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A driver of economic growth

Filipe Naigulevu
Thursday, June 22, 2017

URBANISATION, while traditionally viewed as a problem, is a driver for economic growth and potentially economic development.

This was highlighted by University of the South Pacific's senior economics lecturer Rup Singh during a presentation at the 2017 Pacific Update Conference in Suva yesterday. Speaking on the topic of urbanisation and sustainable development in Fiji, Mr Singh said this was an area of research which had become very interesting not only to geographers and socialists, but also to economists.

This means that there is a complete shift of conceptual paradigm in urban economic growth literature where mainstream economists were now interested in.

He said this was because urbanisation was something real that was happening on a day-to-day basis.

"There has been a complete shift of thinking of how we view urbanisation, development and growth now compared with what we used to do in the past," he said.

"We knew that modernisation promotes development, but this was realised very late."

Mr Singh said traditional literature endorsed four problems of urbanisation, the mass movement of people into towns/cities, which were crime, traffic congestion, contagious disease and burgeoning housing cost.

"We are now looking at urbanisation as an opportunity for growth," he said.

"Urbanisation is much related to growth and development because of the impact of agglomeration, scale effects of large population and knowledge spill over because we want to be close to where we have technology and infrastructure."

"In a nutshell, we are saying that urbanisation is a driver for economic growth and potentially economic development."

Mr Singh, however, indicated a few shortfalls into the literature of viewing urbanisation as a driver for economic growth.

"The empirical support are reasonably weak to establish that connection, the pace of urban concentration and economic productivity," he said.

"There also seems to be many theoretical frameworks and there is no one overarching framework that relates to the development process."

Mr Singh said urbanisation in the context of Fiji and some Pacific Islands countries promoted economic growth, "we don't doubt this conclusion".

He said this was true for Fiji and Vanuatu where urbanisation was growth supportive, but needed to be managed.

This was because small, vulnerable economies (SVEs) had limited capacity to invest in bold and smart infrastructure development.

He said this raised the need for long-range development planning, which was a must. Mr Singh said this deferred in the Solomon Islands where the growth effects were negative, which was possibly attributed to weak infrastructure and lack of connectivity to the urban markets.

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