Sunday, December 5, 2010

Metropolitan areas and economic growth

The Brookings Institution and the London School of Economics have released an excellent report on the economic growth and employment creation before, during and after the Great Recession in the 150 largest metropolitan cities across the world. In 2007, while these metros formed only 12% of the global population share, they contributed 46% to the global value added.

The performance of Indian metros on income growth and employment creation during the pre-recession 1993-2007 period was moderate. Bangalore enjoyed excellent performance.

Unlike the Chinese metros which escaped largely unscathed, the Indian cities were moderately affected by the Great Recession.

The Indian cities have been amongst the best performing metros during the post-recession recovery since 2009. Mumbai and Hyderabad have had the most impressive recoveries while New Delhi has lagged behind.

There are several interesting insights from the report. In general, employment growth rates have been much higher in the metros than the remaining country. Bangalore has been the standout performer among Indian cities. Delhi, Mumbai and Hyderabad too have out-performed the rest of the country, though Chennai and Kolkota have done no better than the remaining country. However, none of the Indian cities can match the emerging Chinese cities like Shenzhen and Guangzhou with their hugely impressive job creation achievements.


H A K Bhaskar said...

okay sir. Results agree with that. But does not telling about poverty line. If leaving creation of jobs, it depends on simply minds of such cities?

KP said...

Dear Gulzar,

A quick question - can the employment growth rates be decomposed to those areas which cater to internal demand / and those that cater to external demand for goods and services ??

While they cannot be completely decoupled - Is this an indicator that the chinese economy is now focused on the welfare of its citizens - and has identified its larger growth opportunities as within.

While India's strategy is largely to cater to growth through export (goods and services) - and the consequent increase in internal consumption of goods and services ??

your take?


gulzar said...

may be difficult to objectively decompose the two contributors to job creation. also am not sure whether the metros data also includes the SEZs etc in those areas. however, a few observations

interestingly, the performance of the chinese cities have remained excellent throughout the 1993-2010 period, through both good and bad times. all along the chinese economy has grown rapidly. does this mean that these cities have by now become sustainable economies, capable of growing on their own, irrespective of global economic conditions? am more inclined towards the belief that the growth of these areas are driven more by services and higher value added mfg. and so long as MNCs find China attractive, these areas will continue to grow rapidly.

much the same applies to India too. in fact, the growth of its cities may be more a reflection of domestic market growth trends, in view of the much smaller presence of FDI and foreign MNCs than China.