# **5.  Conclusions**

The development of East Dhaka is a potentially transformative project for the city of Dhaka, and the country of Bangladesh. The World Bank report by Bird et al. (2018), addresses the potential risks and benefits of developing this area, versus doing nothing and leaving the area on the same development path as it is today. The risks the city faces, from flooding, congestion, and an urban messiness from a lack of investment in good quality services, are affecting the city today and will increasingly do so in the future, unless some action is taken. East Dhaka provides a unique opportunity to address some of these challenges. The modelling described in this paper suggests that the construction of the Eastern Embankment and related flood protection measures, increasing the availability of land near the heart of the city, might be expected to lead to large returns.

In order to examine in more detail the potential size and the distribution of these returns, the model and simulations in this paper have been developed as a background paper to the World Bank report. The use of the general equilibrium framework allows for consideration of the interaction between different players in the city. Firms and households all interact across the urban space, and so policies that directly may affect only one group will have subsequent indirect impacts on others within the city. The modeling builds on recent developments in the economic literature, differentiating households by skill, commuting modes and housing preferences, firms by sector, and sectors by their production technologies and the tradability of their output. This creates a model which replicates the essential elements of the geography of the current city today. The framework also allows us to elaborate on potential investment scenarios the city may choose to undertake, with a benchmark situation in which the city develops without significant extra investments, against which other scenarios can be quantifiably compared. The size of economic returns, and whether these are in the form of wage incomes for high or low skill households or rents for land-owners, are shown to vary significantly according to how the development of East Dhaka is planned and executed.

The scenarios simulated in this background paper are embedded in a wider framework of the institutional, geographical and environmental situation that Dhaka finds itself in today; these are addressed more thoroughly in the full report. The economic analysis of this background paper highlights the processes through which the impacts of these potential scenarios will be felt, and the relative size of these impacts. A successfully planned development of East Dhaka, with a geographically focused area in which business costs are further reduced to encourage new tradable-services firms, could lead to a large and transformative change for the city. By running through a range of scenarios, we document that the increases in GDP per capita for those living in the city can be from 5%, to as much as 17.6%. Combined with population growth enabled by the policy, the increase in GVA can be as much as 39%. Yet to achieve this requires coordinated policy: engineering, to construct the embankment, transport planning, to ensure the newly developable land is accessible, land policy, to encourage the allocation of land to high-value sectors, and service provision, to facilitate the construction of modern 30