City of Blinding Lights? Urban economics in the 21st century

Annie Williamson

Continuing our series of blog posts which explore topical issues through insightful new papers, we turn to urbanisation and megacities this week. We’ve just launched a new edition of the Oxford Review of Economic Policy about just this phenomenon, so take a look here to discover more at the cutting edge of urban economics.

1) Managing a mega-city: learning the lessons from Lagos

Nic Cheeseman and Diane de Gramont

Lagos markets. Image: Zouzou Wizman

A much-needed analysis of the challenges and opportunities of African urbanisation, this paper presents a case study of Lagos state in Nigeria to consider the role of local and regional governments in innovation and urban management. With a population over 21 million in 2016, Lagos is the largest city in Africa and has seen “sub-national political leaders embark on a process of impressive statebuilding and institutional transformation”. However, Cheeseman and de Gramont suggest these lessons be followed with caution; “the necessary conditions for sub-national statebuilding are rare and can only be found in a small number of African states.” Like many issues, good politics must accompany effective developmental policies.

2) The benefits of density

Professor Ed Glaeser, Harvard University

Megacities have always been divisive, combining agglomeration benefits and improved service density with pollution, overcrowding and, often, increased visibility of poverty. As climate change heats up literally and politically, this adds another crucial dimension to the cities debate. Ed Glaeser powerfully makes the environmental case for denser, urban-based living in this blog post, based on an extract from his 2011 book ‘Triumph of the City’.

He and Matthew Kahn put together a ‘carbon inventory’ of new housing in the US, with shocking findings — for instance, they find that an average household in the most urban areas uses just over half the petrol per year that a very rural household uses, and 88% less electricity in a dense apartment block compared to a detached home.

“Simply put, if we wanted to reduce emissions by changing our land-development policies, more US residents should live in denser, more urban environments.”

The policy calls for smarter, greener cities are crucial in the US, as dozens of mayors and governors vow to follow the Paris climate accord following Donald Trump’s move to pull out. They also must determine the future trajectory of megacities around the world, with six out of the ten largest cities worldwide situated in developing countries. This urbanisation must be dense, and well designed, to prevent carbon footprints spreading far wider than the city boundaries. “Dense cities offer a means of living that involves less driving and smaller homes to heat and cool. For the sake of humanity and our planet, cities are — and must be — the wave of the future.”

Singapore’s Gardens by the Bay blends environmental diversity with a thriving city

3) Gold Mining and Proto-Urbanization: Recent Evidence from Ghana

Marcel Fafchamps, Michael Koelle and Forhad Shilpi

This fascinating working paper from the World Bank Development Research Group examines agglomeration effects driving urbanisation. Fafchamps, Koelle and Shilpi investigate whether gold mining is a catalyst for proto-urbanisation in rural Ghana. They find that locations within 10 kilometres from gold mines have more night light and proportionally higher employment in industry and services and in the wage sector. Most interestingly, the changes arising from increasing gold production are not reversed when large gold mines shrink — this intuitively resonates when we think of the many port or construction-based cities that continued to thrive once the initial industry moved on. To understand the risks and potential of metropolises, we can learn a lot from studying the initial conditions of these cities. This paper sheds light on one early driver of urban migration, as minerals continue to shape the trajectory of cities, and development, around the world.

Will our cities grow up into thriving, sustainable centres or add to the web of policy challenges faced today? Take a look at these three papers, and our new Urbanisation issue here, to be at the cutting edge of urban economic thought. Also be sure to check out the OxREP website, and join the debate by following us on Twitter.

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