World Development Report 2009 Reshaping Economic Geography
Three special places Tokyo the biggest city in the world 35 million out of 120 million Japanese, packed into 4 percent of Japan s land area Every day, its subways move 8 million people USA the most mobile country More than 35 million out of 300 million changed residence in 2006 Every year, 8 million people migrate between states West Europe the most integrated continent About 35 percent of its GDP is traded 60 percent of its trade is intra-regional back and forth trade in all types of goods and services June 28, 2008 Mumbai Consultation 2
Crowded cities Tokyo s trains have been moving 8 million people every day June 28, 2008 Mumbai Consultation 3
Packing in the subways Tokyo s trainpackers crush commuters into metrorail carriages June 28, 2008 Mumbai Consultation 4
And piling up wealth the fruits of proximity Japan s economic mass is concentrated in the Tokyo-Yokohama area June 28, 2008 Mumbai Consultation 5
Going home for the Planes in the air on the Tuesday before Thanksgiving in the US holidays June 28, 2008 Mumbai Consultation 6
Going home for the Some of the 35 million Thanksgiving travelers stuck in traffic jams holidays June 28, 2008 Mumbai Consultation 7
Stranded by storms before the Thanksgiving weekend Going home for the holidays? June 28, 2008 Mumbai Consultation 8
Why Americans put up with the pain of moving Economic mass is concentrated in a few parts of a big country June 28, 2008 Mumbai Consultation 9
Specializing and trading in Western Europe Airbus parts are made, moved, and assembled all over Western Europe Great Britain wings parts Belgium Netherlands parts Germany body vertical stabilizer United States engines France cockpit wheels Belgium G.B. Germany vertical stabilizer Spain Spain Toulouse assembly wing France bod y horizontal stabilizer horizontal stabilizer body Germany France engine U.S. June 28, 2008 Mumbai Consultation 10
Loading and moving Airbus parts are made, moved, and assembled all over Western Europe June 28, 2008 Mumbai Consultation 11
Made possible by a painful integration Slow institutional integration in Western Europe during the last 50 years June 28, 2008 Mumbai Consultation 12
The result? The US, EU-15, and Japan cover much of the economic globe June 28, 2008 Mumbai Consultation 13
Stories being repeated now in developing Asia Mumbai the most densely populated city About 30,000 people per sq. km.; already twice the density of Seoul, Shanghai, and Bogota More people keep coming China the most mobile developing country 60 million migrant workers traveled from home on the last day of Chinese New Year holidays in 2006 200 million travelers were stranded due to snow storms days before Chinese New Year in 2008 Southeast Asia the most rapidly integrating developing region Trade is big part of GDP More than 25 percent of its trade is within Southeast Asia; more than 50 percent if Northeast Asia is included June 28, 2008 Mumbai Consultation 14
Mumbai s trains move 6 million people every day Stuffed trains in Mumbai June 28, 2008 Mumbai Consultation 15
Trainpackers needed People die every day on Mumbai s trains June 28, 2008 Mumbai Consultation 16
Going to work in China Millions of Chinese workers migrated despite restrictions in the 1990s June 28, 2008 Mumbai Consultation 17
Going home in China Guangzhou railway station during Chinese New Year, 2008 June 28, 2008 Mumbai Consultation 18
Specialization and trade in Southeast Asia Computer parts are made and assembled all over East Asia June 28, 2008 Mumbai Consultation 19
The result? China, Southeast Asia, and India can again be recognized on this map June 28, 2008 Mumbai Consultation 20
Spatial transformations needed for progress Higher Densities No country has grown to high income without urbanizing Shorter Distances Growth seldom comes without the need to move closer to density Fewer Divisions Growth seldom comes to a place that is isolated from others June 28, 2008 Mumbai Consultation 21
Messages Growth will be unbalanced Trying to balance growth amounts to fighting it Development can still be inclusive Persistent spatial disparities in basic living standards are neither desirable nor inevitable Integration is the way to get both unbalanced growth and inclusive development Report attempts to change debates from spatial targeting to spatial integration: institutions, infrastructure, and incentives June 28, 2008 Mumbai Consultation 22
