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© RIA Novosti. Natalia Seliverstova

Outlook for world cities: rapid growth, competition

by Nathan Gray at 09/07/2013 10:59

As globalization has taken hold in the world economy, a second trend will continue to develop in the 21st century: urbanization.

As city populations grow, agglomerations - the fusion of different communities into a single socio-economic entity, in terms of communications and labor markets - will only increase. These agglomerations will not necessarily mean a union in terms of government, but will contribute to the phenomenon of the mega-city.

For Moscow, this could go beyond last year's annexation of the New Moscow territory, now a southwestern arm of the city extending to the border of the Kaluga region, to build greater interaction between the capital and the surrounding regions.

"Analysts say that the Moscow agglomeration could extend beyond the borders of the Moscow region by 2025, and include nearby large regional centers such as Tula, Tver, Kaluga and possibly Vladimir," Andrei Sharonov, Moscow's acting deputy mayor for economic policy, told The Moscow News in e-mailed comments. "There is an advantage here: a huge, dynamic territory will take shape, a huge market. Currently, the daily population of Moscow is 15 million, and with the nearby communities around Moscow, it is 18 million."

Rising competition

One of the side effects of increasing urbanization will be rising competition among cities for business, workers and the resulting tax base a strong economy will bring.

At a session at last month's St. Petersburg Economic Forum, experts were on hand to discuss cities' challenges in the 21st-century world economy.

Edward Skyler, executive vice president at Citi and former deputy mayor for operations in New York City, cited predictions that 70 percent of the world's population will be living in cities in 2050. That's about equal to today's total world population, if calculations by the UN are correct.

The strength of a city, however, will not be derived from population alone.

"One of the most important things is, what cities are going to be the most competitive? What are going to be the drivers of growth?" Skyler said.

Leonid Kazinets, founder and chairman of Barkli Corporation, argued that a development model based on one or a few major centers - as in Russia - could in fact be counter-productive to a country's development. Moscow's identity as a transportation hub, for example, was standing in the way of Russia's economic growth by depriving regional centers of population and opportunity.

Instead, the Soviet monocities that have declined since the shutdown of their sole employers could provide a foundation for urban development that is responsive to 21st-century concerns, such as sustainable living. They could even make life in existing centers more comfortable by reducing congestion.

"We can now find whole empty quarters in monocities of quality residential buildings that, maybe, require some renovation, but on the whole they are ready and empty," Kazinets said. "There are no traffic jams, and environmental conditions are quite good." Diversification of communications and local economies around Russia, as well as higher wages, could make smaller cities attractive to workers again.

New ghost cities

A concern with competition, though - raised by David Gray, managing partner at PricewaterhouseCoopers - is the "losers" of the game, and the potential for new ghost cities to follow the former monocities of the Soviet Union.

Sharonov pointed out that Moscow is looking to improve its position in this competition, to become "a destination point both for people coming from the Urals and coming from London," instead of just being a transfer point between the Russian regions and Britain. To do so, it will have to capitalize on its strengths, an educated workforce and an improving infrastructure.

"We also have to bring back those people who left because they could not use their abilities fully, or receive [suitable] compensation and, most of all, the quality of life they could have in other cities around the world," he said.

One of the beneficiaries of this emigration, not just from Moscow but from Russia as a whole, was Israel, where Tel Aviv has shaped itself into a cradle for entrepreneurship, said Tel Aviv Mayor Ron Huldai.

"Russian immigration was one of the miracles that happened to Israel," Huldai told The Moscow News. "Israel got, maybe, $10 billion in free education."

A lack of advanced technology in Russia at the time, however, meant that these immigrants could not take full advantage of their education, a solution for which they found in Israel.

"When Russian people encountered the entrepreneurship and the technology in Israel, they created a lot of economic growth," he said.

Tel Aviv has also pursued an "ecosystem" - including culture, nightlife and free public wi-fi - to attract young entrepreneurs, which has led to a start-up community of around 700 businesses.

The bedroom regions

Moscow, meanwhile, is looking ahead to the end of 2014, when its general development plan for the next two decades will be released.

Congestion, especially in the center, has become a key issue for urban planning. The "bedroom regions" at the far ends of the metro lines have therefore increasingly come onto City Hall's radar.

The issue of aging infrastructure and housing stock in these areas is a "serious challenge" for city planners, Sharonov said, as there is a lack of identity and positive image.

"Living in one of the [bedroom] regions can be of a low prestige," he said. "The basic idea for creating an identity is raising the attractiveness and recognition of a region through the development of public spaces, cultural and historical sites, and entertainment centers. It will help to lower the necessity of residents to relocate."

Reflecting the importance of peripheral development for cities worldwide, the subject will be the focus of December's third Moscow Urban Forum, he added.

Read other articles of the print issue "The Moscow News #26"
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