THE STATE OF THE WORLD'S CITIES REPORT 2001

With just under half of its population living in cities, the world is already urbanized. When measured in knowledge, attitude, aspiration, commercial sense, technology, travel and access to information, even most rural societies are, to one extent or another, woven into a global network of cities.

Globalization seriously took off during the industrial revolution of the late 18th century. Since then, the steam engine, the telephone, the elevator, and now, the Internet and cheap air transport, have conveyed people, goods and ideas both horizontally and vertically at an unprecedented volume and velocity. The focal point of these activities has invariably been the city, a place of deals and decisions, take-offs and landings - a place less concerned with the rhythms of nature, where everything can be bought or sold, especially one's ideas and labour.

In today's globalized world, cities no longer stand apart as islands. They are the nexus of commerce, gateways to the world in one direction and focus of their own hinterland. Tied together in a vast web of communication and transport, cities are concentrations of energy in a global field. In a real sense, the world is completely urbanized, as this force field has the power to connect all places and all people into a productive, constantly adapting unity.

Three billion people - nearly every other person on earth - already live in cities. Today the planet hosts 19 cities with 10 million or more people; 22 cities with 5 to 10 million people; 370 cities with 1 to 5 million people; and 433 cities with 0.5 to 1 million people. By 2030, over 60 percent of the world's population (4.9 billion out of 8.1 billion people) will live in cities.

Developed country cities are rapidly disappearing from the list of the world's largest cities. Between 1980 and 2000, Lagos, Dhaka, Cairo, Tianjin, Hyderabad and Lahore, among others, joined the list of 30 largest cities in the world. By 2010, Lagos is projected to become the third largest city in the world, after Tokyo and Mumbai, Milan, Essen and London will disappear from the 30 largest cities list, and New York, Osaka and Paris will have slipped farther down the list by 2010.

The current worldwide rate of urbanization (that is, the percentage, per year, that the urban share of the total population is expanding) is about 0.8 percent, varying between 1.6 percent for all African countries to about 0.3 percent for all highly industrialized countries. Urbanization of poverty is a growing phenomenon; it is estimated that between one-quarter and one-third of all urban households in the world live in absolute poverty.

Starting with this 2001 edition, the State of the World's Cities Report takes the reader through Africa, the Arab States, Asia and the Pacific, the highly industrialized countries, Latin America and the Caribbean and countries with economies in transition to understand better how shelter, society, environment, economy, and, above all, systems of governance can contribute to urban vibrancy and viability in a globalizing world.

Africa

Sub-Saharan Africa's urban population will approach 440 million, or 46 percent of its projected total of 952 million by 2020. Today, Africa's urban areas account for 34 percent of the total population of 611 million and are credited with 60 percent of the region's Gross Domestic Product (GDP). Municipalities, however, capture only a small percentage of GDP - on average US$ 14 per capita per year - in revenue, creating disparity between the requirements for municipal governance and available resources.

Global economic processes have stalled in Sub-Saharan Africa with severe consequences for its urban areas. Africa is the only region in the world without a true newly industrializing economy. The failure to industrialize can partly be explained by external factors, but a variety of domestic factors must also be taken into account, including economic policies, the effects of personal rule, historical legacy, the role of the state and low levels of literacy. Structural adjustment, which has created shortages of imported materials, reduced investment, retrenched the public sector and led to declining effective demand, has badly affected urban-based manufacturing. Large-scale manufacturing, which created an impressive volume of jobs in the Asian and Latin American regions, has generated only a small number of employment opportunities in urban Africa and, consequently, the informal sector continues to remain the largest source of employment in the region.

Nonetheless, there is a forward movement. In recent years, national governments across Africa are increasingly adopting decentralization as one of their primary strategies for development. Africa has also spawned an 'associative' sector built on local solidarity movements. Several countries in Africa have revised their constitutions and passed legislation that supports the participation of excluded and disadvantaged groups, especially women.

Arab States

The Arab States' urban population is projected to be 260 million, or 66 percent of its estimated total of 395 million, by 2020. Today urban areas account for 56 percent of the total population of 270 million, Municipalities capture about US$ 46 per capita in revenue per year.

The Arab States comprise a great diversity of socio-economic and human settlement profiles and characteristics: from least developed through developing to oil rich countries; conflict and post-conflict situations; from very open economies to economic isolation; and from highly urbanized to predominantly rural. The region's considerable internal disparity is reflected in the conditions in its cities and has resulted in widely varying domestic needs and priorities: rehabilitation and reconstruction (Iraq, Lebanon, Palestine and Somalia); poverty alleviation (Egypt, Jordan, Syria, Morocco and Yemen); urban management and housing needs (Egypt, Jordan and Algeria); and capacity building (Gulf countries).

Asia and the Pacific

The urban population in the Asia and Pacific region is expected to be 1,970 million or 46 percent of its projected total of 4,298 million, by 2020. Urban areas today account for 35 percent of the total population of 3,515 million. On average, municipalities secure about US$ 153 per capita in revenue per year.

