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K. CHOE and A. LAQUIAN


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2008 Asian Development Bank

All rights reserved. Published 2008.Printed in the Philippines.

Publication Stock No. BBK123508ISBN 978-971-561-697-3

Cataloging-In-Publication Data

Asian Development Bank.

City cluster development: toward an urban-led development strategy or Asia.Mandaluyong City, Phil.: Asian Development Bank, 2008.

1. Urban development. 2. City-cluster development. 3. Asia.I. Asian Development Bank.

The views expressed in this book are those o the authors and do not necessarilyreect the views and policies o the Asian Development Bank (ADB) or its Board oGovernors or the governments they represent.

ADB does not guarantee the accuracy o the data included in this publication andaccepts no responsibility or any consequence o their use.

Use o the term country does not imply any judgment by the authors or ADB as tothe legal or other status o any territorial entity.

ADB encourages printing or copying inormation exclusively or personal and non-commercial use with proper acknowledgment o ADB. Users are restricted romreselling, redistributing, or creating derivative works or commercial purposes withoutthe express, written consent o ADB.

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Foreword

When the Asian Development Bank (ADB) was establishedin the 1960s, only 20% o Asias population lived in cities. Aterour decades, this share has doubled, more cities and towns haveagglomerated, and the fgure has risen quickly. Urbanization willincrease rom 38% in 2003 to 55% by 2030. Urbanizing Asia in the

new millennium takes dierent patterns rom the conventional urbandevelopment theories projected. There is growing recognition thatthe urbanrural dichotomy deeply ingrained in planning systems isinadequate or dealing with Asias urbanization patterns. Consideringthat urban centers are hubs or economic growth and service centersor surrounding areas, and that almost all inrastructure lies withinor is linked, sustainable urban development and environmentmanagement o urban regions will become a major challenge in

years to come. Urbanizing Asia in the 21st century requires a resh

look at urban development. ADB has a role to play in this area. To increase eectiveness in pursuing inclusive growth under

ADBs Long-Term Strategic Framework 2020, the urban communityo practice in ADB views that urban development activities shouldalso include more rigorous knowledge sharing with developingmember countries by disseminating good practices and innovativedevelopment tools and approaches. In this regard, the urbancommunity o practice o ADB initiates the Urban DevelopmentSeries to spearhead knowledge contribution toward the challenging

urbanization contexts o Asia and the Pacifc. This book is the frsto such a series.

We hope this series will encourage discussion on the sustain-able development o Asian cities, and help develop orward-lookingurban policies and practices to manage the challenges ahead.

Hun KimChair, Urban Community o Practice

Asian Development Bank


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Acknowledgments

We grateully acknowledge the assistance o the ollowing individuals in preparing this City Cluster Development Study. Fromthe World Bank: Emmanuel Jimenez, Larry Hannah, and JulieViloria. In India: Vinod Tewari o The Energy and ResourcesInstitute, New Delhi; A. Bandhopadhyay, commissioner, Kolkata

Municipal Corporation; Mahesh Hiremath, chie engineer,KUIDFC, Government o Karnataka; and Roopa Purushothaman,Future Capital Research, Mumbai. We also thank the ollowing peerreviewers rom the Asian Development Bank staFlorian Stein-berg, Mike Lindfeld, and Sekhar Bonuwho careully read themanuscripts and provided valuable comments. Manuscript editing

was done by Caroline Herrick. Ma. Priscila P. Del Rosario and MurielOrdoez assisted with editorial matters; Au Ables coordinatedlayout and graphics; and Vic Angeles assisted with production mat-

ters. Ma. Virginita A. Capulong provided overall coordination inproduction and publication.

Kyeong-Ae Kay ChoePrincipal Urban Development SpecialistSouth Asia Urban DivisionAsian Development [email protected]

Aprodicio A. LaquianProessor Emeritus o Community and Regional PlanningUniversity o British Columbia, Vancouver, [email protected]

August 2008


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Abbreviations

ADB Asian Development BankCCD city cluster developmentCNY yuanGDP gross domestic productLGB local government body

IT inormation technologyNGO nongovernment organizationOBA output-based aidPRC Peoples Republic o ChinaPPP private sector participationRs Indian rupeesSEZ special economic zoneSRSD sector review and strategy development

NOTE

In this report, $ reers to US dollars.


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Executive Summary

The Asian Development Banks (ADBs) recent adoption o a newlong-term strategy (Strategy 2020) to reduce poverty in develop-ing member countries through inclusive development and growth-promoting activities provides an excellent opportunity or achievingsustainable economic and social development through city cluster

development (CCD). Cluster-based development has become anincreasingly attractive topic during the last decade in the feldo business competitiveness and among economic developmentproessionals. CCD is an urban-led approach that enhances thedevelopmental potential o cities and towns within an urban regionby strategically linking their development felds through efcientprovision o urban inrastructure and services and innovative fnanc-ing techniques. Since ADB was launched in 1966, Asia has urbanizedrapidly, and it is projected to become 55% urban by 2030. Asia already

has more than hal o the worlds megacities, and city clusters madeup o small and medium-sized cities are growing at a aster rate inAsia than elsewhere. The approach can be strategically used to sparkoverall economic growth with the use o modalities such as

prioritized investments in urban inrastructure and servicesby governments and the private sector;long term comprehensive development planning thatencompasses whole urban regions;

innovative fnancing schemes, including publicprivate

partnerships, domestic and oreign investments, newrevenue sources through taxation reorms, levying o usercharges, and new credit schemes;unlocking the value o land as an instrument o develop-ment and capturing increases in the value o land andproperty because o the improved inrastructure provision;establishing clustered economic development zones, high-tech enclaves, and industrial parks as integral parts o CCD

schemes; andadopting innovative orms o urban region governance.


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This agship study traces the theoretical antecedents o CCDand analyzes its emergence in Asia. It proposes a ramework or

assessing the use o CCD as an urban-led strategy or economic andsocial development. It suggests various approaches that ADB canuse to encourage CCD among its developing member countries. Italso outlines a CCD approach or the development o selected urbanregions in India.


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Contents

Executive Summary vi

Background 1

City Cluster Development 7

Urban, Urbanization, and City Clusters 7

Views on the Role o Urbanization in Development 12Benefcial Aspects o Clustered Urbanization 14

City Cluster Development in Asia 21

Urban Corridors 22Megacity-Dominated Clusters 25Subnational City Clusters 29Transborder City Clusters 31Special Economic Zones and Other Enclaves

by Distinctive Functions 33

A Strategic Framework or City Cluster Development 37

Barriers to City Cluster Development and Measuresto Mitigate Them 38

Approaches or Developing City Clusters 50

A Road Map or Pursuing City Cluster DevelopmentInitiatives 61

Including Urban Sector Initiatives in Country

Development Strategies 63Identiying Potential Areas or CCD Initiatives 63Adopting a Set o Guidelines or Selecting Potential

CCD Projects 64Seeking and Using Local Expertise 66Mobilizing Financial Resources 67

Conclusions and Recommendations 69

Reerences 73

Appendix: City Cluster Development in India 79


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Background

The urban sector community at the Asian Devel-opment Bank (ADB) has identifed city clusterdevelopment (CCD) as a key strategy or urban-led development in developing member countries.CCD is a process o economic and social develop-

ment through which the built-up areas o a num-ber o human settlements become linked togetherunctionally, structurally, and spatially to orm anintegrated urban region. CCD occurs when theterritorial scopes o a number o adjoining citiesexpand until they create an urban corridor, asin the TokyoNagoyaYokohamaOsakaKyotoKobe Shinkansen, or bullet train, conurbationin Japan. It can arise rom the expansion o a

megacity that envelops adjoining small and inter-mediate-sized cities to orm a mega-urban region,as in Metro Manila, Jakarta, Delhi, or Karachi(Laquian 2005). It may take the orm o a sub-national city cluster made up o large and medi-um-sized cities in which no one city is dominant,as in the GuangzhouShenzhenHong KongMacau Pearl River Delta region in the PeoplesRepublic o China (Yeh et al. 2002). Some city

clusters have small cities that act as service centersor small towns, as in the NagaLegaspiIrigaDaet city cluster in the Philippines (Mangahas2006). Finally, some transborder city clusters haveadjoining cities located in separate nation-statesthat pursue common development initiatives, asin the SingaporeJohorRiau growth triangle inSoutheast Asia (Macleod and McGee 1996).

