Bangladesh’s Urban Space Today: Implications for the Growth Agenda
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Box 2.2 Deconcentrating Manufacturing in Brazil and Indonesia As urbanization increases, manufacturing employment tends to deconcentrate out of core urban centers “first into their suburbs and nearby ex-urban transport corridors and then into smaller cities, with their lower cost of living, lower wages, and lower rents” (De Mata and others 2005, 22). Many developing countries are decentralizing manufacturing from the largest cities to peri-urban areas. Suburbanization of manufacturing characterized Brazil’s industrialization process between 1970 and 2000. During this period, manufacturing moved away from core urban areas toward suburban areas, as cities became larger. Manufacturing employment in core urban areas as a share of total urban manufacturing employment decreased from 64 percent in 1970 to 47 percent in 2000. To a lesser extent, the suburbanization of services shows a similar pattern, although in 2000 the level of concentration of services was higher in core urban areas (66 percent) than in peri-urban areas (55 percent). Suburbanization in Brazil is most evident in the largest cities. In Indonesia, manufacturing employment deconcentrated from central Jakarta to adjacent districts. Economic census data for 1975–2001, which cover establishments with at least 20 employees, suggest that despite congestion and high factor prices, Jakarta, with more than 13 million people, continues to attract residents and businesses. However, Indonesia experienced deconcentration of manufacturing employment from Jakarta to the districts surrounding it (known as Jabotabek). In the garment sector, central Jakarta lost ground, as the share of the garment establishments in the core city dropped from a high of 25 percent in the 1980s to about 5 percent by 2000. Deconcentration coincided with an increase in the share of establishments in the Jabotabek region and neighboring areas, probably as a result of the establishment of new rather than relocated firms. The largest increase was in districts neighboring cities with at least 1 million residents. Similar patterns are evident in other large industries, such as chemicals, rubber, plastics, machinery, and equipment. Connective infrastructure facilitated the deconcentration of manufacturing. The construction of tollring roads around the city, which allowed firms to retain most of the agglomeration benefits of the region, facilitated the suburbanization of manufacturing production from the core of Jakarta to peri-urban areas. Aggregate transport costs per unit of sales revenue dropped, because a larger market could be accessed by a better road network. Deconcentration in Brazil and Indonesia did not lead to the relocation of economic activities to secondary cities; firms relocated to districts close to major markets and export or transport hubs in order to continue to benefit from agglomeration economies. Only manufacturing sectors that are closely tied to the natural resource base maintained relatively high establishment shares in districts neighboring small cities far from urban centers. These sectors include tobacco; wood products, including furniture; and, to a lesser extent, food processing. Sources: Da Mata and others 2005; Deichmann and others 2010; Henderson, Kunkoro, and Nasution 1996.
Extremely Poor Infrastructure, Low Level of Services, and Lack of Amenities Bangladesh’s cities are characterized by extremely poor infrastructure and low level of services. Dhaka ranks among the 10 worst large cities in the world in provision of services (including infrastructure, healthcare, Bangladesh • http://dx.doi.org/10.1596/978-0-8213-9859-3