Fostering Growth and Inclusion in Asia’s Cities
Asian Development Outlook 2019 Update Theme Chapter

Yasuyuki Sawada
Economic Research and Regional Cooperation Department
Asian Development BankOutline• Urbanization: Some key patterns• Urban agglomeration economies in Asian cities• Managing the city as a labor market• Managing the urban system• Road safety in developing Asia and ADB’s recent efforts

Urbanization: Some key patterns
V4.1

3

Developing Asia is urbanizing rapidly
Urban population by region (1970-2050)

Number of years from 10% to 50% urbanization rate
Number of years from about 10% to 50% Urbanization Rate

1.06 billion

1970
0.4 billion+ 5-fold2017
1.8 billion

+ 70%

2050
3 billion

Latin America andCaribbean

211 years

10%
9%North AmericaEurope
Asia and the Pacific

12%

50%

105 years

51%

150 years

52%
95 years

11%

Viet Nam

12%

Indonesia

12%

Lao PDR

China, People's Rep. of

88 years
60
60yearsyears
10%

Bhutan

51%

50%

50%

70 years

52%

53years
years 50%
10% 5312%

61 years

51%

1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 2050
Source: ADB estimates based on World Urbanization Prospects, the 2018 revision.

Source: ADB estimates using Bairoch (1988) and UN (2018).

Faster urbanization and economic growth arecorrelatedFive-year changes in GDP per capita
versus change in urbanization, 1970-2017% change in real GDP per capita

Developing Asia
Rest of the world

Source: ADB estimates based on UN (2018) World Bank (2019).

Cities are expanding beyond
administrative boundaries• “Natural cities” capture actual
urban footprint using nighttime
lights satellite imagery.

PHILIPPINES
Cebu

1992

PHILIPPINES
Cebu

2016

INDIA
Kolkata

1992

INDIA
Kolkata2016• 1,459 natural cities are identified,hosting 34.7% of the population
on 2.3% of land area.

1992• Natural cities have expanded
beyond administrative
boundaries.
• Some have gotten connected toform city clusters.
Source: ADB estimates.

2016

28 city clusters in developing Asia have a
population of 10 million or more
2016

DelhiChandigarh

ShanghaiNanjing

GuangzhouHuizhou

Source: ADB estimates.

Evolution of city sizes
Distributions of Natural City Size by Land Area

Distributions of Natural City Size by Population

Source: ADB estimates using nighttime lights images from the National
Oceanic and Atmospheric Administration and grid population data from LandScan datasets.

Urban agglomeration economies in Asian cities
V4.1

9

The benefits of agglomeration
Concentration of households and firms enables:• Learning through spillovers of ideas and knowledge- Garments in Dhaka, soccer balls in Sialkot, IT startups in Bengaluru• Matching of input-output markets- Workers find more suitable jobs
- Firms locate next to suppliers and buyers• Sharing of resources- Infrastructure- Tap into wide-ranging expertiseAsian cities benefit from “agglomeration economies”
Big cities pay similar workers more
Urban wage premium
relative to rural areas (%)

Big city firms are more innovativeFirms responding
affirmatively%
47.2

5040

38.0
34.0
27.3

30
19.5

20

12.5

10

*0
Process
Innovation* Small cities’ wage premium over rural areas is
not statistically different from zero.

Big cities (>1M)

Product
Innovation

R&D

Small cities

Source: ADB estimates based on labor force surveys of 4 countries (left side chart) and World Bank enterprise surveys of 25 countries (right side chart).

Role of universitiesLarger cities have:• Higher shares of college
graduates

Firm innovation and universities• Greater presence of college
graduates benefits less educatedworkers as well

• Better opportunities for femaleworkers• Presence of universities• High quality universities enablefirms to be more dynamic
Source: ADB estimates based on World Bank enterprise surveys, QS
World University Rankings, and NTL based natural city data.

