Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations. Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a priori a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.
We analyse the relationship between urban sprawl and changing patterns of inequality and segregation in metropolitan areas of Argentina. The existing literature has endeavoured to study the determinants of the expansion of cities, but less attention has been placed in understanding the effects of this sprawl on the livelihood of the people that live in them. Understanding whether different patterns of urban extension determine both segregation and inequality is extremely relevant in the context of fast growing urban agglomerates of Latin American countries. Among other findings, we provide evidence that there is segregation of the poor and not of the rich in all urban agglomerates but in Greater Buenos Aires, where segregation of the affluent, not the poor, prevails in the areas of greater informal urban expansion, measured by the extension of informal settlements. Yet, not all the patterns of urban development and built-up growth have the same effect. More leapfrog appears to explain greater segregation -particularly of the poor - while both infill and extension are positively related to more homogeneous urban agglomerations. This means that the most disadvantaged are more evenly distributed in agglomerations that have not seen much of their sprawl due to discontinue urban expansion of their borders. Finally, we also find a positive association between more unequal municipalities and greater slum expansions. The causality of this relationship is unclear and further analysis could be promising. It might be the case that more unequal municipalities allow for institutional environments in which slums can grow faster. Or it might well be that places which have experienced more accelerated slum growth have become more unequal because of the arrival of new families that accentuates such disparities.
The Maldives’ relatively strong economic growth has brought about a dramatic reduction in poverty and improvement in the welfare of the Maldivian people. However, the growth, which is primarily driven by the tourism sector, has been highly cyclical and vulnerable to external shocks, and unable to create adequate jobs for the growing young population. Moving forward, the Maldives needs to shift to a more broad-based, sustainable, and inclusive growth strategy given its resource endowments and small population. Transport infrastructure is critical, and improved transport will help address the country’s connectivity issue and reduce the cost of doing business. An educated and skilled workforce can improve productivity and help find additional economic niche markets for the country. As with all countries, the government must remain aware of the importance of maintaining fiscal stability and an adequately functioning system of financial intermediation to enable and support both public and private investments needed in the growth process. This report provides support to the Maldivian government in formulating its high-priority policies by identifying the critical constraints to achieving inclusive growth. The report also provides policy recommendations aimed at helping the government to overcome the constraints to achieving a process of growth that is both sustained and inclusive.
Fiji’s economy has made a turnaround since 2010 under a government strongly committed to reform. That period saw Fiji experiencing one of the few episodes of sustained growth in its post-independence economic history, averaging 3.3% annually or nearly four times the average growth during 2000–2009. Its successful national elections and return to democracy in 2014 boosted investor sentiment. A key challenge for Fiji now is to create an environment conducive to greater private sector activity so it can sustain its growth momentum and make its growth more inclusive. This study, using an inclusive growth framework, has identified the critical constraints that Fiji needs to address to strengthen investor sentiment even further and achieve inclusive growth.
South-east Asia is likely to sustain larger economic losses from climate change than most other areas in the world. Moreover, those losses—the collective effect of impacts on agriculture, tourism, energy demand, labour productivity, catastrophic risks, health, and ecosystems—may be larger than previously estimated. When these loss estimates are considered simultaneously in the modelling, gross domestic product (GDP) is found to be reduced by 11% in 2100 under the business as usual emissions scenario of this study, which is 60% higher than the earlier ADB assessment. Climate change is a global concern of special relevance to South-east Asia, a region that is both vulnerable to the effects of climate change and a rapidly increasing emitter of greenhouse gases. From 1990 to 2010, carbon dioxide (CO2) emissions in South-east Asia have grown more rapidly than in any other region of the world.
This publication analyses how closer regional connectivity and economic integration between South Asia and Southeast Asia can benefit both regions. With a focus on the role played by infrastructure and public policies in facilitating this process, it provides a detailed and up-to-date discussion of issues, innovations, and progress. Country studies of national connectivity issues and policies cover Bangladesh, India, Myanmar, Nepal, Sri Lanka, and Thailand, examining major developments in trade and investment, economic cooperation, the role of economic corridors, and regional cooperation initiatives. Thematic chapters explore investment in land and sea transport infrastructure, trade facilitation, infrastructure investment financing, supporting national and regional policies, and model-based estimates of the benefits of integration. They also identify significant opportunities for strengthening these integration efforts as a result of the recent opening up of Myanmar in political, economic, and financial terms. For the first time for these regions, the book employs a state-of-the-art computable general equilibrium (CGE) model incorporating heterogeneous firms to estimate the advantages of integration.
Issues with grid integration of wind energy has led to curtailment of wind power, delay in interconnection for commissioned wind projects and/or denial of generation permit. This report describes the impact of wind power on the grid, methods to analyze the impact and approaches to mitigate the impact. Countries like Denmark, Germany, Spain, and regions within the United States like Texas and Colorado have achieved high penetration of wind energy with modest changes to the grid. The key to high penetration of wind energy has been flexible grids. The report outlines the lessons learned with a focus on applicability to emerging wind energy markets.
