Rethinking Eurasian Cities

March 11, 2013

Souleymane Coulibaly's view on the Eurasian Cities report.

World Bank Group

World Bank recommends actions for sustainable development of cities in Eurasia

Washington, March 11, 2013 – Once flourishing along the Great Silk Road, today, a thousand years later, the cities of Eurasia need to be rethought in order to be competitive in a market economy and to re-emerge as the main drivers of growth. Policy makers need to promote the changes and reorganize cities by better planning, connecting, greening, and financing them, says a new World Bank report Eurasian Cities: New Realities Along the Silk Road”.

“The central planners got some things right – easy access to public transportation, district heating networks, almost universal access to water systems, and socially integrated neighborhoods,” said Indermit Gill, World Bank Chief Economist for Europe and Central Asia. “But they failed to acknowledge the importance of markets and individual choice in shaping places for people to live in. To become sustainable, Eurasian cities need to find the right balance between markets and institutions.”

The report looks at cities in 12 countries of the Former Soviet Union: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan, which prospered during the times of the Great Silk Road thanks to burgeoning international trade. Today the cities are reorganizing due to recent economic, political, and demographic developments. The fall of the Soviet Union and the rise of the European Union and Asia affect the reorganization of Eurasia and reshaping of its cities, and present new opportunities for re-emergence of the “Silk Road”.

Russia’s Moscow and St. Petersburg remain the major economic centers not just in the Russian Federation but in the whole of Eurasia, and keep attracting people who come in search of better job and life opportunities. Moscow’s population grew steadily from 1989 and ballooned to more than 10 million though it was originally planned to be kept at 2 million. As markets now dictate the movement of people, goods and firms, cities need to respond by providing flexibility for changing population dynamics while remaining livable places.

“Many cities in Russia still feel the legacy of the Soviet past, when plan affected the spatial allocation of people and activities,” said Michal Rutkowski, World Bank Country Director for Russia. “Also, many Soviet cities were built around a factory and are not necessarily places where people would choose to live. As a result, the remote regions of Siberia and Far East, if compared with similar regions in Canada, have about 18 million too many people. Today, the policy makers and city planners need to help Russia’s population to move in sync with economic activity.”

Kazan, for example, succeeded in becoming more competitive by developing and making more transparent its local government institutions and simplifying procedures for businesses. After pursuing reforms in construction and property regulations, Kazan now scores best of the 10 Russian cities sampled by the subnational Doing Business indicators. But more remains to be done to allow Kazan to catch up with the world leading economic centers and become a real driver of growth in Tatarstan and beyond.

“Modern cities need to be the catalysts of development by bringing people together, helping them benefit from mobility, better connectivity, and economies of scale,” said Souleymane Coulibaly, World Bank Senior Economist and lead author of the report. “To be able to respond flexibly and dynamically to changing economic circumstances, the Eurasian cities need to be rethought along the four key intertwined dimensions: planning, connecting, greening, and financing.”

For better planning of the Eurasian cities, the policy makers need to eliminate the bottlenecks caused by weak rental markets, misallocated housing stock, and missing or poorly enforced regulations. This can be done through collaboration between local and central governments to enhance land markets, revive and make attractive the housing markets, and revamp public infrastructure, including transportation systems.

For better connectivity, the report reviews the necessary changes to enhance trade and transport corridors, improve air transportation, and further promote information and communications technology (ICT). Specific recommendations include: standardizing transit fees, harmonizing border procedures for road and rail transport, simplifying customs procedures, improving regulations and strengthening the capacity of institutions governing air transportation, new investments and better regional cooperation for enhanced ICT, and others.

To green the Eurasian cities and make them environmentally friendlier and more livable, the report recommends a number of measures to mitigate pollution and use resources more efficiently. Recommended actions include reducing transport congestion from private cars, motivating use of environmentally friendlier cars, improving public transportation networks, upgrading district heating networks, improving energy efficiency of the residential housing, and reviving the recycling networks.

To finance all the changes needed, the report suggests new approaches to mobilizing additional financing for the cities. On the sub-national level, policy makers first need to improve the technical and economic efficiency of public utilities. Then they can explore ways of getting additional revenues from the most appropriate source: the consumers of the urban services themselves. Increases in local taxes, housing maintenance fees, and charges for water, heating, and public transport are among the possible sources of finance. More private sector investment and financing from reputable regional development banks can also be considered by policy makers, particularly to provide cross-border infrastructure needed for regional connectivity.

As cities in Eurasia experience unprecedented spatial reorganization influenced by city agglomeration, renewed mobility and population dynamics, policy makers need to find sustainable development paths for the cities in the region. “When a new “Silk Road” emerges, it will have to be biaxial: along the North-South axis connecting Russia and India and along the East-West axis connecting China and the EU,” said Souleymane Coulibaly.

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