South Africa and the World Development Report: Urbanisation or Balanced Growth?

By Stephen Greenberg · 24 Jul 2009

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Picture credit: Kool_Skatkat
Picture credit: Kool_Skatkat

The World Bank’s recently released 2009 World Development Report - titled Reshaping Economic Geography - suggests South Africa may be out of step with mainstream thinking on economic development approaches. But what is this ‘mainstream’ thinking, and is South Africa really so out of step with it? In the report, the Bank argues that successful development will result from increasing economic concentration in urban areas, and that the role of the state is to enable urbanisation and the integration of their economies with ‘world markets’.

Some time around 2007, so we are told, more people lived in urban areas than in rural areas for the first time in history. This is defined as a turning point and a justification that urbanisation is the only game in town. According to the report, the reason why urban areas have grown so rapidly, especially in the past 30 years, is that agglomeration and economies of scale have created massive wealth. This wealth, we are led to believe, could be shared amongst all if only market forces were allowed to prevail. If the state wants to intervene at all, it should do so by encouraging urbanisation and economic concentration.

Three primary mechanisms for realising this are suggested. First, states should invest in urban areas where the potential for agglomeration exists. Agglomeration means spatially dense interconnections between economic agents. Second, states should facilitate labour mobility by improving transportation infrastructure. Third, states should encourage regional integration to scale up supply, and global integration to scale up demand.

It is not a coincidence that the ‘urban revolution’ - the sharp growth of urban populations - occurred at precisely the time of neoliberalisation, from the early 1980s onwards. The rise of finance capital, deregulation of capital flows, a systematic and ongoing attack on wages and working conditions for the majority, and the destruction of rural livelihoods all resulted in a rapid, unprecedented concentration of resources and power in the hands of a small elite. The report unabashedly states that it focuses on economic development and does not consider social or environmental impacts in any detail. From a purely economic point of view, the global economy has undoubtedly grown as a result of these policies of urbanisation and concentration. But it has also created vast economic inequalities, and ongoing social, spatial and economic dislocation and marginalisation for billions of people.

Let us take at face value the suggestion (even if based on dubious statistics) that the urban population is now larger than the rural population for the first time. This ‘milestone’ is the lynchpin of the analysis in the report: that urbanisation is now an inexorable trend and rural areas are destined to die off. But other statistics also generated by global agencies (including the International Fund for Agricultural Development and UN Habitat) suggest that while the rural population might be declining as a proportion of the total population, it is likely to remain at around 3.25bn people in the decades ahead. That is an awful lot of people to consign to the dustbin of history.

The same sources note that poverty is most definitely still a rural phenomenon. Of the estimated one billion people living in poverty (arbitrarily defined as those living on less than US$1/day), 75% live in rural areas. These people are numerically concentrated in Asia, but the poverty is deepest in sub-Saharan Africa. The depth of this poverty in Africa was in no small measure the direct result of structural adjustment programmes (SAPs) forcibly imposed on African governments by no other than the World Bank. It is a similar story to the logic of privatisation: first you destroy the public sector’s capacity to provide services by imposing deregulation and the shrinking of the state, and then you argue that the state is unable to provide quality services so the private sector must be tasked with the job. In this case, first the SAPs destroy any potential of a sustainable rural economy by narrowly focusing on export-oriented cash crop production to the exclusion of all other support. Then when those policies drive millions off the land and into the cities in a desperate attempt to find some source of sustenance, the argument is that the rural economy is not ‘natural’ and that the future is urban.

More: the very flow of these desperate, impoverished people into the cities is used as proof that people want to move to areas of economic concentration. Then the report tells us that the state should facilitate this process, because it is the only chance for successful development. Provide transport for those who want to come to the cities. Those who have the skills required by the owners of the concentrated resources will benefit from the wealth. This is another self-fulfilling prophecy: as skilled people leave the rural areas because of lack of economic investment by the state or capital, they enhance the power of the economic core, and simultaneously further impoverish the rural periphery. And those who don’t have the skills to make it in the capitalist city…well, development will inevitably be uneven, we are told.

This flood of the desperate into the cities - mostly into slum conditions - gives rise to the notion of ‘the urbanisation of poverty’, another term used by the World Bank and its ilk to justify their focus on the cities. It is as if those people carry poverty around with them on their backs, first polluting the rural areas and then the urban areas with it. But poverty is a product of the environment, not the individual. The World Bank’s prescriptions over the past 50-odd years have had a lot to do with the way the conditions for poverty have been reproduced and expanded, drawing more and more people into its sphere. Forget the Millennium Development Goals. Poverty is increasing, in both urban and rural areas.

The basic assumption in the report is that economic concentration is a necessary feature for development. This flies in the face of overwhelming evidence that shows that poverty grows side by side with wealth creation in a capitalist system. It is in fact a necessary counterpart to the generation and concentration of wealth in the hands of a few. This is the logic of uneven development: concentrated growth in some places necessarily leads to the impoverishment of others. This is true both within cities, between urban and rural areas, between sub-national regions and between countries and international regional blocs.

At times reading the report feels like we are back in the days of George Bush and the World Trade Organisation (WTO). Not surprising, perhaps, since Robert Zoellick, Bush’s appointment to head the Bank, is still in place. This is the same guy who spearheaded US agricultural negotiations at the height of the WTO’s power. The report bangs away at the need for countries to open their borders and embrace the ‘world market’ - blatantly identified with the markets of the US and the EU. Finance Minister Pravin Gordhan correctly noted that the report views markets as static, with “existing markets always remaining the same ones”. The logic of the report is for greater investment where investment already exists. At a global as much as an intra-city level, this means never breaking out of the inherited investment and growth logic that has taken us into these times of economic, social and ecological crisis.

Is the World Bank’s policy advice really contrary to the South African government’s approach? Two very important policy initiatives will give us the answer. First, we will have to wait to see what happens to the National Spatial Development Perspective (NSDP), which was the ANC’s macro-investment strategy in the era of Thabo Mbeki. This strategy almost precisely mirrors the World Bank’s current prescriptions, in focusing public investment in 26 identified areas of economic concentration across the country. Unsurprisingly, all are urban nodes. Those members of the population who happen to live outside these nodes will be provided (theoretically speaking, of course) with skills development to enable them to move to areas of economic activity. This is based on the rather far-fetched assumption that the urban areas will generate employment at a fast enough pace to absorb job seekers. Those who cannot or will not move will be offered basic welfare support but no more. We can only hope that this strategy will fall by the wayside in the new administration. For that to happen, major existing strategic frameworks at provincial, metro and local levels will need to be unravelled and redone.

Second, we will have to wait and see (since government tends to disdain input from the mere citizenry) whether all the talk about a rural development strategy will actually materialise into some kind of coherent vision and plan, and how it will relate to the urbanisation dynamic. From the dribs and drabs emerging out of government so far, the chances do not look promising. At this stage, talk of an “ambitious rural development plan” is going a bit far. Yet the opportunity precisely for the government to go against the disastrous ‘mainstream approaches’ of the World Bank is present. Whether government can carry the process through to its logical conclusion remains to be seen.

Stephen Greenberg is a freelance researcher with an interest in food systems, land, agriculture and rural development.

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