Leveraging Urbanization in South Asia Pakistan Urban Forum Karachi January 10, 2014 Peter D. Ellis Lead Urban Economist The World Bank

SAR Countries Still at Early Stage of Transformation Least urbanized region in the world with low urban shares. By 2030, 315 million people added to South Asia’s cities. Urbanized share by Region (2011) Latin America and the Caribbean Europe and Central Africa Middle East and North Africa East Asia and Pacific Sub-Saharan Africa South Asia Urban Share Growth Rate (%) Source: WB staff estimates based on WUP-2011 data

High Concentration of Mega-cities From 5 now to 9 in next 10 years Lahore will be added Source: Taubenbock et al (Feb 2012)

Strengthening of Agglomerations

Formation of a Transnational Mega-Agglomeration

Urbanization Process Urbanization City size and spatial structure Connectivity Access to markets Urban planning Land & affordable housing Crime, Grime, Disease & Congestion Productivity, Skills, Jobs & Innovation Governance & finance Accountability, basic services Migration & Skills Access to jobs Outcomes Prosperity Poverty Livability

Main Challenges to Urbanization Access to markets Access to land & housing Access to basic services Access to jobs Governance & Financing Arrangements which create correct incentives for efficient provision , & tackle issues of horizontal & vertical fragmentation Connectivity Hard & soft infrastructure improvements Planning Integrated land use & transportation planning which relaxes, rather than exacerbates, supply constraints Skills & Migration Agglomeration economies are facilitated by human capital accumulation & pull migration

Land Management is Critical to City Development Urban planning uses greater granularity in zoning. Fine-grained approach promoting mixed land-use. Using land value to guide infrastructure investments. Mumbai Metropolitan City - 603 sqkm Singapore - 710 sqkm

Sprawl vs. Densification New York City Karachi

Using Zoning to Capture Property Value Gains Manhattan focus on transit nodes select catalyst sites for piloting Seoul variations in FSI linked to location of metro stations and network of main streets Mumbai Increase proposed development charge from 8 to 15 % of property value Expected revenue of Rs. 100,000 Crore (roughly US$ 16 billion) over 15 years

Pakistan’s Urban Corridor

Intensifying Around Key Urban Centers

Dominance of Karachi consistent with other Cities Across Asia City/region Population (2007) City Pop/ national pop City GRDP/ national GDP Seoul 9,800,000 20.8% 33.0% Bangkok 12,000,000 17.8% 35.0% Kuala Lumpur 4,800,000 17.4% 36.0% Manila 11,500,000 13.0% 47.0% Karachi 16,000,000 8.0% 20.0% Ho Chi Minh City 6,000,000 6.9% 24.0% DKI Jakarta 9,000,000 4.1% 18.0% Mumbai 16,400,000 1.3% 6.2% Shanghai 2.9% City is defined only as core only

However, Smaller Cities are Becoming Medium-sized Cities Note: Calculations from 1998 Census and UNWUP.

Large Cities Outperform Medium and Small Cities Fastest population growth Higher per capita incomes Lower poverty rates Bigger manufacturing shares Largest concentration of high-tech firms

Informal Sector Very Dominant Large informal sector: many low productivity firms Low tax collection constrains public investment Worse problem in smaller cities Note: Calculations, from Pakistan Labor Force Survey

Need to connect medium and small cities to improve market potential Source: Calculations based on 1998 census. Quintiles of market access

Critical Elements for Urban Transformation Clearly articulated vision at national and city levels. Identification and implementation of catalytic investments within city. Detailed financing plan. Extensive stakeholder consultation.

Pakistan is Well Positioned to Capture the Urban Dividend What do Pakistan’s cities need to do in order to meet the demands of their growing populations? How does the nationally articulated vision and strategy support city development? How will the local government structure be reformed to allow cities to effectively manage their transformation?

Thank You! 20