P.G. STUDIES SEM- 1Graduate Report

PLANNING THEORY (C-631)

IMPACTS OF URBANISATION ON ECONOMY

Guided By : Prepared by : Dr. J.E.M.MACWAN CHEITALI SHROFF P11 UP023

POST GRADUATE SECTION IN URBAN PLANNINGC.E.D,SVNIT

2011 (July-December)

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certificate This is to certify that Graduate Report

entitled “IMPACTS OF URBANISATION ON ECONOMY” is submitted by SHROFF CHEITALI C. (P11UP023), student of 1st semester, M.Tech (Urban Planning) for the subject Planning Theory (CE – 631) for the term ending in November 2011.

Signature of PG In-charge Signature of

guide(Dr. J. E. M. Macwan) (Dr. J. E. M.

Macwan)

Civil Engineering Department, M.Tech. (Urban Planning), Semester-1

Acknowledgement I earnestly wish to express my heartfelt thanks

and a sense of Gratitude to Dr. J. E. M. Macwan, for his

Valuable Guidance and constant inspiration in preparing this

report, without which i would not have been able to complete

this report. Civil Engineering Department, M.Tech. (Urban Planning), Semester-1

CONTENTS

1 Introduction 2 Purpose Of the report3 Terminology4 Urbanisation & Economy in general5 Impacts of urbanisation Positive & negative6 Conclusion 7 References

  

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Introduction• Urbanization is a defining phenomenon of the 21st century.

• It is the phenomenon that changes the structure of the society, globally.

• The developing world is at the center of demographic & economic transformation.

• About 400,000 sq. kilometers will be constructed for urban uses between 2000-2030 ,doubling the world’s buiit up urban area.

• Nearly two billion new urban residents are expected in the next 20 years. Doubling the urban populations of South Asia and Africa.

• UN World Urbanization Prospects report for global urban population.2005

• Rapid Urbanization Growth 220 Million Year 1900 13% 732 Million Year 1950 29 % 3.2 Billion Year 2005 49 % 4.9 Billion Year 2030 60 %

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Purpose

The purpose of the report is

• To study the various factors creating rapid urbanisation globally.

• To indicate various positive and negative Impacts of Urbanization on economy.

• To study how to minimize these negative Impacts of Urbanization

• To study how to improve rural economy & growth

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Urbanisation

• People from villages move into cities to seek economic opportunities.This migration from rural areas to big cities is called urbanization. • Living in cities permits individuals and families to take advantage of the

opportunities & luxuries.

• Cities are flourished with industries , educational institution ,recreational areas ,better food supplies ,healthcare with basic infrastructural facilities such as transportation , water supply, electrical, sanitary, etc. whereas there are limited opportunities & basic amenities avail within rural areas; contributing migration to cities.

• After rural migrants coming to urban area they spend their lives in insecure, poorly paid jobs in spite, they participate in economic growth, and adjust to economic change, through urban labor markets.

• They grow as urban poor slums & their life is worse then a village in most cases. They are not able to earn basic amenities of life, due to rich economy of cities.

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Industrial pollution

Traffic jams on roads

High-rises & slums

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Urbanization facts of INDIA – Report by World Bank

• 3 out of world's 21 mega cities: -Mumbai (19 mill); Delhi (15 mill) Kolkata(14mill) • Large Cities: -23 in 1991; 40 in 2001

• Urban Pop.: - 28% of 1,030 mill in 2002.

• Estimated Urban Pop. by 2017: 500 million

• % of Urban Residents who are Poor: About 25%

• Slum Population: About 41 million in 2001

• Estimated Slum Pop. by 2017: 69 million

• In the next 20-25 years, India’s urbanization level is expected to rise from the present 30% to 40- 50%, with over 60 cities of 1 million plus population contributing about 70% of India’s GDP.

• India’s growing cities and towns face major challenges in creating adequate infrastructure including transportation, water, solid waste, and power sectors.

