Tuesday, January 13, 2009

The world is not flat: World Bank

Jan 10, 2009

Urbanisation necessary for countries to progress, says report

By Robin Chan

THE world is not flat, contrary to recent theory, and geography still counts for much in the global economy.

A new report from the World Bank refutes the popular notion that globalisation and technology have flattened out differences between nations.

It maintains that economic success will remain unbalanced in a country because of inherent geographical barriers, so trying to spread growth within borders will be counter-productive.

Citing the experience of developed countries, it stated: 'A generation of economic research confirms this: there is no good reason to expect economic growth to spread smoothly across space.'

Instead, developing mega cities is still the best way to promote growth and galvanise a population's productivity and governments should make it easier for people to move to urban centres.

'Big cities, mobile people and connected countries - these are necessary for progress,' said the report's director, Dr Indermit Gill, who spoke at the Institute of Southeast Asian Studies yesterday.

'People fear bigger cities, fear the need to move to places that are doing well, and fear greater openness to trade.

'But we say these are things that are absolutely necessary for economic development. If countries want to grow, they must also think about how to increase economic density, shorten economic distance and lower economic divisions.'

The aim is also to include all groups in society, so no one is left out.

World Bank economists insist that development can still be inclusive. People who start their lives far from economic opportunity can benefit from these growing concentrations of wealth as long as governments do a better job of making it easier for people to get there.

Dr Gill said: 'These are the things that have helped countries like the US, Western Europe and Japan get to high income, and these are the things that are helping countries like India, China and those in South-east Asia also get to higher and higher levels of income.

'And we believe that there is no reason to think that the world will be so dramatically different in the future that these will not be necessary for other countries.'

The report, which was released last November, proposes three levels of policies to encourage urbanisation.

The most fundamental function is to establish institutions to provide basic social services in education, health, water and sanitation.

Once urbanisation has begun, roads and railways and other infrastructure must be built to ease movement of people and goods and services within a country and internationally. At its most advanced stage, urbanisation brings problems of overcrowding and slums, which then must be addressed by targeted policies aimed at lifting living standards.

The bank recognises Singapore's success in developing a vibrant, workable city and joined forces last month to set up the World Bank-Singapore Urban Hub to provide advice on urbanisation for other countries.

A companion publication to the report focuses just on East Asia. One chapter explains how huge benefits could result if the many economic barriers between Malaysia and Singapore were to be overcome.


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