Tuesday, September 20, 2005

Mega City Growth in Brazil

The share of urban population in Brazil increased from 58 to 80 percent between 1970 and 2000. Economic dynamics point to a process of
increased diversification among larger cities, and greater specialization among medium-sized agglomerations. In bigger centers there is a trend towards suburbanization.

These are some of the new facts reported in the World Bank Study:
Examining the Growth Patterns of Brazilian Cities
World Bank Policy Research Working Paper 3724, September 2005

The authors note that Brazil is trying to direct economic activity away from mega-cities towards “secondary cities.” Ades and Gleaser in a paper called Trade and Circuses (see Quarterly Journal of Economics) examined the determinants of which nations have mega-cities. Closed economies, dictatorships and Latin American Nations were more likely to have a very large % of their population in the largest cities.

In Brazil, the policy goal is to “to distribute economic gains more broadly and to relieve the increasing strain experienced by the fastest growing cities. This debate occurs at the national level, where the focus is on second tier cities in the lagging regions of the North and Northeast, as well as at the regional level, where states promote
development of smaller and medium-sized towns.”

INTERESTING FACTS ---For the last 30 years, Brazil accommodated its growing population through both increasing sizes and numbers of individual cities. Over 80 percent of the country's population lives in urban areas, up from 56 percent in 1970. According to estimates by the UN Population Division, the entire growth in population that is expected over the next three decades will be in cities when the urbanization rate is expected to exceed 90 percent (UN 2003; Figure 2). This will add about 63 million people to Brazil's cities, and total urban population will be over 200 million.

Turning to urban externalities the interesting question to me concerns convexity. If a mega-city of 15 million people grows by 1 million to 16 million how much worse is congestion and pollution in this city? Clearly this depends on who are these 1 million people, where they live what they consume and what jobs they do but the raw scale of this growth could exacerbate “Brown Cities” unless government is up to the job of mitigating these externalities. Turning things around, if these million people could be “deflected” to a smaller city, what is the marginal increase in pollution in those cities? Is this a zero-sum game? Intuitively even if the same pollution is merely transferred from the big city to the smaller city since the smaller city has fewer victims living there the total social damage from pollution will decline. Air pollution is a local public bad and will cause less damage in less populated areas.

I would be interested in the political economy of whether land owners in the mega cities and land owners in the secondary cities both are in favor of this government “deflection program”? Clearly land owners in the secondary cities will be helped by the growth in local demand but land owners in the mega cities will only be helped by this “exporting” if quality of life damage from local growth was very large.