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Urbanisation & economy in general

• Urbanization itself has punctuated economic development. • What happens to surrounding rural areas when a city grows?Agents effecting urbanization on rural economy• Backward linkages& Rural non-farm employment

transport

Higher income ,more consumption production of goods, labor incomeMarket, technology• People may commute to cities for small jobs & trades. These process boost

ups the transportation & marketing. • Remittances- The urban migrated worker sends share of his income to his

family in rural area.• Agricultural production: due to migration less agricultural production.• Rural land prices: higher demand of agricultural land for residential/different

commercial purposes for expansion. This may generate increased income for land/farm owners.

• Agricultural products: Due to unavailability of proper transport and technology such as cold storages in rural areas, they may have to sell the goods at lowest profits in nearby towns.

urban rural

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Economic Aspects• Urbanization is an integral part of the process of economic growth. • With less than 1/3 of India’s people, its urban areas generate over 2/3 of the

country’s GDP and account for 90% of government revenues.

• Economic development refers to progress toward a community’s economic goals such as increased employment, income, productivity, property values, and tax revenues.

• Economic development of any country hinges on the efficient employment of factors of production such as labor, land, capital and organization.

• There is commercialization of production with monetization of economy. • The people must have the required ability, experience and knowledge to make

the best use of the resources & facilities that are made available.

• The technology plays very important role when appropriate social conditions are present.

• Transportation planning decision also affect economic development by influencing the connections between resources, workers, businesses and customers; by influencing consumer expenditures; and by affecting land use development location and intensity.

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World Systems Analysis• There is a Global Economy which all countries are a part of.

• The global economy benefits the rich at the expense of the poor

• The Global Economy is divided into the Core, Semi Periphery and Periphery.

• World Systems Analysis theorists such as Immanuel Wallerstein argue that the development of the Core is a result of its exploitation of the Periphery.

• Core – Initially based on comparative

advantages (resource and location), develops

from acquired advantages (agglomeration,

increased tax revenue, increased public spending, education and health care, skilled labour, improvements in infrastructure).

• Periphery – Inaccessible, under populated,

poor resources.

• Downward transitional area could be seen as the periphery suffering from backwash effects of development in the Core.

John Friedmann’s Stages of Growth

Gives a more detailed explanation of periphery and highlights that spatial inequalities change over time.

Stage 1 – No urban hierarchy

Stage 2 – Primate city

Stage 3 – Regional sub-centres

Stage 4 – Regional inequalities are reduced in a fully integrated urban system

Impacts of urbanisation on economy

Urbanisation brings with it several consequences- both adverse and beneficial. They impact on social ,commercial and environmental areas.

• Positive Impacts• Industrialization• Employment Opportunities• Application of Technology• Standard of life• Infrastructure development• Educational Development• National growth

• Negative Impacts • Housing sector• Land market• Cost of living• Cost of transportation• Cost of urban infrastructure

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Positive Impacts of urbanization on economy:

INDUSTRIALISATION• Industries plays important role in employment of the people and economic

activity. • The more industrialization matured, the more opportunities were created for

work and investment, and this brought more people to cities as consumers and as workers & generates the economy.

EMPLOYMENT OPPERTUNITIES:• Due to industrialization there are more job opportunities in urban areas as

different industries & corporate sectors expands & they need labors to run the machines.

APPLICATION OF TECHNOLOGY• Due to higher market growth & competitions there are new research &

advancement in technology, at global level.• In India, software development and related information-communication

services is the leading sector for economic growth. • This sector has grown more rapidly and become internationally more

competitive than any of the country’s traditional industrial sectors.

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STANDARD OF LIFE: • The family structure changes with urbanisation. • In urban areas nuclear family, consisting of only of parents and their growing

children, predominates.• Due to small families they tend to fulfill all luxuries of life, hence standard of

living increases, hence there is more consumption.

INFRASTRUCTURE DEVELOPMENT:• As city grows with industries all the necessary infrastructures such as roads,

railways, water supply system ,electrification, drainage system, land development immediately take place for communication & to attract more people to stay there.

