Column : Moving away from cities

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William R Kerr, Arti Grover Goswami, Ejaz Ghani: Nov 24 2012, 03:23 IST

One of the biggest challenges in development is urbanisation. Within developing countries, nearly two billion people are expected to move from rural regions into cities in the next two decades. The pace at which this will happen will be much faster than what the world has experienced before. For instance, China’s and India’s economic transformation and urbanisation is happening at 100 times the scale of the first country in the world to urbanise—the UK—and in just one-tenth of the time. Most countries have only one chance to get it right, and there is no ‘one size fits all’ recipe.

McKinsey Global Institute contends that cities in India have the potential to generate 70% of the country’s new jobs and GDP over the next 20 years, a process that could drive a four-fold increase in per capita incomes. While promising and greatly desired, such urbanisation imposes unprecedented managerial and policy challenges. However, in spite of the potential for urbanisation in the country, research on spatial location and concentration of economic activity in cities is still at an early stage.

Given the great challenges ahead, we looked backward to describe how the urbanisation process has proceeded (or not) for the Indian manufacturing sector over the 1989-2005 period. We had two goals. The first goal was to trace the trends and depth of India’s manufacturing urbanisation across states and industries. This description can yield important insights for researchers and policymakers going forward.

Our second goal was to examine whether localised education and infrastructure are linked to

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