The international-dimension-of-european-urban-policy

The International Dimension of (European) Urban Policy- a view from the OECD

Ioannis Kaplanis Economist Regional Development Policy Division Public Governance and Territorial Development Directorate

Open Days- 12th European Week of Cities and Regions Brussels, 9 October 2014

Topics

1| Urbanisation trends 2| A new urban paradigm- European and international 3| Governance arrangements matter 4| Collaboration at the international level

3

Most people across the OECD live in cities

13.4%

25.3%

27.3%

28.0%

28.7%

29.3%

29.8%

30.2%

35.3%

36.0%

36.8%

37.2%

37.4%

37.9%

38.8%

39.3%

39.6%

40.0%

40.4%

40.8%

44.4%

47.0%

48.3%

48.6%

50.9%

53.5%

56.3%

68.5%

73.2%

83.1%

24.3%

22.2%

25.1%

11.9%

21.7%

17.9%

25.0%

20.3%

20.9%

18.8%

32.3%

36.9%

15.9%

17.9%

25.0%

16.1%

15.8%

9.1%

25.0%

33.3%

14.7%

10.8%

24.9%

18.3%

11.0%

15.0%

16.8%

9.5%

13.4%

16.9%

62.4%

52.5%

47.6%

60.1%

49.5%

52.9%

45.2%

49.5%

43.8%

45.3%

30.9%

26.0%

46.7%

44.3%

36.3%

44.5%

44.5%

50.9%

34.7%

25.9%

40.9%

42.2%

26.8%

33.1%

38.0%

31.5%

26.9%

21.9%

13.4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Luxembourg (1)

Slovak Republic (8)

Norway (6)

Finland (7)

Slovenia (2)

Hungary (10)

Czech Republic (16)

Poland (58)

Italy (74)

Switzerland (10)

Denmark (4)

Spain (76)

Netherlands (35)

Sweden (12)

Ireland (5)

Germany (109)

Portugal (13)

Estonia (3)

Greece (9)

France (83)

United Kingdom (101)

Belgium (11)

Austria (6)

Chile (26)

OECD (1179)

Mexico (77)

United States (262)

Canada (34)

Japan (76)

Korea (45)

Metropolitan Areas (500,000+) Small/Medium Sized Functional Urban Areas (50,000-500,000) Residents living outside Functional Urban Areas

4

The rise of the mega-cities

0

5

10

15

20

25

30

35

40

45

50

-7000 -3500 -2500 -2100 -700 200 600 900 1200 1500 1800 1825 1900 1950 2007 2020 2025

RioLondon

Beijing

NYC

Sao Paolo

Mexico City

Mumbai

Tokyo

Delhi

Uruk(40k)

Mari (50k) Ur

(65k)

Constantinople (600k)

Baghdad (900k)

Babylon (200k)

Rome (1.2M)

Kaifeng (1M) Beijing

(1M)

Mega-city = 10M

(- = BC)

Largest cities in the world 7000 BC until 1800

NYC only mega-city in 1950

29 mega-cities in 2025

9 mega-cities in 1985

21 mega-cities in 2012

Population (Millions)

Source: http://geography.about.com/library/weekly/aa011201a.htm, citing Chandler, T. (1987) Four Thousand Years of Urban

Growth: An Historical Census, Edwin Mellen Press.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1950-1970 1971-1990 1991-2010 2011-2030 2031-2050

Developed countries

Developing & emergingcountries in Asia

Developing & emergingcountries in other regions

5

Urban population is growing at the fastest

speed in developing and emerging countries

Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision

New urban dwellers in absolute numbers (1950-2050)

Bil

lio

ns

6

7

Income growth comes with urbanisation; however

urbanisation doesn’t guarantee it

Urbanisation rate (%)

Income

growth

40-50%

Country Group A (urbanisation hand-

in-hand with income growth)

Country Group B (intermediate)

Country Group C (urbanisation doesn’t bring

income growth)

The traditional paradigm:

• Efficiency and growth come first.

• Pursuit of equity or environmental goals should interfere as little as possible with the pursuit of growth.

• Regional policy as the ‘residual sectoral policy’.

A new approach:

• Giving greater weight to complementarities (not just tensions) between efficiency, equity and environmental objectives.

• Complementarities between these three dimensions of progress are most visible and most effectively managed in particular places.

• Not one size fits all- but place based policies

• Urban/regional policy is not simply another line of policy running in parallel to sectoral policies: it is about co-ordinating and optimising the mix of sectoral policies where they interact – in specific places. 8

Reconciling efficiency, equity and environmental sustainability

9

Sustainability must be pursued in all

its three dimensions

Identifying and promoting links between economic, environmental and social goals is both possible and critical to building cities/regions that work

Efficiency Equity Environmental

sustainability

Economic policies

Sustained growth

Economic reforms may increase equity

Green growth policies can improve

sustainability

Social policies

Social cohesion can increase efficiency

(e.g., trust, security, knowledge)

Social cohesion

Inequality can be reduced without

environmental harm (e.g., replace fuel

subsidies with transfers)

Environmental policies

Green growth policies can boost

innovation and efficient resource use

Environmentaldegradation tends to

hit disadvantaged groups more

Environmentalsustainability

Sustainable development requires a search for policy complementarities

Role of Subnational Governments by types of expenditures

26%

18%

14% 14% 12%

16%

20%

13% 12%

16%

20% 18%

0%

5%

10%

15%

20%

25%

30%

Education Health EconomicAffairs

GeneralServices

Socialprotection

Other*

OECD (27 countries) EU27

OECD and EU (2011, % of expenditure)

*Other: Defence; Public order and safety; Housing and community amenities; Recreation, culture and religion; Environment.

