Resources Research

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Posts Tagged ‘income inequality

Sizing up city life

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Close ranks of tall residential towers signal a new township on the outskirts of Beijing, P R China.

Close ranks of tall residential towers signal a new township on the outskirts of Beijing, P R China.

Some two years ago, it was calculated, the world firmly entered the urban age, for the available evidence pointed to a startling truth: more people now live in cities than outside them. The balance between urban and rural populations differs between countries, at times considerably. Chad and Congo have about the same number of people living in cities, 2.95 million and 2.96, but these urban populations are 22% of the total population for Chad and 65% of the total population for Congo.

Overall, the balance between urban and rural populations is thought, conventionally, to directly describe whether a country is likely to be in the high income or low income groups of countries. The Department of Economic and Social Affairs – a specialist agency of the United Nations – entrusts such calculations to its Population Division whose ‘World Urbanization Prospects’ found, in its 2014 revision, that the proportion of urban populations for high income countries was 80% while that for low income countries was 30%. This seems to lend weight to the conventional wisdom that it is cities that galvanise the creation of the sort of wealth which gross domestic product (GDP) growth depends on.

Cities are seen to harbour dynamism and vitality. For those who live in such cities, this is largely true. Residents of cities like Seoul (Korea), Lima (Peru), Bangalore, Chennai and Hyderabad (all India), Bogotá (Colombia), Nagoya (Japan), Johannesburg (South Africa), Bangkok (Thailand) and Chicago (USA) are very likely to agree that living and working in their respective cities has brought tham prosperity, and are less likely to ponder about this group of cities being the top ten in the world with populations under 10 million in 2014 (there are 28 cities worldwide with populations of at least 10 million).

RG_CN_Beijing_201405_01_bwThere is however another aspect to the formation of cities. In 1927, the film Metropolis, conceived by Fritz Lang and delivered as an artfully stylised cinematic message, described the strains and dangers of the power that cities had already come to have over their residents. For Metropolis was a futuristic city where a cultured utopia existed above a bleak underworld populated by mistreated workers. Just over 50 years later, another film, Blade Runner (1982), blended science fiction with a disturbing portrait of a dystopian and dangerous cityscape that was both gigantic and technology-centric, through which the human element struggled to find meaning.

If Metropolis represented the post-industrial revolution European cityscape, then Blade Runner depicted the flagship of what has been called the Asian century, for its mesmerising and frightening urban backdrop was Tokyo then, and could well be China now. The Japanese capital remains in 2014 the world’s largest city with an agglomeration of 38 million inhabitants, followed by New Delhi with 25 million, Shanghai with 23 million, and Mexico City, Mumbai and São Paulo, each with around 21 million inhabitants. By 2030, so the projections say, the world will have 41 mega-cities of more than 10 million inhabitants.

For all their celebrated roles as centres of wealth, innovation and culture, these mega-cities and their smaller counterparts exert dreadful pressures on natural resources and the environment. These are already either unmanageable or uneconomical to deal with, more so in the rapidly growing urban centres of Asia and Africa. Despite the lengthening list of urban problems – most caused by rural folk flocking to cities faster than urban governance structures can cope with existing needs – demographers foresee that today’s trend will add 2.5 billion people to the world’s urban population by 2050. India, China and Nigeria are together expected to account for 37% of the projected growth of the world’s urban population between this year and 2050. It is there that the idea of the city, which so fascinated Fritz Lang, will be sorely tested.

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Who are the unbanked? The World Bank deals out the numbers

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Why are people unbanked? The Global Findex shows 3/4 of the world’s poor do not have a bank account, not only because of poverty, but also due to costs, travel distance and paper work involved. Graphic: The World Bank / Global Findex project

The World Bank’s Global Findex (global financial inclusion index) project has said that worldwide, approximately 2.5 billion people do not have a formal account at a financial institution.

“Access to affordable financial services is linked to overcoming poverty, reducing income disparities, and increasing economic growth,” explained the World Bank in its usual ponderous manner – and with its flair for linking the unlinked.