Urbanization in Asia and the Pacific raises red flags, particularly because an increasing number of the region's poor live in urban areas. The size and urgency of the problem requires different ways of managing cities and their related infrastructure and service requirements. Recently, macro-economic and financial crises have cast doubt on conventional approaches and concepts. The financial crises of the 1990s affected millions of lives and aggravated social vulnerabilities. In East and Southeast Asia, the social consequences of the financial crisis have been felt more in cities, reflected in increased poverty brought about by cutbacks in both public and private employment as well as in public expenditures for health and education.

However, the increased pace of urbanization and its linkages to economic globalization have reinvigorated interest in the process of governance and its links to economic growth. Decentralization and local autonomy are gaining more momentum, and with this, the interest in building the capacity of local governments is growing. While several Asian countries have adopted decentralization policies, excessive controls are still exercised in others on the functional, financial and administrative responsibilities of local government. As a result, there is a mismatch between the functional powers of local governments and the financial resources available to them.

Highly Industrialized Countries

The urban population in the highly industrialized countries is projected to be 547 million, or 84 percent of its total population of 649 million, by 2020. Today, urban areas account for 80 percent of the total population of 597 million. On average, municipalities obtain about US$ 2,906 per capita in revenue per year.

In 2020, there will be 5 urban agglomerations larger than 5 million inhabitants in Europe: Paris, Moscow, London, Essen/Ruhrgebiet and St. Petersburg. Most urban populations in Europe live in small or medium-sized towns; half the urban population lives in small towns of 10-50,000 people, and a quarter in medium-sized towns of 50-250,000. Only 25 percent of the urban population lives in cities with more than 250,000 people.

Cities in highly industrialized countries no longer deal with the effects of urbanization, but rather with a combination of other demographic issues and the impacts of global trends: increasing internationalization of metropolitan regions; changes in the distribution of responsibilities between the public and private sectors; a generally stronger role for a few major cities within each country; ageing populations and the related problems of access to health care and pensions; international migration; and the highly detrimental impacts of social and economic polarization.

For the past two decades, the highly industrialized countries committed themselves to economic policies aimed at encouraging macroeconomic stabilization, structural adjustment and the globalization of production and distribution. Although these policies have in general been effective in promoting short-term economic growth, low inflation and lower current account imbalances.Negative longer-term societal implications, however, are now emerging as major political and socio-economic dilemmas. Growing political disenchantment arising from widening income gaps, declining political participation and widespread social exclusion are manifesting themselves in cities across North America and Europe alike. In the United States, for instance, racial tension is reported to be the number one issue facing cities.

Latin America and the Caribbean

Latin America and the Caribbean is the most urbanized region in the developing world. With 75 percent, or 391 million, of its people living in cities, it has an urban-rural ratio similar to that of the highly industrialized countries. However, unlike highly industrialized countries, urban areas are not geographically scattered in terms of physical size or populations. Urbanization patterns in the region, with the exception of Brazil, typically involves one very large city that accounts for most of the country's urban population. The urban population in the region will approach 539 million, or 81 percent of its projected total population of 665 million, by 2020. On average municipalities capture about US$ 87 per capita in revenue per year.

The biggest challenge facing the region is the growing urbanization of poverty. Despite general economic growth, the number of poor people in the region rose from 44 million to 220 million between 1970 and 2000, as did the number of women living in poverty. More than one-third of the poor households are headed by women. Much poverty is concentrated in urban areas; a massive 40 percent of the population of Mexico City, for instance, and a third of São Paulo's population is at or below the poverty line.

Economies in Transition

The urban population in countries with economies in transition will approach 420 million, or 78 percent of its projected total population of 541 million, by 2020. Today, urban areas account for 70 percent, or 382 million of the total population of 543 million. On average, municipalities capture about US$ 275 per capita in revenue per year.

There are sharp differences among the various countries with economies in transition, notably in criminality, corruption and levels of democracy. Some, particularly in central Europe, have clearly started to adjust to the market economy promoted by the West. But, although the laissez-faire model was assumed by many to be the solution, experience during the past decade indicates that this does not necessarily hold true for all.

It is now recognized that sustainable urban development in these countries will depend on the creation and maintenance of efficient land and property markets; the development of more and better housing finance options; a greater emphasis on municipal finance and institution building; strengthening of urban utility systems; a growing interest in the preservation of cultural assets and heritage; and the responsiveness to emergencies such as earthquakes and flooding.

Urban Shelter

More than one billion of the world's urban residents live in inadequate housing, mostly in the sprawling slums and squatter settlements in developing countries. A significant trend during the past decade has been the growing awareness of the relationships between human rights and sustainable development. In the field of shelter, this has led to a decline in human rights abuses, such as mass forced evictions. Negotiation and participation are increasingly being employed to secure the urban poor their rights to shelter.

