Posts that I liked

I recently came across pages and posts that I quickly want to share:

• Future Cape Town has a new web page. Lots of news and views for someone who is interested in cities.
• I'm still looking for something similar for Joburg. If you know about anyone writing about Johannesburg from a urban economics, geography, even town planning perspective, please send in a comment and a link. In the meantime I have come across a nice blog arguing that Joburg rocks!
• Finally, it is not a geography story, but I enjoyed Johan Fourie's latest post on economic history, his study of the 18th century Cape Colony and what it means for the colonisation of Mars. Private space flight is in the news, Voyager is heading into interstellar space and one day we might have companies out on Mars!

Enjoy.

On subnational data - pick your black box

South Africa faces significant challenges such as a low economic growth rate, high unemployment rate, high poverty rate and substantial inequality.  I often argue that these problems and their possible solutions have a spatial dimension that is neglected.  But, to support local economic development the public and private sectors require access to reliable sub-national data.  Statistics South Africa collects and disseminates socio-economic data, but information about local economies is limited to two private sector databases: Global Insight's REX and Quantec's Regional indicators.Recently, one of my Master's students set out to compare the two databases and we found some interesting differences.

The first thing to note is that in both cases the data are derived or imputed. This in itself is not a problem - it is also the case with for example the EU's NUTS-3 data - but the questions are about the amount of source data that do exist and the assumptions made to generate economic data at municipal level. It has been said that sub-national economic data in South Africa are not suitable for dynamic analysis because it is generated from aggregate GDP figures on the basis of a static algorithm. Our look at the data did not find simple disaggregation of official national or provincial total to the municipal level based on some or other fixed proportion, or fixed growth rates over time. We did find some interesting differences in, for example, population numbers.

There is hardly any way of knowing which is more correct, so for the economic data we argued as follows. If you subscribe to the idea that agglomerations of economic activity are characterised by cumulative causation and path dependency you would expect that over the short period for which there is data available, some places would grow faster and others slower than the national average but there would be persistence in relative positions and ranking. This is typically what the databases show. There is a lot more in the dissertation about the growth rates of GVA and different places' share of GVA, but the table below gives a brief summary of a test of rankings.

Each database shows internal consistency, but there are large (and significant) differences in rankings of places' share of GVA between the two databases.

Our conclusion: There is no evidence that the private sector databases are a simple breakdown of national or provincial numbers. There are no exploding standard errors. But the databases are black boxes and they differ substantively. They should not be used together. It is a question of picking your black box. 

What we need is an academic, open source dataset - a resource that can be vetted, applied and improved by all users.

Workshop: Urban governance and service delivery

I receieved a mail about this workshop and want to add the details here:

The African Centre for Cities and the United Nations University-World Institute for Development Economics Research have the pleasure of inviting you to a seminar on:

Urban Governance and Service Delivery in Africa

5 June 2012

8:30-12:30

University of Cape Town

Studio 5, Environmental and Geographical Science Building, Upper Campus

Africa is one of the fastest urbanizing regions of the world.  On the one hand, this demographic transformation offers important opportunities for growth, economic development, and innovation.  On the other hand, rapid urbanization generates high demand and formidable challenges for delivering basic services, including housing, water, sanitation, and electricity.

In preparation for the 2012 World Urban Forum VI, this seminar emphasizes the role of governance structures and institutions for addressing these opportunities and constraints, paying particular attention to the interaction between local actors and national political contexts.  The presenters will offer both an understanding of urban governance and service delivery across Africa while also elaborating on specific case studies of cities in Kenya, Senegal, South Africa, and Uganda.  Through these empirical examples, the seminar will also aim to provide practical policy recommendations for confronting the region’s rapid urbanization and highlight areas for greater 

research.

Since space is limited, you have to confirm your participation by 1 June 2012 by registering online.

The #CityTalk discussion on Twitter last night

The quality of places

Earlier this week the Future Cape Town blog linked to an interesting article in The Urban Times online magazine. It makes the argument that cities, through agglomeration economies, drive growth. The article goes on to say that cities also have a complex social life and 

"the quality of that place matters – the range and affordability of housing, the job opportunities, the schools, health care and public transport – because it shapes day-to-day life and long-term opportunities".

The rest is a nice explanation of the value of the local community and of making the built environment greener. Well worth the read. There is also a South African perspective on this. Prof Valerie Moller has published extensively on the quality of life and quality of place in South Africa.

A few year ago I also collaborated with colleagues Wim Naudé and Stephanie Rossouw for a paper on the non-monetary quality of city life in South Africa. Simple socio-economic profiles showed that there were clear differences between South Africa's metropolitan cities.