Policy concerns Concentration of people in cities will outstrip concentration of economic mass A billion people in the world s slums Spatial disparities in living standards will widen as economic mass concentrates in places distant from where people are A billion people in remote and lagging areas Poor people will be trapped in isolated countries that are not developing The new Third World : Collier s Bottom Billion June 28, 2008 Mumbai Consultation 23
A billion in slums June 28, 2008 Mumbai Consultation 24
A billion in remote areas June 28, 2008 Mumbai Consultation 25
The bottom billion June 28, 2008 Mumbai Consultation 26
Spatial scales June 28, 2008 Mumbai Consultation 27
Report structure Spatial Scale 1: Area Spatial Scale 2: Country Spatial Scale 3: Region Part One: Stylized Facts 1 2 3 Density : Rural-Urban - Distance : Lagging-leading - Division : Isolated-Connected Part Two: Market Forces 4 5 Factor mobility : 6 Migration Scale economies : Agglomeration Transport costs: Specialization and trade Part Three: Government Policies 7 8 9 Territorial Regional Urbanization development integration June 28, 2008 Mumbai Consultation 28
Agglomeration Index Concentration of economic activity rises, then levels off The richer, the denser: People concentrate in towns and cities as nations develop Agglomeration Index, using a spatial resolution of 1 square kilometer 1 Egypt Korea Japan 0.8 Germany India USA 0.6 0.4 China Brazil South Africa Norway 0.2 Botswana Ethiopia 0 Belize 0 5 10 15 20 25 30 35 40 GDP per capita (thousands, PPP, 2000 constant US$) June 28, 2008 Mumbai Consultation 29
concentration Concentration of economic activity rises, then levels off 10 9 Brazil,1960-2004 8 7 6 5 4 3 Chile, 1976-2004 France,1801-1999 Japan,1900-2000 Spain, 1850-2000 USA,1960-2000 Canada,1890-2006 Ne the rlands,1850-2006 2 1 0 0 10000 20000 30000 40000 per cap GDP (constant 2000 US$) June 28, 2008 Mumbai Consultation 30
Concentration of economic activity rises, then levels off June 28, 2008 Mumbai Consultation 31
Divergence, then convergence, in rural-urban gaps June 28, 2008 Mumbai Consultation 32
spatial inequality (coeff of variation of regional wages or income) Divergence, then convergence, but only in growing countries 0.6 0.5 Sweden,1920-1961 0.4 Spain, 1860-1975 0.3 0.2 Habsburg Empire,1756-1910 USA,1840-1960 Japan, 1955-1983 0.1 UK,1871-1955 0 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 per capita GDP in constant intl Geary-Khamis dollar June 28, 2008 Mumbai Consultation 33
Divergence, then convergence, in basic living standardsin Malaysia June 28, 2008 Mumbai Consultation 34
Convergence in East Asia, 1950-2006 (Coefficient of variation and per capita GDP growth) Divergence, then convergence, but only in growing regions June 28, 2008 Mumbai Consultation 35
Urbanization rates not unprecedented, but city sizes are Average size of largest 100 cities, 1800-2000 June 28, 2008 Mumbai Consultation 36
Global Trade as Share of Global GDP (Percent) Market size is still important, but globalization is unprecedented Exports as a share of world trade, 1820-2000 30 25 26 20 15 12 10 5 6 1 0 1820 1900 1950 2000 June 28, 2008 Mumbai Consultation 37
Number of Borders Border restrictions have precedents, but number of borders is unprecedented Number of international borders, 1820-2000 700 600 600 500 400 300 200 200 100 75 104 0 1820 1900 1950 2000 June 28, 2008 Mumbai Consultation 38
Drivers The Drivers of Spatial Transformations Economic force Key factor of production Examples Spatial Scales Local National International Unit Area Country Region Guangdong (178,000 sq km) Rio de Janeiro State (44,000 sq km) Lagos State (3,600 sq km) Greater Cairo (86,000 sq km) Agglomeration Speeded by migration, capital mobility, and trade Land Immobile China (9.6 million sq km) Brazil (8.5 million sq km) Nigeria (933,000 sq km) Egypt (995,000 sq km) Migration Influenced by agglomeration and specialization Labor Mobile within countries East Asia (15.9 million sq km) South America (17.8 million sq km) West Africa (6.1 million sq km) North Africa (6.0 million sq km) Specialization/Trade Aided by agglomeration and factor mobility Intermediate inputs Mobile within and between countries Note: Throughout the report, areas are within-country economic neighborhoods or administrative units such as states or provinces, and regions are groupings of countries based on geographic proximity. Source: WDR Team. June 28, 2008 Mumbai Consultation 39
