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The changing economic environment for spatial policies in the third world
The Changing Economic Environment Spatial Policies in the Third World
PETER
M. TOWNROE,*
Norwich,
for
U.K.
Abstract:
The prospects for economic growth among the developing countries of the world over the next two decades are not as promising as the experience of the last two decades. Aspects of the current world economic environment have implications for the pattern of urban growth in developing nations, and hence for the role of spatial policies. This paper outlines the U.N. projections for the growth of urban populations in the world. It then reviews the current external economic situation of the developing countries, faced by world economic recession and high levels of international indebtedness, before considering some of the implications of this situation for urban growth.
Spatial
Guayana programme in Venezuela region in southern South Korea.
Policy Objectives
Spatial policy, broadly defined, may encompass four principal sets of objectives in those poorer nations of the world experiencing rapid population growth. The first set of goals is probably the least important in economic terms for the majority of less-developed countries (LDCs) but has nevertheless received much political attention as well as analytical concern. It is the group of goals that fall under the heading of ‘regional balance’. Here both development and welfare objectives are focused on an economically lagging region or an agricultural or resource frontier region, the impetus frequently coming from diplomatic tensions with a neighbouring state or from inherited tribal and ethnic differences between regions. Government investments in infrastructure may be supported by industrial subsidies, together with the creation of special development agencies, the acceptance of fiscal transfers and even the introduction of linked controls on industrial investments in more prosperous regions: all to foster greater equality in the inter-regional pattern of economic growth and of household incomes and access to services. Examples of the first set of spatial policy objectives would include those laid down for the north-east region of Brazil, for the *Department of Economics, School of Economic Social Studies, University of East Anglia, Norwich 7TJ, U.K.
or the Pusan
The second set of objectives which can fall under the heading of ‘spatial policy’ frequently ties in with the first set but is analytically distinct and has rather different implications for the most desirable geographical distribution of industrial and infrastructure investments. This set is concerned with agricultural development and rural planning. It has to do with improving the land, labour and capital productivity of the agricultural sector in order to raise the output of food to feed a growing population, as well as to provide crops for export where possible. The urban and industrial growth associated with this development process is fostered by public sector interventions and investments in order to push forward improved production methods, including access to equipment, fertiliser, finance and advice, as well as the creation of efficient institutions for transporting and selling the products. Complementary policies also seek to improve the availability of public sector health and education services and private sector commercial and retail services to villages and small towns. The spatial element in the objectives here is usually secondary to raising food output, in contrast to rural policies in many developed nations, which are often trying to defend an outmoded settlement hierarchy. However, an important component of this spatial policy area will frequently be the provision of
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alternative employment. either for workers displaced from the land by rising labour productivity or for a surplus workforce from a growing population never absorbed into the agricultural sector in the first place. The third and fourth sets of spatiai policy objectives are often but not necessarily complementary to each other and both have to do with the management of urban growth. These sets may be taken region by region in the larger nations. LDCs with high rates of population increase suffer the twin pressures on the expansion of their towns and cities of growth of the existing urban population and of rural-urban migration. Urban growth rates of population are therefore frequently more than twice as high as the growth of the rural residents. For example, the U.N. estimate for Africa in the 1970-1980 decade was of an urban population growth rate of 4.0% p.a., compared with a rural population growth rate of 1.7% p.a. (HAUSER and GARDNER, 1980). This expansionary pressure invokes two sets of responses by national and state or provincial governments under the heading of spatial policy. One set has to do with the selection and promotion of designated secondary cities as a way of allocating scarce urban investment funds and professional managerial capacity. This set of objectives should link ciosely with the first two but frequently fails to do so. The other set of objectives, the fourth set, arises from a concern with the very largest cities in the national economy. Here, pressures of population growth combine with the pressures of the needs of an expanding manufacturing and commercial sector (for transport links, for water, electricity, telephones, etc.) and with the pressures of rising household incomes (even if this rise fails to benefit all groups in the income spectrum). Public opinion is influenced by rising congestion and pollution and by utility failures and delays. This puts pressure on public sector managers and officials who find themselves faced by the twin problems of not only providing services to the increments in population but of also defending the quality and guaranteed access of services to the existing popuiation. And this population in turn not only remembers the apparent delights of a smaller city but also has expectations of improvement, not of deterioration. Spatiai policy here therefore has to do with both the scufe of the growth and the speed of the growth of the largest cities. It also has to do with the relative size of the largest cities, the issue of primacy. From
Geoforum, Volumr 15 Xiumber 3/19&t this there comes a link with the first set of spatial policy objectives. In many nations the dominance of one or a small number of very large cities with a large discontinuity then occurring in the overall urban size hierarchy is seen as a cause for concern. So worries focus on regional balance in urban development as well as on the relative intensities of the problems thrown up by different-sized cities. Public officials have to worry about the per-capita investment and service provisions costs involved to meet those problems. All of these issues have been intensively discussed in recent years in many different forums.’ Spatial policy in LDCs frequently now falls under the heading of ‘national urbanisation policy’, ‘national urban deveiopment strategy’ (although these two headings may omit the rural development dimensions) or ‘population distribution policy’. Policy interventions to influence the location of city growth in an economy are justified on political, administrative and social grounds, as well as on a perceived failure of market forces to fully reflect social opportunity costs (due to negative external economies, distortion in the price system due to monopoly power or bias arising from other non-spatial sectoral or macroeconomic policy interventions). The resulting ‘strategies’ may be grouped under the ten headings proposed by RICHARDSON (1981): iaissezfaire do-nothing policy, policentric development of the primate city region, leap-frog decentralisation within the core region, counter-magnets, small service centres and rural development, regional metropolis and subsystem development, growth centres, development axes or corridors, promotion of provincial capitals, and secondary city development. This typology is set out in Table 1. Clearly the choice of any one strategy, or of a number of these prototypes in combination, will depend upon the conditions met in each specific country. All of the strategies seek to influence the size distribution of cities in an economy. All have implications for the well-being of rural as well as urban residents. All require a long-term political commitment. All need to be seen in the contexts of the implicit spatial impacts of non-spatial policies. It is not the purpose of this paper to argue the case for spatial policy measures for LDCs, nor to describe or to evaluate past initiatives undertaken in many countries. Rather, it seeks to provide a brief outline of the changing internationa1 economic environment for spatial policy, or national urbanisation policy, in LDCs in the eighties. The next
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Table 1. Typology
of national
urban development
Descriptions
Strategy Luissrz-fuirr
no specific spatial policy. Urban infrastructure investments allocated by existing population. No linking of patterns of urban development to societal goals and objectives
Policentric city region
development
Leap-frog region
decentralisation
of the primate
within the core
Counter-magnets
6. Regional metropolis development
satellites developed which are not contiguous with the metropolitan core. The city-region is therefore extended. Develops the hinterland within one region
and rural develop-
trying to hold would be rural migrants in country areas by developing local employment opportunities, while providing support for the development of agriculture. IMaybe very costly in infrastructure and service costs per capita
and subsystem
combining 1 and 5 across the urban hierarchy of a single region. Difficult when resources are scarce. May increase inter-regional inequity. Requires regional planning
centres
8. Development
subcentres and satellites are planned, linked to a metropolitan core in a city-region-aide transport system. Builds on agglomeration advantages of the primate city. Increases interregional inequity
strengthening major cities as competitors to the primate city, usually in another region. Requires magnets to already be relatively large. May merely replicate big city problems
Small service centres ment
7. Growth
strategies
selecting urban centres on the basis of economic potential for a programme of accelerated growth. Political temptation to select too many centres. Many relatively unsuccessful programmes in recent past axes or corridors
attempt to achieve mutally reinforcing cities and economy in major transport investments. Often arise de facto. Maybe a way of building up adjacent but economically unequal regions
9. Provincial
capitals
a strategy of dispersal of urban expenditures which may ignore development potential, focusing on administrative capacity rather than industrial growth in too many centres. Politically attractive
10. Secondary
cities
limited number of cities are promoted on the basis of economic potential. Typically focuses on fewer and larger centres than 7, but probably needs to be combined with other strategies for full effectiveness. May be able to meet both efficiency criteria and the demands of equity between regions. Both service centre and larger scale industrial development
Source: Adapted
from RICHARDSON
(1981).
briefly lays out the anticipated dimensions of the increments to cities in LDCs in both the current decade and the next decade, drawing upon the U.N. population estimates already referred to. This is followed by an outline of the key dimensions of the world economic environment for the developing nations. The implications of this changing environment over the current decade are then discussed in terms of the implications for future patsection
terns of urban growth policy interventions.
Urban Growth
and hence the need for spatial
in Developing
Countries
The scale of urban expansion anticipated over the last two decades of this century is quite awesome in its magnitude. The U.N. estimates (HAUSER and
338
Gsoforum
GARDNER. 19&I) show a world-ttide increase in lrrbn!r residents of ilOt miltion (a 78% rise) between 19SO and the year 2000 (cf. a rural increase of 479 million). This compares with an increase in numbers living in cities of 442 million from 1910 to 1960, and 795 million from 1960 to 1980. The scale of urban grouth is unprecedented: and threequarters of the growth will occur in the less developed nations of the world. This LDC urban expansion of nearly one billion. the estimates suggest. will be at an average rate of approximately 3.9% p.a., a rate far exceeding that experienced by the more industrialised nations (except in isolated cities at the height of the industria1 revolution) and will result in the urban population more than doubling to 2116 million people.
Table 2.
in many nations: the average in Africa, for example, being from 3-9 to 135. Africa of as an urbanising continent.
Urban population as percentage of total populations 1950 1975 2000
World
20.6 62.4 16.9 20.7 29.0
31.1 74.4 55.5 34.4 39.3
is not usually thought but 60% of the incre-
ment population to XXI0 wiii live in cities. The percentage urban in 19Sl and the projected growth rates of population to the end of the century are given in Table 3 for a selection of the larger lowand middle-income developing nations. together with both the level of the per-capita gross national product and the growth of that level over the past two decades. The table is interesting in that it shows how uneven is the association between the coilective cash income of countries, expressed by the GNP per-capita figures, and both growth rate of population and urbanisation levels. The contrasts between. for example. China and Ghana, or Peru
Urbanisation rates and urban populntion
developing countries lndustrialised countries Capital surplus oil exporters Centrally planned economies
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45.5 53.6 77.9 49.2 51.5
growth. 19%.2000
19jO- 1960
Average annual percentage growth of urban population 1970- 1980
1990-2000
4.0 2.0 7.9 5.2 3.5
3.0 1.2 7.1 2.7 2.s
3.5 0.8 3.1 2.4 2.6
Source: WORLD BANK (1979, p. 72).