We were interested in distinguishing between cities' economic quality of life, the higher wages and incomes due to higher productivity, and non-economic quality of life due to the scenery, climate, low crime rate etc. The analysis involved a regression model of income per capita on the human development index and we used the residual to construct an own index of non-monetary quality of life. The residual captures the well-being achieved independently of income. The details of the analysis are explained in the paper.

The results showed that although Johannesburg was ranked 1st in 2004 in terms of economic quality of life (using per capita income), it was only ranked 5th in terms of the residuals from the HDI, and 2nd in terms of the residuals from the new index constructed above. The City of Tshwane (Pretoria) is likewise ‘underperforming’ in terms of the non-monetary quality of life as measured by both the residuals from the HDI and this paper’s own index. Specifically, Tshwane is ranked the worst (6th) according to both measures. In contrast, the City of Cape Town is ranked 1st in South Africa on both estimates of the non-monetary quality of life,  although in terms of per capita income it can only be ranked 4th in South Africa. Ekurhuleni (East Rand) and Durban’s performances seem to be on average: their per capita income ranking place them respectively in 3rd and 5th place, similar to their non-monetary quality of life rankings.

Our point is that even with the limited data available in South Africa, there are ways to measure the ability of place to translate income gains into non-monetary quality of life.

If you are interested in this sort of thing, the South African Academy of Science and Arts is hosting a one-day workshop on quality of life on the 22nd of June in Pretoria. For more info contact linda@akademie.co.za 

A few good posts: New cities, place-dependent output and SEZs in Africa

I came across three good blog posts on economic geography today and would like to recommend the further reading. 

At the Marginal Revolution blog Alex Tabarrok linked to a new Credit Suisse report, Opportunities in an urbanizing world. He highlights the close association between US state level GDP and the urbanization rate and shows that urban dwellers generate much lower levels of CO2 emissions per GDP per capita:

At the Economist's Free exchange blog Ryan Avent writes that modern economic growth is inextricably linked to agglomeration. He argues that the driving forces are rural-urban migration and the idea generating capacity of cities (the city as workshop). He finishes up with the following:

"...you can make people wealthy by making places wealthy OR by moving people to wealthy places. It is a very funny (and not funny ha ha) characteristic of economics, that it seems to focus overwhelmingly—indeed, almost exclusively—on trying to figure out the former, even though the historical record of success is much greater for the latter".

This ties in with a Let's talk development blog by the World Bank's chief economist on SEZs in Africa. Policymakers have recently launched a new wave of spatially targeted initiatives, but caution is required. Earlier initiatives failed due to to poor governance, a lack of institutional framework and political commitment, weak implementation capacity, and a lack of proper monitoring and evaluation mechanisms. The blog goes on to argue that Africa needs a new SEZ strategy that builds on a number of thrusts:

• Stronger stakeholder ownership.
• Better business environment inside the zone.
• Starting small.
• Flexibility and autonomy at local level.
• Technology transfer and skills training.
• Better linkages with the local economy.
• Clear objectives with sound benchmarking and competition.

These could be criteria for many of the local SEZ initiatives recently published by the DTI. Is it sensible to try to make the economy grow at Coega, or should more people move to Gauteng? Can we tick this list for a fuel cell cluster in the North West?

More on creative cities

Last week I wrote a blog about creativity, growth and development and where South Africa ranks in the Global Creativity Index. Since then I seem to be reading about creativity and the creative class everywhere. The Mail and Guardian has asked "Can creativity fix South Africa?", they mentioned the CGI and reported on an initiative called Culture Shift. The Future Cape Town blog asked "Why do we want to be a creative city?" and linked to an article at the Global Urbanist that argues that ranking creative cities is an exercise in futility. Oli Mould of the Globalisation and World Cities research network at Loughborough University states that:

The 'creative city' — the city of tolerance and cycle paths, gays and galleries — is qualitatively different from the creativity that Jacobs alludes to. The impulse to quantify the former is, unfortunately, usually to the detriment of the latter. In striving to climb to the top of the league tables, cities focus on how they can create the conditions that stimulate creativity quickly and cheaply (although it rarely ends up being either), missing or neglecting the role that individualised, neighbourhood creativity plays; and which is often already present in the city. 'Creativity' has been hijacked as a pseudonym for the promised land of economic prosperity, in effect reduced to marketing a city, creating a competitive city brand.

Though I agree that creative city branding may get to be too much, I do want to argue that there is a clear link between the nature of the local labour market and city growth and the creative class cannot be dismissed.