Finding the appropriate policy instru-

ments (such as CCD) that deal with worseningurban problems is particularly important inAsia because the regions urban population isexpected to reach 2.7 billion, or about 55% o


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2 City Cluster Development

the world urban population, by 2030. This means that close to1 billion people (or 48 million per year) will be added to Asias

urban population over the next two decades. More than hal o theworlds megacities (agglomerations with populations o 10 millionor more) are in Asia. The proportion o Asian megacity residentsto total urban population worldwide has risen rom 5% in 1960 to10% in 2000. In 1950, Asia had only one large city; by 2015, it isprojected to have 23 cities (population size 5 million or above). In1950, 6 million people lived in large cities; by 2015, that number isprojected to increase to 160 million. The astest urban growth ratesin Asia (occurring in small cities with less than 500,000 people) are

o ar greater concern. In 1975, about 12% o urban populations inthe region were living in small cities; this proportion increased to19% in 2000 and is projected to increase to 22% by 2015 (UnitedNations 2007).1

In many Asian megacities, the built-up area has sprawled intosurrounding regions engulfng villages, small towns, and othercities to create what have been called extended metropolitan regions(McGee 1995). As the outward thrust o urban agglomerations hasspread, they have linked up with the territories o other cities to

create city clusters. A planned development o city clusters is im-portant because cities and towns generally unction as engines oeconomic growth and the principal agents or socioeconomic trans-ormation. However, empirical evidence shows that in Asia andother developing regions, the capacity o these engines to generatepositive change is critically hampered by poor inrastructure andservices, weak fnancial bases, and inefcient governance and urbanmanagement mechanisms. Asian urban institutions are unable tocope with the complex problems conronted by urban areas, not

the least o which is that 200 million poor people already live inADBs developing member countries (DMCs). The costs o provid-ing urban inrastructure and services are daunting. ADB estimatesits DMCs will need around $60 billion per year between 2006 and2010 to provide adequate water supplies, sanitation, solid wastemanagement, shelters, urban roads, and transportation systems tomake cities unction optimally (ADB 2006).

1 The population fgures or Asian cities available rom the United Nations andother sources are based on ofcial country defnitions that are confned to ormalpolitical boundaries. There is demographic evidence, however, that these fguresare signifcantly undercounted because the spread o urban development actuallyextends way beyond ormal city boundaries.


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Since the end o World War II, the rapid growth o very largecities has been a major policy concern in most Asian countries. Alarmed

by the rapid growth o megacities, governments have pursued strat-egies to control their expansion. In the Peoples Republic o China(PRC) and Viet Nam, a household registration (hukou) system strictlycontrolled ruralurban migration and limited access to jobs, housing,and other benefts to bona fde urban residents. Metropolitan plansin Bangladesh, India, and Pakistan used greenbelts in an eort toconfne urban growth within specifed zones. Indonesia and the Phil-ippines issued identity cards to city residents that entitled them to cityservices denied to migrants. The Government o the Philippines gave

ree bus passes to urban migrants who agreed to return to their homevillages. In the PRC during the Great Proletarian Cultural Revolution(19661976), some urban residents were sent to rural areas to learnrom the peasants. In India, Pakistan, the Philippines, and Thailand,poor people living in inner-city slums were evicted and resettled insuburban colonies. Indonesia, Malaysia, Nepal, and Sri Lanka, openedresettlement areas and land development schemes in rontier areas todeect migration rom cities. India and the Republic o Korea createdgrowth centers and growth poles to act as counter-magnets to large

cities. In almost all Asian countries, basic urban services have beendenied to residents o slum and squatter communities, the argumentbeing that providing these services would be tantamount to reward-ing them or their illegal actions. It was also believed that helpingthe urban poor would only encourage more people to move to urbanareas, expanding slums.

Only in recent years have some Asian governments recognizedthe developmental role o cities, and adopted more proactive,urban-led strategies. This policy shit was based on the observation

that a countrys urbanization level (the proportion o the populationthat lives in cities and towns) is directly correlated with its level oeconomic growth. It is a act that the Asian countries and regionsthat are the most urbanized have the highest per capita gross domes-tic product (GDP). In 2006, Singapore and Hong Kong, Chinaboth 100% urbanhad per capita GDPs o $38,714 and $33,471,respectively. Japan, more than 80% urban, had a per capita GDP o$33,100 (purchasing power parity). In contrast, countries with lowurbanization levels, such as Bhutan (7.1%) and East Timor (7.5%),

had the lowest per capita GDPs. In the light o the positive relation-ship between urbanization levels and economic growth, some devel-opment specialists have advocated using accelerated urbanization asan instrument or stimulating overall economic growth.

Background 3


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Thus, instead o passively reacting to urban developmentproblemsincreasing urban population, urban sprawl, trafc con-

gestion, water shortages, and air and water pollutionthey advocatethe use o urban-led strategies to proactively spark economic andsocial development. For example, in the PRC, the Government hasinvested heavily in such urban inrastructure and services asroads and transportation, water, sewerage and sanitation, energygeneration and distribution, housing, and solid waste managementand concentrated these in selected coastal cities and regions, specialeconomic zones (SEZs), export processing zones, industrial parks,and high-tech parks. In India, the Jawaharlal Nehru National Urban

Renewal Mission has earmarked unds to augment urban inrastruc-ture and services in 63 cities. The Government o India has approvedthe establishment o SEZs, or example, Positra in Gujarat andNanguneri in Tamil Nadu. In Malaysia, the Government has pursueda clustered cities development strategy around Kuala Lumpur byestablishing the new cities o Putrajaya and Cyberjaya. The Govern-ment o the Philippines is developing the Manila-centered region bycreating a constellation o 22 chartered cities around Metro Manilaand setting up two SEZs in the ormer US military bases o Subic

Bay and Clark Air Force Base. These proactive strategies that usecity clusters as the leading edge or urban-region growth constitutean important paradigm shit in the feld o development.

The conceptual ramework o clusters was initiated byM. Porter (1990). Clusters are groups o companies and institutionsco-located in a specifc geographic region and linked by interdepen-dencies in providing a related group o products and/or services.2Cluster development is increasingly receiving attention globally3as one orm o economic development strategy involving business

clusters. Since it was frst proposed in 1990 by M. Porter, govern-ments and academics have come to see the concept as a means tostimulate urban and regional economic growth. Though the types oclusters can vary depending on which environment or context we areinterested in or strengthening business competitiveness, this study

2 This defnition is built-up based on M. Porters initial work (1990), by C. Ketels,Harvard Business School: The Development o the Cluster Concept: PresentExperiences and Further Development. A paper prepared or the Conerence onClusters, Duisburg, Germany, 5 December 2003.

3 C. Ketels (2003) provides simple statistics, indicating that there are more than300 entries or the last 3 years, and the cluster profle database at the Institute orStrategy and Competitiveness contains more than 800 entries rom 52 countries.


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ocuses on the geophysical space o urban areas and urbanization ortheir competitiveness and economic development.

Positive economic impacts o agglomerated city regions andtheir contributions to expediting growth should be tapped as oppor-tunities in the context o rapidly urbanizing Asian developingmember countries. This agship study is an initial, exploratory stepin pursuing city cluster development (CCD) as a strategy or ADBoperations. It attempts to defne and analyze the CCD process andlooks into the developmental potentials o CCD as it relates toAsian urbanization. Based on an analysis o how city clusters ormand develop, it explores strategic directions and makes a preliminary

market analysis o possible CCD initiatives in developing membercountries in Asia. Other objectives o the study are

to identiy and analyze potential challenges, critical issues,and constraints that may conront CCD as a policy inter-

vention instrument;to ormulate a long-term strategic ramework or pursuingCCD; andto explore, as a specifc case study, the applicability o the

CCD strategic ramework to India.

Background 5


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City ClusterDevelopment

Urban, Urbanization, and City Clusters

To better understand city cluster development(CCD), a clear distinction must be made betweenurban and urbanization.The traditional def-nition o urban is based on the number o peopleliving within a clearly demarcated area. Settle-ments with population density or size smallerthan the specifed cuto number are defned asrural unless they have special urban-like char-acteristics or are designated urban by law. CCD

goes beyond the boundary o an administra-tive jurisdiction, encompassing complex social,economic, and technological processes thatconstitute what has been called urbanization.According to Wirth, when people are concen-trated in a well-defned area, signifcant socioeco-nomic changes occur. These changes include

a shit rom agricultural production to

crats, commerce, manuacturing, indus-try, and services;separation o workplace rom residence;monetization o economic transactions;

weakening o amily and communityties; anda shit rom sacred to secular beliesystems (Wirth 1938).

The German geographer Walter Christallertheorized that there are laws that determinethe number, size, distribution, and clustering ordispersal o urban settlements (Christaller 1966).


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In analyzing how market unctions are carried out in urban settle-ments, he proposed that people are willing to travel only short

distances to get certain lower order goods and services (grocer-ies rom corner stores) while to obtain higher order goods (largeappliances rom specialty stores) they are willing to go arther. Theinuence o these consumer preerences on peoples behavior resultsin a system o urban centers o various sizes. Larger settlements (bigcities) oer a greater variety o higher-order goods and services.