Inclusive businesses are commercially viable business models that provide in-scale innovative and systemic solutions to problems relevant to the lives of low-income people. Inclusive business companies often involve women in their value chain and provide specific services that help low-income women. This report assesses the extent to which inclusive business models promote women's economic empowerment. Examples come from the inclusive business portfolios of the Asian Development Bank, the Inter-American Development Bank and the International Finance Corporation.
In order to maximize the full development potential of the higher education system, strategic interventions will be needed at both the national, such as creation of appropriate economic and institutional regimes, as well as an efficient national policy for fostering innovation, and university levels. University-level interventions would include capacity building, improvements in the learning environment, exposure of students to the world of work, and promoting international best practices. This report presents current arrangements and initiatives in the country’s skills development strategies. These are complemented by critical analyses to determine key issues, challenges, and opportunities for innovative strategies toward global competitiveness, increased productivity, and inclusive growth. It emphasizes making skills training more relevant, efficient, and responsive to emerging domestic and international labor markets.
Financial inclusion is receiving increasing attention as having the potential to contribute to economic and financial development while at the same time fostering more inclusive growth and greater income equality. However, although substantial progress has been made, there is still much to achieve. East Asia and the Pacific and South Asia combined account for 55% of the world’s unbanked adults, mainly in India and the People’s Republic of China (PRC). This paper surveys the experience of a number of advanced and Asian emerging economies to assess factors affecting the ability of low-income households and small firms to access financial services, including financial literacy, financial education programs and financial regulatory frameworks, and identify policies that can improve their financial access while maintaining financial stability. It aims to identify successful experiences and important lessons that can be adopted by other emerging economies. This analysis is based on studies of the experiences of Germany, the United Kingdom, Bangladesh, India, Indonesia, the Philippines, Sri Lanka and Thailand. The study aims to take a practical and holistic approach to issues related to financial inclusion. For example, innovative methods of promoting financial access, such as mobile phone banking and micro-finance, require corresponding innovations in regulatory frameworks, perimeters and capacity. Moreover, programs in the areas of financial education and consumer protection are needed to enable households and small firms to take full advantage of improvements in financial access.
Innovation plays a critical role in shaping the industrial and firm competitiveness of any nation. Innovation is often discussed in the setting of developed countries, but the rise of emerging economies such as India has generated a new interest in understanding innovation in developing economies. This paper aims to study and present the current state of innovation in small and medium-sized enterprises (SMEs) in India. The focus of the paper is to bring out the key barriers SMEs face in the innovation process in the context of the existing government policy. India, being a developing nation, has its own set of unique situations and challenges that impede the innovation potential of SMEs operating in it. Many of these barriers are related to public policy, funding constraints, shortage of skilled research and development (R&D) workforce, and weak linkages between institutions and the firms, among others.
This paper presents the results of a study into the performance and stability of Bhutan’s banking system. It finds that economic growth has fueled a large demand for household credit over recent years. In turn, banks have responded by substantially increasing their loan portfolios. Although the largest recipient of credit is the building and construction sector, personal loans now make up more than 18% of credit extended to the private sector. Within this context, this study discusses policy recommendations to strengthen and improve the banking sector. These measures include fostering banking sector competition, improving regulatory practices on both the monitoring and the enforcement side, and enhancing risk diversification and liquidity management practices.
Water has been sculpting Bhutan’s landscape for millennia, flowing down from majestic alpine mountains to the narrow valleys and deep gorges that make up the country’s iconic landscape before spreading out toward the southern plains. Water needs to be managed well, and in an integrated and adaptive way. This kind of management is very challenging because it involves many actors and stakes. Water is not a sector in the traditional sense. Rather, it is a complex fabric—particularly in Bhutan—of interconnections between agriculture, ecology and energy that need to be recognized and managed as a system. This view of water management gives coordination a central role. Bhutan’s framework for integrated water resource management (IWRM) adopts coordination as its core management principle. It builds on a strong Bhutanese tradition of water sharing and collective management, examples of which are illustrated in this book.
Building on robust economic growth since the end of a civil war in 1997, Tajikistan has transformed itself into a service economy driven by consumer spending fueled by strong remittance inflow. Yet the transfer of resources to high value-added sectors has been restrained, and structural change has generated few new jobs. Without sufficient employment opportunities in the services and industrial sectors, agriculture became the fallback for most of the labor force. To continue its economic growth, Tajikistan requires new drivers from a diversified industry sector and a modernized economy through structural transformation and export diversification.
This book focuses on local government’s role in increasing city competitiveness through planning, governance, and finance, particularly in small to medium-sized cities in South Asia. Existing studies on city competitiveness tend to focus on megacities, and yet smaller cities house an increasingly large portion of South Asia’s population. This study seeks to initiate a more systematic thinking on the role of planning, governance, and finance to overcome the challenges of urbanisation, improve the investment climate, and provide greater opportunities for more people, especially in small to medium-sized cities.