A thick city labour market allows for better matching between workers and jobs and there are two models in the literature. Helsley and Strange (1990) showed that a large city allows for a better match between different workers and firms’ job requirements and this enhances efficiency.  On the other hand, Duranton (1998) argued that a large market allows workers to become more specialised and, therefore, to be more efficient.  Either way, the better matching gives rise to increasing returns and growth. The cheerleaders for the importance of the creative class are thinking about these benefits and specifically for a subset of the labour force in high-skilled, high-value added occupations. There is enough evidence that innovation and creative destruction are key drivers of growth.

However, local policymakers' efforts to foster the creative class are often flawed. There are clear external benefits to having the creatives in your city, but will you be able to crowd them in with a flagship opera house or a bike sharing scheme? The relationship between creative places and agglomerations of technology, talent and tolerance probably runs both ways. But in a South African economy, competing on the world stage, it won't hurt to have good bistro's, or maybe some bike paths!
 
 

City 2.0

At this week's annual TED conference, the TED prize 2012 was announced. It was not awarded to a person, but to an idea: The city 2.0.

Ed Glaeser, Harvard economist and author of the The triumph of the city, was one of the speakers at the event. “At their heart,” he said, “cities are the absence of physical space between people.” And cities power the economy: In the U.S., the three largest metropolitan areas produce 80% of GDP but contain only 13% of population. He went on to explain how cities make us smarter.

In practice the TED initiative is about the cloud and the crowd. They sponsor a new site TheCity2.org to connect leaders, experts, companies, organizations and citizens. The goal is to crowdsource a virtual clearinghouse for tools and methodologies and best practices to reshape cities around the world.

An interesting bit on the TED blog is about Suja Lowenthal, the Vice Mayor of Long Beach and her involvement in a project planned in the Free State (the province in South Africa).

Her story today is about a city she has been dreaming about, and is about to help build in Free State, a province at the heart of South Africa. Two years ago the provincial government asked her to be part of building a new city, the CITY for Tomorrow. It will be a city of over half a million, and deeply green — no cars allowed in the center. It will be designed to appeal to a young generation, that appeals to health, education and opportunity. It will be a beautiful modern city built on a blank canvas.

The rest of the story is here. Has anyone here heard about this?

Thinking cities

I have been busy with more WTP stuff today, but came across this cool video via @urbandata on Twitter. FastCompany's Co.Exist site has this wonderful short film on Thinking cities and how cities drive growth and development.

"There’s an enormous realization of the importance of cities. That is true for business, it’s true for government, it’s true for civil society."

Enjoy.

The Gated City, chapter 1

This month I'm reading Ryan Avent's The Gated City. He writes for The Economist and recently had two excellent blogs on geographical economics:

Moving towards stagnation
Moving towards stagnation, continued

The Gated City is a Kindle Single in which Mr Avent argues that “Our cities are where most of us live, where most of our economic output is produced, and where most of the ideas that enrich our lives originate. When they function well, the act as engines of discovery and opportunity. When they do not, the economy suffers, and the labour force with it”.

Something has gone wrong:

He starts with the concerns about the U.S. economy: slower growth and rising inequality. He also briefly outlines some of the explanations:

• Worker bargaining power has declined (Krugman)
• The demand for skills has shifted (Autor)
• The education system has not been successful at increasing educational attainment (Katz & Goldin)
• The emerging world is catching up
• The low-hanging fruit of available land, uneducated population and revolutionary technological innovations are gone and growth has slowed (Cowen).

Mr Avent agrees that there is some truth to all these explanations, but wants to add another: “That America has made its productive locations ever less accessible. The best opportunities are found in one place, and for some reason most Americans are opting to live in another”.

He argues this point by highlighting the productivity of cities, but notes that cities are often reined in “because we worry that urban growth will be unpleasant”. His example is of the San Francisco Bay area, which, despite wonderful climate, culture, innovation and much higher than average wages, have lost residents, while places like Phoenix, Arizona have been growing. This is ascribed to differences in the cost of living, specifically housing. It is a question of supply not meeting demand in the right places and it is often caused by residents who oppose development because they want to “protect neighbourhoods, views and buildings they love from changes they fear”. This, Not-In-My-Back-Yard view has significant consequences.

Mr Avent estimates that migration from costly cities to affordable but less productive ones overthe period 2000 to 2009 may have cost the American economy between 0.25% and 0.5% of GDP per year. Adding the effect of lost innovation of growth, new firm creation and employment, the cost may be trillions in lost output.