EDUCATIONAL DEVELOPMENT: Education is a tool to eradicate social evils. As population grows in urban areas & due to high standard of living they demand for good qualitative, competitive education, it is at very speedy growth at no cost.

NATIONAL GROWTH: As the urban area grows, in all sectors, fields, the growth of city results in state as well as national economical growth at global level .

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Negative Impacts of urbanization on economy:There are some negative impacts of urbanisation due to excessive concentration on urban areas.

• HOUSING SECTOR: • Due to population growth & industrialization the housing cost has

tremendously boost up. Houses have become expansive. • For rural migrants, due to their poor economic condition they are not able

to buy the good houses & they create slums in open urban or near industrial areas.

• LAND MARKET: • land is a major resource• Agricultural land converted in to nonagricultural land• Land prices rises tremendously & unexpectedly due to more demands.

• UNEMPLOYMENT:• Unskilled rural migrant many times lacks jobs.• fails to meet financial obligations ,family daily needs,rent etc.• Rising unemployment increases the crime rate in cities.

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COST OF LIVING: • Due to more demands, cost of living increases, becomes expensive.• It becomes difficult for rural migrant people to meet both ends of life for

basic necessities & amenities, & they are deprived from basic necessities of food ,clothing & home. Thus rural poverty translates into urban poverty.

TRANSPORTATION: • Transportation is a key issue in cities as transportation is the movement of

people and goods from one place to another. • Masses of Poor people have to depend on public transport to commute to

their work & on other hand classes of rich people uses luxurious four wheelers for their smaller trip.

• Due to inadequate investments ,public transport is lacking in growing cities. Hence commuters have to spend more time in travelling & it reduces the efficiency of production.

Environment: • Due to urbanisation, industrialization results, which give rise to air, noise,

water, land pollution effecting the health & living condition of poor labors ,which will reduce the production capacity of goods/products thus effecting economy.

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Conclusions• As a city grows, due to over population& limited infrastructure, it fails to meet

the growing demands which are uncertain ,hence it starts decaying. • Indian is the mixed economy where the emphasis is on macro-economic

planning.hence Governments often do not meet these basic necessary services/ needs of residents and hence urban development is dominated by private capital.

In order to save the dying cities the different policies should be thought of • Encourage private/commercial sector invest ment. • Policies should be made for High quality public transport which can provide

many economic benefits and can be cost effective, with supportive land use policies.

• Government should develop policies for affordable housing projects for different income groups & to make cities rid of unhealthy slums.

• Policies should be developed for growth of High-tech industries & specialisation techniques which can earn valuable foreign exchange .

• Investment policies for poor urban slums with affordable insurance & transit house facilities for slums to make them sustainable in urban fabric.

• Lastly we should prepare policies to support these structural shift & inequalities occurring in the process of urbanisation, instead of arguing about the cities growth & limit, for its better functioning & development.

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References Astha Agarwalla,(jan-2011), ” Agglomeration Economies and Productivity Growth in India” –

IIMA ,DELHI, W.P. No. 2011-01-08 Briefing paper 44 ,jornal odi,London (November -2008), “Opportunities & exploitation in urban

labor markets”. Overseas development institute ,London. Charles m. becker & Andrew r. Morrison(10th February 2005), “Urbanisation in Transforming economies” Dr. kiran wadhwa , chief economist (retd), hudco,new delhi (july 2009) “Affordable housing for

urban poor”. Ministry of Housing & Urban Poverty Alleviation ,Government of India. Jean d'Aragon, (13thjune 2007) “Housing & sustainable urbanisation in developing countries.”

International Development Research Centre, Ottawa, CANADA. P.Duraisamy (2004) “Health, Poverty and Economic Growth in India” Department of

econometrics ,university of madras. Todd Litman (18 August 2010), “Evaluating Transportation Economic Development Impacts

Understanding How Transport Policy and Planning Decisions Affect Employment, Incomes, Productivity, Competitiveness, Property Values and Tax Revenues , Victoria Transport Policy Institute.

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