Former WB officer:Urbanization needs good governance

By He Shan
0 Comment(s)Print E-mail, October 19, 2015
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Anthony Pellegrini, former director of the Transport, Water and Urban Development Department of the World Bank [Photo by Yang Jia/] 

"Urbanization doesn't guarantee the potential for modernization and the innovation for prosperity, and it needs good management and leadership," said Anthony Pellegrini, former director of the Transport, Water and Urban Development Department of the World Bank.

The former officer of the World Bank weighed in with his brilliant ideas on urbanization and the future of emerging markets during his trip to Beijing for the Beijing Forum for Emerging Markets held from October 19 to 20.

He said governance is very essential to urbanization that provides an engine of growth for emerging markets amid the global economic slowdown.

According to the statistics issued by McKinsey in 2012, urbanization will create an over-four-billion-strong global "consumer class" by 2025, up from around one billion in 1990. Nearly two billion will be in emerging market cities. These cities will inject nearly US$25 trillion into the global economy through a combination of consumption and investment in physical capital.

This is a very significant shot in the arm for a global economy that continues to struggle.

He praised China, saying the country has done amazingly well in rebuilding and transforming its cities and providing infrastructure to take care of the basic needs of its population.

He stressed that urbanization is the biggest challenge for Asian and African countries.

"It is a problem for managers of the cities and countries, which grow very rapidly, to find a way to provide resources needed to develop properly," he said. "Cities and towns of all sizes need to be very careful about their management and provide the basic infrastructure."

He believed that the provisions including basic water supply, transportation and road systems can help alleviate the divergent situation between the poor and rich.

It's about social cohesion. "All residents in the city should have equal access to basic services," he said.

He noted that Asian countries need to pay attention to the way that the national and local governments manage the assets they have.

He said, local governments in emerging markets generally face very difficult times, because they are growing rapidly and investment is needed for infrastructure.

However, the local governments are not in a position to borrow the money needed to finance the infrastructure investment.

Often, they suffer from problems associated with the amount of autonomy they have. They don't control the resources, while the national government very tightly controls what the local governments can do.

"National and local governments need to improve basic things such as budgeting and accounting," he asserted.

At the same time, urbanization is a source of innovation for many productive enterprises; it's the engine of the growth for countries. It's where a country modernizes and where innovation takes place.

"It is very important for cities to be properly managed, so businesses located in the cities can be more efficiently run, be more innovative and be better connected with the world," he said.

Commenting on the current anemic economic growth, Pellegrini was very upbeat and said the slowdown will pass.

His optimism is built from experiencing a small number of crises affecting emerging markets over the past few decades.

"Lessons have been learned in how to deal with these crises,"he said. "They are all more resilient."

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