By the year 2000, over half of the world’s population is likely to be living in urban areas, with the proportions still rising as suggested in Table 2. The rate of urban popuIat~on growth in the developing countries is expected to siow in the next two decades, but will still remain extremely high in both absolute growth rates and in numbers of extra urban residents to be provided for. Although this urbanisation is seen by policy makers as presenting opportunities for developing industry and raising productivity and incomes, so reducing poverty, there is also widespread concern that the process is excessively rapid and costly and geographically concentrated, generating poverty and economic inefficiency within cities. The 1980-2000 20-year average growth rates are forecast to be highest in Africa (4.8%), closely followed by South Asia (4.4%), Latin America (3.3%) and East Asia (2.7%). The proportion of the population living in cities will therefore rise quite sharply
and Nigeria, are dramatic. And even though some of the population growth rates, especially in Asia, are slowing, the table brings out the potential for much higher urbanisation levels within many of the nations listed. A further way of looking at the projected urban population growth in LDCs is to consider the prospects by size of city. Forecasting here is more hazardous than for the global total, particularly because of the uncertainty over the internal rural to urban migration rates. After detailed work on 29 LDCs over the last three decades, the U.N. figures show that migration and reclassification of areas from rurai to urban as they grow in population accounted for only 39% of the annual urban growth rate, on average, across the sample. Natural increase is clearly seen to be the major driving force behind city growth in LDCs (HAUSER and GARDNER, 1980, pp. 20-21). Factors which influence both the balance between rural and urban
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Table 3. Population
and urban growth
GNP per capita Dollars 1981
Growth* 1960-1981
characteristics
in selected
developing
Population Millions 1981
Projected* 1980-2000
Level+ 1981
countries
UrbanisationP In cities over 0.5 millions 1980
In largest city> 1980
Low-income countries11 Bangladesh Ethiopia Nepal Burma Zaire Uganda India Tanzania China Sri Lanka Pakistan Sudan Ghana
:;n 27 29 26 37
51 37 0 23 38 52 39 50 73 16 51 31 48
30 37 27 23 28 52 6 50 16 21 31 35
4.5 2.0 2.1 2.0 2.3 3.5 3.5 2.3 2.0 2.1 1.6 2.1 3.6 2.1 2.6
15 21 44 15 37 41 21 66 64 47 56 30 44 68 67
57 50 53 69 34 50 58 44 51 42 77 27 12 48 44
57 23 39 69 30 26 17 39 26 2-t 41 27 12 15 32
0.7
78
55
18
l-40 110 150 190 210 220 260 280 300 300 350 380 400
0.3 1.4 0.0 1.4 -0.1 -0.6 1.4 1.9 5.0 2.5 2.8 -0.3 -1.1
90.7 32.0 15.0 34.1 29.8 13.0 690.2 19.1 991.3 15.0 84.5 19.2 11.8
2.9 3.1 2.6 2.3 3.2 3.5 2.0 3.5 1.0 1.9 3.0 3.0 3.9
12 14 6 28 36 91 24
420 530 650
770 790 860 870 1170 1380 1540 1700 1810 2140 2220 2250
2.9 4.1 3.5 4.6 2.8 2.4 3.5 1.0 3.2 3.5 6.9 4.3 3.2 5.1 3.8
17.4 149.5 43.3 48.0 49.6 20.9 87.6 17.0 26.4 45.5 38.9 14.2 19.6 120.5 71.2
11,120
3.4
719.5
Middle-income countries Kenya Indonesia Egypt Thailand Philippines Morocco Nigeria Peru Columbia Turkey South Korea Malaysia Algeria Brazil Mexico Industrial market economies* Source:
*
WORLD
BANK (1983. Tables
1, 19 and 22).
*Average annual percentage growth rate. +As percentage of total population. $As percentage of urban population. SDefinitions of ‘urban’ are not fully consistent between countries. I/The list includes all nations with a population of at least ten million in 1981 up to a per-capita GNP level of U.S..!2500 except Afghanistan, Viet Nam, Mozambique, North Korea, Iran and Iraq, all omitted because of data deficiencies. 11980 figure. **Nineteen industrial countries with a per-capita GNP level in 1981 of U.S..$5230 (Ireland) to U.S.$17,430 (Switzerland).
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growth and the relative growth rates of different sizes of city include: rising levels of household incomes, increasing job opportunities in the manufacturing and formal service sectors, a bias in the provision of public services to towns and with higher quality to larger cities, labour-saving technological change in agriculture, a concentration of exports from larger cities, inequitable iand tenure systems in rural areas, discriminatory tax and price policies favouring urban areas, biassing of large infrastructure investments to the larger cities, and the centralisation of government departments and agencies in the major cities. This incomplete list stresses the point that the strength and the pattern of urban growth are necessarily creatures of the social, political and institutional arrangements in a society as well as of the workings of economic forces. In 1980 three-quarters of the urban population of the LDCs lived in places of 20,000 or more population. There will be little change in this proportion over the next 20 years, In contrast, the proportion of the urban population living in larger cities will rise. By the year 2000,44% of the urban population in LDCs is forecast to be living in cities with populations in excess of one million. This contrasts with 7% in 1920, 19% in 1950 and 35% in 1980. It also contrasts with the year 2000 forecast for moredeveloped countries of 40%. The proportion of large city dwellers is, and will be, particuIarly high in Latin America. The number of such cities will rise over the 20-year period in the LDCs from 118 to about 280. This group of cities will triple in total population absorbed from 339 million in 1980 to 932 million. The demands made by these major cities on physical and economic resources and upon the managerial and political capacities of all but the smallest developing nations will be intense. Again, Table 3 shows the pattern, country by country, of the present concentration into larger cities by percentage of the urban population; and, indeed, into the largest single city, an indicator of ‘primacy’. The real urban challenge in terms of governmental response might be felt to be coming in the really large metropolitan centres in the LDCs, cities with in excess of five million population. In 1920 there were no LDC cities of this size. I3y 1980 such cities were home for 129 million people. This total is now forecast to rise to 486 million in 20 years, or approximately 10% of the total (urban and rural) LDC population, housed in 40 or so cities; a huge growth in both total magnitude and in rate of expan-
sion. Nearly 20 LDC cities will have a population in excess of ten million. In many industriaIised nations the Iarger metropolitan centres are now losing rather than gaining population (VINING and KONTULY. 1978); and in some LDCs there are signs of incipient ‘polarisation reversal’ as the relatively rapid growth rates of population of the largest centres start to slokv [e.g. for Sao Paul0 in Brazil, as shown by TOWNROE and KEEN (1984)]. These changes suggest real economic and operational constraints on the further growth of extremely large cities, even with major investments in transport and service infrastructures. A large number of developing countries have either considered introducing, or have introduced, explicit measures of spatial policy to counter the continuing expansion of these largest centres in particular. The urban growth pressures will be felt rather differently in different countries of the world. RENAUD (1981) has grouped all the countries of the world into a single six-way grouping to highlight these differences for spatial policy issues:
(9
Very smaff countries. These are countries of less than two million population or they are city states. Their urban problems are of city planning or metropolitan public service management in the latter group and are virtually non-existent in the low-population-density landscapes which characterise the first group.
(ii) Countries with limited domestic markets. These relatively small countries, whether by population, land area or GNP, rely heavily on external markets for their prosperity, and urban growth tends to be very concentrated in a medium-sized centre on the coast or on a key transport route. Such countries are found in the Caribbean, in Central America and among the small African states. (iii)
Large low-income co~i~trie~. These fall into two groups. Such countries in South Asia (India, Bangladesh, Pakistan, Burma and Indonesia) tend to have a significant number of very large cities. Overall levels of urbanisation are low, but urban growth is rapid and concentration in the largest cities is increasing. Similar rapid growth and concentration is found in such large African countries as Nigeria, Zaire, Sudan, Ethiopia, Kenya, Tanbut here growth is zania and Egypt, particularly focused on the capital city region.
341
GeoforumNolume 15 Number ji1981 These capitals are among the fastest growing major cities in the world. income countries. These countries come from Asia, the Middle East and the Mediterranean, and Latin America. In many countries of this group, urban problems are fuelled by rises in industrial production and household expenditures as well as by increments in population alone. Many have sought to introduce different forms of spatial policy measures. Many have both problems of imbalance relative regional and of concentration in very large cities. Developing transport, better education and active policies to promote agricultural production all foster rural-to-urban migration. The pattern of urban growth is strongly influenced by central government power over urban infrastructure investments and local government expenditures.
geographical concentration. Both the Soviet Union and China. being so large, have high degrees of regional inequality.
(iv> Middle
(VI Advanced
market economies. In contrast with the first four groups of countries, in this group urbanisation is already at a high level and populations are only growing slowly. However, considerable geographicai movement is still taking place, with probfems emerging of regional imbalance and of economic, social and physical dereliction in the inner areas of the metropolitan centres. The capacity to implement spatial policies is strong, but there is currently considerable uncertainty about the economic costs and benefits of such policies.
(4 Centraily planned economies. This group is dominated by the Soviet Union and the Eastern European block, and by China. China, with one-fifth of the world’s population, has tried to actively steer the urbanisation process, with controls over migration as well as over investment of all kinds. Pressures to industriafise have reinforced urbanisation trends, but China has tried to orient these trends away from the largest cities, and where possible to link both industrial and city growth to rural development policies. In the Soviet Union there has been concern to economise on the costs of urbanisation, particularly in the largest centres. Policies have focused on buiiding up intermediate centres and new industrial cities, with the overall result of a pattern of high rates of urbanisation but low levels of
History, geography and the place of each nation state in the workings of the world economy together govern the nature of the urban problems and the spatial policy issues in all of these six groupings of nations. Problems of poverty, housing, transport, delivery of utilities and health and education services, of serving essential nutritional needs and of developing empIoyment and income generating opportunities~ are all pressing issues in the cities of the developing world [as the paper in this volume by HARDY and SATTERTHWAITE amply demonstrates (pp. 307-333)]. The pattern and range of responses available to politicians and administrators are not, however, entirely under their control. All but the very poorest nations (with a few exceptions) have their economies locked into a world-wide trade and financial system; policies, events and pressures from beyond national boundaries therefore limit the discretion and the power of local policy makers. This fact of life is true in more or less any policy area, to a greater or lesser degree. The next two sections of this paper consider some of the implications of these world-wide economic pressures for the area of spatial policy in LDCs over the current decade or so.
World Economic Growth to 1!39!Ii2
Any discussion of the implications of present and future trends in the world economic order for a single policy area across the full range of deveIoping nations has to be rather foolhardy in its necessary simplifications. Generalisations must be taken as providing pointers, no more. Inappropriate as these generalisations may be when taken together and applied to a single specific nation state, there is nevertheless utility in arriving at the perspective which the world economy view provides. The discussion here should be read in this spirit. The developing nations arrived at the beginning of the present decade with two dominant pressing sets of economic problems: recession and debt. Both sets were in part of their own making and in part forced upon them by economic change elsewhere. The conventional starting point in any discussion of these issues is the 1973 oil crisis. The 1973 oil price rises forced by the O.P.E.C.
