K. Balchand

“Instead of worrying about the size of metropolises, it must be ensured these work well”

NEW DELHI: Turning on its head tenets favouring dispersal of economic activities geographically to benefit the poor, the World Bank has in its latest report called for shifting populations from villages to cities. “Growing cities, ever more mobile people and increasingly specialised products are integral to development.”

That is the prescription of the ‘World Development Report 2009: Reshaping Economic Geography’ that was released on Thursday.

Director of the the World Development Report (WDR) and Chief Economist, Europe and Central Asia Indermit S. Gill sought to justify the change in its policy recommendation in a historical perspective that production concentrated in big cities, leading provinces and wealthy nations. Half the world’s production fitted into 1.5 per cent of its land.

The report “welcomed and encouraged” the process of migration saying that “globally as well nationally people move in order to improve their prospects in life. It pointed out that about 30 million people had moved from the lagging States of Bihar and Uttar Pradesh to leading States such as Maharashtra and Punjab in the second half of 1990.

Mr. Singh regarded as short-term constraints the recent opposition in Maharashtra to such migration.

In the context of the financial crisis gripping the world, the WDR feared that protectionist tendencies in both developing and developed countries could seriously jeopardise both the recovery and longer term progress.

The report contended that markets favoured some places over others and countering the tendency would amount to fighting prosperity. It expected governments to facilitate such geographic concentration and initiate policies to provide for basic needs such as schools, security, streets and sanitation.

“Instead of worrying about the size of metropolises, cities and towns,” the WDR called upon policy makers “to worry about making sure these places work well.” It highlighted the case of Mumbai, which continued to attract people, and had twice the number of residents today than in 1980 when its population was 7.5 million.

World Bank Senior Economist Somik V.Lall argued that spreading out economic activity could hinder growth and did little to fight poverty underlining the WDR’s approach challenging the assumption that economic activities must be spread geographically to benefit the world’s most poor and vulnerable.

Referring to India, the WDR called for infrastructure development and reduction in transport costs because distance was a challenge and the problem was compounded by concentration of poor people in the rural areas.

The report called for blending of policies so that developing nations could reshape their economic geography the way high income economies died in the past. “If they do this well, their growth will still be unbalanced but their development will be inclusive.”

Mr. Gill was against establishment of heavy industries in rural areas on account of their density and to preserve agricultural activity.

The report examined the Special Economic Zones (SEZ) in India and China, underlining the differing approaches in the two countries. China’s approach reflected a strategy of exploiting the best locations to access external markets, while in India these had been developed by the private sector and targeted the large domestic market. But it felt that these were not as well located.