URBANIZATION AND INDUSTRIALIZATION

CITIES ARE LOCUS AND ENGINES OF ECONOMIC DEVELOPMENT OF NATIONS

Cities are engines of countries economic development. Posted on December 12, 2017,  an article from the newspaper “Jeune Afrique” reported the World Bank’s conclusions on Lagos city’s 2016 development forecast. Its GDP was estimated at $US 136 billion, higher than that of Côte d’Ivoire, Senegal and Cameroon combined. A city can be more productive than one or more countries at a time. However, the city of Lagos, with a large deficit in urban infrastructure, exploits only a tiny fraction of its economic potential, as in most cities in Africa. For example, it fails to provide a safe and economical energy for its inhabitants and industry, imposing the use of generators, which among other things, makes expensive the cost of living and the prices of local businesses products, etc…

MODERN ECONOMY IS INDUSTRIAL AND URBAN BASED, GENERATES HIGH-LEVEL OF PRODUCTIVITY AND DEPEND ON HIGH INTENSITY ENERGY USAGE.

No country in the world has developed without urbanization and only a tiny number without industrialization. Experts from China and Southeast Asian countries say that no country can eradicate poverty without industrialization. Cities, concentrate modern economic activities; industry, services with high added value and high technology. The latest example of country that tailored its urbanization for economic development is China. In 2013, 690 million Chinese lived in cities for less than 200 million in 1980. At this rate, they will be one billion in 2030. In 2010 China had 94 cities with more than one million inhabitants; forecasts are of 143 cities with more than one million inhabitants in 2025, an increase of 52% in 15 years. This ultra-rapid urbanization coupled with export-oriented industrialization policies has made this country the world’s factory and the world’s second largest economy. With vigorous government intervention and the implementation of coherent policies, it has also been able to attract and use Foreign Direct Investments (FDI) in its mega-cities, to build and develop its own scientific and innovation ecosystem, becoming within 40 years period of time a scientific and world-class technological power, a military and space player, leapfrogging Europe, which took 200 years to industrialize. According to JLL a real estate development company, Beijing, Shanghai and Shenzhen are among the 20 most innovative cities in the world.

The default in this rapid industrialization process is that, it is based on the massive use of coal as a source of energy, abundant and less expensive, but extremely polluting and dangerous for the climate,. According to the WHO, seven (7) of the most polluted cities in the world were in China in 1998.

LIGHT INDUSTRY IS SYNONYMOUS WITH MASS EMPLOYMENT BUT VERY SENSITIVE TO LABOR COSTS

With the adoption of the “new silk roads or Belt and Road Initiative (BRI)” policy in 2013, China has embarked on another phase of its economic development, centered on massive investments in infrastructure, both indoors and abroad but especially outside the country. In this logic, it will relocate several million jobs in the light industry in the coming years, because of the rising wages, the aging of its population, the decrease of populations from rural areas which consistitued the reservoirs of cheaper employees for industries. African countries could well position themselves to host the jobs they need if they succeed in creating the conditions for their establishment. Africa offers indeed important assets, the creation of an Economic Free Trade Zone “The African Continental Free Trade Area (AfCFTA)”, which constitutes a market of 1.2 billion inhabitants, the third market in the world after the Chinese markets 1.4 billion inhabitants, and Indian with 1.3 billion consumers, far ahead of those in the US and Europe, the proximity of the European market and a young and poor population and thus a workforce available. However, the creation of specialized training centers, infrastructure according to international standards, dedicated Industrial Parks or Special Economic Zones and / or the development of efficient and cheaper public transport systems, which reduce congestion and costs of transportation, as well as decent and affordable housing not far away from the employment areas will be necessary. The challenge is to integrate the global value chains of the new division of labor around the world, where the labor-intensive production stages of multinational enterprises are often relocated to countries where labor force is cheap, well educated and then competitive.