Gsoforumi’Volume 15 Number 3/l!-&! cartel severely hit the foreign exchange positions of those developing countries without their own supplies of oil or other sources of energy supply to turn to. The same price increases reduced the demand for deveIop~ng country exports, as the rate of growth of the industrialised nations as a group slowed down. in the face of both baiance of payments deficits and rises in domestic price inflation (both in turn calling forth demand dampening policies). The unpredictability introduced into the world economic system by the oil price rises and the earlier rapid rises in 1972 in the price of many primary products induced uncertainty and a cautious response by corporate investors, bankers and government fiscal managers. The current account deficit of the oil importing developing nations widened from $2 billion in 1973 to $33 billion in 1974 and $39 billion in 1975. The oil importers, developed and developing, had three ways of responding to the new situation: slower growth to restrict imports, structural adjustwithin their economies towards ment the production of exports and import substitutes, and/ or external borrowing to cover. the trade deficits. For the developing oil importers, exports to oil exporters increased in the seventies and exports to the industrial countries started to recover as their economies adjusted. By 1978 their current account deficit fell to $26 billion. But the 1979-1980 oil price rises then hit them, and their collective deficit rose again, to $44 billion in 1979 and $70 billion in 1980. Although a number of countries were obtaining a measure of relief from the remittances of migrant workers in the Middle East and from aid flows from oil producers, the overall picture was black. The average percentage growth rate of the GDP of all developing countries slowed to 3.0% in 1980 and 2.0% in 1981, having been 6.0% annually from 1960 to 1973 and 5.1% annually from 1974 to 1979. Per-capita incomes in many nations fell back. The prices of many non-fuei primary commodities then fell through the first three years of the current decade. These commodities account for some 30% of the exports of all developing nations. The rate of increase of these exports slowed from 5.9% p.a. during 1973-1980 to 0.6% p.a. during 1980-1982. The upshot of these events was that the oilimporting developing nations (with four-fifths of the inhabitants of al1 LDCs) found themselves entering the eighties faced by an external economic environment very different from that which had faced them ten years earlier, and on which so many develop-
ment plans and expectations had been laid. And it was at this time that a number of countries discovered that the macroeconomic policy path chosen in the mid-seventies, the path of large-scale externai borrowing. was not after all the most sensible route to have taken. In 1974 it had looked very tempting. At that time roughly 2% of gross world product was transferred to the oil producers. These producers initially wished to save the funds and interest rates fell. Since both oil and commodity price rises had fueled inflation in the major currency nations, the real interest rates governing international borrowing fell below zero; and for developing countries with boosted export prices from the commodity boom the real rates of borrowing in dollars were strongly negative for three years. The developing nations were therefore prepared to apply both structuralist and Keynesian remedies to their depressed economies by borrowing. Western commercial banks, with access to recycled surpluses from oil exporters and higher domestic savings ratios, and experiencing a relatively weak government bond demand. were happy to oblige; and they obliged not only with funds for equity investments by multinational industrial corporations but, more seriously, with greatly increased direct loan debt. The outstanding official and private debt of the developing countries has risen from $69 billion in 1970 to $548 billion in 1982, largely concentrated in the middle-income group of nations. Since most of the loans are denominated in industrial nation currencies, this group of developing nation borrowers found themselves squeezed in the early eighties by falling commodity prices and rising nominal interest rates. Real rates of interest payable rose sharply. Interest payments have risen from 0.5% of the collective GNP of the LDCs in 1970 to 2.1% in 1982, and the total debt service payments from 1.8 to 4.7% of the GNP. By 1982, 20.7% of export earnings of these countries was required to cover the interest charges, compared with 13.5% in 1970. The burden has been heavy.3 Take one example: Brazil. Brazilian economic growth had been 9% p.a. over the ten years to 1975. By 1981 growth had ceased, GNP falling by 2%. It has failed to grow again. The strong growth of the early seventies seemed to underline the huge economic potential of Brazil. And growth continued at 6.5% p-a. during 1974-1980. There was therefore little difficulty of running up debts of $80 billion by 1982, principally to cover necessary imports of oil. Every $1 on or off the price of a barrel of oil
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changes Brazil’s import bill by $260 million each “‘ear. Every percentage point change in the Eurodollar rate makes a difference of $600 million to the interest payments Brazil has to make each year. In 1982 interest payments on the debt accounted for 46% to export earnings. Oil imports accounted for a further 47%. Brazil therefore desperately needs to build up its export earnings, and to hold down imports. And yet many of the structural changes required in the Brazilian economy to achieve this result require imported capital goods. The resulting domestic squeeze is now threatening the planned orderly return to democratic government at all levels by 1985. What now are the prospects for economic growth in the developing countries through the rest of this decade, with the mountain of debt still outstanding but with the industrial nations starting to climb out of recession? The experience of the past ten years has left three unfortunate legacies which will cloud a more expansionist economic environment in the late eighties for these countries. The first of these is the prospect of continuing high real interest rates. Policies of monetary restraint have been followed in most industrial countries, including the United States. Relative to both the U.S. inflation rate and the prices of primary products, dollar interest rates look set to stay high in the short and medium term; especially in the face of the very high borrowing requirements of the U.S. federal government, requirements which cannot be changed quickly.’ Although the United States only accounts for some 15% of world imports of primary products, some 55% of world trade is denominated in dollars, while about 75% of all central bank foreign currency reserves are in dollars; and nearly 80% of all international bank loans are denominated in dollars. The interest repayment burden will therefore stay high. The second legacy of the recession and the two oil price rises has been a rise in protectionist sentiment in the industrial countries towards manufactured imports. This sentiment extends between the industrial countries as a group but it is also directed at the industriaiising development countries. Nonoil LDCs sold $163 billion worth of exports to the industrial countries in 1981. This was only some 14% of their industrial imports, but LDCmanufactured exports tend to be concentrated in sectors sensitive politically for reasons of job loss and regional imbalance in the industrialised group. Sensitive sectors include textiles, steel, shipbuilding, footwear and consumer electronic goods. In all
343 of these sectors protection has increased, hindering structural adjustment in the LDCs. The Common Agricultural Policy of the EEC and American farm policies also impose restraints on the free movement of agricultural products. These restraints have held back the potential development of temperate climate crops and the raising of beef in many LDCs, at some cost to the consumers and tax payers of Western Europe and North America, as well as to LDC export earnings. The third legacy is more indirect. It is the mood of caution induced in the major commercial banks and among aid donors. The dominant current concern among banks heavily committed in countries with major indebtedness is one of safeguarding their existing loans. And in the lending by the I.M.F., the World Bank, the continental Development Banks and many individual government aid programmes there is a new stress on ‘conditionality’, broadly meaning agreement by the recipient LDC to institute what may be domestically unpopular policies to safeguard the loans. It is against these three legacies that the prospects for renewed strong economic growth in the LDCs should be judged. The 1983 World Bank projections offer low, central and high growth scenarios. The Central case assumes that the GDP of industrial countries will grow at about 3.8% p.a. in recovery from the recession up to 1990, and then stabilise to 3.5% to 1995.5 On past post-recession experience, this reflects anticipation of fairly conservative policies aiming to hold down inflation. On this basis, the developing nations are projected to grow at 4.4% p.a. during 1982-1985 and 5.5% 1985-1995 (for the central case), with growth being rather stronger in the middle-income nations and rather slower in the low-income nations. Increases in per-capita incomes will be particularly low in many African nations. The growth outcomes over the forecast period will, of course, depend upon both external factors and domestic factors for each developing country. The external factors are dominated by demand for exports, with a projected growth of 6.8% p.a. for all developing countries in volume terms and 6.6% in value terms. The sensitivity of developing country exports is illustrated by the calculation that if industrial country GDP levels rise by 5% p.a. during 1982-1984, then oil-importing LDCs would increase the volume of their exports by 10% and the value of their exports by between 20 and 30%.
3-l-I
GeoforumX’olume
The capacity of many LDCs to respond to this growth in export demand will be strongly influenced by the path of energy prices. World-wide energy consumption is forecast to grow from 135 million barrels of oil equivalent in 1980 to 191 million in 1995, or 2.3% p.a. during 1985-1995. In developing countries the growth is forecast at 4.5% p.a. In this central case forecast, oil prices rise by 1.6% p.a. and oil only contributes 11% of the total increase in energy consumption during 1980-1995, compared with 43% in the seventies. Coal will become progressively more competitive in world markets. The final important external factor is the ‘resource gap’. This is the net capital inflow to developing countries (3.7% of their collective GNP in 1982) which each year is required to finance deficits on
Table 4. Past and projected
Indicator
Economic
Growth
and Urban
15 Number Development
What are the implications of both the scale of economic growth forecast for the developing countries. and the new world economic environment within which that growth has to take place, for the scale and pattern of urbanisation? It is difficult to foresee major discontinuities with past experience. The outcome of the broad pattern of the U.N. forecasts presented in this paper is unlikely to be much modified, even though those forecasts were drawn up in the late seventies. The underlying pressure on urbanisation, as noted earlier, is the dynamic of the fertility and mortality esperience of the existing urban populations. This dynamic will change only relatively slowly and the influence here of the for-
performance
in all developing
countries
1960-1970
1970-1980
1985-1995
19.6 26.8 1.4: 2.ot. 5.7 2.4
24.2 20.5 1.7 4.4 5.3 2.1
24.0 20.0 1.3 3.0 5.5 2.0
Savings as a percentage of GDP Return on investment (percent)* Import elasticity? Manufactures export ratios Percentage GDP growth Percentage population growth
3/19S-I
Source: WORLD BANK (1983, Table 3.8, p. 38). *Real increase in GDP divided by investment, both valued at current prices. TGrowth of import volume divided by growth of GDP. $1965-1970. §Growth of manufactured export volume divided by growth of world GDP (excluding
centrally planned economies).
their current balances of payments. This inflow contributes to development by financing imports and by supplementing domestic savings, and in many cases by being linked to a transfer of technology. Sources include commercial borrowing, private direct investment, flows from official sources and worker remittances. The outlook is uncertain on all of these. Domestic determinants of growth for the developing nations are fourfold: savings, returns on investments, export promotion and import restraint. The past and projected rates are shown in Table 4, together with the important decline in population growth which allows rises in productivity and per capita incomes otherwise foregone.
tunes of both the domestic and economies is relatively weak.
the international
There are, however, a number of points to be made, of greater importance for the pattern and quality of urbanisation in many LDCs than for the absolute scale. As GILBERT (1981, p. 12) has noted, in discussing urban growth in LDCs, “. . .individual cities perform specialised functions and their individual prosperity depends greatly on their position in the economic system. . the size, role and characteristics of individual cities reflect the world roles of the societies of which they form a part”. From this wider context, the prosperity of social and regional groups in a national population can be seen as being governed by a three-way dualism (LO and
GeoforumiVolume 15 yumbtr 3:198-t SALIH. 1981, p. 142): the North-South dualism of external relations, the contrast between the formal and informal employment markets. and the divide between city and countryside. And running through these dualisms are the twin forces of advancing technology and of government policy interventions. Over the past ten years or so, agriculture has come to be seen as a major contributor to development in its own right, rather than as a mere hand maiden to the growth of manufacturing. providing Iabour, cheap food and tax revenue for urban-based industry. More positive support for agriculture, including land reform, has been shown to pay large dividends (JOHNSTON and KILBY, 1975; LITTLE, 1982; WORLD BANK, 1981, Part II), but that support has required investment in commercial inputs, higher prices to urban consumers and spending on (electricity, ruta1 services transport, health, education, technical advice, etc.). This has, of course, had implications for urban development, both in rural small towns and in influencing migration flows to larger towns, as well as in countering a large city bias in urban public expenditures. Although there is still considerable controversy over what constitutes best practice ‘integrated rural development’ and the pattern of urban growth involved,6 urban growth in the low-income LDCs is still firmly built upon a rural base. In middle-income LDCs (i.e. countries with a GDP per capita above $400 in 1981, and with an average export content of GDP of 23% in 1981) the driving force behind the pattern of urban growth is very much more the growth of empIoyment in the formal manufactured goods sector, where in even the largest countries trade performance and the earning and saving of foreign exchange are the dominant constraints on economic growth. Four factors influencing the relative growth of individual cities are directly associated with industria1 growth: the attraction of multinational corporate investments, the material and labour skill input requirements of the growing sectors, the transport and communication linkages from each town to the rest of the nation and to other nations, and the pattern of trade protection and domestic subsidy provided to each sector in the city. The trade environment of the eighties seems likely to encourage further selective sectoral policy interventions in both public and private sector industries, without necessarily working through the spatial implications.