Urban/regional policy should focus more on coordination failures

& Governance

11

• Recent OECD analyses suggest that governance fragmentation can more than offset the economic benefits of agglomeration.

• Local and regional policies can do more to reduce agglomeration costs (congestion, pollution, etc) than to enhance agglomeration benefits.

• Findings on polycentrism point to the potential benefits of systems of cities: connectivity matters.

• Agglomeration is not a synonym for density.

12

Agglomeration and governance

13

Agglomeration benefits are real

Productivity increases with city size.

Source: OECD Metropolitan Database.

14

Agglomeration in support of

territorial cohesion?

Economic growth increases with proximity to large cities Yearly growth rates of GDP per capita in TL3 regions (1995-2010) and driving time to the closest large

metropolitan area of 2m or more inhabitants

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

within 45 min.by car

45 to 90 min.by car

90 to 180 min.by car

180 to 300 min.by car

more than 300min. by car

Note: Yearly growth rates controlling for country fixed effects and initial GDP. Eighteen OECD countries included.

Source: Ahrend, R and A. Schumann (OECD, 2014)

15

Less fragmented urban governance promotes growth

• Urban sprawl creates negative externalities in Metropolitan areas (MAs)

• Cooperation is a way to internalize the externalities when making policy decisions

Governance bodies reduce the cost of administrative fragmentation

Difference significant at the 99%-level after controlling for log-population levels and country specific trends.

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

1.4

With GovernanceBody

Without GovernanceBody

Change in Urban Sprawl

Based on OECD Metro Governance Survey

Governance bodies increase well-being

55%

60%

65%

70%

75%

80%

With TransportAuthorities

Without TransportAuthorities

Share of Citizens Satisfied with Public Transport • Public Transport

projects usually cut through many jurisdictions

• Cooperation is required for effective implementation and coordination of services

• Citizens are more satisfied in MAs that have sectoral authorities for public transport

Based on European Urban Audit perception survey. Difference significant at 95% level.

• Invest using an integrated strategy tailored to different places

• Adopt effective co-ordination instruments across levels of govt

• Co-ordinate across SNGs to invest at the relevant scale

Pillar 1

Co-ordinate across levels of governments

and policies

• Assess upfront long term impacts and risks

• Encourage stakeholder involvement throughout investment cycle

• Mobilise private actors and financing institutions to diversify sources of funding and strengthen capacities

• Reinforce the expertise of public officials & institutions

• Focus on results and promote learning from experience

Pillar 2

Strengthen capacities and promote policy

learning at all levels of government

• Develop a fiscal framework adapted to the objectives pursued

• Require sound and transparent financial management at all levels

• Promote transparency and strategic use of procurement

• Strive for quality and consistency in regulatory systems across levels of government

Pillar 3

Ensure proper framework conditions for public

investment at all levels of government

18

An OECD instrument: The Principles for Effective Public Investment Across Levels of Government

- The first OECD Instrument in the area of regional policy and where sub-national governments are explicitly recognised

• OECD “Urban trends and governance” project financed by DG Regio (agglomeration, governance, connectivity, etc)

• FUAs: new definition of cities by OECD and EU based on functional economic criteria than administrative boundaries

• Collaboration of OECD with Eurostat on Regional & Metropolitan Area Databases

• Support by EU for OECD research on international experiences of urbanisation (e.g. National Urban Policy Review of China)

• Convergence of views between the CoR and the OECD on multi-level governance approaches and further collaboration on implementation

19

Collaboration of OECD and EU institutions

on urban policy

20

The OECD Metropolitan Database

Interactive maps and data: For metro areas: http://measuringurban.oecd.org/ For regions: http://stats.oecd.org/OECDregionalstatistics/

21 http://www.oecd.org/gov/regional-policy/how-is-life-in-your-region.htm

• Growing numbers of people will reside in cities in the future- mainly from emerging/developing countries

• Urbanisation path matters, since durability in time; can affect prospects of global economy

• New urban paradigm; smart, sustainable and inclusive growth

• Agglomeration benefits are real; but connectivity/polycentricity matter

• Fragmented governance can adversely affect urban performance

• Need to:

• Make best use of city specific assets

• Utilise policy complementarities at the local level; Functional Urban Area level

• Co-ordinate across jurisdictional lines and across levels of government

• In search of a balanced, sustainable and inclusive urban growth model; what next?

22

Concluding remarks

Thank you for your attention!

ioannis.kaplanis@oecd.org