There are ewer such large settlements, and the larger they are, thegreater is the tendency or them to be spread arther apart. Smallersettlements (villages and towns) are more numerous, oer mainly

lower-order goods, and tend to be clustered more closely together.Other things being equal, the emergence o central places resultsin the clustering o a hierarchy o urban settlements. O course, inactual practice, the confguration o urban settlements in a clusterdepends on local actors, including topography, climate, availabletransport modes, technological acilities, and the personal preer-ences o consumers.

A number o economists and geographers have analyzed howspecifc types o industries tend to cluster together to achieve maxi-

mum competitiveness (Audretsch and Feldman 1996, Held 1996,Lindfeld 1998, Porter 1990, Roberts 1998). Cluster analysis hasshown that some industries (such as car assembly plants) orm verti-cal and horizontal linkages with other industries that supply theirinputs or market and sell their products. What has been less under-stood in cluster analysis, however, has been how urban inrastructureand services can be linked to industry clusters to create productivenodes in urban areas (Roberts 1997, Roberts and Lindfeld 2000).In the past, enterprises tended to aggregate in development nodes

that were in turn linked to other nodes to orm easily identifableclusters. In recent years, however, most industries linked to rapidurbanization are inuenced by global orces that avor specializa-tion and depend on widely dispersed networks rather than on linearprocesses like supply chains. One challenge in the use o city clusterdevelopment as a developmental policy tool, thereore, is to seehow cluster analysis that is ocused on industries can be linked toinrastructure provision to enhance the development o whole urbanregions.

In urban and regional planning, the emergence o city clusters islinked to the concept o an urban feld, which is composed o theeconomic and social inuences emanating rom a particular city. Asdescribed by John Friedmann (1992).


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. . . . urban felds typically extend outward rom the city core toa distance o more than 100 km; they include the citys airport,

new industrial estates, watersheds, recreation areas, water andsewerage treatment acilities, intensive vegetable gardens,outlying new urban districts, already existing smaller cities,power plants, petroleum refneries, and so orth, all o whichare essential to the citys smooth unctioning. City regions onthis scale can now have millions o inhabitants, some o themrivaling medium-sized countries. This space o unctional/economic relations may all entirely within a single political/administrative space . . . More likely, however, it will cut across

and overlap with a number o . . . political administrative spaceso cities, counties, districts, towns, provinces, etc.

T.G. McGee (1995), noting the unique eatures o Asianurban agglomerations, has coined the term desakota development todescribe their growth, combining the Bahasa terms desa (village) andkota (city) to describe their mixed ruralurban characteristics. Hehas observed that these urban regions tended to

. . . . produce an amorphous and amoeba-like spatial orm withno set boundaries or geographic extent . . . their radii some-times stretching 75 to 100 km rom the urban core. The entireterritorycomprising the central city, the developments

within the transportation corridors, the satellite towns andother projects in the peri-urban ringeis emerging asa single, economically integrated mega-urban region orextended metropolitan area.

Linking urban development to globalization, Saskia Sassen (1991)has observed that traditional studies o urban systems usually take thenation-state as the unit o analysis. However, she argues that withthe emergence o very large global cities like London, New York,and Tokyo, a globally networked urban system has become a moresignifcant economic and social reality. These very large global citiesserve as major centers o capital, technological innovation, proessionaland management expertise, and communications. They also becomecenters or oreign frms operating in ar-ung international markets.

They provide complex producer services and perorm a multiplicity ounctions. Despite their global signifcance, however, the provision oinrastructure and services in these large cities continues to be linkedto clusters o human settlements in their immediate regions.


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Peter Hall has noted that present-day urban systems have beenprooundly aected by globalization and the widespread use o com-

munications technology. Production has been dispersed in space, andeconomic activities have shited rom manuacturing and industrialsites to centers o advanced services. These services include

fnancial and business services, like banking and insurance,and commercial services, like law, accounting, advertising,and public relations;command and control unctions carried out by govern-ments, transnational corporations, and international orga-

nizations;creative and cultural industries, like the perorming artsand print and electronic media; andtourism activities, including hotels, restaurants, and enter-tainment.

Hall (2003) observes that although these advanced service unc-tions tend to disperse, they eventually aggregate in space becausethey are highly synergistic with each other. Interestingly, despite

their heavy reliance on impersonal inormation technology, residentso Silicon Valleytype urban settlements require intensive ace-to-ace interactions. Thus, they create people-centered city clustersocused on new service unctions.

At the national level, a recent comparative study o 14 Asianmegacities noted that although the inner-city populations o thosecities have not been growing as rapidly as in the past, the populationshave actually been expanding rapidly at the edges o the megacitiesand taking over cities, towns, villages, and other rural settlements to

orm mega-urban regions (Laquian 2005). Despite the eorts o cityauthorities to limit urban expansion, built-up areas have continuedto spread outward. In some areas, outward growth has taken the ormo a spreading pancake pattern. In others, urban development hascreated string developments along arterial highways or rapid transitlines, orming a palm and fngers confguration. Some mega-urbanregions have taken a linear orm, creating an urban corridor like theone that extends between Tokyo and Osaka. Others are dominatedby megacities like the Bangkok, Delhi, Jakarta, Manila, and Seoul

(Figure 1).City clusters are orming at the subnational level, or example,the GuangzhouShenzhenMacau agglomeration in the PeoplesRepublic o China (PRC). Although city clusters around develop-


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ment corridors and megacities are prominent in Asia, many morecity clusters in the region are actually made up o cities with popula-

tions o less than 1 million. To appreciate the development potentialo city clusters, it is important to go beyond the size o cities (asmeasured by population) and consider the relative economic unc-tion, power and inuence o a city within the context o the nationalurban hierarchy and provincial development. The economic, politi-cal, and social characteristics o a city are important considerations inits potential or CCD. This is especially the case in Asian countriesthat have small populations, including the Lao Peoples DemocraticRepublic (5.7 million), Timor-Leste (952,618), Bhutan (672,425),

and Brunei Darussalam (350,898), where national capitals and theiradjoining towns and other settlements play a vital role in the devel-opment o the whole country.

Figure 1: Asias Mega-Urban Regions

Source: Laquian 2005. Karachi, Delhi, Mumbai, Calcutta, Dhaka, Manila,Shanghai, Beijing, Osaka, Tokyo, Seoul, Hongkong, Bangkok, and Jakarta.

In general, most city clusters in Asia have been the productso economic and social processes that spontaneously pushed urbandevelopment outward rom an urban core. Urban planning andmanagement approaches have traditionally been reactive, respond-


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ing to problems only when they arose. More recently, however,some countries have been adopting such proactive urban strategies

as CCD, which are designed to drive economic growth throughurbanization. An example o this approach is the one hour devel-opment circle plan or Chongqing, in Sichuan province. The planencompasses 28,700 square kilometers (km2), roughly the area o acircle the radius o which is the distance a car can travel in 1 hourrom the center o the city. Within this area is the city o Chongqingas well as 23 districts that orm a cluster o urban settlements aroundit. While the city proper o Chongqing is projected to have a popu-lation o 7.9 million by 2010, the whole city cluster is expected to

have a population o 22 million by then. The plan1

envisions that by2015 the whole urban region will become a xiaokang,or all aroundwell-o society, with an annual income per capita o CNY77,300(Zhao 2007).

Views on the Role o Urbanization in Development

When ADB was established in 1966, rural development was the

dominant concern o policy makers. Poverty was perceived asbeing most acute in villages and rural areas, so programs on howto increase crop production, extend arm credit, improve agricul-tural marketing, and build arm-to-market roads were pursued.Most bilateral aid agencies and multilateral fnancial institutionsconcentrated assistance on developing miracle rice and hybrid corn

varieties, improved irrigation systems, postharvest technology, andarm mechanization. National governments launched developmentprograms to improve peoples lives in rural areas. The tacit assump-

tion behind these development strategies was that i people in thevillages and rural areas had a good lie, they would not ock to thebig cities.

The ip side to those rural development strategies was a stronglyheld negative view o urbanization. Urbanization in Asia was called

1 According to the plan, the zone in the core o the circle will be devoted tomanuacturing and industry (Chongqing became the center o the arms industryin the PRC when the Government moved military plants to the interior so thatthey would be ar rom the more vulnerable coastal cities). The districts in thenortheastern part o the circle will be developed as an ecological zone devoted toagriculture and ood processing. The southeastern zone districts will be developedor ecotourism.


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pseudo-urbanization because the growth o cities in Asia was notaccompanied by advancements in manuacturing and industry as it

was in Europe and North America (McGee 1967). The outwardgrowth o big cities in Asia was called premature suburbanizationbecause it was mainly a result o the spontaneous movement or orcedeviction o squatters and slum dwellers to outlying areas, in contrastto the United States, where the outward growth o suburbs was aresult o the upward mobility o ormer city dwellers (Breese 1966).

The exploding cities in developing countries were associated withsquatters and slum dwellers; environmental pollution; crime, drugaddiction, and other vices; and personal and social disorganization

(Wilsher and Richter 1975). In almost all Asian countries, govern-ments used restrictive and punitive policies and programs to stop orreverse urban growth.