34s
The anti-inflation demand dampening and tight money policies which many developing countries are being encouraged to adopt by official and commercial external loan sources will increase unemployment and underemployment in cities, thereby increasing the overall spatial concentration of population, and will limit non-industrial public investment expenditures. The growth futures of individual cities are therefore likely to become even more dependent upon success in the competition for scarce public investment expenditures. Encouragement to improve the management of urban projects and the consequent services, to set prices closer to costs and to improve local tax capacity, reflects this scarcity and is argued on grounds of both equity and efficiency (e.g. LINN, 1983). The pattern of urban growth in a developing country can be seen as an evolving consequence of geographicai and sectoral clustering of economic activities, the key to which is the adoption of innovations (LASUEN, 1973). This process is clearly not the sole influence, but it is important, and in many nations the context for innovation adoption is changing. Improving literacy levels7 rising industrial skill rates, the development of a technical press and the geographical spread within the country of muItiplant companies (a factor discounted by Lasuen) are reducing the relative disadvantage of smaller centres in the innovation diffusion process. Exposure to import competition, high rewards from exporting and the activities of public sector agencies pressing technical advice: all add to the innovation consciousness of smaller firms in smaller towns, improving their exposure to international technological advance. If urban service compiementarities to the acceptance of innovations are made available through regional development planning, then the pattern of urban growth will be influenced.
Conclusions
The developing countries of the world face an uncertain next ten years in their attempts to raise the living standards of their population. Their prospects look brightest if their export earnings can be increased on the back of faster economic growth in the industriaiised nations of the world. The main danger then will be that the faster growth will increase oif prices yet again, and so again increase the trade deficits of the LDC oil importers. It seems
316 clear
obtain
GeoforumiVolume
that commercial loans will be more difficult in that situation than in the recent past.
to
Whatever the economic growth rates achieved, the major policy initiatives which will influence the scale of urban growth in the majority of developing countries have little to do with the path of the global economy. They will have to do with family-planning programmes. anti-poverty and basic needs initiatives, domestic food distribution policies, and choices between cities for the siting of public investments. There are, in addition, further changes which may influence urban development patterns in LDCs in the future, although these are very speculative suggestions. The first is the cumulative impact of both research and experience in the management of large-scale urban development in low-income countries. More and more lessons are emerging to demonstrate the inappropriateness of many high-income country policies and practices, as brought out in the review by LINN (19S3). These lessons cover employment policy, aid for the poor, income redistribution with urban tax policies, urban transport and housing policies, and the delivery of health, education and utility services. Further possible changes are linked to the technological revolution presently occurring in electronics. One change here is within the corporate organisation of large companies, permitting multinational, multiproduct and multiplant operations. Companies based in middle-income nations (e.g. South Korea, Brazil, Colombia, Mexico) are following companies from the industrial nations in a pattern
of overseas
investment.
This
movement
is
linked to the growth in trade between the oilimporting development countries (about onequarter of their exports in 1981). as well as to corporate control and the diffusion of new technologies. Linked to this is the growing impact of microelectronics on not just the cost of manufactured goods but also their quality. This could work against lowcost labour-intensive LDC exports of both consumer goods and capital goods. It may also, of course, reduce the scale advantages of the large producer.
And finally there is the unmeasurable impact of cheap global television, with all the pressures so generated not just for the ‘South’ in its demands for a better trade and aid deal with the ‘North’, but also for greater equality within nations, between social
groups and environment
15 Number
319X-+
between geographical areas. Here, the for spatial policy over the next dccadcs
is one
of changing
rather
than
one
social
and
of constraining
political
expectations
economic
forces.
Notes 1.
3_.
3.
4.
5.
6.
7.
Convenient summaries of the trends can be found in HAUSER and GARDNER (1980) and of the problems in EL-SHAKHS (1980). The policy issues thrown up by rapid urban expansion in LDCs have been recently reviewed by LINN (1983) from the perspective of urban management and by RENAUD (1981) from the perspective of interventions to influence the geographical pattern of growth across an urban system. The papers from a U.N. conference in Bangkok in 1979 also provide an overview of issues and of policy options with both a rural and urban focus, as well as differing viewpoints on the desirable scale for intervention (UNITED NATIONS, 1979). See also JAKOBSON and PRAKASH (1974), FRIEDMANN and WEAVER (1979). STOHR and TAYLOR (1981) and GILBERT and GUGLER (1982). All of the statistics in this section of the paper are taken from WORLD BANK (1983) or Hard pounding this, gentlemen: a survey of the world economy, supplement to The Economist, 24 September 1983. This burden is expected to fall to below 17% in 1954 assisted by the 1983 easing of interest rates. Over the past ten years private loans and bank credit went almost exclusively to the mid&-income countries. At the end of 1982 over 80% of the debt owed by low-income (per-capita income of less than $410 in 1981) nations was owed to official sources, mostly at concessional terms. The U.S. federal budget deficit is forecast to rise from $225 billion in 1983 to $315 billion in 1988, on the assumption of a growth in the U.S. GNP of 4% p.a. The forecasts also assume a rate of growth of the labour force in the industrial countries falling to 0.7% p,a. in the projection period; technical progress sufficient to produce a growth in per-capita output of 2.8%; a GDP deflator (in dollars) of 6.4% in 1982-1995; and real short-term interest rates of 3%. It is assumed that no new protectionist measures are introduced by the developed countries. Contrast, for example, the regional closure notions of the agropolitan development model proposed by FRIEDMANN and DOUGLASS (1978) with the more open agricultural trading model used as the basis of RONDINELLI and RUDDLE (1978). See also FRIEDMANN (1981) and HANSEN (1981). Adult literacy rates rose from 34 to 52% between 1960 and 1980 in the low-income developing countries, from 39 to 59% in the lower-middleincome group and from 61 to 76% in the uppermiddle-income group. In the latter two groups the proportions of the age group enrolled in secondary schools, rose in the same period from 10 and 20% to 33 and 48% (WORLD BANK, 1983. Table 25).
Geoforum,‘Volume
15 sumber
3/19S1
References
EL-SHAKHS, S. (19SO) National and regional issues and policies in facing the challenges of the urban future, In: International Conference on Population and the Urban Furure. Documents. United Nations Fund for Population Activities. Rome. FRIEDMANN, J. (19Sl) The active community: towards a political-territorial framework for rural development in Asia. .&on. Der. cult. Change, 29. 235-263. FRIEDMANN. J. and DOUGLASS, M. (1978) Agropolitan development: towards a new strategy for regional planning in Asia. In: Growth Pole Strategy and Regional Developmerlt Policy: Asian Experiences and Alternative Approaches, F. Lo and K. Salih (Eds). Pergamon Press. Oxford. FRIEDMANN. J. P. and WEAVER, C. (1979) Territory and Function: the Evolution of Regional Planning. Arnold, London GILBERT, A. and GUGLER, J. (1982). Cities. Poverty, and Development: Urbanisation in the Third World. Oxford University Press, Oxford. HANSEN, N. M. (1981) Development from above: the centre-down development paradigm. In: Development from Above and Below? The Diulectics of Regional Planning in Developmeat Countries. W. B. Stohr and D. R. F. Taylor (Eds). Wiley, Chichester. HAUSER, P. M. and GARDNER, R. W. (1980) Urban future: trends and prospects, In: International Conference on Population and the Urban Future, Documents. United Nations Fund for Population Activities. Rome. JAKOBSON, C. and PRAKASH, V. (Eds) (1974) Metropolitan Growth: Public Policy for South and South East Asia. Sage, Beverely Hills, CA. JOHNSTON, B. F. and KILBY, P. (1975) Agriculture and Structural Transformation. Oxford University Press, Oxford. LASUEN, J. R. (1973) Urbanisation and development the temporal interaction between geographical and sectoral clusters, Urban Stud., 10 163-188. LINN, J. F. (1983) Policies for Efficient and Equitable Growth of Cities in Developing Countries. Oxford Uni-
347 versity Press, Oxford. LITTLE, I. &l. D. (19S2) Economic Development: Theory, Policy and International Relations. Basic Books, New York. LO. F. C. and SALIH. K. (1981) Growth poles. agropolitan development. and polarisation reversal: the debate and search for alternatives. In: Development from Above or Below? The Dialectics of Regional Planning in Developing Countries. W. B. Stohr and D. R. F. Taylor (Eds). Wiley. Chichester. RENAUD, B. (1981) Il’ational Urbanisation Policy in Developing Countries. Oxford University Press for the World Bank, Oxford. RICHARDSON, H. W. (1981) National urban development strategies in developing countries, Urban Stud., 18, 267-283. RONDINELLI, D. A. (1983) Secondary Cities in Dergeloping Countries: Policies for Diffirsmg Urbanisation. Library of Social Research, Vol. 145. Sage, Beverely Hills. CA. RONDINELLI, D. A. and RUDDLE, K. (1978) Urbanisation and Rural Development: a Spatial Policy for Eqttitable Growth. Praeger. New York. STOHR, W. B. and TAYLOR, D. R. F. (Eds) (1981) Development from Above or Below? The Dialectics of Regional Planning in Developing Countries. Wiley, Chichester. TOWNROE, P. M. and KEEN, D. (1984) Polarisation reversal in the State of Sao Paulo, Brazil, Reg. Stud., 18, 45-54. UNITED NATIONS (1979) Population Distribution Policies in Development Planning, Population Studies No. 75. Department of International Economic and Social affairs, New York. VINING, D. R. and KONTULY, L. (1978) Population dispersal from major metropolitan regions: an international comparison, Int. reg. Sci. Rev., 3, 49-73. WORLD BANK (1979) World Development Report, 1979. World Bank, Washington, DC. WORLD BANK (1981) World Development Report, 1981. World Bank, Washington. DC. WORLD BANK (1983) World Development Report, 1983. World Bank, Washington. DC.
PETER
M. TOWNROE,*
Norwich,
for
U.K.
