Reshaping Economic Geography; World Development Report 2009

This new edition of the World Development Report will be of particular interest to those working on urban issues. Its main theme is the spatial aspects of economic development, including the importance of place (where a person is born or lives or moves to) for people’s welfare. But it also assembles evidence of the importance of urbanization and large cities for economic success in any nation or region and, potentially, for addressing other aspects of development. It focuses particularly on disparities in incomes and living standards not only between nations but also within nations. It puts forward evidence to support the point that “…as economies grow from low to high income, production becomes more concentrated spatially. Some places – cities, coastal areas and connected countries – are more favoured by producers. As countries develop, the most successful ones also institute policies that make living standards of people more uniform across space” (page 1). Thus, among “successful” nations, location matters less for people – for instance, as disparities in living standards are reduced.

After an overview, the book is divided into three main sections. Part 1 focuses on three spatial dimensions to economic development. The first is density and the reasons why production concentrates in particular cities; also the importance of this concentration for local and national economic success. This section includes the construction of an agglomeration index based on a uniform definition of what constitutes an urban area (unlike conventional urban statistics, which are based on each country’s definitions, with such definitions varying a lot). When applied to nations, this shows that some have agglomeration indices well below their level of urbanization (Argentina, Brazil, Tunisia, Russian Federation), while others have agglomeration indices far above their level of urbanization (including Bangladesh, Sri Lanka, India, Vietnam and Egypt). Perhaps not surprisingly, many of the nations with agglomeration indices far above their level of urbanization are also nations known to have urban definitions that understate the scale of their urban population. The second spatial dimension discussed is distance, in the sense of each place’s distance from markets; this is much more than physical distance, as it includes all the physical constraints (poor quality roads and railways) and political and institutional constraints within nations (including the inefficiency of ports, the need for illegal payments to be allowed to move goods….). The third spatial dimension is division, the constraints on producers being able to export goods, including those imposed by other nations. These points are illustrated with many case studies and analyses of changes in the spatial distribution of people and production. Part 2 focuses on what shapes economic geography – for instance, the scale economies and how these underpin large urban agglomerations, factor mobility and migration, and the influence of transport costs – and how these interact and help shape urbanization. This includes a detailed discussion of the many different kinds of economies of scale (a table lists and describes 12 of these); and also many examples of cities that have thrived and the reasons why. The report also highlights the importance of labour mobility for economic development, and how barriers to such mobility constrain economic success and poverty reduction. Part 3 is on “Reframing the policy debates” and considers what policy makers can do to address “the three big challenges”: a billion people living in slums; a billion people living in remote and underserved areas; and the “bottom billion” in terms of income per person. The title of the final chapter, “Winners without borders – integrating poor countries with world markets”, summarizes the report’s main conclusions.