For a while, it looked like the anti-urban policies were work-ing. During the late 1980s, demographers observed that the growthrates o megacities were slowing down and that many inner-cityareas were losing population. The term urbanization reversal wascoined to describe this phenomenon, and policy makers who hadexpressed alarm over the growing problems o megacities welcomed

the demographic shit. Closer analysis o megacity growth patternssuggest, however, that although the growth rates o populationsliving within the ormal boundaries o cities and statistically defnedmetropolitan areas were declining, suburban areas were continuingto grow. In act, urban growth was engulfng rural areas and smallerurban centers and creating sprawling city clusters.

As urban settlements continued to grow in Asia and otherdeveloping regions, a shit away rom the perception o cities assources o economic and social problems started to emerge. During

the early 1990s, the anti-urban bias was gradually replaced by a morepositive view o cities. This shit was reected in the 1996 GlobalReport on Human Settlements, in which it was observed that

Urbanization has been an essential part o most nationsdevelopment towards a stronger and more stable economy.

The countries in the South that urbanized most rapidly inthe last 1020 years are generally those with the most rapideconomic growth. Most o the worlds largest cities are in the

worlds largest economies, which is urther evidence o thislink between economic wealth and cities. Cities and townsalso have important roles in social transormation. They arecenters o artistic, scientifc and technological innovations,


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o culture and education. The history o cities and towns isinexorably linked to that o civilization in general (UN Centre

or Human Settlements [Habitat] 1996).

Some economists have explained why cities play an importantrole in development. Cities provide economies o scale, agglom-eration, and location; they provide efcient inrastructure andservices by concentrating in one place investments in transporta-tion, communications, and power and water supplies. They attracta pool o labor that makes specialization in knowledge, skills, andmanagement capabilities possible. They oer a large number o

goods suppliers, diversifed fnancial and commercial services,venture capital, and access to inormation on oreign markets andtechnologies. They also provide a diversifed marketplace in whichcompetition sets the optimal prices among producers and sellers(Hamer 1994).

Economists have observed that restrictive policies andprograms inhibited economic development in many Asian cities.Forcities to be transormed into engines o economic growth, they needadequate and assured energy supplies or industry, manuacturing,

commerce, and labors. They require delivery o a reliable supply osae water and a sewerage and drainage system to dispose o wasteand gray water. Solid waste and hazardous materials have to becollected and disposed o efciently and saely. Mobility o indi-

viduals and goods must be assured by modes o transportation thatrespond to the needs o all sectors o society and do not pollutethe environment (Tiwari 2002). Urban residents must be able tocommunicate efciently with each other and with individuals andfrms in other parts o the world. They must also have access to

comortable, aordable shelter. Urbanization is a process o creatingthe growth engine. I essential components o an urban engineare not provided or not well-equipped to run efciently, how can itspark and drive economic development?

Benefcial Aspects o Clustered Urbanization

ADBs adoption in 2007o a long-term strategy that seeks to reduce

poverty through inclusive development and growth-promotingactivities provides an excellent opportunity to make use o citycluster development as an instrument to achieve economic, social,and environmental goals. The experiences o a number o devel-


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oping member countries illustrate that well-ormulated and well-executed CCD can give rise to various benefts:

urban inrastructure and services provided in an integratedmanner or whole urban regions rather than or individualcities, towns, villages, and rural areas;availability o fnancial and other resources to develop

whole urban regions by developing common taxation stan-dards and operations throughout those regions, improvingthe credit rating o whole cities in the urban region, andsetting up a more equitable tax burden among cities, towns,

villages, and rural areas within the region;better opportunities or attracting private sector participa-tion in area-wide development projects, especially thoseinvolving urban inrastructure and services;improved capacity or dealing with urban problems, suchas environmental pollution that do not respect the politicaland administrative boundaries o individual cities, towns,

villages, and rural areas; andinclusive development or both urban and rural areas.

Integrated approach or providing urban inrastructure andservices. Basic inrastructure and services are crucial or urbandevelopment. However, there has been a tendency to set up suchinrastructure and services as single-sector projectsor example,constructing a road, setting up a solid-waste disposal acility, orestablishing a waterworks system or a single city. A review oexperiences in a number o developing member countries hasrevealed that a multisectoral approach that integrates dierent inra-

structure projects and encompasses all cities and towns in an urbancluster yields better results. This is because, by their very nature, someinrastructure and services require area-wide planning. For exam-ple, waterworks projects should take into consideration watershedmanagement, ground water management, ood management, damplanning and management, river basin management, irrigation anddrainage acilities, and environmental ow (Figure 2). Good gover-nance o water resources requires balanced management through-out, upstream and downstream, which usually goes beyond a citys

administrative boundary. Energy generation requires the construc-tion o massive dams, which are also used or ood control andprovide irrigation or agriculture. To unction eectively, suchprojects have to be efciently linked. Solid-waste disposal systems


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can provide energy generation through the use o incinerators, orproduce agricultural ertilizer through composting, i sufcient

volumes can be collected rom a city cluster. Such services can beprovided more cost-eectively i clustered cities act together. Becauseurban inrastructure and services are closely linked and require heavycapital investment, providing them in an integrated manner usinga CCD approach can help achieve economies o scale. Placing anumber o inrastructure elements and services under one manage-ment structure can even be more efcient. A good example is thePublic Utilities Board o Singapore, which develops and manages

water, electricity, and gas services; it not only provides efcient

services to all o Singapore but also sells 15% o its bulk water to theMalaysian state o Johor (ADB 1993).

Figure 2: An Ecosystem View o Water Management

Source: Laquian (2005).

Increasing the potentials o fnancial resources. In most Asiancountries, local government bodies are heavily dependent on

central and provincial or state governments or revenue and grants-in-aid. They have a limited tax base because they do not have com-plete control over developments in their jurisdictions. When localgovernment bodies are ragmented, developers can play one against


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another to gain undue advantages. In Delhi, or example, some pri-vate developers obtained tax privileges by manipulating competing

local ofcials (Gupta 2007). When local government bodies in acity region pursue revenue-raising operations individuallyeachlocal unit having its own tax ordinances and procedures or assess-ment, collection, und transmittal, and auditthey usually end upcompeting with each other and, as a result, get less revenue income.Small local governments with a weak tax basis tend to get lowercredit ratings. Thereore, i clustered local governments set up a jointrevenue-raising mechanism with common standards and operations,they will achieve higher levels o revenue by setting up a common

computerized system o assessment, adopting uniorm tax rates, andapplying standardized collection and tax reporting systems. Theseapproaches can also oster area-wide sharing o the tax burden andenhance equity. In North America, metropolitan governments haveound that when the component local government bodies in a citycluster pool their assets and other resources, they get a much high-er credit rating, which enables them to raise more capital or theconstruction o area-wide inrastructure. In countries where centralgovernments are reluctant to allow local governments to borrow

or inrastructure investments, either locally or in oreign markets,combining the eorts o local governments within a city cluster cangive them enough political clout to be allowed to borrow with or

without sovereign guarantees.

Enhancing opportunities or private sector participation. Theexperience in a number o developing member countries, includingthe PRC and Viet Nam, shows that when local government bod-ies in a city cluster cooperate and pursue an area-wide development

strategy, they are much more successul in attracting private sectorparticipation. For example, private sector investors consider at least apopulation o 200,000 in a single town beore considering investingin water supply projects.2 Both oreign and domestic investors wantto be assured o the commitment and serious intent o their localcounterparts, and, as shown in the cases o Shenzhen and Zhuhaiin the PRC, adopting a CCD approach is an excellent assurance oofcial resolve. A CCD plan can also allocate specifc areas orprivate sector participationsupported projects, as in the Sino-

2 Bidders Survey, conducted in 2007, or the Northern Karnataka Urban SectorInvestment Program Project (Loan 2312-India).


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Singapore Industrial Park in Suzhou, PRC, and can guarantee theprovision o area-wide inrastructure and services, as in the Singapore

JohorRiau growth triangle. Most important, the combined fnan-cial, material, and human resources achieved by common actions olocal units within a city cluster assure private sector investors thattheir public sector counterparts are solid.

Improving environmental protection approaches. One mainproblem caused by competition among local government bodiesis that because they are eager to achieve development goals withintheir individual jurisdictions, they neglect to look ater the common

good. For example, they allow industries to be built along water-ways without worrying about pollution in other jurisdictions down-stream, as in the case o the Pasig River in Metro Manila; they buildsuperhighways and inner-city roads with little concern or air pollu-tion; or they allow the construction o actories and housing projectsthat depend on surace water and the aquier without taking intoaccount that such wanton use o water resources harmsresidents oadjoining areas, as is the case in Greater Jakarta. One major advan-tage o a CCD approach is that it orces local government bodies to

take an area-wide look at the environmental and other impacts ospecifc actions. This has been reected in the environmental programspursued in the DalianShenyang development corridor in the PRCsLiaoning province (Laquian 2006).

Fostering inclusive development. A key beneft o CCD is thatit osters inclusive development. The term urban oten limitsdevelopment ocus within cities, towns, or urban areas, whileignoring adjacent surroundings (peri-urban) or rural areas. Urban

and rural economies are like a symbiotic relationship, but urbandevelopment tends to dichotomize urban against rural areas. CCDpromotes sharing development benefts with rural and peri-urbanareas by including the patches o rural areas between the cities ina city cluster or an urban feld. For example, most Asian cities areplagued with communities o urban poor, who are orced to livein such marginal or dangerous areas as riverbanks, steep hills, orrailroad tracks. Local authorities oten carry out slum eradicationprograms that simply raze shanties and orce poor people to relo-

cate outside the city boundaries. Even when the poor build theirshanties in undesirable places, they can be arbitrarily displaced. InMetro Manila, squatter communities are periodically bulldozed andno provisions are made or their residents despite a law stating that


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evicted amilies should be provided with housing and amenitiesat an alternative site. In Delhi, some entrepreneurs have displaced

slum dwellers and set up plants in the areas they once occupied. Thisprocess called degenerated peripherilization has been criticized asdetrimental to the development o the whole city, especially sincethe sites in question were not earmarked or industrial developmentin Delhis master plan (Kundu 2007).

When properly ormulated, a CCD plan can include acomprehensive program or upgrading shelters and rural communi-ties within a whole city region. It can designate inner-city areas tobe upgraded as well as sites or upgraded housing and basic inra-

structure and services. It can provide jobs or the rural poor residingin between the city clusters, as well as aordable and convenientmeans o transportation or them. In a comprehensive review o 26community-upgrading projects supported by ADB and the WorldBank in 11 Asian countries, Basil van Horen (2007) concludedthatin addition to inrastructure provisioninstitutional reormssuch as improvement o the regulatory ramework, integration oslums into the whole urban abric, improved access to fnance andcredit, more eective environmental management, and the estab-

lishment o area-wide metropolitan governance were necessaryingredients or a community-upgrading policy ramework.


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City ClusterDevelopmentin Asia

Although many city clusters have emerged inAsia, the process by which a number o urbancenters expand and take over adjoining settle-ments, thereby creating an integrated urbanregion, is not unique to the Asian region. As earlyas 89 BC, the patrician citizen-soldiers o Romeconquered surrounding cities, connected themby roads, and ormed the nucleus o the capi-

tal o the Roman Empire. In the 17th century,when Philip II transerred the capital o Spainrom Toledo to Madrid, the new capital cityenguled nearby towns that later became cities, orexample, Aranjuez, Avila, and Segovia. During the19th century, Baron Haussmanns plan or theexpansion o Paris added eight arrondissements,or municipal boroughs, to the citys original 12,creating city clusters around the main city. In

the United States, the growth o Boston, NewYork, and Washington, DC, resulted in a clustero large cities that Jean Gottman called a mega-lopolis (Gottman 1961). Gottman also identi-fed the Great Lakes Megalopolis, which runsrom Chicago to Pittsburgh and includes thecities o Bualo, Cleveland, and Detroit, and hedescribed another urban corridor, in the UnitedStates west, stretching rom San Francisco to

San Diego.City clusters in Asia, as in other parts othe world, have been shaped by networks oinrastructure and services. In such older cities as


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Beijing and Delhi, inrastructure and services were reactively pro-vided to accommodate the expansion o built-up areas. In recent

years, however, some governments have proactively built inra-structure and services ahead o the development o built-up areas,thereby inuencing the size and shape o city clusters in a planned

way. A ew have set up special economic zones and industrial parksto lead the way in the ormation o city clusters. Although theindividual cities are usually bound by clearly defned territories, theireconomic and social inuences extend to other parts o the region.As a result, planning dierent types o linkages has enhancedCCD. CCD has also been energized by such economic orces as

the linking o industrial clusters, such as in the case o Ho ChiMinh City; enhanced production and manuacturing acilities;and expediting buying and selling, fnancial transers, and capitalows, such as in the case o Hong Kong, China, and Shenzhen.A ew Asian cities are now cooperating with neighboring munici-palities to ormulate comprehensive CCD plans or a whole urbanregion, but in most cases, each city or town has adopted its ownmaster plan, zoning codes, housing and building standards, andland use regulations.

City clusters in Asia all into at least our types in terms ogeo-spatial orms: urban corridors, megacity-dominated clusters,subnational regional clusters, and transborder clusters. By its unc-tion, CCD involving industrial parks or economic special zonescould be added as another typology, though largely it could all underany o the our types in geo-spatial terms. These types o clusters aredistinguished by their population, the geographic area theycover, planning and governance mechanisms, and their spheres oeconomic and social inuence in the context o the particular regions

where they are located. Although settlements within the clustersinitially developed as individual cities, those cities have been drawncloser by their economic and social links. In some cases, the built-upareas o the individual cities in the cluster have merged. In othercases, agricultural land, open space, and greenfelds still separatethe cities rom each other, but economic and social activities andcomprehensive regional plans integrate them into unctional clusters.

Urban Corridors

Urban corridors are made up o a number o large cities andmetropolitan areas linked together by shared urban inrastructure


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and services, economic interrelationships, and inormation net-works. Within a corridor are complex economic production, distri-

bution o goods, and fnancial and commercial activities. Economicrelationships linking governmental and private sector enterpriseswith each other abound. Cities in a cluster are connected to eachother, to the central city, and to urban centers in other parts o the

world by inormation technology networks. The backbone o anurban corridor is usually a major expressway, a rail line, or a combina-tion o the two. Examples o urban corridors include the TokyoYo-kohamaNagoyaOsakaKobeKyoto Shinkansen, or bullet train,corridor in Japan; the BeijingTianjinTangshan development corri-

dor in northeast Peoples Republic o China; and the MumbaiPunedevelopment corridor in India.

TokyoYokohamaNagoyaOsakaKobeKyoto Shinkansen Cor-ridor.The anchor o the Shinkansencorridor is the Greater Tokyoarea, which, with its 34.5 million people, has been the largestmetropolitan area in the world since 1965. Greater Tokyo, byitsel, is a city cluster made up o 23 special wards (ku), 26 cities (shi),5 towns (cho), and 8 villages (son), with a combined population o more

than 8 million. Yokohama, 30 km rom Tokyo, has a population o3.6 million. It is a major port and commercial hub o the GreaterTokyo area, although it is an incorporated city and the capital oKanagawa preecture. Nagoya is a port city with a metropolitanpopulation o 8.7 million, 2.1 million within Nagoya City proper.It is the capital o Aichi preecture and the center o the Chuburegion. Nagoyas economy is based on automobile manuacturing,spearheaded by the Toyota Motor Corporation, now the largest carmanuacturer in the world. Even i only the populations o the six

agglomerations on the Shinkansenline are counted, the populationin the whole corridor is estimated to be 66 million. I the residentso districts, towns, and villages clustered around the metropolitanareas are included, the corridor has more than 75 million people,or about 60% o the total population o Japan. Agglomeratedimpact achieved through city cluster development along the wholecorridor has been the main impetus or Japans dominant economicposition. Tokyo is acknowledged to be a global city, and it canbe said that, with the complementary development o the other

megacities, the whole Shinkansencorridor is now a global region.

BeijingTianjinTangshan Corridor. Development in north-east Peoples Republic o China has been astest in the so-called


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JingJinTang corridor, along the expressway that connectsBeijing with Tianjin and its port, Tanggu. The master plan or Beijingollows the urban clusters approach; it encompasses our inner-citydistricts, our adjacent suburban districts, two outer suburbandistricts, and eight counties. Beijing city proper, at one end o thecorridor, has a population o 6.5 million, and another 5 million peoplelive in 14 satellite towns and 140 nearby small towns. At the other endo the corridor is the port city o Tianjin, which has a population o9.9 million. Between these two large cities are nine special eco-

nomic zones and eight development zones. Two intermediate-sizedcities, Langang and Tangshan, are located along the expressway. Thetotal population along the corridor is estimated to be 36 million. Thecorridor successully links the trading port, special economic zones,

Figure 3: TokyoYokohamaNagoyaOsakaKobeKyotoShinkansen Corridor

Source: Laquian (2005).


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and the capital, and demonstrates that dierent economic unctionso each city can achieve better synergic impact o expediting eco-

nomic growth through clustered cities and towns along the corridor.

MumbaiPune Corridor. The MumbaiThaneNavi MumbaiKhopoliPimpriPune corridor is one o the most progressiveregions in India. It begins in the coastal city o Mumbai (ormerlyBombay), Indias largest metropolitan area, which has a popula-tion o 23.5 million. Within the Mumbai conurbation is the city o

Thane, located 30 km rom Mumbai. Thane is the administrativeheadquarters o Thane district and has a population o 1.4 million.

Also within the Mumbai conurbation is the city o Navi Mumbai(New Bombay), established in 1972, which now has 1.5 millionresidents and is one o Indias largest special economic zones. TheMumbai agglomeration is projected to be the second largest in the

world by 2015, with a population o 26.2 million. About 150 kmrom Mumbai is the city o Pune (ormerly Poona), capital o Punedistrict and the eighth-largest urban agglomeration in India, witha population o 4.5 million. The Pune urban area measures about700 km2 and consists o the PimpriChinchwad Municipal

Corporation and three cantonments (Khadki, Pune, and DehuRoad). Pune is a major industrial center in India and specializes inmotor vehicle production (Bajaj, DaimlerChrysler and Tata Motorshave manuacturing acilities there).In recent years, Pune has alsodeveloped a burgeoning sotware industry centered on such inor-mation technology (IT) parks as Rajiv Gandhi IT Park, MargapattaCyber City, Marisot IT Park, and Weikfeld IT Park; the sotwareindustry benefts rom the many high-level universities and technicalcolleges in the city region.

Megacity-Dominated Clusters

Megacity-dominated clusters have one very large city that inu-ences developments in an entire region, and surrounding cities,towns, and villages unction as mere satellites o the large city.Most o these urban clusters are ound in South and SoutheastAsia,where the large cities exert signifcant inuence in not only

the city region but also the whole country. Examples o megacity-dominated clusters include the National Capital Region o Delhi,the Karachi-centered mega-urban region in Pakistan, the Dhaka-centered mega-urban region in Bangladesh, the Metro Manila


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National Capital Region in the Philippines, the BangkokThonburimetropolitan region in Thailand, and the Jakarta-centered Jakarta

BogorTangerangBekasi region in Indonesia.

Greater Bangkok. Bangkok has been more successul thanother Asian cities in planning and managing outward expansion.

The Greater Bangkok Plan was ormulated in 1960 or an esti-mated population o 4.5 million by 1990. The population sharplyincreased with the absorption o Thonburi into Greater Bang-kok in 1970 and the annexation o parts o the adjoining prov-inces o Phra Nakorn and Thonburi in 1972. In 1980, the Bangkok

Metropolitan Region was established, absorbing urbanized areasin the provinces o Nakhon Pathom Nontaburi, Pathum Thani,Samut Prakan, and Samut Sakhon. While the United Nations proj-ects that Greater Bangkoks population will reach 9 million by 2010,

Thailands National Economic and Social Development Boardhas proposed an extended Bangkok Metropolitan Regionwitha projected population o 17 million by 2010by adding to theexisting metropolitan region urbanizing sections o the provinceso Ayutthaya, Chachoengsao, Chon Buri, Rayong, and Saraburi, to

the city cluster. Greater Bangkok dominates the countrys economy,contributing 44% o GDP with 25% o its total population 64 mil-lion (UN 2007).

The Metro Manila National Capital Region. In 1964, theMetro Manila National Capital Region (NCR) was composed oonly our cities and our towns. However, in the Philippines, citymayors and councils are vested with more powers than town mayors.Cities also generally have more income than towns, because towns

have to share their tax and other revenues with provinces while char-tered citiesdo not. While certain standards have to be met beorea town can be converted into a city (or example, population, percapita annual income), granting a city charter to a town is basicallya political act on the part o the Philippine Congress. Getting a citycharter has become so politically attractive that at present all but 1o the 23 local government areas within the Manila-centered NCRhave become chartered cities. Despite the presence o the MetroManila Development Authority, which deals with urban planning,

trafc management, and solid waste disposal, the cities clusteredin the Metro Manila NCR enjoy a great deal o autonomy, andsubsequently coordination o area-wide inrastructure and servicesis largely ineective. Some urban planners have suggested that the


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Manila-centered region already extends to the urbanized sections othe provinces o Batangas, Cavite, Laguna, Quezon, and Rizal, and

that the total population o the NCR is more than 30 million.

Figure 4: The Metro Manila National Capital Region

Source: Laquian (2005)

Greater Jakarta. The Greater Jakarta mega-urban region ismade up o entities rom three jurisdictional levels: the SpecialRegion o the National Capital o Jakarta, locally reerred to asDaerah Khusus Ibukota,or DKI Jakarta, which has the status o a


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province in the Indonesian system; the municipalities (kotamadya)o Bogor and Tangerang; and the districts or regencies (kabupaten)

o Bogor, Tangerang, and Bekasi. The municipalities and districtsthat cluster around DKI Jakarta belong to the province o West Java,which has been resisting the expansion o DKI into its territory. Theprovince has pursued its own urban development plans by approvingthe establishment o special economic zones and industrial estateson the outskirts o DKI. Eorts to rationally plan the spread o thesettlements in the city cluster generally reerred to as the JakartaBogorTangerangBekasi region have been made,but political andadministrative ragmentations have rustrated them. Meanwhile,

the feld o inuence o the Greater Jakarta mega-urban region isar beyond the geophysical sphere and is believed to have reached200 km away to the city o Bandung (Dharmapatni and Firman 1995).

Delhi National Capital Region. The Delhi National Capital Re-gion (NCR) covers 33,578 km2, which includes the Union Territoryo Delhi (1,483 km2); the Haryana subregion (13,413 km2), whichcomprises Faridabad, Gurgaon, Jhajjar, Mewat, Panipat Rewari,Rohtak, and Sonepat districts; the Rajasthan subregion (7,829 km2),

which is made up o the whole o Alwar district; and the UttarPradesh subregion (10,853 km2), which comprises Baghpat,Bulandshahr, Ghaziabad, Gautam Budh Nagar, and Meerutdistricts. While the United Nations estimated the population o theDelhi NCR at 15.0 million in 2005, the regional plan or the wholeregion set the 2001 population at 37.1 million, composed o 13.8million or the Union Territory, 8.6 or the Haryana subregion, 2.9or the Rajasthan subregion, and 11.5 or the Rajasthan subregion.

Within the NCR are 3 metropolitan cities (Delhi, Faridabad, and

Meerut); 14 districts; 66 tehsils (towns;108 other urban settlements with populations ranging rom 5,000 to 100,000; and 7,528 ruralsettlements (National Capital Region Planning Board, Delhi 2005).

Greater Karachi. Karachi is the largest city in Pakistan and thecapital o Sindh province. It was the national capital until 1958, whenthe Government moved the capital to Rawalpindi, and then movedthe capital to Islamabad in 1960. Greater Karachi covers 3,530 km2and has a population o 12.3 million, which is projected to increase

to 16.5 million by 2010. In 1976, Karachi had fve subdivisions. In2000, the Government o Pakistan abolished the subdivision andmerged the fve into the Karachi district. At present, Karachi hasa three-tier ederated system o governance composed o the citydistrict government, town municipal administrations, and union


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council administrations. The Karachi city district is divided into 18towns, which are each governed by an elected municipal administra-

tion. The towns, in turn, are divided into 178 union councils. Themayor (nazim) and council system in Pakistan makes or extremeragmentation o the decision-making process. Despite security andpolitical problems, Karachi continues to be the fnancial center oPakistan; about 60% o national revenue is generated in Karachi.Clustered around the city are several large industrial zones. Futureplanned city cluster development in Greater Karachi may be acili-tated by the Governments ownership o about 1,600 km2 o themetropolitan areas 1,722 km2 (93%) o land.

Greater Dhaka. Dhaka, the capital o Bangladesh, covers 816 km2;in 2005, its population was 15.3 million, and its population isprojected to reach 18.3 million by 2010 and 21.1 million by 2015.Dhaka city proper, which is governed by the Dhaka City Corporation,is divided into 135 wards. Greater Dhaka includes the central city,7 principal and14 auxiliarythanas(subdistricts), and covers 1,463 km2.Urban and regional planning in Greater Dhaka is carried out byRajdhani Unnayan Kartripakkyya (commonly reerred to as RAJUK),

or Capital Development Authority. However, governance andmanagement o urban unctions are divided among at least 41 gov-ernment agencies and units, making coordinated CCD difcult.

Subnational City Clusters

Subnational city clusters are made up o large, medium-sized, andsmall cities and towns that are unctionally interlinked. However,

no one city dominates the whole region, and economic and socialinterrelationships may be truncated by the autonomous nature oeach city. Examples o subnational clusters include the GuangzhouShenzhenHong KongMacau region in the Pearl River Deltao the PRC and the Naga CityLegaspiIriga city cluster in thePhilippines.

Pearl River Delta cluster. The oldest cities in the Pearl RiverDelta cluster are Guangzhou (ormerly Canton); Macau; and Hong

Kong, China, although Hong Kong, China, and Macau, as specialadministrative regions, did not become part o the PRC until 1997and 2000, respectively. In 1979, the PRC set up Shenzhen andZhuhai as special economic zones to accelerate economic growthin the region. The strategic locations o Shenzhen, which is only


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20 km rom Hong Kong, China, and Zhuhai, which is next toMacau, were signifcant actors in their rapid development. By

2007, the population o Shenzhen had grown to almost 10 million,outstripping both Guangzhou, with 7 million, and Hong Kong,China, with 7.5 million. At present, the Pearl River Delta cluster hasthree levels o cities: the three large cities o Guangzhou; Shenzhen;and Hong Kong, China; the eight medium-sized cities o Macau,Zhuhai, Foshan, Jiangmen, Zhongshan, Dongguan, Huizhou, andZhaoqing; and 22 small, county-level cities, as well as some 300towns (Yeh et al.2002).

Figure 5: The Pearl River Delta City Cluster


The Pearl River Delta cluster grew ast as a result o the provision o modern inrastructure and services that link the citiestogether through a regional development planning with a longer-term perspective. Within the Pearl River Delta region can be oundeight airports, our o which can handle international ights. In ad-dition to the port o Hong Kong, China, the region also has three

major seaports and 70 smaller ports along the seacoast and the PearlRiver. The region is served by the BeijingGuangzhou railway andthe BeijingKowloon railway. Expressways and ultramodern tele-communications networks crisscross the cluster. The Pearl RiverDelta region is, thereore, a city cluster with many hubs. One study


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projects that by 2022, the cluster will have become a South ChinaMegalopolis with a population o 51 million and a contribution to

GDPo $1.1 trillion (Enright et al. 2003).

The NagaLegaspiIriga Urban Cluster. The NagaLegaspiIriga urban cluster is in the Bicol region, one o the poorestareas in the Philippines. Since the election o a 29-year-old mayorin Naga in 1988, Nagas economy has surged ahead at the growthrate o 6.5% per year. Naga city is 377 km south o Manila and hasa population o 137,800. It is the core o Metro Naga, composed o12 municipalities and Naga city. Although Metro Naga started as

a voluntary ederation, its metropolitan structure was granted legalstatus in 1993. The Metro Naga Development Council, which iscomposed o the mayors in the metropolitan area, has ormulateda comprehensive development plan or the entire city cluster, andhas set up an executive ofce, headed by a director, to coordinatedevelopment activities. Observing visible economic growth impactso the cluster development approach, other adjacent local govern-ments joined in recent years. Led by the council, local governmentsin the Bicol region have pooled resources to set up an economic

development und to pursue projects like small-scale waterworksand arm-to-market roads. They have also invited the private sectorto invest in such inrastructure projects as markets and shoppingmalls. The biggest challenge to the council is that it is an island oprogress in a sea o want. The leaders o the cities within the region,however, hope to see the city cluster become the engine that willspur the development o the whole Bicol region (Mangahas 2006).

Transborder City ClustersTransborder city clusters are made up o urban settlements locat-ed in dierent nation-states and, despite the existence o dierentpolitical systems and legal regimes, pursue common developmentinitiatives. The best example o a transborder city cluster is theSingaporeJohorRiau growth triangle ormed in the early 1980sby the governments o Indonesia, Malaysia, and Singapore. Thecore o the development scheme is the island nation o Singapore,

which has a population o 4.6 million and occupies an area o 704km2. Although Singapore is the smallest country in SoutheastAsia, it has a per capita GDP o $37,489 (purchasing power parity)and ranks 25th among the worlds countries in the human develop-ment index.


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Figure 6: The SingaporeJohorRiau Growth Triangle


Located just across the causeway rom Singapore is Johor Bahru,the capital o the Malaysian state o Johor. The state o Johor hasbeen critical to Singapores development because it supplies practi-cally all o the water or the nation-state, as well as many workers.

When Singapores economy expandedater it became independentrom the Federation o Malaya in 1965, it did not take long beoreMalaysia and Singapore started to cooperate with one another ormutual beneft. During the 1980s, the governments o Singaporeand Malaysia signed an agreement to create a growth triangle thatincluded not only Singapore and Johor but also the Indonesian prov-ince o Riau. For most urban settlements in the cluster, the growthtriangle scheme created many advantages, among them

lower transportation and other economic transaction costs;more efcient production and distribution networks;access to investment capital rom Singapore and land andother natural resources in Johor and Riau;more productive specialization in economic activities,economies o scale, and enlarged markets;improved urban inrastructure and inormation networks;

job creation in all the urban settlements in the cluster; andimproved access to oreign direct investment.


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The growth triangle, in eect, created an extended metropolitanregion despite the urban development areas that made up the cluster

being located in three dierent countries (Macleod and McGee1996).

Special Economic Zones and Other Enclavesby Distinctive Functions

The main ideas that eventually led to the establishment o specialeconomic zones (SEZs) evolved rom such early ventures as the

Shannon Export Free Zone in Ireland, which was established in1959. Basically, an SEZ is a production enclave in which oreign anddomestic investors are allowed to set up enterprises under avorableterms and generous incentives, provided they sell their enterprisesproducts in international markets. The investors bring in capital,materials not available locally, and technological expertise. The SEZprovides land, inrastructure and services, labor, management o,and logistical acilities. In the PRC, an SEZ is defned as a smallarea demarcated within a countrys territory and suitably insulated

or adopting special and exible policies to attract and encourageoreign investments in industrial and other economic activities (Yee1992). In India, SEZs are regarded as duty-ree enclaves deemedas oreign territories or the purpose o trade operations, duties andtaris. They are considered second-generation reorms and a contin-uation o such earlier governmental initiatives as export-processingzones, export-oriented units, technology parks, and ree trade zones(India SEZ 2007).

Thus, a number o Asian countries have used themalong with

export-processing zones, bonded areas, industrial parks, and high-tech parksas instruments or pursuing urban-led development.Typically, SEZs and other development enclaves are on the outskirtso large cities. For example, in the PRC, the Shenzhen SEZ was20 km north o Hong Kong, China, to attract investments rom thathaven o ree enterprise. The dramatic growth o Shenzhen, roma fshing village o 30,000 to a city o more than 10 million within27 years, has becomea cluster o urban districts in the Pearl RiverDelta that includes Baoan, Futian, Longgang, Luohu, Nanshan,

and Yantian. Although smaller than Shenzhen, the Zhuhai SEZ hasbeen expanding rapidly, energized by its proximity to Macau. Simi-larly, the siting o an industrial park in the ancient city o Suzhou,

which is about 80 km rom Shanghai, has sparked the growth o a


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city clusteraround the ancient city, Suzhou, involving Changshu,Kunshan, Taicang, Wujiang, and Zhangjiagang, as well as the dis-

tricts o Canglang, Jinchang, Pingjiang, Wuzhong and Xiangcheng.

Figure 7: The Development Regions in the PRC


In India, where at least 404 SEZs had been ormally approved

by the end o 2007, entrepreneurs are oered attractive fscal andother incentives to invest in these acilities. Thus, investors in SEZsbeneft rom


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a 100% exemption rom income taxes or 5 years, and a 2%tax exemption an additional 2 years thereater;

exemption rom customs duties on the importation o capi-

tal goods, raw materials, and consumables;exemption rom central excise taxes on goods procuredrom domestic markets;exemption rom licensing requirements or items used bysmall-scale industries; andreedom to repatriate profts without any dividend-balanc-ing requirement.

Aside rom these incentives, the Government o India oersa ull range o banking, insurance, storage, warehousing, and otherlogistical services. A large, well-trained, skilled workorce capableo managing modern enterprises is required. Interestingly, unlikeother countries, where SEZs and other development schemes aremainly government run, India relies more heavily on joint venturesand publicprivate partnership arrangements.

In the Philippines are proposals to extend the planning o theManila-centered region to include developments in the SEZs set up

in the ormer Subic Bay US naval base in Zambales province andthe ormer Clark Air Force base in Pampanga province. Growth inthe Subic SEZ has spread to the adjacent city o Olongapo, and theClark SEZ has contributed to the rapid growth o nearby cities likeAngeles and San Fernando. The construction o an expressway link-ing the Subic and Clark SEZs is encouraging the growth o townsstrung along it. Plans are being developed to make Clark the maininternational airport o the national capital region, and a rail-basedtransport system and limited-access expressways are being developed

to connect it to Metro Manila. In addition to the Clark and SubicSEZs, the Government has also set up an export-processing zonein Mariveles, Bataan province, and an industrial park in Rosario,Cavite province. All these development enclaves have contributedto the economic expansion o the Manila-centered urban cluster.Because o their proactive nature, SEZs are excellent instrumentsor pursuing CCD.


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A StrategicFramework forCity ClusterDevelopment

In the light o CCDs benefts, a strategic rame-work can be useul to guide ofcials in decidingwhether or not to pursue CCD. The rameworkshould answer some basic questions:

What key actors should be assessed in

identiying CCD potentials? What are the barriers to eective andefcient CCD?How can the barriers be mitigated sothat CCD can be accelerated?

What strategies can achieve eectiveand efcient CCD?

Experiences in Asia show that at least eight

key actors need to be assessed to determine whether or not to use CCD as an instrumentor urban-led, inclusive economic and socialdevelopment:

institutional and governance mechanisms;demographic, resources, and spatialactors;development planning coordination over

time and jurisdictions;use o land resources and land tenure;


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economic growth potential and trade unctions;taxation, intergovernmental transers, and fscal discipline;inrastructure and inormation networks; androle o private sector participation.

Most o these actors are multiaceted and closely linked witheach other. Thereore, eorts to achieve socioeconomic developmentthrough CCD require a thorough understanding o how variouseconomic, social, institutional, and technological resources can bemobilized cost-eectively. In general, an eective CCD plan is onein which the development objectives are achieved in compliance

with both quantitative and qualitative perormance standards. Incontrast, an efcient CCD plan is one in which the developmentobjectives are achieved with the optimal allocation o various mate-rial, human, and technological inputs. A schematic representation oa CCD ramework is shown in the table.

Barriers to City Cluster Development and Measuresto Mitigate Them

Institutional and Governance Mechanisms

One barrier to CCD is a mind-set among some public ofcials thatassociates urban growth with problems such as slums and squatters,lack o urban inrastructure and services, trafc jams, environmentalpollution, and crime and violence. Another barrier is ofcials whoare ideologically committed to local autonomy and thereore fnd itdifcult to pursue CCD. Administrative ragmentation at the centraland provincial or state levels also hinders interagency cooperationand coordination. The activities and advocates o civil society areoten viewed negatively by ofcials, especially when those advo-cates demand governance reorms and campaign against grat andcorruption.

Legal and regulatory measures and judicial precedents can alsobe barriers to CCD, as seen in cases where individual local govern-ment bodies enact ordinances, zoning codes, and land use regula-tions that dier vastly rom each other, thus creating jurisdictionalconicts. Another barrier is extreme political partisanship among cityauthorities, especially i that partisanship is based on ethnic iden-tity, religious afliation, or ideological dierences. Experiences in anumber o Asian countries have shown that when local government


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AStrateg

icFrameworkforAssessingGrowthPotentialsofCityClusterDevelopmen

t

AssessKeyFactors

AnalyzeBarriers/Weaknesses

StepUpMitigationsas

DevelopmentOpportunities

StrategizeCCD

1.Institutional,

legaland

govern

ance

mechanisms;

e.g.,cross-border

coordination

Autonomous

localunitsmayresist

CCD

Centralandp

rovincialorstate

governments

maynotavorCCD

oranti-urban

mind-set

Decentralizationprogramsandlocal

autonomycre

ateragmentationamong

localgovernm

entbodiesincityclusters

Failuretorecognizeuniqueconditions

inacountrymaylimittheuseulness

oCCD

Providemoreinormationto

localgovernmentofcialsab

out

meritsoCCD

Localgovernmentreorms

Coordinatethrougha

developmentcouncil

Allowstrongpoliticalleadership

andentrepreneurialabilities

ormoreeectiveandefcie

nt

governance

BlindcopyingspecifcCCD

initiativeswithoutproperregard

oruniqueconditionsina

particularcountryorareashould

beavoided

Useregion-widepla

nning

tousherinregion-w

ide

governance

Setupmetropolitan

authoritiestoimpro

ve

area-widedevelopm

ent

eorts

Usedevelopmentplans

toencourageunifed

governancestructures

Allowparticipation

ocivil

societyingovernance

Undertakeselected

observationandstudy

tourstocountriesth

athave

usedCCDsuccessully

continuedon

nextpage


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AssessKeyFactors


StepUpMitigationsas


StrategizeCCD

2.Demographics,

resources,and

spatial

aspects

orinclusive

development:

i.e.,integration

orura

land

urbaneconomy,

andinclusiono

urbanorrural

poor

Minimalpopulationsizetoorman

agglomerated

patternocityregions

Geographicd

ispersaloinhabitants

Conventionalperceptionon

ruralurband

ichotomydetersCCD

inclusively

Not-in-my-backyardattitudehinders

inclusivedevelopmenteorts

Politicalcon

ictsbasedonlocal

partisanship,ethnicafliations,and

ideologicalleaningsthreatensocial

sustainability

Accommodatemorerural-

to-urbanmigrants

Harnesscivilsociety

tostrengtheninclusive

development

Strengtheneconomiclinks

betweenruralandurbanareas

Improvetheowsogoodsand

servicesbothways

Strengthenunifedcity

clusterwideeortstoreduc

e

povertythroughpoliticalwill

andavailabilityofnancial

resources

Encouragecompact

settlementpatternswithin

80kmradiusromthecore

Donotdichotomizeurban

andrural,butinclud

e

bothurbanpoorand

underprivilegedgroupsin

area-widedevelopm

ent

Promoteindustrializing

agroprocessingbusiness

andenterprises

Civilsocietygroups

canstrengthenpublic

participationindeciding

ondevelopingcityc

lusters

continuedon

nextpage


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AssessKeyFactors

AnalyzeB

arriers/Weaknesses

StepUpMitigationsas


StrategizeCCD

3.Develo

pment

planningissues

Plannersuse

mainlyphysicalplanning

methodsand

resistcity-region

planning

Weakplanningcapacityorlacko

dataresulting

inplansthatcannotbe

implemented

Zoningcodesandstandardstoo

ocusedonlo

calissues

Supportmoredatagathering

anddissemination

Trainmoreplanners

UseAsianDevelopmentBank

technicalassistancetohelpuse

comprehensiveplansincity

clusters

Adoptanarea-wide

approachsuitableto

usher

ingovernancereorms

Formulateplansandadopt

comprehensivecity

cluster

plansoralonger-term

perspective

Formulateacompre

hensive

planinaparticipative

mannerandconside

rinputs

romallstakeholders

4.Landresources

andlandtenure

Strongadherencetoprivateproperty

Privateownershipolandmakesit

difculttoleveragelandorCCD

fnancing

Peoplesresistancetolandgrabbing

orprojectuse

Failuretorep

eallegislationonland

issueswilldelayCCDprograms

Capturetaxrevenuerom

increasedvaluesoland

andpropertyresultingrom

inrastructureprovision

Implementtaxreormsto

captureeconomicvalueola

nd

andlandtenure

Uselandreadjustment

Uselandbankingschemes

Uselandreadjustment

mechanismstounlo

ck

theeconomicvalue

o

landresourcesandt

o

increasepropertyva

lues

throughimprovedu

rban

inrastructureprovision

Revisetaxlawsto

acilitateuseoland

into

adevelopmentfnan

cing

resourcebyunlockingits

locationusevalue

continuedonnextpage


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AssessKeyFactors


StepUpMitigationsas


StrategizeCCD

5.Economic

growth

potentials

andtrade

unctio

ns

Lowleveloeconomicproductivity

Lackoindustrialcommercial

activities

Economicgrowthpotentialsand

impactlimitedtoaconfnedarea

Tapintellectualcapitalsand

resourcesromexistingacademic

andresearchinstitutionsasa

stepping-board

LocateSEZsnearabiggerc

ity

totapintospillovergrowth

benefts

Promoteeconomicsustainab

ility

byormulatingand

implementingacityclusterlocal

economicdevelopmentstrategy

Concentrateinrastructure

investmentsinoneareato

attractmoreenterprises

Attractoreignand

domesticinvestorsb

y

oeringtaxincentiv

esand

otherbeneftsinacity

clusterorSEZs

Strengthenurban-led

developmentstrateg

y

6.Taxatio

n,fscal

issues

Lowrevenue-generatingcapacityo

localgovernm

entbodies

Dependenceonhigher-levelund

transersand

grants-in-aid

Creditratingsarelowanddonot

supportcapitalimprovement

Difcultiesin

standardizingtaxrates

amonglocalunitsincluster

Localunitsresistallocationounds

tometropolitanorregionalgovernance

structure

Installarea-widetaxreorms

toincreaseefciencyotax

collection

Trainlocalofcialsinrevenue-

raisingtechniques,budgeting,

andfscalaccountability,to

attractPSPinfnancingurban

inrastructureandservices

Makefnancialburdenmore

equitablebysharinglocal

resources

Improvetaxcollection

machinery

InvitemorePSP

investments

Setupmechanisms

to

enhancetransparencyand

accountability

Pulltheresourcesw

ithin

theclusterbyconsolidating

acityclusterapproa

ch,or

ahighercreditrating

continuedon

nextpage


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CCD=city

clusterdevelopment,PSP=privatesectorparticipation,SEZ=specialeconomiczone.

Source:K.ChoeandA.Laquian.2008.City

ClusterDevelopment:TowardanUrban-led

city cluster development

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