Tuesday, October 15, 2019

Is Japan peak-urbanisation?

Japan has been the trend-setter for many themes in the economy and the society. The latest could be in mapping the trajectory of urbanisation. In fact, Japan could represent peak-urbanisation. 

Bloomberg has an excellent article,
When it comes to Japan’s economy, there’s actually two of them. In Japan A, an urban-industrial corridor stretching about 300 miles from Tokyo through Osaka, you’ll find cutting-edge businesses and world-class wealth. In Japan B, which is just about everywhere else, small cities and towns are dying as people move to Japan A in search of opportunity. While other major developed economies are headed down a similar path, Japan has a head start on them when it comes to aging and depopulation, making it a cautionary tale for policy makers across the globe... Japan A, in which about half of the country’s 126 million people live on just 14% of the landmass... More than 80% of towns that replied to an agriculture ministry survey last year said they need to take steps to help residents who find it difficult to obtain groceries, with almost all citing aging as a reason. From 2002-2017, more than 7,000 public schools across Japan shut their doors, the majority in rural areas, as the country’s birthrate remained mired well below replacement level. As more schools close and other services disappear or become harder to access, young families will have even more reason to flock to the cities.
And this is the clincher, or peak-urbanisation, at least for Japan,
Japan will fare better in the 21st century if it reinvents itself as more of a city-state than a continental nation, said Kotaro Kuwazu, executive fellow at the Nomura Research Institute, one of Japan’s most prominent think tanks. Cities will drive the future, so to compete globally Japan should give more resources and power to Tokyo – or what will become the Tokyo megalopolis, he said.
Is this unique to Japan or is Japan a portend of things to come for the others?

Drawing the analogy of physics, a city generates positive centripetal and centrifugal forces. The former attracts migrants towards it, and the latter generates positive externalities on the conurbation and beyond. The desirable state of affairs is a balance between the two forces. If the former is disproportionately high, then development gets concentrated within the core and the periphery withers. The metropole becomes the banyan tree which crowds-out other growth.

I am inclined to believe that there are two progressive equilibriums with the trajectory of urbanisation. The first involves an evolution of numerous smaller towns co-existing with a few large cities. The growth in the larger towns and their emergence as metropolises feed their peripheral towns. This was the one which developed countries followed in their urbanisation pathway. It allows for spatial spreading out of the gains from urbanisation and promotes a very orderly structural transformation.

Then, spurred by certain factors (and this may be unique to regions and countries) and the dynamics of the modern economy, the centripetal forces come to dominate, and instead of feeding the periphery, the larger cities end up squeezing growth outside. A second equilibrium starts to emerge where a handful of very large cities become the big banyan trees and the hinterland struggles. This results in the concentration of economic activity around a few clusters/regions, with decaying hinterlands.

It is perhaps the case that developing countries are still in the first phase. This is especially likely with larger developing countries like India. However, for whatever reasons, there is also a danger of going down the second pathway prematurely. Would rapid urbanisation result in this transition? What would be the socio-economic and political consequences of such transitions? Which Indian states manifest such a transition? Andhra Pradesh?

No comments: