Report on Human Development in South Asia 2014: Urbanisation promotes economic growth with employment creation

Properly planned and well-managed urbanisation is the driving force for economic growth and human development, says a report on the Human Development in South Asia 2014. Given the fact that South Asia is one of the least urbanised regions of the world, planners and policy makers have to consider future urbanisation as an opportunity to address issues of poverty, inequality, deprivation and underdevelopment. Such an approach will facilitate economic growth and create employment opportunities.
Published annually by the Mahbub ul Haq Centre, the report points out that South Asia is the second fastest growing economic region of the world. Three-fourths of total economic growth is contributed by the urban areas. The level of urbanisation in South Asia is projected to increase from 31 per cent (498 million) in 2010 to 52 per cent (1.189 billion) by 2050. With an increase in the level of urbanisation in the future, urban areas' contribution to region's total GDP will increase even at a higher rate. If properly planned, this urban transformation would provide a great opportunity to change the destiny of people by creating jobs for urban residents and also contributing to rural development.
The role of urbanisation will be vital to absorb the growing labour force. In South Asia, the labour force will increase by 12 to 14 million per annum during the next two decades. As the agriculture sector already contains surplus labour, urban-based industry and services sectors have to create employment opportunities for urban residents, and rural to urban migrants. So far, urban areas of South Asia have not created sufficient formal sector jobs. In South Asia, 8 out of every 10 workers are employed in the informal sector, the report says.
Besides job creation for urban workers, urbanisation can also promote rural development by providing jobs to rural migrants and markets for rural farming and non-farming sectors. In Pakistan, in 2001 average income of working men and women improved by 1.8 and 2.4 times after migration to cities. The ratio of female to male earnings also increased from 62 to 85 per cent. Similarly, in different urban centres of Pakistan, urban areas have benefited rural residents not only by providing employment opportunities, but also by providing markets for the sale of their food products. For instance, Lahore and its surrounding districts; twin cities of Islamabad and Rawalpindi and their nearby cities of Jhelum, Chakwal and Attock and Sialkot, Gujrat and Gujranwala are examples of this.
However, rapidly expanding urban areas have increased demand for land in surroundings of cities in South Asia to build residential areas, industrial clusters, transport corridors and for waste disposal. Such trends are not only reducing farm land but also affecting food availability. For instance, in Lahore, between 1972 and 2010 about 3,016 hectares of vast agricultural areas on the fringes of the city were converted for urban use annually. If present land use policy and norms are not modified, the remaining total cultivated area of 52,332 hectares will be exhausted by 2030.
The report recommends that the region has to link economic growth with job creation by boosting investment in labour-intensive sectors, encouraging small- and medium- enterprises and increasing social sector spending on health and education. Any urban development policy must recognise the role of the urban informal sector and work towards incorporating them in the formal growth process in a substantial way.