Alarmed by the number of people who apparently have neither credit nor any wish to, the World Bank has created the Global Findex, described in glowing terms as “a new global financial inclusion database to measure the use of financial services and identify those with the greatest barriers to access”.

The graphics are useful, so here are the rest:

Who are the unbanked? The Global Findex shows gaps in financial inclusion across demographics, with women, the poor, youth, and rural residents at the greatest disadvantage. Graphic: The World Bank / Global Findex project

Regional differences in banking. In sub-Saharan Africa 16% Have used a mobile phone to pay bills, send or receive money in the past 12 months. Graphic: The World Bank / Global Findex project

Going mobile. The Global Findex shows mobile banking may help historically unbanked regions gain financial access. Graphic: The World Bank / Global Findex project

More information on the Global Findex project and data is available here.

Written by makanaka

May 10, 2012 at 07:44

Costing Goa’s mineral resource curse

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Coconut palms line bunds between fields and alongside streams

Coconut palms line bunds between fields and alongside streams

In late August we had a discussion to talk about the ways in which the ‘suppressed entitlement’ of Goa’s population, in relation to mining profits, could be freed. This would have the effect of galvanising a sense of right and ownership using the admittedly troublesome monetary incentive route (we will find a way to deal with this).

The concentration of wealth is astonishing, even in a region that is part of a country whose state Gini coefficients for income are well over 0.45 (over 0.30 is considered to be potentially socially destabilising). Goa’s top six iron ore mining families together with India’s largest private sector iron ore exporter have amassed immense wealth. Based on the derived industry profit for 2009-10, the share per resident family is Rs 3.19 lakh (not including profits from illegal ore sale, not subtracting for the ‘producer’s share of risk and managerial input’).

Based on time-series profits for the years 2000-01 to 2009-10 and average per ton prices we can ‘entitle’ the 360,000 resident families to their ‘withheld shares’ as follows: Rs 2.80 lakh in 2008-09, and working backwards Rs 2.50 lakh, Rs 2.15 lakh, Rs 1.80 lakh, Rs 1.45 lakh, Rs 1.10 lakh, Rs 76,000, Rs 40,000 and Rs 28,000. This totals close to Rs 16.5 lakh due per family for a decade of mineral exploitation. That’s one aspect, to place in perspective the stratospheric super-profits of the main mining families (companies). The other is to work towards a ‘true cost’ accounting of the extraction.

Rice is still planted and harvested in the coastal talukas, but fields such as these are threatened by urbanisation

Rice is still planted and harvested in the coastal talukas, but fields such as these are threatened by urbanisation

The startling per family ‘entitlement’ also raises the question of how they have been used by the state of Goa. The indications from the contribution of mining and quarrying (the basic accounting head) in the Goa state accounts is that this has contributed between 6% and 4% of state domestic product. We may raise this contribution by 2% to include mineral extraction activities not covered directly by this head. Even so, where is the gross capital formation rate at the state level to show how this wealth has been used? Where is the rise in the net savings rate to show how this wealth has been retained? These are serious questions for the state government to answer.

A ‘true cost’ accounting of the extraction will help us achieve two things:

1. It will help fix the liability of the state administration towards the costs of ecosystem loss and degradation caused by mineral extraction.

2. It will similarly ‘spread the liability’ on a per family basis so that an economic disincentive is created at the household level for such an activity (mining) if households shared both profit and liability.

How are the populations of the 11 talukas (populations in the note below) to benefit from their share of ‘entitlements’ and ‘liabilities’ of the export profits and environmental burden of iron ore mining? To what extent must the state administration bear the liability and underwrite the costs of mitigation for all of Goa’s affected (directly and indirectly) families? How can participatory shares and fund instruments be created that embody these concepts, who will regulate them, how will they be counter-guaranteed? These are the community economics questions that will face us when we make such calculations.

The full article is on this page.