World Bank’s ‘World Development Report’ deals with importance of ‘place’ for prosperity

By Nizla Naizer
In order for the country to prosper, Sri Lankan policy makers should focus on developing the economy of the major cities, World Bank World Development Report Director and Europe and Central Asia Chief Economist, Indermit S. Gill said yesterday.
“From our studies we see that no country goes to a high income level unless it is urbanised,” he said at a press conference outlining the World Development Report, “Sri Lanka already has the groundwork laid for proper urbanisation. It is up to the policy makers to incorporate proper changes to policy to develop economic activity in the cities further, to ensure growth overall.”
He is in Colombo to highlight these issues to the policy makers this week and is confident that the new paradigm for development will be beneficial to the country.
Density, Distance and Division
The need for increasing economic density, reducing distance to opportunity and decreasing the division between countries to bringing about economic prosperity are the key elements highlighted by the ‘World Development Report (WDR) 2009, Reshaping Economic Geography’. “You don’t want to spread economic production within the country if keeping it in the urban areas is going to lead to the country’s prosperity,” Gill informed, “But you must spread social services to the rural areas such as schools, security, streets and sanitation.”
“The world’s most geographically disadvantaged people know all too well that growth does not come to every place at once,” he stated. “Markets favor some places over others. To fight this concentration is tantamount to fighting prosperity. Governments should facilitate the geographic concentration of production.”
Rising densities, reduced distances and fewer divisions are the prerequisites for progress, according to the WDR and Gill states that it is inevitable for people to move from the villages to the cities to leave poverty behind. “The policy must ensure that there is enough economic activity within the city to sustain these people who migrate. A lesson learnt from Mumbai, which failed to invest in its people and infrastructure and now has 50% of its population living in slums.”
Cities should be complementary
While explaining that the Western Province in Sri Lanka had the highest economic density, it also has the highest density of poor people living within the island. Sri Lanka has seen 1.5 million (45% of the population) as internal migrants to the Western Province, the most economically dense province in the region. Also, the Western Province adds 76% of industrial value with 30% of the country’s total industrial establishments. Some may see the growth of the Western Province as cause for alarm but Gill states that it’s important to see large, medium and small cities as complementary and not as substitutes. “Also it is important for leading and lagging regions to integrate. Successful cities in the world have reached that stage due to proper planning between the central, state and city authorities.”
When asked the future of development when countries are straining under the global recession, Gill informed that in these times of global slowdowns, it’s important for integration within the region to increase and improve. “This is not the time to turn inward or be protectionist. It is the time to integrate with the region and for the stronger economies to be more inclusive in their policy making.” The South Asian region is the least integrated region in the world, and Gill stated that there is opportunity for Sri Lanka to develop further through economic activity within the region.