Abstract:
The prospects for economic growth among the developing countries of the world over the next two decades are not as promising as the experience of the last two decades. Aspects of the current world economic environment have implications for the pattern of urban growth in developing nations, and hence for the role of spatial policies. This paper outlines the U.N. projections for the growth of urban populations in the world. It then reviews the current external economic situation of the developing countries, faced by world economic recession and high levels of international indebtedness, before considering some of the implications of this situation for urban growth.
Spatial
Guayana programme in Venezuela region in southern South Korea.
Policy Objectives
Spatial policy, broadly defined, may encompass four principal sets of objectives in those poorer nations of the world experiencing rapid population growth. The first set of goals is probably the least important in economic terms for the majority of less-developed countries (LDCs) but has nevertheless received much political attention as well as analytical concern. It is the group of goals that fall under the heading of ‘regional balance’. Here both development and welfare objectives are focused on an economically lagging region or an agricultural or resource frontier region, the impetus frequently coming from diplomatic tensions with a neighbouring state or from inherited tribal and ethnic differences between regions. Government investments in infrastructure may be supported by industrial subsidies, together with the creation of special development agencies, the acceptance of fiscal transfers and even the introduction of linked controls on industrial investments in more prosperous regions: all to foster greater equality in the inter-regional pattern of economic growth and of household incomes and access to services. Examples of the first set of spatial policy objectives would include those laid down for the north-east region of Brazil, for the *Department of Economics, School of Economic Social Studies, University of East Anglia, Norwich 7TJ, U.K.
or the Pusan
The second set of objectives which can fall under the heading of ‘spatial policy’ frequently ties in with the first set but is analytically distinct and has rather different implications for the most desirable geographical distribution of industrial and infrastructure investments. This set is concerned with agricultural development and rural planning. It has to do with improving the land, labour and capital productivity of the agricultural sector in order to raise the output of food to feed a growing population, as well as to provide crops for export where possible. The urban and industrial growth associated with this development process is fostered by public sector interventions and investments in order to push forward improved production methods, including access to equipment, fertiliser, finance and advice, as well as the creation of efficient institutions for transporting and selling the products. Complementary policies also seek to improve the availability of public sector health and education services and private sector commercial and retail services to villages and small towns. The spatial element in the objectives here is usually secondary to raising food output, in contrast to rural policies in many developed nations, which are often trying to defend an outmoded settlement hierarchy. However, an important component of this spatial policy area will frequently be the provision of
and NR4
335
336
alternative employment. either for workers displaced from the land by rising labour productivity or for a surplus workforce from a growing population never absorbed into the agricultural sector in the first place. The third and fourth sets of spatiai policy objectives are often but not necessarily complementary to each other and both have to do with the management of urban growth. These sets may be taken region by region in the larger nations. LDCs with high rates of population increase suffer the twin pressures on the expansion of their towns and cities of growth of the existing urban population and of rural-urban migration. Urban growth rates of population are therefore frequently more than twice as high as the growth of the rural residents. For example, the U.N. estimate for Africa in the 1970-1980 decade was of an urban population growth rate of 4.0% p.a., compared with a rural population growth rate of 1.7% p.a. (HAUSER and GARDNER, 1980). This expansionary pressure invokes two sets of responses by national and state or provincial governments under the heading of spatial policy. One set has to do with the selection and promotion of designated secondary cities as a way of allocating scarce urban investment funds and professional managerial capacity. This set of objectives should link ciosely with the first two but frequently fails to do so. The other set of objectives, the fourth set, arises from a concern with the very largest cities in the national economy. Here, pressures of population growth combine with the pressures of the needs of an expanding manufacturing and commercial sector (for transport links, for water, electricity, telephones, etc.) and with the pressures of rising household incomes (even if this rise fails to benefit all groups in the income spectrum). Public opinion is influenced by rising congestion and pollution and by utility failures and delays. This puts pressure on public sector managers and officials who find themselves faced by the twin problems of not only providing services to the increments in population but of also defending the quality and guaranteed access of services to the existing popuiation. And this population in turn not only remembers the apparent delights of a smaller city but also has expectations of improvement, not of deterioration. Spatiai policy here therefore has to do with both the scufe of the growth and the speed of the growth of the largest cities. It also has to do with the relative size of the largest cities, the issue of primacy. From
Geoforum, Volumr 15 Xiumber 3/19&t this there comes a link with the first set of spatial policy objectives. In many nations the dominance of one or a small number of very large cities with a large discontinuity then occurring in the overall urban size hierarchy is seen as a cause for concern. So worries focus on regional balance in urban development as well as on the relative intensities of the problems thrown up by different-sized cities. Public officials have to worry about the per-capita investment and service provisions costs involved to meet those problems. All of these issues have been intensively discussed in recent years in many different forums.’ Spatial policy in LDCs frequently now falls under the heading of ‘national urbanisation policy’, ‘national urban deveiopment strategy’ (although these two headings may omit the rural development dimensions) or ‘population distribution policy’. Policy interventions to influence the location of city growth in an economy are justified on political, administrative and social grounds, as well as on a perceived failure of market forces to fully reflect social opportunity costs (due to negative external economies, distortion in the price system due to monopoly power or bias arising from other non-spatial sectoral or macroeconomic policy interventions). The resulting ‘strategies’ may be grouped under the ten headings proposed by RICHARDSON (1981): iaissezfaire do-nothing policy, policentric development of the primate city region, leap-frog decentralisation within the core region, counter-magnets, small service centres and rural development, regional metropolis and subsystem development, growth centres, development axes or corridors, promotion of provincial capitals, and secondary city development. This typology is set out in Table 1. Clearly the choice of any one strategy, or of a number of these prototypes in combination, will depend upon the conditions met in each specific country. All of the strategies seek to influence the size distribution of cities in an economy. All have implications for the well-being of rural as well as urban residents. All require a long-term political commitment. All need to be seen in the contexts of the implicit spatial impacts of non-spatial policies. It is not the purpose of this paper to argue the case for spatial policy measures for LDCs, nor to describe or to evaluate past initiatives undertaken in many countries. Rather, it seeks to provide a brief outline of the changing internationa1 economic environment for spatial policy, or national urbanisation policy, in LDCs in the eighties. The next
Geoforum.
Volume
15 Number 3 19%
Table 1. Typology
of national
urban development
Descriptions
Strategy Luissrz-fuirr
no specific spatial policy. Urban infrastructure investments allocated by existing population. No linking of patterns of urban development to societal goals and objectives
Policentric city region
development
Leap-frog region
decentralisation
of the primate
within the core
Counter-magnets
6. Regional metropolis development
satellites developed which are not contiguous with the metropolitan core. The city-region is therefore extended. Develops the hinterland within one region
and rural develop-
trying to hold would be rural migrants in country areas by developing local employment opportunities, while providing support for the development of agriculture. IMaybe very costly in infrastructure and service costs per capita
and subsystem
combining 1 and 5 across the urban hierarchy of a single region. Difficult when resources are scarce. May increase inter-regional inequity. Requires regional planning
centres
8. Development
subcentres and satellites are planned, linked to a metropolitan core in a city-region-aide transport system. Builds on agglomeration advantages of the primate city. Increases interregional inequity
strengthening major cities as competitors to the primate city, usually in another region. Requires magnets to already be relatively large. May merely replicate big city problems
Small service centres ment
7. Growth
strategies
selecting urban centres on the basis of economic potential for a programme of accelerated growth. Political temptation to select too many centres. Many relatively unsuccessful programmes in recent past axes or corridors
attempt to achieve mutally reinforcing cities and economy in major transport investments. Often arise de facto. Maybe a way of building up adjacent but economically unequal regions
9. Provincial
capitals
a strategy of dispersal of urban expenditures which may ignore development potential, focusing on administrative capacity rather than industrial growth in too many centres. Politically attractive
10. Secondary
cities
limited number of cities are promoted on the basis of economic potential. Typically focuses on fewer and larger centres than 7, but probably needs to be combined with other strategies for full effectiveness. May be able to meet both efficiency criteria and the demands of equity between regions. Both service centre and larger scale industrial development
Source: Adapted
from RICHARDSON
(1981).
briefly lays out the anticipated dimensions of the increments to cities in LDCs in both the current decade and the next decade, drawing upon the U.N. population estimates already referred to. This is followed by an outline of the key dimensions of the world economic environment for the developing nations. The implications of this changing environment over the current decade are then discussed in terms of the implications for future patsection
terns of urban growth policy interventions.
Urban Growth
and hence the need for spatial
in Developing
Countries
The scale of urban expansion anticipated over the last two decades of this century is quite awesome in its magnitude. The U.N. estimates (HAUSER and
338
Gsoforum
GARDNER. 19&I) show a world-ttide increase in lrrbn!r residents of ilOt miltion (a 78% rise) between 19SO and the year 2000 (cf. a rural increase of 479 million). This compares with an increase in numbers living in cities of 442 million from 1910 to 1960, and 795 million from 1960 to 1980. The scale of urban grouth is unprecedented: and threequarters of the growth will occur in the less developed nations of the world. This LDC urban expansion of nearly one billion. the estimates suggest. will be at an average rate of approximately 3.9% p.a., a rate far exceeding that experienced by the more industrialised nations (except in isolated cities at the height of the industria1 revolution) and will result in the urban population more than doubling to 2116 million people.
Table 2.
in many nations: the average in Africa, for example, being from 3-9 to 135. Africa of as an urbanising continent.
Urban population as percentage of total populations 1950 1975 2000
World
20.6 62.4 16.9 20.7 29.0
31.1 74.4 55.5 34.4 39.3
is not usually thought but 60% of the incre-
ment population to XXI0 wiii live in cities. The percentage urban in 19Sl and the projected growth rates of population to the end of the century are given in Table 3 for a selection of the larger lowand middle-income developing nations. together with both the level of the per-capita gross national product and the growth of that level over the past two decades. The table is interesting in that it shows how uneven is the association between the coilective cash income of countries, expressed by the GNP per-capita figures, and both growth rate of population and urbanisation levels. The contrasts between. for example. China and Ghana, or Peru
Urbanisation rates and urban populntion
developing countries lndustrialised countries Capital surplus oil exporters Centrally planned economies
Volume 15 Number 3,19SJ
45.5 53.6 77.9 49.2 51.5
growth. 19%.2000
19jO- 1960
Average annual percentage growth of urban population 1970- 1980
1990-2000
4.0 2.0 7.9 5.2 3.5
3.0 1.2 7.1 2.7 2.s
3.5 0.8 3.1 2.4 2.6
Source: WORLD BANK (1979, p. 72).
