The new world or­der of mega cities

Enterprise - - World view -

The world’s first cities grew up in what is now Iraq, near the banks of the Ti­gris and Euphrates rivers. The first city in the world to have more than one mil­lion peo­ple was Rome at the height of the Em­pire in 5 A.D. At that time, the world’s pop­u­la­tion was only 170 mil­lion. But Rome was some­thing new in the world. It had de­vel­oped its own so­phis­ti­cated san­i­ta­tion and traf­fic man­age­ment sys­tems, as well as aque­ducts, multi-storey low-in­come hous­ing and even sub­urbs, but after it fell in 410 A.D., it would be 17 cen­turies be­fore any met­ro­pol­i­tan area would have that many peo­ple.

By the 20th cen­tury, the pop­u­la­tion of the world started crowd­ing to­gether in ma­jor ur­ban ar­eas. This ur­ban­iza­tion led to the new phe­nom­e­non of mega city – an ur­ban area with over 10 mil­lion in­hab­i­tants.

Mega cities are key el­e­ments in to­day’s global econ­omy, which is very dif­fer­ent from pre­vi­ous ‘world economies’. We have now pos­si­bly en­tered the third era of glob­al­iza­tion, which rep­re­sents a rad­i­cal de­par­ture from the past.

Highly pro­duc­tive in­di­vid­u­als liv­ing in ar­eas with high-qual­ity en­vi­ron­ments can par­tic­i­pate in pro­duc­tive pro­cesses any­where in the world. More eco­nomic pro­cesses, like pro­duc­tion, con­sump­tion, man­age­ment, in­for­ma­tion, cap­i­tal, mar­kets, and labour, op­er­ate world­wide than ever be­fore. This abun­dance of op­por­tu­nity ap­plies not only to multi­na­tional com­pa­nies but to mi­cro, small and medium sized busi­nesses and even in­di­vid­u­als linked with larger en­ter­prises through pro­duc­tion and sup­ply net­works. Na­tional gov­ern­ments could dom­i­nate mar­kets once but now they need to op­er­ate within the in­ter­na­tional econ­omy.

The first large city in the mod­ern era was Bei­jing, which sur­passed the one mil­lion pop­u­la­tion mark in around 1800, fol­lowed soon after by New York and Lon­don. But at that time city life was an ex­cep­tion with only three per­cent of the world’s pop­u­la­tion liv­ing in ur­ban ar­eas. In the present time, cities are push­ing be­yond their lim­its and are merg­ing into new and mas­sive ur­ban con­cen­tra­tions known as mega re­gions, which are linked both phys­i­cally and eco­nom­i­cally.

The big­gest mega-re­gions lead­ing the front of rapid ur­ban­iza­tion to­day are: Hong Kong-Shen­hzen-Guangzhou, China, home to about 120 mil­lion peo­ple; Nagoya-Osaka-Ky­oto-Kobe, Ja­pan, ex­pected to grow to 60 mil­lion peo­ple by 2015 and Rio de Janeiro-São Paulo re­gion in Brazil with 43 mil­lion peo­ple. The same trend on an even larger scale is seen in other fast-grow­ing ur­ban cor­ri­dors: West Africa: 600 km of ur­ban­iza­tion link­ing Nige­ria, Benin, Togo and Ghana, and driv­ing the en­tire re­gion’s econ­omy; In­dia: From Mum­bai to Delhi and East Asia: Four con­nected mega­lopolises and 77 sep­a­rate cities of over 200,000 each oc­cur from Bei­jing to Tokyo via Py­ongyang and Seoul. In the first half of the 20th cen­tury, the fastest ur­ban growth was seen in western cities. New York, Lon­don and other First World cap­i­tals were mag­nets for im­mi­gra­tion and job op­por­tu­ni­ties. In 1950, New York, Lon­don, Tokyo and Paris boasted hav­ing the world’s largest met­ro­pol­i­tan pop­u­la­tions. Also in the top 10 were Moscow, Chicago and the Ger­man city of Essen. By then, New York had al­ready be­come the first mega city, with more than 10 mil­lion peo­ple.

By 2000, Europe and Africa had their first mega cities in Moscow and Cairo, but there were also an­other four mega cities in Asia, in­clud­ing Karachi in Pak­istan and Dhaka in Bangladesh. Asia now had more mega cities than any other con­ti­nent. Karachi, Dhaka, Jakarta, Mum­bai and Manila ex­pe­ri­enced ur­ban pop­u­la­tion growth rate at higher than 2.4 per­cent. By 2025, Asia will have the ma­jor con­cen­tra­tion of mega cities in the world. The de­vel­op­ment of mega cities in Asia needs to be an­a­lyzed in the con­text of For­eign Di­rect In­vest­ment in the re­gion.

The first wave of FDI be­gan with the re­con­struc­tion of Ja­pan in the 1950s when a sub­stan­tial in­jec­tion of Mar­shall Plan aid in­vest­ment was used to re­build the coun­try’s in­dus­trial and eco­nomic base. Out of this a con­sid­er­able amount was spent on spe­cial­ized re­gional man­u­fac­tur­ing in­dus­try de­vel­op­ment, par­tic­u­larly in the Tokyo and Yoko­hama re­gions. This led to a sec­ond wave of Ja­panese-led in­vest­ment to off­shore sites in the Repub­lic of Korea, Taipei, Sin­ga­pore, and Hong Kong. These coun­tries wel­comed the cap­i­tal in­fu­sion and the em­ploy­ment, and tech­no­log­i­cal up­lift that ac­com­pa­nied the in­vest­ment.

The third wave oc­curred in the 1970s and 1980s, when South­east Asian coun­tries be­gan to at­tract Ja­panese in­vest­ment. This led to higher lev­els of in­dus­tri­al­iza­tion in In­done­sia, Malaysia, Philippines and Thai­land.

The fourth wave be­gan in the late 1980s and early 1990s and cen­tered on China. Four eco­nomic de­vel­op­ment zones (EDZs) in Guang­dong and Fu­jian in south­ern China were given spe­cial priv­i­leges to en­cour­age for­eign in­vest­ment.

The fifth wave of FDI be­gan in the late 1990s with the open­ing of In­dia to over­seas in­vest­ment, es­pe­cially in the in­for­ma­tion tech­nol­ogy and com­mu­ni­ca­tions sec­tors. Coun­tries with new-found wealth such as Malaysia, Repub­lic of Korea, Sin­ga­pore, and Taipei, China, also be­gan to in­vest in Bangladesh, Pak­istan, China and Viet­nam tak­ing ad­van­tage of favourable labour costs, lower reg­u­la­tory costs and also lower stan­dards in some cases.

For the de­vel­op­ment of mega cities on a stronger eco­nomic ba­sis, a new wave of in­vest­ment is emerg­ing, with China’s busi­nesses fac­ing higher pro­duc­tion costs and com­pe­ti­tions seek­ing to in­te­grate with global busi­ness. This leads China to in­vest in other cities in Asia and else­where that of­fer com­pet­i­tive ad­van­tages

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