Strengthening urban economies: Production, People, and Place

Cities are potential platforms for progress because they make people and firms more productive. Agglomeration creates positive value and facilitates learning and creativity. It also generates efficiencies for public infrastructure and essential services. Yet urbanisation of the population does not automatically lead to rising prosperity or inclusion, especially if it accompanied by congestion, social instability, public health risks or inflated property prices.

The research seeks to understand the determinants of urban economic success and the obstacles faced in order to improve policy and practice – for government, the private sector and civil society. The intention is to analyse the factors and forces that drive economic development across the urban system, and that help and hinder urbanisation contributing to economic and social development.

Part of the rationale is that policy-makers need to do more to anticipate and prepare for urbanisation, thereby avoiding the growth of haphazard and poorly-serviced informal settlements. Government economic and industrial policies also need to be more sensitive to different local contexts, and to align and integrate diverse interventions to achieve synergies through co-location, industrial clustering and backward and forward linkages.

The research programme involves four interrelated streams of work. The common point of departure is a recognition that cities are complex adaptive systems characterised by diverse interactions between their constituent elements - firms, households, public bodies and civil society organisations. The quality of these interactions influences whether the growth of cities generates value and income, or whether it creates inefficiencies and raises costs. The outcome is also affected by wider forces and developments, including the position of the city economy in national and global value chains, the overall state of the national and global economy, and the nature of government policy.

1. The urban system – demographics and economics

This workstream is overarching and integrative. Its aims to understand how South Africa’s urban system is evolving through shifts in population and economic activity. A new typology of city-regions and urban settlements will be produced, based on the nature and resilience of their economic base. As well as large and intermediate cities, it will include mining towns, tourism centres and regional service centres. SA’s settlement hierarchy will be compared with that of other middle-income countries to assess whether there is a disproportionate concentration of population in the big metros and there is a ‘missing middle’ of smaller cities.

The research seeks to establish (i) the ways in which cities make a positive contribution to the development of surrounding territories, (ii) the extent to which the fortunes of cities (including secondary cities) are dependent on each other, and (iii) whether any of these relationships are particularly imbalanced in a way that threatens the long-term stability of SA’s urban system. Patterns of domestic migration between different settlement types will be analysed to assess whether there is any evidence of a stepped, sequential process, e.g. from small to medium and larger cities.

2. Economic sectors in space

The objective of this theme is to identify the main propulsive industries and occupations behind the growth and decline of SA’s cities and towns. These are the leading tradeable sectors whose performance has powerful multiplier effects on the rest of the local economy. Mining and manufacturing have traditionally performed this role, but their contribution has generally declined, causing major adjustment problems for local economies. Nevertheless, some traditional manufacturing industries (food processing, furniture and fast-fashion clothing) appear to be resurgent and the automobile industry appears to be reasonably healthy.

Newer engines of growth in tradeable services, finance and technology need further research. How are they inserted into national and global value chains? This also includes their innovation capabilities, linkages to suppliers and customers, their locational requirements, skill-sets and labour practices. Work is needed on their barriers to growth and investment, and the local operating environments required to accelerate their expansion. Research is also planned on key cross-cutting occupations where know-how and technical expertise can foster or frustrate progress across different sectors of the emerging knowledge-based economy.

3. Dynamic places

This theme has a spatial rather than a sectoral lens. The focus is on what makes some places within cities more productive than others, and how this is changing. Core concepts include urban density, diversity and connectivity, and the recent fashion for mixed-use development. There is also an interest in place-making policies and regulations, including precinct management, land-use zoning and building regulations, which can help or hamper the adaptive reuse and repurposing of key business districts.

Government silos generally struggle to align themselves in particular places because of their vertical rather than horizontal mode of organisation. Setting up special area-based initiatives is a common response to this problem. However, this may not resolve the problem if powerful departments and entities continue to disregard the territorial imperative. The impact of municipal Built Environment Performance Plans as a recent institutional innovation to coordinate state actions in support of compact and integrated urban development will be assessed. 

4. Strategic urban assets

The focus of this theme is on distinctive assets that make a disproportionate contribution to urban economies. The question is how effectively they are embedded in place and integrated into the local economy. The issue arises partly from the fragmented ways in which cities are governed and the predilection of many decision-makers for prominent flagship schemes and mega-projects. The proposition to be explored is whether a more devolved and coordinated approach to city planning and governance could achieve greater synergies and stronger economic impacts than the current disconnected approach.

An efficient urban transport system is critical to sustaining dense concentrations of economic activity by enabling them to be served by large numbers of commuters from the suburbs and townships. The harm caused by PRASA’s dysfunctional commuter rail networks goes well beyond the inconvenience for commuters and employers. Their stand-alone character means poor alignment with land-use decisions and management’s disinterest in urban development around stations. This has serious consequences for urban economies, including unreliable commutes, congestion on the roads and promoting business dispersal.