The twenty-first century will witness a rapid urban expansion in the developing world. India, it is believed, will be at the forefront of such a phenomenon. This book acknowledges the role of agglomeration externalities as the cornerstone of urban public policy in India.
Arguing that hypotheses of over-urbanization and urban bias theory—which articulated a negative view of urbanization—are based on fragile theoretical as well as empirical foundations, this book calls for proactive public policy to harness planned urbanization as resource. India requires agglomeration-augmenting, congestion-mitigating, and resource-generating cities as engines of economic growth, including rural development.
The book provides a large number of practical examples from India and abroad to enable policy-makers undertake reforms in urban and regional planning, financing, and governance to meet the challenges of urbanization in India. It combines theory and practice to draw lessons for an urban agenda for India and recognizes the central role of cities in catalysing growth and generating public finance for economic development.
Chapter 1: Cities and Agglomeration Economies
Cities and Agglomeration Economies
Economic Significance of Cities
The twenty-first century will witness an “urban revolution” sweeping across the developing world. This revolution is likely to be more significant than the agricultural and industrial revolutions in terms of its impact on humanity. It will provide a unique opportunity to developing countries to enhance economic growth through the agglomeration of economic activity in cities. Urbanization will perhaps be the single-most important policy concern for national, provincial, and local governments in these countries. If managed properly, it will be a powerful instrument to improve the lives of millions of poor and the marginalized. If neglected, it will lead to disastrous consequences. India remains at the forefront of the urban revolution. To convert the urban challenges ...