GL, 3-digit.1.2.3.4.5.6 Intra-industry trade Primary Goods Intermediate Goods Final Goods 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Year June 28, 2008 Mumbai Consultation 40
Intra-industry trade 1962 1975 1990 2006 Southern Africa 0.00 Western Africa Middle Africa 0.01 0.01 0.02 0.03 0.03 0.01 0.02 0.03 Northern Africa 0.02 0.03 0.05 0.04 Central Asia, Caucasus and Turkey 0.03 Eastern Africa 0.01 0.01 0.03 0.06 Western Asia 0.00 0.02 0.05 0.07 Southern Asia 0.02 0.02 0.04 0.08 Central America and Caribbean 0.03 0.11 0.14 0.17 South America 0.02 0.08 0.15 0.23 Eastern Europe and Russia 0.06 0.14 0.16 0.25 Northeast Asia 0.04 0.12 0.30 0.34 Southeast Asia and Pacific 0.02 0.13 0.32 0.41 Western Europe 0.26 0.40 0.53 0.54 Australia and New Zealand 0.20 0.47 0.56 North America 0.21 0.44 0.62 0.63 0.2.4.6 GL index, 3-digit, intra-group trade June 28, 2008 Mumbai Consultation 41
Dimensions Density, distance, and division are the most important dimensions at the local, national, and international scales, respectively Most important dimension Second-most important dimension Third-most important dimension Spatial Scales Local National International Unit Area Country Region Density Of rural and urban settlements Distance Due to congestion Division Between formal and informal settlements Distance Between lagging and leading areas Density Of population and poverty in lagging areas Division Between areas within countries Division Between isolated and connected countries Distance To major world markets Density Absence of large country in region Note: Throughout the report, areas are within-country economic neighborhoods or administrative units such as states or provinces, and regions are groupings of countries based on geographic proximity. Source: WDR Team. June 28, 2008 Mumbai Consultation 42
Production is concentrated in just a few places Economic density June 28, 2008 Mumbai Consultation 43
Economic distance Distance to density can be great even in developed countries Travel time in hours and days to the nearest city of 50,000 or more people 0 1 2 3 4 6 8 12 18 24 36 2d 3d 4d 5d June 28, 2008 Mumbai Consultation 44
Economic division Borders are thickest in the poorest regions of the world June 28, 2008 Mumbai Consultation 45
Policies An I for a D? An indicative matrix for calibrating the policy response Complexity of challenge Onedimensional Twodimensional Threedimensional Place type local (L), national (N), and international (I)spatial scales L. Areas of incipient urbanization N. Nations with sparse lagging areas I. Regions close to world markets L. Areas of intermediate urbanization N. Nations with dense lagging areas I. Regions distant from world markets L. Areas of advanced urbanization that have within-city divisions N. Nations with dense lagging areas and domestic divisions I. Regions distant from markets with small economies Policy priorities for economic integration Institutions Infrastructure Incentives (Spatially blind) (Spatially connective) (Spatially targeted) Note: Throughout the report, areas are within-country economic neighborhoods or administrative units such as states or provinces, and regions are groupings of countries based on geographic proximity. Source: WDR Team. June 28, 2008 Mumbai Consultation 46
1D China: Lagging areas have high poverty rates, but leading areas have most of the poor June 28, 2008 Mumbai Consultation 47
2D Brazil: Lagging areas have high poverty rates and many of the poor Brazil: Poverty rates are high in the North and Northeast, but most poor people live along the coast June 28, 2008 Mumbai Consultation 48
3D India, lagging areas have high poverty rates and a big share of the poor June 28, 2008 Mumbai Consultation 49
Market access measures help to classify regions Access to (domestic and foreign) markets differs greatly: Real market potential in 2003 Source: Mayer (2008) for this Report. The 3Ds suggest a simple taxonomy of the world s neighborhoods June 28, 2008 Mumbai Consultation 50
What the report proposes 1. Understand the spatial transformations necessary for progress Higher Densities Shorter Distances Fewer Divisions 2. Unleash the market forces that promote concentration and convergence Agglomeration Migration Specialization 3. Calibrate policies to achieve economic integration institutions which unite helping labor and capital move to opportunity infrastructure to connect but do not expect production to spread out incentives that target but only where necessary 4. Result: Unbalanced growth, inclusive development June 28, 2008 Mumbai Consultation 51