Urbanization is occurring at an unprecedented scale globally. Larger cities are more productive and have higher GDP per capita due to agglomeration effects like larger labor markets and faster spread of ideas. However, cities also concentrate pollution and income inequality. Denser cities have lower carbon emissions from transport. Fragmentation of governance across many municipalities in a metropolitan area reduces productivity, but establishing governance bodies to coordinate policies across jurisdictions can help mitigate these issues. Land use and transport policies especially need coordination to achieve good outcomes in areas like reduced urban sprawl and improved public transportation. Effective metropolitan governance reform focuses on desired outcomes, encourages long-term cooperation, and monitors results.

1. THE METROPOLITAN
CENTURY &
GOVERNING
METROPOLITAN AREAS
Joaquim Oliveira Martins
OECD Regional Development Policy Division
Comité Grand Lille, 3 Juillet 2015

2. Urbanisation is proceeding at an
unprecedented scale

3. Urbanisation and economic
development
Levels of urbanisation and per capita GDP (relative to the U.S.) 1970 – 2005

4. The economics of urbanisation
0
20 000
40 000
60 000
80 000
100 000
120 000
Europe (OECD) United States/Canada Mexico/Chile Japan/Korea
Averagelabourproductivity
0.5-1 million 1-2 million 2-5 million 5+ million
Larger cities are more productive

5. Larger cities have higher GDP per capita levels:
• They benefit from agglomeration effects
– Larger local labour markets, faster spread of
ideas, more competition, more efficient use of
infrastructure, …
– For a doubling in city size, productivity increases
by 2% - 5%
• They have higher human capital levels
• They are often trade and transport hubs
• They offer opportunities for rent extraction
The economics of urbanisation

6. Connectedness to cities also benefits surrounding regions
The economics of urbanisation

7. Cities create agglomeration benefits – but
also agglomeration costs
The economics of urbanisation

8. The economics of urbanisation
Income inequality has increased most strongly in large cities

9. • Cities are big polluters because many
people live in them
• Spreading the urban population over a
larger rural area would not improve
environmental impact
• Urban form matters: denser cities have
lower carbon emissions and a smaller land
footprint
The environmental impact of cities

10. The environmental impact of cities
Bangkok
Barcelona
Cape Town
Denver
Geneva
London
Los Angeles
New York City
Prague
Toronto
Beijing
ShanghaiTianjin
Chicago
Paris-IDF
Kitakyushu
0
1
2
3
4
5
6
7
0 5 000 10 000 15 000 20 000 25 000
Transportemissions(tCO2e/capita)
Urbanised population density (persons per km²)
Denser cities have lower CO2 emissions from transport

11. • Fragmentation of a metropolitan area into many
municipalities reduces per capita GDP and productivity
– A doubling of the number of municipalities per 100,000
inhabitants reduces productivity by 6%
Good governance for metro areas

12. • Negative impact of
fragmentation can be reduced
through organisations that
coordinate policies in metro
areas
– Approximately half of the
productivity penalty from municipal
fragmentation disappears when
governance bodies exist
• Metropolitan governance bodies
are common throughout the
OECD
Good governance for metro areas

13. • Governance bodies also lead to better outcomes in
several other dimensions
Good governance for metro areas
Sprawl Satisfaction with Public
Transport

14. • Policies not only need to be coordinated across
jurisdictions
• Coordination across policy fields is equally
important
• In particular, land use and transport policies
need to be coordinated in metro areas
– Both policy fields highly complimentary
– Good outcomes in one field only possible with good
outcomes in the other field
Good governance for metro areas

15. When considering metro governance reform, pay
attention to the reform process
• Focus on the outcomes that are supposed to be
achieved
• Encourage long-term cooperation between involved
actors
• Compensate actors that lose from the reform
• Monitor outcomes of the reform to judge if it is
effective
Good governance for metro areas

16. THANK YOU