Managing the city as a labor market
V4.1

13

But, the benefits of agglomeration do not flow automatically
Urban agglomeration benefits

Source: Based on Henderson, J.V., 1974. The sizes and types of cities. The American Economic Review, 64(4), pp.640-656; Duranton, G., 2008. From cities to productivity andgrowth in developing countries. Canadian Journal of Economics/Revue canadienne d'économique, 41(3), pp.689-736.

Cities thrive when they function
well as labor markets Low mobility scenario• Key conditions• Travel within the city is fast andcheap• Firms and households haveflexibility to relocate within thecity• Real estate is relatively
affordable

High mobility scenario

Source: Adopted from Bertaud (2018)

A tale of two cities….
Chongqing, PRC
Population: 13.4M (2015)

Share of informal subdivisions in residential areas andshare of arterial roads within walking distance(2000-2013)
Percent (%)
100

Lagos, Nigeria
Population: 12.2M (2015)

91

90
80

IBM
Foxconn
Cisco Systems
Ford Motor Company

70

70

60

53

50
40

Seplat Petroleum
Dangote Cement
Nestlé Nigeria
Nigerian Breweries

30
20
10

Unemployment rate:
3.9% (2010)

3.50

Informal subdivisions(residence)
Chongqing

Arterial roads withinwalking distance
Lagos

Source: UN (2018) and China Statistical Yearbook (2018)
Source: ADB estimates based on 2016 Atlas of Urban Expansion

Unemployment rate:
27.6% (2010)
Source: UN (2018) and Nigeria Data Portal (accessed 27
September 2019).

Congestion is generally worse in larger cities• We use Google Maps trip
information to measure congestion
across 278 Asian cities• Hotspots in each city are identified
using nighttime lights and grid
population data.
• Random origins and destinations
are sampled from the hotspots• Projected driving durations foreach pair of OD are obtained fromGoogle Maps API for peak and offpeak hours of Monday, 3 June
2019.

Average congestion index of natural cities
with population greater than 5 million
2.0

1.8

Average
1.5

1.6

1.4

1.2

1.0

Note: 1.5 represents the average index of the 24 cities in the chart.
Source: ADB estimates using Google Maps.

Stock of cars has increased dramatically in the region
Share of passenger car increase, 2005-2015

Average annual passenger cars growth rate indeveloping Asia and other economies, 2005-2015

Note: Passenger cars are definedas road motor vehicles other thanmotorcycles intended for carrying
passengers and designed to seatno more than nine people. Thiscovers taxis and hired passenger
cars, provided that they havefewer than 10 seats, and may
include pickups or microcars.

Source: ADB estimates using data from the International Organization of Motor Vehicle Manufacturers..

Affordability of public transport is an issue in some cities
Share of income spent on urban commuting trips per month in developing economies

Source: ADB estimates using data from the Land and Housing Survey in a Global Sample of 200 Cities of the New York University Urban Expansion Program 2006

More fundamentally, must ensure that urban expansion issubject to land use planning
Dhaka, Bangladesh

Mumbai, India

Good land-use planning is on the decline
Share of residential
area laid out before
development

Share of built-up area
within walking distance(625 meters) of anarterial road

Source: ADB estimates using data from Landand Housing Survey of the New York University
Urban Expansion Program 2016.

Housing affordability poses a challenge
Housing affordability measured byhousing price to income ratio (PIR)
PIR
20
17.2
15

13.6
10.9

10
4.0
Developedcountries

50(<M) Medium (1-5M)
Small (1<M)

Big (>5M)

City size
Note: The price-to-income ratio (PIR) was computed as the average house price (50 m2) divided by
the mean annual household income.
Source: ADB estimates using data from Colliers International; Global Property Guide; householdincome and expenditure surveys, various countries; Knight Frank; Makaan; National Bureau ofStatistics, People’s Republic of China; Numbeo; World Bank’s PovcalNet; Zameen.

