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Trends in Urbanisation and Urban Policies in OECD Countries: What Lessons for China?

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Trends in Urbanisation and Urban Policies in OECD Countries: What Lessons for China? Trends in Urbanisation and Urban Policies in OECD Countries: What Lessons for China? FOREWORD This report is a joint OECD-CDRF project. It was undertaken in the context of OECD’s Programme on Regional Development of the OECD Public Governance and Territorial Development Directorate, under the supervision of Joaquim Oliveira Martins, Head of the OECD Regional Competitiveness and Governance Division (www.oecd.org/regionaldevelopment). The report was produced at the request of Mr. Lu Mai, Secretary General of CDRF, and prepared as a background paper for the 2009-2010 Development Report of the China Development Research Foundation (CDRF) "Urbanisation in China: For a People-Centered Strategy". Ms. Irène Hors, Adviser to the Secretary General, CDRF, and Mr. Du Zhixin, Senior Program Officer, CDRF, put forward the original idea of the project, ensured coordination with the Chinese partners and provided useful background information. Whilst China, as a whole, is less urbanised than OECD countries, it nonetheless has the world’s largest urban population, with over 600 million urban citizens today. Although the scale of China’s urbanisation and the growing number of metropolitan regions where this urbanisation is concentrated are unprecedented globally, issues confronting all levels of government in managing this growth are not unique. Most OECD countries have faced a wide range of urban management challenges, and are continuing to acquire valuable experience in doing so. This report provides a synthesis of trends in urbanisation and urban policies in OECD countries. One of the key messages for China is that a successful urban development strategy should build upon each urban region’s endogenous attributes, i.e. not only the mortar and bricks of infrastructure, but also the knowledge and skills of workers, and the social capital needed to trigger and sustain innovation. Therefore, for countries like China, it might make sense to focus on efficiency issues in the provision of public services; strategic infrastructure; human capital formation and integration; and economic growth/diversification and agglomeration strategies. The report has been produced and coordinated by Ms. Lamia Kamal-Chaoui, Head of Urban Unit, OECD’s Regional Competitiveness and Governance Division, in collaboration with Javier Sanchez-Reaza, Tadashi Matsumuto, Olaf Merk, Daniel Sanchez-Serra, Mario Piacentini, Alexis Robert, Dorothee Allain-Dupré and Michael Donovan, Xiao Wang and Kasuko Ishigaki. The findings draw upon various OECD Territorial Reviews of National, Regional and Urban areas, as well as OECD synthesis reports on regional policies, in particular Regions Matter (2009) and Competitive Cities in the Global Economy (2006). The report has also benefitted from background contributions from Professor Paul Cheshire (London School of Economics), Colin Crouch (University of Warwick Business School) and Adam Ostry (Chair, OECD Working Party on Territorial Development Policy Issues in Urban Areas, and Director, Infrastructure Canada). Further enquiries about OECD urban development programme should be addressed to Lamia Kamal- Chaoui ([email protected]) Further enquiries about CDRF’s work on urbanisation in China should be addressed to Du Zhixin ([email protected]) Mario Pezzini, Deputy Director, OECD Directorate for Lu Mai, Secretary General, CDRF Public Governance and Territorial Development 1 TABLE OF CONTENTS Introduction ................................................................................................................................ 7 1. Trends in urbanisation in OECD countries ............................................................................ 8 1.1. What is ‘urban’? ............................................................................................................. 8 1.2. Trends in urbanisation .................................................................................................. 17 1.3. Stages, pattern and drivers of urbanisation................................................................... 28 2. Economic performance of urban areas ................................................................................. 34 3. Main factors of growth and decline ..................................................................................... 46 3.1. What are the main drivers of economic growth in urban areas? .................................. 46 3.2. Social disparities, exclusion and poverty: the urban paradox ...................................... 54 3.3. Negative externalities of urbanisation .......................................................................... 56 4. Strategies and trends in urban policies ................................................................................. 66 4.1. Urbanisation, market forces and strategic planning ..................................................... 66 4.2. Recent trends in urban policies in OECD countries ..................................................... 72 4.3. Urban areas and the new paradigm for regional development in OECD countries ..... 80 5. Land policy and strategic urban planning ............................................................................ 83 5.1. Legal and technical tools for efficient land markets .................................................... 85 5.2. Using land values for urban infrastructure financing ................................................... 93 5.3. Managing urban growth ............................................................................................... 95 6. Building up competitive cities............................................................................................ 106 6.1. Fostering competitiveness and innovation in urban regions ...................................... 106 6.2. Fostering city competitiveness whilst ensuring that others do not fall into neglect ... 123 7. Problems of the social environment ................................................................................... 128 7.2. Affordable housing ..................................................................................................... 129 7.2. Integration in the labour markets ................................................................................ 138 7.3. Integrated urban development for distressed neighbourhoods ................................... 141 8. Climate change and environmental damage ....................................................................... 145 8.1. Urban policies to address climate change and urban sustainability ........................... 146 8.2. National-local policy frameworks .............................................................................. 158 8.3. Incorporating climate change into existing national, regional and urban development frameworks ........................................................................................... 161 9. Innovated urban governance ............................................................................................. 163 9.1. Main rationale for improving urban governance ........................................................ 163 9.2. Horizontal co-ordination within urban areas .............................................................. 164 9.3. Enhancing local capacity ............................................................................................ 168 9.4. Beyond the public sphere: involving the private sector in the supply of public goods .......................................................................................................................... 173 9.5. Effective multi-level governance ............................................................................... 174 10. Sustainable urban finance................................................................................................. 180 10.1. Traditional and new funding mechanisms for cities ................................................... 180 10.2. Financing urban infrastructure ................................................................................... 183 10.3. Cost recovery policies for urban services ................................................................... 185 10.4. Experiences of OECD countries with local debt and borrowing................................ 186 10.5. Experiences with public-private partnerships in OECD countries ............................. 187 3 10.6. Monitoring performance of local services .................................................................. 187 Conclusions and suggestions for a Chinese urbanisation strategy ......................................... 188 A- Contextual Assumptions................................................................................................ 189 B- Policy Approaches ......................................................................................................... 192 C- Governance and Finance ............................................................................................... 202 BIBLIOGRAPHY ...................................................................................................................... 206 Tables Table 1. Urban sprawl and decentralisation........................................................................ 30 Table 2. China’s cities and towns by population size, 2005 ............................................... 45 Table 3. National urban policies in a sample of OECD countries ...................................... 73 Table 4. Old and new paradigms of regional
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