By the year 2000, over half of the world’s population is likely to be living in urban areas, with the proportions still rising as suggested in Table 2. The rate of urban popuIat~on growth in the developing countries is expected to siow in the next two decades, but will still remain extremely high in both absolute growth rates and in numbers of extra urban residents to be provided for. Although this urbanisation is seen by policy makers as presenting opportunities for developing industry and raising productivity and incomes, so reducing poverty, there is also widespread concern that the process is excessively rapid and costly and geographically concentrated, generating poverty and economic inefficiency within cities. The 1980-2000 20-year average growth rates are forecast to be highest in Africa (4.8%), closely followed by South Asia (4.4%), Latin America (3.3%) and East Asia (2.7%). The proportion of the population living in cities will therefore rise quite sharply
and Nigeria, are dramatic. And even though some of the population growth rates, especially in Asia, are slowing, the table brings out the potential for much higher urbanisation levels within many of the nations listed. A further way of looking at the projected urban population growth in LDCs is to consider the prospects by size of city. Forecasting here is more hazardous than for the global total, particularly because of the uncertainty over the internal rural to urban migration rates. After detailed work on 29 LDCs over the last three decades, the U.N. figures show that migration and reclassification of areas from rurai to urban as they grow in population accounted for only 39% of the annual urban growth rate, on average, across the sample. Natural increase is clearly seen to be the major driving force behind city growth in LDCs (HAUSER and GARDNER, 1980, pp. 20-21). Factors which influence both the balance between rural and urban
Geoforum;Volume
15 Number
339
3’198-1
Table 3. Population
and urban growth
GNP per capita Dollars 1981
Growth* 1960-1981
characteristics
in selected
developing
Population Millions 1981
Projected* 1980-2000
Level+ 1981
countries
UrbanisationP In cities over 0.5 millions 1980
In largest city> 1980
Low-income countries11 Bangladesh Ethiopia Nepal Burma Zaire Uganda India Tanzania China Sri Lanka Pakistan Sudan Ghana
:;n 27 29 26 37
51 37 0 23 38 52 39 50 73 16 51 31 48
30 37 27 23 28 52 6 50 16 21 31 35
4.5 2.0 2.1 2.0 2.3 3.5 3.5 2.3 2.0 2.1 1.6 2.1 3.6 2.1 2.6
15 21 44 15 37 41 21 66 64 47 56 30 44 68 67
57 50 53 69 34 50 58 44 51 42 77 27 12 48 44
57 23 39 69 30 26 17 39 26 2-t 41 27 12 15 32
0.7
78
55
18
l-40 110 150 190 210 220 260 280 300 300 350 380 400
0.3 1.4 0.0 1.4 -0.1 -0.6 1.4 1.9 5.0 2.5 2.8 -0.3 -1.1
90.7 32.0 15.0 34.1 29.8 13.0 690.2 19.1 991.3 15.0 84.5 19.2 11.8
2.9 3.1 2.6 2.3 3.2 3.5 2.0 3.5 1.0 1.9 3.0 3.0 3.9
12 14 6 28 36 91 24
420 530 650
770 790 860 870 1170 1380 1540 1700 1810 2140 2220 2250
2.9 4.1 3.5 4.6 2.8 2.4 3.5 1.0 3.2 3.5 6.9 4.3 3.2 5.1 3.8
17.4 149.5 43.3 48.0 49.6 20.9 87.6 17.0 26.4 45.5 38.9 14.2 19.6 120.5 71.2
11,120
3.4
719.5
Middle-income countries Kenya Indonesia Egypt Thailand Philippines Morocco Nigeria Peru Columbia Turkey South Korea Malaysia Algeria Brazil Mexico Industrial market economies* Source:
*
WORLD
BANK (1983. Tables
1, 19 and 22).
*Average annual percentage growth rate. +As percentage of total population. $As percentage of urban population. SDefinitions of ‘urban’ are not fully consistent between countries. I/The list includes all nations with a population of at least ten million in 1981 up to a per-capita GNP level of U.S..!2500 except Afghanistan, Viet Nam, Mozambique, North Korea, Iran and Iraq, all omitted because of data deficiencies. 11980 figure. **Nineteen industrial countries with a per-capita GNP level in 1981 of U.S..$5230 (Ireland) to U.S.$17,430 (Switzerland).
Groforum,Volums 15 Number 319S-t
3-N
growth and the relative growth rates of different sizes of city include: rising levels of household incomes, increasing job opportunities in the manufacturing and formal service sectors, a bias in the provision of public services to towns and with higher quality to larger cities, labour-saving technological change in agriculture, a concentration of exports from larger cities, inequitable iand tenure systems in rural areas, discriminatory tax and price policies favouring urban areas, biassing of large infrastructure investments to the larger cities, and the centralisation of government departments and agencies in the major cities. This incomplete list stresses the point that the strength and the pattern of urban growth are necessarily creatures of the social, political and institutional arrangements in a society as well as of the workings of economic forces. In 1980 three-quarters of the urban population of the LDCs lived in places of 20,000 or more population. There will be little change in this proportion over the next 20 years, In contrast, the proportion of the urban population living in larger cities will rise. By the year 2000,44% of the urban population in LDCs is forecast to be living in cities with populations in excess of one million. This contrasts with 7% in 1920, 19% in 1950 and 35% in 1980. It also contrasts with the year 2000 forecast for moredeveloped countries of 40%. The proportion of large city dwellers is, and will be, particuIarly high in Latin America. The number of such cities will rise over the 20-year period in the LDCs from 118 to about 280. This group of cities will triple in total population absorbed from 339 million in 1980 to 932 million. The demands made by these major cities on physical and economic resources and upon the managerial and political capacities of all but the smallest developing nations will be intense. Again, Table 3 shows the pattern, country by country, of the present concentration into larger cities by percentage of the urban population; and, indeed, into the largest single city, an indicator of ‘primacy’. The real urban challenge in terms of governmental response might be felt to be coming in the really large metropolitan centres in the LDCs, cities with in excess of five million population. In 1920 there were no LDC cities of this size. I3y 1980 such cities were home for 129 million people. This total is now forecast to rise to 486 million in 20 years, or approximately 10% of the total (urban and rural) LDC population, housed in 40 or so cities; a huge growth in both total magnitude and in rate of expan-
sion. Nearly 20 LDC cities will have a population in excess of ten million. In many industriaIised nations the Iarger metropolitan centres are now losing rather than gaining population (VINING and KONTULY. 1978); and in some LDCs there are signs of incipient ‘polarisation reversal’ as the relatively rapid growth rates of population of the largest centres start to slokv [e.g. for Sao Paul0 in Brazil, as shown by TOWNROE and KEEN (1984)]. These changes suggest real economic and operational constraints on the further growth of extremely large cities, even with major investments in transport and service infrastructures. A large number of developing countries have either considered introducing, or have introduced, explicit measures of spatial policy to counter the continuing expansion of these largest centres in particular. The urban growth pressures will be felt rather differently in different countries of the world. RENAUD (1981) has grouped all the countries of the world into a single six-way grouping to highlight these differences for spatial policy issues:
(9
Very smaff countries. These are countries of less than two million population or they are city states. Their urban problems are of city planning or metropolitan public service management in the latter group and are virtually non-existent in the low-population-density landscapes which characterise the first group.
(ii) Countries with limited domestic markets. These relatively small countries, whether by population, land area or GNP, rely heavily on external markets for their prosperity, and urban growth tends to be very concentrated in a medium-sized centre on the coast or on a key transport route. Such countries are found in the Caribbean, in Central America and among the small African states. (iii)
Large low-income co~i~trie~. These fall into two groups. Such countries in South Asia (India, Bangladesh, Pakistan, Burma and Indonesia) tend to have a significant number of very large cities. Overall levels of urbanisation are low, but urban growth is rapid and concentration in the largest cities is increasing. Similar rapid growth and concentration is found in such large African countries as Nigeria, Zaire, Sudan, Ethiopia, Kenya, Tanbut here growth is zania and Egypt, particularly focused on the capital city region.
341
GeoforumNolume 15 Number ji1981 These capitals are among the fastest growing major cities in the world. income countries. These countries come from Asia, the Middle East and the Mediterranean, and Latin America. In many countries of this group, urban problems are fuelled by rises in industrial production and household expenditures as well as by increments in population alone. Many have sought to introduce different forms of spatial policy measures. Many have both problems of imbalance relative regional and of concentration in very large cities. Developing transport, better education and active policies to promote agricultural production all foster rural-to-urban migration. The pattern of urban growth is strongly influenced by central government power over urban infrastructure investments and local government expenditures.
geographical concentration. Both the Soviet Union and China. being so large, have high degrees of regional inequality.
(iv> Middle
(VI Advanced
market economies. In contrast with the first four groups of countries, in this group urbanisation is already at a high level and populations are only growing slowly. However, considerable geographicai movement is still taking place, with probfems emerging of regional imbalance and of economic, social and physical dereliction in the inner areas of the metropolitan centres. The capacity to implement spatial policies is strong, but there is currently considerable uncertainty about the economic costs and benefits of such policies.
(4 Centraily planned economies. This group is dominated by the Soviet Union and the Eastern European block, and by China. China, with one-fifth of the world’s population, has tried to actively steer the urbanisation process, with controls over migration as well as over investment of all kinds. Pressures to industriafise have reinforced urbanisation trends, but China has tried to orient these trends away from the largest cities, and where possible to link both industrial and city growth to rural development policies. In the Soviet Union there has been concern to economise on the costs of urbanisation, particularly in the largest centres. Policies have focused on buiiding up intermediate centres and new industrial cities, with the overall result of a pattern of high rates of urbanisation but low levels of
History, geography and the place of each nation state in the workings of the world economy together govern the nature of the urban problems and the spatial policy issues in all of these six groupings of nations. Problems of poverty, housing, transport, delivery of utilities and health and education services, of serving essential nutritional needs and of developing empIoyment and income generating opportunities~ are all pressing issues in the cities of the developing world [as the paper in this volume by HARDY and SATTERTHWAITE amply demonstrates (pp. 307-333)]. The pattern and range of responses available to politicians and administrators are not, however, entirely under their control. All but the very poorest nations (with a few exceptions) have their economies locked into a world-wide trade and financial system; policies, events and pressures from beyond national boundaries therefore limit the discretion and the power of local policy makers. This fact of life is true in more or less any policy area, to a greater or lesser degree. The next two sections of this paper consider some of the implications of these world-wide economic pressures for the area of spatial policy in LDCs over the current decade or so.
World Economic Growth to 1!39!Ii2
Any discussion of the implications of present and future trends in the world economic order for a single policy area across the full range of deveIoping nations has to be rather foolhardy in its necessary simplifications. Generalisations must be taken as providing pointers, no more. Inappropriate as these generalisations may be when taken together and applied to a single specific nation state, there is nevertheless utility in arriving at the perspective which the world economy view provides. The discussion here should be read in this spirit. The developing nations arrived at the beginning of the present decade with two dominant pressing sets of economic problems: recession and debt. Both sets were in part of their own making and in part forced upon them by economic change elsewhere. The conventional starting point in any discussion of these issues is the 1973 oil crisis. The 1973 oil price rises forced by the O.P.E.C.
