“The future is complex. In order to get anywhere, you have to move, and if enough people are moving in enough directions, then some of them will hopefully reach the right point. And if that is recognized, then the world will move to some kind of place. Whichever direction you go in, you need the planner to shape that story. You had created a city for an industrial world, it worked for 100 years. Now we need to set balls rolling in different directions. It’s not enough to say that all we need is a bunch of planners," he says.
This is the first in a six-part series. For more stories on the Urban Thinkers series, read here: Why and how cities succeed