Economic growth in Bangladesh, above 6% in most years since the 2000s, has been on the fast track since the 1990s. Not many developing countries, especially the least developed, have been able to achieve this consistently for such a long period. Yet despite the jobs generated in the export-oriented ready-made garment industry, the fruits of growth have not been widely shared. This joint study by the Asian Development Bank and the International Labour Organization examines the nature and magnitude of the employment challenge Bangladesh faces, looking at the nature of productive employment and its role in transmitting the benefits of growth into incomes for the poor. It indicates that the positive economic turnaround in Bangladesh is largely due to the rising presence of women in the workplace.
Bangladesh has transformed its economy over the last 2 decades, graduating to middle-income status as average annual growth remained strong at 5%–6%. The country’s goal to become an upper-middle-income country by 2021 will require even stronger annual growth of 7.5%–8%. The study finds that the most critical constraints to growth are (i) insufficient reliable energy supply, (ii) policies that indirectly stunt development of economic activities unrelated to ready-made garment exports, and (iii) insufficient security about property and land rights due in part to inadequate registry systems. If policies are designed to urgently tackle these constraints, Bangladesh will be free to harness its potential for inclusive and sustainable growth.
Working conditions in developing countries are the focus of policy makers and stakeholders in Europe, the Americas, and especially Asia. In this debate, the garment sector has perhaps captured the most attention. This paper reviews academic studies of the causes and consequences of poor conditions in developing country garment factories with a special emphasis on causes and potential solutions for South Asia. This review provides an introduction to some of the leading academic literature and ideas that are important for understanding the persistence of poor labor practices and possible policies to address these conditions.
Opportunities for energy efficiency in South Asian power systems exist mostly in the areas of operation of thermal power plants, electricity transmission and delivery systems and in demand management and conservation at the user-end. This paper concludes that there is scope for significant improvement in coal-fired power plant efficiency improvements and loss reduction in transmission and distribution systems. On the demand side expanded application of time-of-use electricity tariffs and appliance standards along with demand control through smart metering will improve efficiency. These improvements can be realized with appropriate policies and programs that can be readily implemented with the existing institutional framework.
This paper examines how transformations in the housing system in the People’s Republic of China (PRC) influence the PRC pattern of urbanization. It first discusses how housing policies determine the supply and demand of housing in urban PRC and subsequently analyzes how the changes in the mode of housing provision have affected rural–urban migration, intercity labor mobility, the financing of urban infrastructure, and general urban economic activities in the PRC. The PRC experience of the interaction between the housing system and urbanization is unique, but it clearly indicates that an effective housing system that can responsively provide adequate and affordable housing is crucial to the success of inclusive and equitable urbanization.
The relationship between human capital development and urbanization in the People’s Republic of China (PRC) is explored, highlighting the institutional factors of the hukou system and a decentralized fiscal system. Educated workers disproportionately reside in urban areas and in large cities. Returns to education are significantly higher in urban areas relative to those in rural areas, as well as in large, educated cities relative to small, less-educated cities. In addition, the external returns to education in urban areas are at least comparable to the magnitude of private returns. Rural areas are the major reservoir for urban population growth, and the more educated have a higher chance of moving to cities and obtaining urban hukou. Relaxing the hukou restriction, increasing education levels of rural residents, providing training for rural–urban migrants, and guaranteeing equal opportunity for all residents are necessary for a sustainable urbanization process in the PRC. In terms of health, rural–urban migration is selective in that healthy rural residents choose to migrate. Occupational choices and living conditions are detrimental to migrants’ health, however. While migration has a positive effect on migrant children, its effect on “left-behind” children is unclear.
This publication documents Japan’s experience in pursuing sustainable sanitation solutions in the context of economic development. Five case studies illustrate how sound sanitation policies are essential in achieving a nation’s growth. Produced by ADB in cooperation with Japan Sanitation Consortium, this publication also documents key policies and laws that enable the integration of sewerage systems and wastewater treatment facilities in development plans. It shares learnings on how the sanitation challenge can be met, not only at the community, but also at the national level.
In this paper, a new set of corridors is being proposed for Bangladesh—a nine-corridor comprehensive integrated multimodal economic corridor network. This paper presents the initial results of the research undertaken as an early step of that development effort. It recommends an integrated approach to developing economic corridors in Bangladesh that would provide a strong economic foundation for the construction of world-class infrastructure that, in turn, could support the growth of local enterprises and attract foreign investment.
This paper assesses the positive cobenefits of promoting green and clean energy in Asia, and discusses four case studies where cobenefits have been delivered in practice in Indonesia, People's Republic of China, Japan, and Singapore. It first defines what is meant by “clean” energy across the four technological systems of cooking, renewable electricity, energy efficiency, and urban transport. It summarizes at least four general types of cobenefits to investing in these systems.
Myanmar has abundant energy resources, particularly hydropower and natural gas. However, the country’s energy sector has been underdeveloped due to global isolation and lack of financial and technical capacity. This is the first energy sector assessment, strategy, and road map for Myanmar prepared by ADB's Southeast Asia Energy Division. It highlights energy sector performance, major development constraints, government plans and strategy, past ADB support and experience, other development partner support, and future ADB support strategy. This document is linked to and feeds into ADB’s country partnership strategy for Myanmar and will be updated as strategic developments and program changes are needed.