Gsoforumi’Volume 15 Number 3/l!-&! cartel severely hit the foreign exchange positions of those developing countries without their own supplies of oil or other sources of energy supply to turn to. The same price increases reduced the demand for deveIop~ng country exports, as the rate of growth of the industrialised nations as a group slowed down. in the face of both baiance of payments deficits and rises in domestic price inflation (both in turn calling forth demand dampening policies). The unpredictability introduced into the world economic system by the oil price rises and the earlier rapid rises in 1972 in the price of many primary products induced uncertainty and a cautious response by corporate investors, bankers and government fiscal managers. The current account deficit of the oil importing developing nations widened from $2 billion in 1973 to $33 billion in 1974 and $39 billion in 1975. The oil importers, developed and developing, had three ways of responding to the new situation: slower growth to restrict imports, structural adjustwithin their economies towards ment the production of exports and import substitutes, and/ or external borrowing to cover. the trade deficits. For the developing oil importers, exports to oil exporters increased in the seventies and exports to the industrial countries started to recover as their economies adjusted. By 1978 their current account deficit fell to $26 billion. But the 1979-1980 oil price rises then hit them, and their collective deficit rose again, to $44 billion in 1979 and $70 billion in 1980. Although a number of countries were obtaining a measure of relief from the remittances of migrant workers in the Middle East and from aid flows from oil producers, the overall picture was black. The average percentage growth rate of the GDP of all developing countries slowed to 3.0% in 1980 and 2.0% in 1981, having been 6.0% annually from 1960 to 1973 and 5.1% annually from 1974 to 1979. Per-capita incomes in many nations fell back. The prices of many non-fuei primary commodities then fell through the first three years of the current decade. These commodities account for some 30% of the exports of all developing nations. The rate of increase of these exports slowed from 5.9% p.a. during 1973-1980 to 0.6% p.a. during 1980-1982. The upshot of these events was that the oilimporting developing nations (with four-fifths of the inhabitants of al1 LDCs) found themselves entering the eighties faced by an external economic environment very different from that which had faced them ten years earlier, and on which so many develop-
ment plans and expectations had been laid. And it was at this time that a number of countries discovered that the macroeconomic policy path chosen in the mid-seventies, the path of large-scale externai borrowing. was not after all the most sensible route to have taken. In 1974 it had looked very tempting. At that time roughly 2% of gross world product was transferred to the oil producers. These producers initially wished to save the funds and interest rates fell. Since both oil and commodity price rises had fueled inflation in the major currency nations, the real interest rates governing international borrowing fell below zero; and for developing countries with boosted export prices from the commodity boom the real rates of borrowing in dollars were strongly negative for three years. The developing nations were therefore prepared to apply both structuralist and Keynesian remedies to their depressed economies by borrowing. Western commercial banks, with access to recycled surpluses from oil exporters and higher domestic savings ratios, and experiencing a relatively weak government bond demand. were happy to oblige; and they obliged not only with funds for equity investments by multinational industrial corporations but, more seriously, with greatly increased direct loan debt. The outstanding official and private debt of the developing countries has risen from $69 billion in 1970 to $548 billion in 1982, largely concentrated in the middle-income group of nations. Since most of the loans are denominated in industrial nation currencies, this group of developing nation borrowers found themselves squeezed in the early eighties by falling commodity prices and rising nominal interest rates. Real rates of interest payable rose sharply. Interest payments have risen from 0.5% of the collective GNP of the LDCs in 1970 to 2.1% in 1982, and the total debt service payments from 1.8 to 4.7% of the GNP. By 1982, 20.7% of export earnings of these countries was required to cover the interest charges, compared with 13.5% in 1970. The burden has been heavy.3 Take one example: Brazil. Brazilian economic growth had been 9% p.a. over the ten years to 1975. By 1981 growth had ceased, GNP falling by 2%. It has failed to grow again. The strong growth of the early seventies seemed to underline the huge economic potential of Brazil. And growth continued at 6.5% p-a. during 1974-1980. There was therefore little difficulty of running up debts of $80 billion by 1982, principally to cover necessary imports of oil. Every $1 on or off the price of a barrel of oil
Geoforum,Volume
15 Number
31’l’sS-l
changes Brazil’s import bill by $260 million each “‘ear. Every percentage point change in the Eurodollar rate makes a difference of $600 million to the interest payments Brazil has to make each year. In 1982 interest payments on the debt accounted for 46% to export earnings. Oil imports accounted for a further 47%. Brazil therefore desperately needs to build up its export earnings, and to hold down imports. And yet many of the structural changes required in the Brazilian economy to achieve this result require imported capital goods. The resulting domestic squeeze is now threatening the planned orderly return to democratic government at all levels by 1985. What now are the prospects for economic growth in the developing countries through the rest of this decade, with the mountain of debt still outstanding but with the industrial nations starting to climb out of recession? The experience of the past ten years has left three unfortunate legacies which will cloud a more expansionist economic environment in the late eighties for these countries. The first of these is the prospect of continuing high real interest rates. Policies of monetary restraint have been followed in most industrial countries, including the United States. Relative to both the U.S. inflation rate and the prices of primary products, dollar interest rates look set to stay high in the short and medium term; especially in the face of the very high borrowing requirements of the U.S. federal government, requirements which cannot be changed quickly.’ Although the United States only accounts for some 15% of world imports of primary products, some 55% of world trade is denominated in dollars, while about 75% of all central bank foreign currency reserves are in dollars; and nearly 80% of all international bank loans are denominated in dollars. The interest repayment burden will therefore stay high. The second legacy of the recession and the two oil price rises has been a rise in protectionist sentiment in the industrial countries towards manufactured imports. This sentiment extends between the industrial countries as a group but it is also directed at the industriaiising development countries. Nonoil LDCs sold $163 billion worth of exports to the industrial countries in 1981. This was only some 14% of their industrial imports, but LDCmanufactured exports tend to be concentrated in sectors sensitive politically for reasons of job loss and regional imbalance in the industrialised group. Sensitive sectors include textiles, steel, shipbuilding, footwear and consumer electronic goods. In all
343 of these sectors protection has increased, hindering structural adjustment in the LDCs. The Common Agricultural Policy of the EEC and American farm policies also impose restraints on the free movement of agricultural products. These restraints have held back the potential development of temperate climate crops and the raising of beef in many LDCs, at some cost to the consumers and tax payers of Western Europe and North America, as well as to LDC export earnings. The third legacy is more indirect. It is the mood of caution induced in the major commercial banks and among aid donors. The dominant current concern among banks heavily committed in countries with major indebtedness is one of safeguarding their existing loans. And in the lending by the I.M.F., the World Bank, the continental Development Banks and many individual government aid programmes there is a new stress on ‘conditionality’, broadly meaning agreement by the recipient LDC to institute what may be domestically unpopular policies to safeguard the loans. It is against these three legacies that the prospects for renewed strong economic growth in the LDCs should be judged. The 1983 World Bank projections offer low, central and high growth scenarios. The Central case assumes that the GDP of industrial countries will grow at about 3.8% p.a. in recovery from the recession up to 1990, and then stabilise to 3.5% to 1995.5 On past post-recession experience, this reflects anticipation of fairly conservative policies aiming to hold down inflation. On this basis, the developing nations are projected to grow at 4.4% p.a. during 1982-1985 and 5.5% 1985-1995 (for the central case), with growth being rather stronger in the middle-income nations and rather slower in the low-income nations. Increases in per-capita incomes will be particularly low in many African nations. The growth outcomes over the forecast period will, of course, depend upon both external factors and domestic factors for each developing country. The external factors are dominated by demand for exports, with a projected growth of 6.8% p.a. for all developing countries in volume terms and 6.6% in value terms. The sensitivity of developing country exports is illustrated by the calculation that if industrial country GDP levels rise by 5% p.a. during 1982-1984, then oil-importing LDCs would increase the volume of their exports by 10% and the value of their exports by between 20 and 30%.
3-l-I
GeoforumX’olume
The capacity of many LDCs to respond to this growth in export demand will be strongly influenced by the path of energy prices. World-wide energy consumption is forecast to grow from 135 million barrels of oil equivalent in 1980 to 191 million in 1995, or 2.3% p.a. during 1985-1995. In developing countries the growth is forecast at 4.5% p.a. In this central case forecast, oil prices rise by 1.6% p.a. and oil only contributes 11% of the total increase in energy consumption during 1980-1995, compared with 43% in the seventies. Coal will become progressively more competitive in world markets. The final important external factor is the ‘resource gap’. This is the net capital inflow to developing countries (3.7% of their collective GNP in 1982) which each year is required to finance deficits on
Table 4. Past and projected
Indicator
Economic
Growth
and Urban
15 Number Development
What are the implications of both the scale of economic growth forecast for the developing countries. and the new world economic environment within which that growth has to take place, for the scale and pattern of urbanisation? It is difficult to foresee major discontinuities with past experience. The outcome of the broad pattern of the U.N. forecasts presented in this paper is unlikely to be much modified, even though those forecasts were drawn up in the late seventies. The underlying pressure on urbanisation, as noted earlier, is the dynamic of the fertility and mortality esperience of the existing urban populations. This dynamic will change only relatively slowly and the influence here of the for-
performance
in all developing
countries
1960-1970
1970-1980
1985-1995
19.6 26.8 1.4: 2.ot. 5.7 2.4
24.2 20.5 1.7 4.4 5.3 2.1
24.0 20.0 1.3 3.0 5.5 2.0
Savings as a percentage of GDP Return on investment (percent)* Import elasticity? Manufactures export ratios Percentage GDP growth Percentage population growth
3/19S-I
Source: WORLD BANK (1983, Table 3.8, p. 38). *Real increase in GDP divided by investment, both valued at current prices. TGrowth of import volume divided by growth of GDP. $1965-1970. §Growth of manufactured export volume divided by growth of world GDP (excluding
centrally planned economies).
their current balances of payments. This inflow contributes to development by financing imports and by supplementing domestic savings, and in many cases by being linked to a transfer of technology. Sources include commercial borrowing, private direct investment, flows from official sources and worker remittances. The outlook is uncertain on all of these. Domestic determinants of growth for the developing nations are fourfold: savings, returns on investments, export promotion and import restraint. The past and projected rates are shown in Table 4, together with the important decline in population growth which allows rises in productivity and per capita incomes otherwise foregone.
tunes of both the domestic and economies is relatively weak.
the international
There are, however, a number of points to be made, of greater importance for the pattern and quality of urbanisation in many LDCs than for the absolute scale. As GILBERT (1981, p. 12) has noted, in discussing urban growth in LDCs, “. . .individual cities perform specialised functions and their individual prosperity depends greatly on their position in the economic system. . the size, role and characteristics of individual cities reflect the world roles of the societies of which they form a part”. From this wider context, the prosperity of social and regional groups in a national population can be seen as being governed by a three-way dualism (LO and
GeoforumiVolume 15 yumbtr 3:198-t SALIH. 1981, p. 142): the North-South dualism of external relations, the contrast between the formal and informal employment markets. and the divide between city and countryside. And running through these dualisms are the twin forces of advancing technology and of government policy interventions. Over the past ten years or so, agriculture has come to be seen as a major contributor to development in its own right, rather than as a mere hand maiden to the growth of manufacturing. providing Iabour, cheap food and tax revenue for urban-based industry. More positive support for agriculture, including land reform, has been shown to pay large dividends (JOHNSTON and KILBY, 1975; LITTLE, 1982; WORLD BANK, 1981, Part II), but that support has required investment in commercial inputs, higher prices to urban consumers and spending on (electricity, ruta1 services transport, health, education, technical advice, etc.). This has, of course, had implications for urban development, both in rural small towns and in influencing migration flows to larger towns, as well as in countering a large city bias in urban public expenditures. Although there is still considerable controversy over what constitutes best practice ‘integrated rural development’ and the pattern of urban growth involved,6 urban growth in the low-income LDCs is still firmly built upon a rural base. In middle-income LDCs (i.e. countries with a GDP per capita above $400 in 1981, and with an average export content of GDP of 23% in 1981) the driving force behind the pattern of urban growth is very much more the growth of empIoyment in the formal manufactured goods sector, where in even the largest countries trade performance and the earning and saving of foreign exchange are the dominant constraints on economic growth. Four factors influencing the relative growth of individual cities are directly associated with industria1 growth: the attraction of multinational corporate investments, the material and labour skill input requirements of the growing sectors, the transport and communication linkages from each town to the rest of the nation and to other nations, and the pattern of trade protection and domestic subsidy provided to each sector in the city. The trade environment of the eighties seems likely to encourage further selective sectoral policy interventions in both public and private sector industries, without necessarily working through the spatial implications.