The right to adequate housing is recognized by more than 70 percent of the world's countries. Almost all countries in the Asia-Pacific region promote housing rights in their legislation and the Arab States provide the greatest protection against eviction.

Extending urban citizenship to the poor, through the granting of secure tenure, for example, is one of the most far-reaching decisions that can be taken in promoting a sustainable shelter strategy.

Urban Society

Despite the potential of cities to improve living standards, the benefits of urbanization are not shared equally. All too often, cities are still divided into haves and have-nots; the established and the marginalized; offering different life opportunities for women and men. In developing countries, the statistics are particularly disturbing: over 50 percent of the population of Mumbai and New Delhi lives in slums, while in Lagos and Nairobi over 60 percent of households remain unconnected to water.

Exclusion, as a result of physical, social or economic barriers, prevents many groups from participating fully in urban life and services. Failure of local authorities to integrate such groups in their decision-making is often a function of inertia, along with bureaucratic and unresponsive forms of governance. Participatory governance is a prerequisite to social cohesion and inclusion. It involves supporting local populations to engage in, and benefit from, opportunities offered by urban-scale activities, all of which devolved to the local level, while simultaneously offering opportunities for strengthening civil society.

Urban Environment

Apart from its effect on health and well-being, environmental degradation and pollution continue to constrain development and growth of cities. Ill health and premature death not only cause pain and suffering, they also impose heavy costs on the economy. Ultimately, neither the human population nor the environment escapes the detrimental effects of unsustainable consumption and environmental degradation.

An increasing number of countries now recognize the key principles of environmental management. One is that the environment is not an end in itself - not something to be 'protected' from development - but that it is a resource to be carefully managed on a sustainable basis. Secondly, urban development necessarily depends on the natural resource base available to the city - which in turn has an impact on the state of those resources. It is, therefore, crucial to improve understanding of the two-way relationship between the environment and development.

Urban Economy

Large cities typically produce a significant share of the Gross Domestic Product (GDP) of their countries. For instance, Bangkok alone contributes 38 percent towards Thailand's GDP, more than the GDP of any of the agriculture-based economies in Africa. Yet, despite the significant economic role played by cities, they often receive less than they might warrant for their contribution to the national economy, negatively influencing their productive potential. Key constraints to urban productivity include infrastructure deficiencies, inappropriate regulatory frameworks for urban land and housing markets, weak municipal institutions, and inadequate financial services for urban development. Strategies to combat these constraints include:

a) strengthening the management of urban infrastructure by improving the level and composition of investments, reinforcing institutional capacity for operation and maintenance, and seeking opportunities for greater private sector involvement; b) improving city-wide regulatory frameworks to increase land and housing market efficiency and to enhance private sector provision of shelter and infrastructure; c) improving the technical and financial capacity of municipal institutions through more effective application of resources and division of responsibility between central and local governments; and d) Strengthening financial services for urban development, ranging from micro-credit to municipal bond markets.

Urban economies in the developing world are largely driven by the informal sector. Informal sector employment makes up 37 percent of the total employment in developing countries as a whole, and is as high as 45 percent in Africa. Cities can support the informal sector through the provision and maintenance of infrastructure, including adequate supply of electric power, water, transport and telecommunications networks. By relaxing rules and regulations, the informal sector can be expected to contribute further to the creation of jobs and, perhaps, eventually be integrated in the formal economy.

Urban Governance

Effective governance is increasingly dependent on people assuming their responsibilities as citizens and participating in decision-making and implementation. Citizens are learning to forge new alliances that strengthen their voice and make their concerns felt in legislation. For their part, governments at all levels increasingly recognize the value of communication and consultation, negotiation of joint-decisions and joint-implementation of policies that meet the changing needs of society.

However, reform of governance institutions and strengthening of local actors are necessary prerequisites for effective governance. Some of the emerging issues and priorities that need to be addressed include: redefining the roles and responsibilities of central and local governments; promoting city-wide development strategies; regulating equitable financial transfer between all levels of government; encouraging transparency through free flows of information; effective civic engagement and participation; and strengthening leadership while promoting ethical conduct in the governance of cities.

The Key Finding

A country's global success rests on local shoulders. For the good of all citizens, city and state must become political partners rather than competitors. If accommodation requires new political arrangements, institutional structures or constitutional amendments, it is never too early or too late to begin making changes. The nature of those changes can best be determined through empirical observation, analysis of information and dialogue on both the condition of a nation's cities and a national strategy to improve that condition. Each country should, indeed, prepare and publish, periodically, a report on the state of its cities, focusing especially on national and local policies and how they affect cities and their citizens. Gathering of evidence by putting in place proper information systems and diagnostic tools is a practical first step. Good information will provide the common platform for dialogue among stakeholders -- an essential part of the process -- as they approach a vision for the future and set priorities for conservation and change. The main goal is to make the structures of governance more responsive to individuals, households and communities so that both national and local authorities can better serve civil society, each through separate but complementary instruments.

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