Managing the urban system
V4.1

23

Growth requires vibrancy indifferent types of cities• Urban system: Cities connected byflows of goods, services, and people• Small cities• Medium size cites• Large cities• Hinterland

Smaller cities face greater business obstacles
Major or severe obstacle to business operation by city size (% firms)

Source: ADB estimates using World Bank Enterprise Survey.

Realizing the promise of cities
CitiesUrban systems• Multi-modal public
transport system• Affordable housing• Land-use planningand regulations• Businessenvironment• Inter-cityconnectivity• Coordination ofspatial andeconomic planning• Metropolitan
governance

Environmental sustainability

Road Safety:
Institutional Capacity and Operations
V4.127

Road Safety in Asia: WHO (2018)Rates of road traffic death per 100,000 population: 2013,201628

Distribution of Deaths by Road User Type

Source: WHO, 201829

Road Traffic Death by Country Income Category
Proportion of population, road traffic death and vehicles byincome of countries

No. of countries where a change in the no. ofroad traffic deaths

Source: WHO, 201830

Road Crash Data Challenges in Asian Countries
No. of fatalities on the road as reported by thePolice Vs. Health Sector in ASEAN cities

Source: WHO, 201831

Source: Global Road Traffic Fatalities, Statistical Overview by Region, FIA, 2017

Road Safety Observatory (RSO) in Asia and Pacific• A network :➢Policy level➢

Data experts• A forum to exchange and discuss➢

Policy issues➢

Technical and methodological issues➢

Experiences➢

Learn from each other• A common database• Common surveys, annual reports, joint research• Kick-off workshop: March 20-21, 2019, in Singapore.
• Over 70 participants from Bangladesh, Cambodia, Indonesia, Japan, Korea, Lao, Malaysia, Myanmar, Nepal,Pakistan, Philippines, Singapore, Sri Lanka, Thailand, Vietnam.
34

Regional Safety ObservatoryObjectives:• To accelerate country-level improvements in data collection, analyses and decision
making.
• Stimulating harmonisation between countries for better monitoring.
• Fostering a positive competition between countries to improve crash data systems.
• Offering a common space for data and information sharing.
Expected Outcomes:• Raising road safety on the political agenda.
• Creating incentives for better road safety performance, emulation, co-operation.
• Help countries to improve data as required by WHO monitoring process.
• Scale up achievements of a few countries to more countries (snow ball effect).
• Provide country with a tool to more systematically collect safety data.
35

ADB-cofinanced result based loan:
India state road safety incentive program• Registered vehicles in India: 230 million (March 2016)• Annual growth rate: 9.9% (2006-2016); 10.1% for two-wheelers and cars, jeeps and taxis• Highest share of two-wheelers (73.5%) followed by cars, jeeps and taxis (13.1%), othervehicles (8.1%), goods vehicle (4.6%) and buses (0.8%)

Road and Accident in India• Road accidents in 2017: 464,910• 147,913 fatalities• 470,975 injuries• National Highways accounted for
36% of deaths in 2017 while they
constitute only about 2% of road
length• Fatalities on state highways andother roads constitute 26.9% and37.1%, respectively

Result based loan:
India state road safety incentive program• ADB currently co-finances with Indian
government to reduce fatalities from roadaccidents in eight focus states with five main
outputs:
1. Institutional and monitoring systemestablished
2. Accident risk identification systems
established
3. Vehicle fitness and accident risk spotsrectified
4. Accident response system strengthened
5. Awareness campaigns implemented• The project will provide monetary incentive tostate government based on the road safety
indicators accomplished by each state. Here aresome examples of project indicators.

Key Messages• Developing Asia in urbanizing rapidly, forming city clusters• Asian cities benefit from “agglomeration economies” but the benefits
do not flow automatically• Realizing the promise of cities as engines of growth and job creation
requires overcoming challenges in transport, housing, and urban
planning, among others• Improving road safety outcomes is also critical for eliminating binding
constraints for the promise. Asian Development Bank is committed tosupport safer roads in the region through a variety of channels including
innovative programs.
39

Thank you!
https://www.adb.org/publications/asian-development-outlook-2019-update