34s
The anti-inflation demand dampening and tight money policies which many developing countries are being encouraged to adopt by official and commercial external loan sources will increase unemployment and underemployment in cities, thereby increasing the overall spatial concentration of population, and will limit non-industrial public investment expenditures. The growth futures of individual cities are therefore likely to become even more dependent upon success in the competition for scarce public investment expenditures. Encouragement to improve the management of urban projects and the consequent services, to set prices closer to costs and to improve local tax capacity, reflects this scarcity and is argued on grounds of both equity and efficiency (e.g. LINN, 1983). The pattern of urban growth in a developing country can be seen as an evolving consequence of geographicai and sectoral clustering of economic activities, the key to which is the adoption of innovations (LASUEN, 1973). This process is clearly not the sole influence, but it is important, and in many nations the context for innovation adoption is changing. Improving literacy levels7 rising industrial skill rates, the development of a technical press and the geographical spread within the country of muItiplant companies (a factor discounted by Lasuen) are reducing the relative disadvantage of smaller centres in the innovation diffusion process. Exposure to import competition, high rewards from exporting and the activities of public sector agencies pressing technical advice: all add to the innovation consciousness of smaller firms in smaller towns, improving their exposure to international technological advance. If urban service compiementarities to the acceptance of innovations are made available through regional development planning, then the pattern of urban growth will be influenced.
Conclusions
The developing countries of the world face an uncertain next ten years in their attempts to raise the living standards of their population. Their prospects look brightest if their export earnings can be increased on the back of faster economic growth in the industriaiised nations of the world. The main danger then will be that the faster growth will increase oif prices yet again, and so again increase the trade deficits of the LDC oil importers. It seems
316 clear
obtain
GeoforumiVolume
that commercial loans will be more difficult in that situation than in the recent past.
to
Whatever the economic growth rates achieved, the major policy initiatives which will influence the scale of urban growth in the majority of developing countries have little to do with the path of the global economy. They will have to do with family-planning programmes. anti-poverty and basic needs initiatives, domestic food distribution policies, and choices between cities for the siting of public investments. There are, in addition, further changes which may influence urban development patterns in LDCs in the future, although these are very speculative suggestions. The first is the cumulative impact of both research and experience in the management of large-scale urban development in low-income countries. More and more lessons are emerging to demonstrate the inappropriateness of many high-income country policies and practices, as brought out in the review by LINN (19S3). These lessons cover employment policy, aid for the poor, income redistribution with urban tax policies, urban transport and housing policies, and the delivery of health, education and utility services. Further possible changes are linked to the technological revolution presently occurring in electronics. One change here is within the corporate organisation of large companies, permitting multinational, multiproduct and multiplant operations. Companies based in middle-income nations (e.g. South Korea, Brazil, Colombia, Mexico) are following companies from the industrial nations in a pattern
of overseas
investment.
This
movement
is
linked to the growth in trade between the oilimporting development countries (about onequarter of their exports in 1981). as well as to corporate control and the diffusion of new technologies. Linked to this is the growing impact of microelectronics on not just the cost of manufactured goods but also their quality. This could work against lowcost labour-intensive LDC exports of both consumer goods and capital goods. It may also, of course, reduce the scale advantages of the large producer.
And finally there is the unmeasurable impact of cheap global television, with all the pressures so generated not just for the ‘South’ in its demands for a better trade and aid deal with the ‘North’, but also for greater equality within nations, between social
groups and environment
15 Number
319X-+
between geographical areas. Here, the for spatial policy over the next dccadcs
is one
of changing
rather
than
one
social
and
of constraining
political
expectations
economic
forces.
Notes 1.
3_.
3.
4.
5.
6.
7.
Convenient summaries of the trends can be found in HAUSER and GARDNER (1980) and of the problems in EL-SHAKHS (1980). The policy issues thrown up by rapid urban expansion in LDCs have been recently reviewed by LINN (1983) from the perspective of urban management and by RENAUD (1981) from the perspective of interventions to influence the geographical pattern of growth across an urban system. The papers from a U.N. conference in Bangkok in 1979 also provide an overview of issues and of policy options with both a rural and urban focus, as well as differing viewpoints on the desirable scale for intervention (UNITED NATIONS, 1979). See also JAKOBSON and PRAKASH (1974), FRIEDMANN and WEAVER (1979). STOHR and TAYLOR (1981) and GILBERT and GUGLER (1982). All of the statistics in this section of the paper are taken from WORLD BANK (1983) or Hard pounding this, gentlemen: a survey of the world economy, supplement to The Economist, 24 September 1983. This burden is expected to fall to below 17% in 1954 assisted by the 1983 easing of interest rates. Over the past ten years private loans and bank credit went almost exclusively to the mid&-income countries. At the end of 1982 over 80% of the debt owed by low-income (per-capita income of less than $410 in 1981) nations was owed to official sources, mostly at concessional terms. The U.S. federal budget deficit is forecast to rise from $225 billion in 1983 to $315 billion in 1988, on the assumption of a growth in the U.S. GNP of 4% p.a. The forecasts also assume a rate of growth of the labour force in the industrial countries falling to 0.7% p,a. in the projection period; technical progress sufficient to produce a growth in per-capita output of 2.8%; a GDP deflator (in dollars) of 6.4% in 1982-1995; and real short-term interest rates of 3%. It is assumed that no new protectionist measures are introduced by the developed countries. Contrast, for example, the regional closure notions of the agropolitan development model proposed by FRIEDMANN and DOUGLASS (1978) with the more open agricultural trading model used as the basis of RONDINELLI and RUDDLE (1978). See also FRIEDMANN (1981) and HANSEN (1981). Adult literacy rates rose from 34 to 52% between 1960 and 1980 in the low-income developing countries, from 39 to 59% in the lower-middleincome group and from 61 to 76% in the uppermiddle-income group. In the latter two groups the proportions of the age group enrolled in secondary schools, rose in the same period from 10 and 20% to 33 and 48% (WORLD BANK, 1983. Table 25).
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References
EL-SHAKHS, S. (19SO) National and regional issues and policies in facing the challenges of the urban future, In: International Conference on Population and the Urban Furure. Documents. United Nations Fund for Population Activities. Rome. FRIEDMANN, J. (19Sl) The active community: towards a political-territorial framework for rural development in Asia. .&on. Der. cult. Change, 29. 235-263. FRIEDMANN. J. and DOUGLASS, M. (1978) Agropolitan development: towards a new strategy for regional planning in Asia. In: Growth Pole Strategy and Regional Developmerlt Policy: Asian Experiences and Alternative Approaches, F. Lo and K. Salih (Eds). Pergamon Press. Oxford. FRIEDMANN. J. P. and WEAVER, C. (1979) Territory and Function: the Evolution of Regional Planning. Arnold, London GILBERT, A. and GUGLER, J. (1982). Cities. Poverty, and Development: Urbanisation in the Third World. Oxford University Press, Oxford. HANSEN, N. M. (1981) Development from above: the centre-down development paradigm. In: Development from Above and Below? The Diulectics of Regional Planning in Developmeat Countries. W. B. Stohr and D. R. F. Taylor (Eds). Wiley, Chichester. HAUSER, P. M. and GARDNER, R. W. (1980) Urban future: trends and prospects, In: International Conference on Population and the Urban Future, Documents. United Nations Fund for Population Activities. Rome. JAKOBSON, C. and PRAKASH, V. (Eds) (1974) Metropolitan Growth: Public Policy for South and South East Asia. Sage, Beverely Hills, CA. JOHNSTON, B. F. and KILBY, P. (1975) Agriculture and Structural Transformation. Oxford University Press, Oxford. LASUEN, J. R. (1973) Urbanisation and development the temporal interaction between geographical and sectoral clusters, Urban Stud., 10 163-188. LINN, J. F. (1983) Policies for Efficient and Equitable Growth of Cities in Developing Countries. Oxford Uni-
347 versity Press, Oxford. LITTLE, I. &l. D. (19S2) Economic Development: Theory, Policy and International Relations. Basic Books, New York. LO. F. C. and SALIH. K. (1981) Growth poles. agropolitan development. and polarisation reversal: the debate and search for alternatives. In: Development from Above or Below? The Dialectics of Regional Planning in Developing Countries. W. B. Stohr and D. R. F. Taylor (Eds). Wiley. Chichester. RENAUD, B. (1981) Il’ational Urbanisation Policy in Developing Countries. Oxford University Press for the World Bank, Oxford. RICHARDSON, H. W. (1981) National urban development strategies in developing countries, Urban Stud., 18, 267-283. RONDINELLI, D. A. (1983) Secondary Cities in Dergeloping Countries: Policies for Diffirsmg Urbanisation. Library of Social Research, Vol. 145. Sage, Beverely Hills. CA. RONDINELLI, D. A. and RUDDLE, K. (1978) Urbanisation and Rural Development: a Spatial Policy for Eqttitable Growth. Praeger. New York. STOHR, W. B. and TAYLOR, D. R. F. (Eds) (1981) Development from Above or Below? The Dialectics of Regional Planning in Developing Countries. Wiley, Chichester. TOWNROE, P. M. and KEEN, D. (1984) Polarisation reversal in the State of Sao Paulo, Brazil, Reg. Stud., 18, 45-54. UNITED NATIONS (1979) Population Distribution Policies in Development Planning, Population Studies No. 75. Department of International Economic and Social affairs, New York. VINING, D. R. and KONTULY, L. (1978) Population dispersal from major metropolitan regions: an international comparison, Int. reg. Sci. Rev., 3, 49-73. WORLD BANK (1979) World Development Report, 1979. World Bank, Washington, DC. WORLD BANK (1981) World Development Report, 1981. World Bank, Washington. DC. WORLD BANK (1983) World Development Report, 1983. World Bank, Washington. DC.